Stocks and oil are going to appear as a couple on Dancing with the Stars! Oil fell about 5% causing the Dow to trade off as well. At the closing bell the Dow was off 189 points to 16,431 on heavy volume.
Mark Mills, Senior Fellow and all around good guy at the Manhattan Institute tink tank, commented in a Bloomberg article about the recent inaugural shipments of US crude oil to export markets. These come on the heels of a lifting of the export ban that had been in place since the 1970’s. The shipments so far have been to Europe and Israel. Mills thinks the big losers in this scenario will be Saudi Arabia and Russia. Mark “tinks” foreign buyers will prefer to buy US oil because “it’s a supplier you know is never going to threaten you or cut off supplies, which is certainly not the case with exporters like Saudi Arabia, Russia or Iran.” Another effect of US oil exports could be to ease the US trade deficit and strengthen the US dollar.
Speaking of a strong greenback, the effects of a rising dollar are being seen in US corporate earnings. A recent study showed that companies with greater than 50% of sales coming via overseas markets reported an average net income decline of 11.7% last quarter while companies with less than 50% of sales via overseas markets reported a 2.7% increase in net income.
Home Depot (some refer to it as “Home Despot”) reported great earnings as mild weather and a robust housing market benefited the retailer. Revenue was up 9.5% and profits were up 17%. Both top and bottom lines hammered estimates and the company had a good outlook for future business. Big ticket item sales (plus $900) were up 12% which was a big surprise and drove comp sales.