Your Thursday Market Blip 4/21/16

Your Thursday Market Blip 4/21/16

Stocks today fell back below 18,000 on heavy volume as a pullback in transports and telecoms led the way lower. At the close the Dow was off 113 at 17,982. Several big companies are reporting earnings after the close today and these might set the tone for tomorrow.

Natural gas pipeline giant Kinder Morgan reported Q1 earnings last night and they were lower than the prior Q1 and missed estimates to boot. The company reported an 11% drop in Revenue and a 14% decline in net income. Cash flow however stayed steady and the company said it was lowering its capex budget from $3.3 billion to $2.9 billion and its backlog from $18 billion to $14 billion by suspending some pipeline projects because they have no customers as of yet. Going forward the company lowered its cash flow projection by 4% but was confident in its financial position saying that with a robust cash flow and rising demand for gas in a low price environment would not force it to access the capital markets at all.

Gold slipped back and closed at $1,251 an ounce as the US dollar rose a bit. Gold has been flying high for the first time in a dog’s age and the move has some people baffled because gold usually does not do well in a deflationary environment like we have today. Some gurus think the rise in gold is a reflection of the lack of confidence people have in recent central bank NIRP (negative interest rate policy) actions. As a currency, gold and silver have zero counter party risk and this might be an attractive feature considering how some governments play games with their currency. An example of this is Venezuela which has devalued its own currency with bad policy decisions leading to hyper inflation. The big question on everyone’s lips is “what is the rise in gold telling us?”

WTI crude oil today was off a bit dropping about 1.5% to trade just over $43 a barrel. Oversupply concerns and a stronger dollar were reasons for the down tick.