Your Tuesday Market Blip 1/19/16

Your Tuesday Market Blip 1/19/16

Stocks rallied, fell and then managed a small rally at the close with the Dow gaining 27 points to 16,016. Trading volume was off from last Friday’s session. Markets continue to trade in “correction mode” as the oil price war plays out.
It promises to be a big week for earnings reports. Today Morgan Stanley and Bank of America reported results to kick things off. Morgan Stanley had a 5.3% increase in revenue and saw profits swing from a loss to a better than expected gain. Bank of America also managed a 6% revenue gain which was below estimates. Net income came in above estimates as mortgage originations, trading and global banking did well. The company posted net profits up about 10%. B of A’s book value was up 6% over this time last year. The fly in the ointment however was that results for both companies was due in part to cost cutting.
Delta Airlines reported a 51% increase in net income and a 1.5% drop in revenue. The revenue drop was due to adverse foreign currency conditions while the rise in net income was due to falling fuel prices. Delta expects to save $3 billion in fuel costs this year.
China announced its GDP growth numbers and they were the worst in 25 years as the country grew at a pace of 6.8% which was slower than Q3 pace of 6.9%. Many economists believe China’s official data are not accurate noting that electricity consumption only grew by a half a percentage point. Sino industrial production was up 5.9% while retail sales were up by 11.1%. Both of these figures were below estimates. Fixed asset investment in urban areas grew 10% last year.
WTI crude closed off 3.8% today to $28.25 per barrel. Reports of record demand for oil in China in 2015 was offset by Iran saying it would lower its prices to Europe in an effort to prevent market share loss to Saudi Arabia which is also lowering prices. This is a complete reversal from what took place in the 1970’s. OPEC is now called CEPO! “Counties Engaging in Petrolium Oversupply”.