Edge and Odds

The enemy of knowledge is not ignorance, it’s the illusion of knowledge (Stephen Hawking)

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so (Mark Twain)

Edge and Odds

Invest with smart knowledge and objective odds

NEW$ & VIEW$ (16 MAY 2014)

U.S. HOUSING
  • Home Builders Remain Downbeat U.S. home builders remained downbeat in May, reflecting a housing market struggling to regain traction well into the spring selling season.

An index of builders’ confidence in the market for new single-family homes fell one point to a seasonally adjusted 45 in May, the lowest level in 12 months, the National Association of Home Builders said Thursday.

The monthly decline was driven by builders’ negative view of current sales conditions. However, their expectations for sales in the next six months improved, as did builders’ assessment of traffic from potential buyers. The index declined by one point in the South and West, but held steady in the Northeast and Midwest.

This is the most important stat from this survey. No sentiment, just hard facts, boots on the ground in the middle of housing prime time:

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More hard facts showing that unless many, many cash buyers show up, you should not hold your breath for a housing turnaround anytime soon:

Notwithstanding support from mild weather and a supposedly improving labor market, May 9th’s MBA index of mortgage applications for the purchase of a home plunged by -12.5% from a year earlier. By contrast, early May 2013’s comparable serial comparison showed a 10% yearly increase for homebuyer mortgage applications.

Basically, the growth of employment income was not great enough to compensate for a climb by MBA’s effective 30-year mortgage yield from the 3.73% of the four-weeks-ended May 10, 2013 to the 4.55% of the four-weeks-ended May 9, 2014. (Moody’s)

Much yadi, yadi, yada in this FT article until this:

(…) Although the US economy has added several million jobs in the last few years, there has been little incomes growth for the average American, and that may have reduced housing demand. New household formation has been exceptionally low, with many adults in their 20s and 30s continuing to live with their parents.

That helps to explain some of the divergent trends in the housing market. For example, builders are putting up much bigger homes, to cater to wealthy Americans who are doing well, which helps to explain why the number of starts is low.

“If you look at the average size of a new single family home then we’re at an all-time high,” says Ms Meyer. The average new home now covers around 2,700 sq ft – even larger than before the housing crash.

The demand for homes is also highest in affluent cities, such as San Francisco, that also have the toughest restrictions on building, leading to rising house prices, but no equivalent rise in activity to boost the overall economy and comfort Ms Yellen. (Chart fro Minack Advisors)

Here’s the debate among money managers:

Bill Miller said investor Jeffrey Gundlach and real estate billionaire Sam Zell are wrong about housing.

Gundlach, the chief executive officer of DoubleLine Capital LP, and Zell, chairman of landlord Equity Residential, predict fewer young people will buy homes, further driving down the U.S. ownership rate. Miller, the stock picker who beat the Standard & Poor’s 500 Index for a record 15 years, said he’s so confident lending and housing will rebound that he’s betting on mortgage insurers, homebuilders and subprime servicers.

“Anytime there’s a cataclysm, people always say it’s never going to come back,” said Miller, 64, sitting outdoors at a table overlooking Baltimore’s harbor. “I don’t believe there’s been a secular change in demand for housing. People may just rent longer than they otherwise would have before eventually buying.” (…)

Miller, who can recall how the stock market performed on many days as far back as the 1980s, said he remains upbeat on housing because banks are beginning to ease lending requirements.

In March, credit standards were the loosest in at least two years, according to a Mortgage Bankers Association index. The measure, based on underwriting guidelines, rose to 114 from 100 when it started in 2012. Wells Fargo & Co. (WFC), the largest U.S. home lender, last month cut its minimum credit score for borrowers of Fannie Mae and Freddie Mac-backed loans to 620 from 660. And earlier this week, the Federal Housing Finance Agency, which oversees the two government-backed mortgage companies, unveiled plans to spur lending by reducing the risk to banks of having to buy back loans that default.

“The housing recovery is far less robust right now than it’s ever been historically coming out of a recession,” which means there’s so much room for improvement, said Miller. “That’s the opportunity and also what gives rise to the confusion” among investors, he said. (…)

Earlier this month at the Sohn Investment Conference in New York, Gundlach recommended betting against an exchange-traded fund that tracks an index of homebuilders because declining affordability will reduce housing demand. Gundlach said in an e-mail that he doesn’t expect a significant increase in housing starts.

“You have a huge fraction of 18- to 34-year-olds who are unemployed and they also are much less interested in homebuying,” Gundlach said May 6 during an interview with Matthew Winkler, editor-in-chief of Bloomberg News, in New York. “Most of these people have been scarred by the housing collapse.”

The share of Americans who own their homes was 64.8 percent in the first quarter, the lowest since 1995, according to a Census Bureau report last month. That’s down from 65.2 percent in the previous three months and 69.2 percent at its peak in 2004.

Zell said in April at the Milken Institute Global Conference in Beverly Hills, California, that the rate may fall to as low as 55 percent as Americans postpone getting married and having children.

“The deferral of marriage has such a staggering impact on real estate and I just don’t think people focus on it,” Zell said at the conference. (…)

This isn’t the first time Miller has bet heavily on an optimistic outlook. His 15-year streak leading the Legg Mason Value Trust to better returns than the S&P 500 ended in 2006. His performance worsened as he wagered on financial stocks during the credit crisis, prompting a 55 percent decline in his fund in 2008. In 2012, Miller stepped down from the Value Trust, while staying on as the manager of the Opportunity fund. (…)

Pointing up  Some more interesting facts for this debate:

As long as incomes grow sufficiently, lax mortgage loan standards might be tolerable. However, in view of how the current recovery suffers from the slowest growth by employment income of any upturn since the Second World War and because income growth has been skewed toward higher-income individuals and older Americans, employment income may be especially vulnerable to the next, inevitable recession.

Here’s a change that favors a worsened age distribution of income. One of the more stunning characteristics of the current recovery is the jump by the employment of Americans aged 55-years and older from April 2004’s 15.7% of household- survey employment to April 2014’s record 22.0%.

In fact, the current labor market recovery has been skewed toward the workforce’s oldest age cohort. For example, April 2014’s 4.0% cumulative increase by household-survey employment since the end of the Great Recession was unevenly divided between a meager 0.5% rise in the employment of those aged 16 to 54 years and an 18.3% advance in the employment of those aged 55 years and older. In turn, the upsides for US household expenditures and Treasury bond yields may now be limited by the degree to which subpar income growth has been skewed toward older Americans having a relatively lower propensity to spend.

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Unprecedented demographic change may be having a more profound effect on financial markets than most investors realize. Consider how just 10-years ago, the number of Americans aged 65 years and older grew by 340,000 annually, while the number aged 16- to 64-years expanded by a much larger 2.33-million. Today’s situation is radically different, as the number aged at least 65-years expands by 1.54-million annually and the working-age population rises by a smaller 880,000. This ongoing shift in the age distribution of the US population complements expectations of relatively slow rates of growth for economic activity and price inflation and comparatively low Treasury bond yields. (Moody’s)

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U.S. Industrial Production Falls 0.6% U.S. industrial production fell sharply in April, though weather-related distortions may have muddied the gauge of output.

(…) The decline in industrial production was largely the result of a 5.3% fall in utility output from elevated levels in the prior months. Unusually cold weather had caused a spike in Americans’ demand for gas and electricity to heat their homes.

Manufacturing, the biggest and most closely watched component of industrial production, fell by 0.4% in April. But that, too, was likely distorted by weather factors.

After stalling in December and January because of harsh weather, U.S. factories came roaring back to life in February and March in an attempt to make up for lost production. March’s gain was revised upward to 0.7% from 0.5%. An average gain of 0.3% for the first four months of the year puts manufacturing growth back close to its monthly average last year. (…)

Two Federal Reserve banks released Thursday gauges of May manufacturing activity in their regions. The Federal Reserve Bank of Philadelphia said its index of factory output fell slightly this month after surging in April, while the New York Fed’s Empire State survey showed activity picking up sharply.

“Overall, this morning’s Philly and Empire manufacturing reports continue to suggest further strengthening in manufacturing sector activity in May,” said Gennadiy Goldberg, strategist at TD Securities. (Chart from Haver Analytics)

Hong Kong Growth Cools to Slowest Pace Since 2012 on Exports Hong Kong’s economy grew in the first quarter at the slowest pace since a contraction in 2012 because of weakness in exports.

Gross domestic product expanded 0.2 percent from the previous three months, the government said in a statement on its website today. That was less than the 0.4 percent estimate in a Bloomberg News survey of 11 economists.

MORE ON CHINA’S SLOW AND SLOWER

Storm cloud April electricity consumption in China was flat with March, seasonally adjusted. The first 4 months of 2014, electricity was up 5.2% year-to-date. That’s weaker than in any year back thru the 2008-09 global meltdown. April does not look like it was an upturn month for China’s economy. (ISI)

EU Car Sales Growth Slows The recovery of car sales in the European Union remained intact in April, but growth in demand slowed considerably after a strong first three months, according to industry data.

European Union new car registrations, which mirror sales by dealers, rose 4.6% to 1.09 million vehicles in April, the European Automobile Manufacturer’s Association, or ACEA, said Friday. The report reveals a sharp slowdown in demand after sales rose nearly 11% in March, caused in part by early Easter holidays and a 4% decline in sales in Germany, Europe’s biggest car market.

In the four months to the end of April, EU car sales increased 7.4% to 4.34 million vehicles. That suggests that the recovery in Europe is still intact, but car sales are still down 20% from the same period in 2007 when EU car sales totaled 5.4 million vehicles. (…)

European car markets may be bouncing back from low levels, but still not in a fully-fledged recovery. Car sales in Spain, for example, grew at a stellar 29%, largely on discounts and government cash-for-clunkers subsidy.

Analysts say that on average European dealers are offering discounts of at least 10% and as much as 40%. That means that any rise in car sales is bought at a high price for manufacturers.

French car maker Renault SARNO.FR -3.49% grew fastest in April, posting a 16% increase in unit car sales.Volkswagen AG VOW3.XE +0.29% , Europe’s largest car maker by revenue, achieved growth of 4.4% across its entire fleet, driven by higher sales of its Audi,NSU.XE -0.16% Porsche, SEAT and Skoda brands. However, sales of VW brand cars, its largest business, declined 0.2% in April.

The turnaround at General Motors Co. GM -1.66% ‘s Opel unit continued in April, as sales of Opel and its U.K. subsidiary Vauxhall rose 8.1% in April, raising Opel’s market share to 6.8% in the four months to the end of April. But Opel is offering the steepest discounts in Europe, analysts said, which suggests it may be difficult for the GM subsidiary to maintain that pace of growth.

Global Growth Worries Climb Five years after the financial crisis ended, soft growth in Europe, a stop-and-start U.S. recovery and waning momentum in China have policy makers groping for what to do next.

Europe, China, U.S. housing…and now, inflation, where the Fed wants it at 2.0% Y/Y is seen as “complicating matters for the Fed”.

(…) Yields on bonds issued in big developed markets continued to fall Thursday. Yields on German bunds with 10-year maturities sank to 1.307%, their lowest level in a year, while yields on 10-year U.S. Treasury notes fell to 2.498%, the lowest level in six months. (…)

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Complicating matters for the Fed are signs that inflation is heading back toward the Fed’s 2% goal after running below that for nearly two years. The U.S. consumer-price index rose 2% in April from a year earlier, a notable pickup from a 1.5% pace in March and a 1.1% pace recorded in February.

EARNINGS WATCH
Guidance Spread Finishes Positive

The first quarter earnings season came to an end today with Wal-Mart’s (WMT) report this morning.  One positive takeaway is that more companies raised guidance than lowered guidance this season.  Just barely though.  Below is a chart showing the quarterly spread between the percentage of companies raising guidance minus lowering guidance.  Heading into this earnings season, we were riding a ten-quarter streak of a negative guidance spread (more companies lowering than raising).  While it barely finished in positive territory this season, we finally broke the negative guidance streak that has plagued the corporate world since the third quarter of 2011. 

As I wrote in SELL IN MAY? YOU MAY BE SORRY! on May 12,

In fact, 26 companies have positively preannounced for Q2 so far. This is the highest absolute number of positive preannouncements since Q1’13 (24) which was reached after 106 companies had preannounced (vs 88 so far).

This is pretty significant: one, we know that companies are inherently wary of over-promising, knowing very well the cost of under-delivering. Two, Q2 estimates currently assume a breakout of corporate margins as this Factset chart illustrates. The fact that corporations are not trying to reign in these estimates is positive.Mean-reversion remains elusive…

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NEW$ & VIEW$ (15 MAY 2014)

INFLATION WATCH
U.S. Consumer Prices Up 0.3% U.S. consumer prices advanced in April at their strongest rate in nearly a year, a sign of modestly increasing inflation pressures in the economy.

So-called core prices, which strip out volatile food and energy costs, rose 0.2% last month. April prices were up 2.0% from a year earlier compared with the 1.5% annual advance in March.

April’s price gains were largely driven by increased costs for staples such as gasoline, food and shelter.

Seasonally adjusted gasoline prices rose 2.3% in April, the largest monthly jump since December. Still, gasoline prices are up just 2.4% from a year earlier.

Food prices rose 0.4% last month, the fourth straight increase. Meat prices posted their largest gain since 2003 and fruits and vegetables also cost more.

Shelter prices, which account for almost a third of the total index, rose 0.2% last month.

Electricity costs fell 2.6% in April, the biggest one-month drop since 1986. Much of the decline can be attributed to “climate credits applied to utility bills in California,” the Labor Department said.

Medical care prices rose 0.3% last month and are up 2.4% from a year earlier. Last year, medical inflation fell behind the pace of overall gains. However, that trend has reversed in recent months, coinciding with some 8 million Americans signing up for insurance coverage made available under the new health-care law.

Click to View

The Fed wants 2.0% inflation and it just got it. Total CPI rose at a 3.0% annualized rate in March and April and is now up 2.0% Y/Y. Core CPI rose at a 2.4% annualized rate in the last 2 months and is up 1.8% Y/Y.

Services less energy services, (e.g. shelter, transportation services and Medical care) have been in a sharp acceleration since December, rising at a 4.1% annualized rate to +2.6% Y/Y. (Chart above from Doug Short, below from BloombergBriefs)

BloombergBriefs this a.m. posts these two charts illustrating diverging trends in consumer spending:

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The BB economist then asserts that

Outlays on housing and utilities are up 4.6 percent, health-care 6 percent, transportation 9.9 percent and recreational services 2 percent. Demand for transportation and recreational services indicate a growing confidence among households in prospects for disposable income growth.

Maybe, after seeing today’s CPI breakdown, he will re-examine the notion that the increase in services spending indicate any kind of growing confidence in anything. Rather, it results from sharply rising inflation in these non-discretionary categories of expenditures.

Today’s CPI was for April. Here’s what’s in the pipeline for coming months:

U.S. Producer Prices Rise 0.6% in April

The producer-price index for final demand, which measures charges for everything from gasoline to accounting services, rose a seasonally adjusted 0.6% in April from a month earlier, the Labor Department said Wednesday. That marked the biggest jump since September 2012. Prices rose 0.5% in March.

April’s rise was more than double what economists surveyed by The Wall Street Journal had forecast and reflected price increases for a broad range of goods and services, from warehousing to meat prices. Excluding the volatile food and energy components, prices climbed 0.5%.

Over the past year, overall producer prices were up 2.1% in April, marking the biggest year-over-year rise in two years. (…)

Pointing up Within the report, a measure called “personal consumption” is a close equivalent to the government’s consumer-price index. In April, the personal consumption measure climbed 0.7% from a month earlier and 2.4% from a year earlier.

Last month’s rise in producer prices reflected higher charges for a broad range of goods and services. The 0.6% rise in services prices was driven by a big increases in higher margins received by wholesalers and retailers. That measure tracks the difference between the firm’s costs to produce service and to sell it. The rise could signal firms are tamping down costs, raising prices in the face of higher demand, or both. (…)

Here’s the BLS table: core PPI has risen at a 3.1% annualized rate since December. Note how “Final Demand Services” has accelerated in March and April (+8.0% a.r.), likley reflecting rising wages in the Services sector.

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Job market debate rages at Fed, likely keeping rates on hold  Economists within the Federal Reserve are struggling to size up the strength of the U.S. labor market but can’t even agree what yardstick to use.

Nerd smile Meanwhile, in the real world:

Actually, we are at cyclical lows as this chart from Doug Short clearly shows:

Click to View

Old Dominion Freight Line Inc. and Knight Transportation Inc. are ordering hundreds of vehicles to keep up with freight demand. They’re part of an industrywide push that’s propelling sales of big rigs to an eight-year high, buoying trucking stocks and raising pay for drivers, who are in short supply.

“Freight is up, availability of trucking assets is tight,” said Sandy Cutler, chief executive officer of Eaton Corp., whose products include truck transmissions. Truckers “are feeling more comfortable ordering increased assets.”

imageRising cargo rates are giving truckers confidence to expand fleets and replace tractors averaging a near-record age of 9.6 years. (…)

Even with winter storms disrupting highway travel, first-quarter truckload shipping volumes rose 4.9 percent and rates climbed 1.2 percent, according to consultant FTR Associates. North American truckers placed net orders for 90,289 large trucks in the three months ended in March, 35 percent more than a year earlier and the fastest such pace since early 2006. (…)

Eaton raised its 2014 forecast for North American truck output by 5.7 percent to 280,000 units. That was among the highest annual totals projected by seven truck and equipment manufacturers, based on data compiled by Bloomberg. Their average prediction is for an 11 percent gain over 2013. (…)

Tight capacity hadn’t spurred more truck sales because companies are struggling to find people to drive them, FTR’s Starks said. The company estimated the driver shortage at 236,000 in the first quarter, 43 percent more than a year earlier and the largest shortfall in a decade.

Covenant Transport Group Inc., a long-haul trucking company based in Chattanooga, Tennessee, is looking to expand its fleet this year. That means charging more for freight and using most of those profits to attract drivers with higher wages, CEO David Parker said on an April 30 conference call.

“End of the day, our drivers need to be making a whole lot more money,” he said.

Rate increases may push more long-haul cargo to railroads, which can carry double-stacked containers at lower prices than trucks. The tradeoff for rail shipments: slower speeds and, this year, a traffic jam on U.S. tracks because of harsh winter weather, a larger harvest and rising crude-by-rail volumes.

“The ability to put more stuff onto the railroads has been completely constrained,” Starks said. “We know shippers have actually taken some freight off the railroads because they can’t get their stuff there in a timely fashion.”

Nerd smile Meanwhile, in the twilight zone:

30Y Yield Tumbles To Fresh 11-Month Lows As Europe’s Bond Bonanza Breaks

 

Nervous Investors Pile Into Bonds Global bond rates dropped to their lowest levels of the year, as central bankers signaled their determination to jolt the world’s largest economies out of their malaise.

Investors piled into U.S., German and British government bonds—used to price everything from mortgages to car loans—driving down their yields. The yield on the 10-year U.S. Treasury dropped to as low as 2.523%, its lowest level in more than six months. In Germany, 10-year bund yields fell to their lowest point in a year.

Euro-Zone Economy Shows Weak Expansion The euro zone’s economy expanded at a surprisingly weak pace last quarter despite a strong recovery in Germany, as other key countries in the region stalled or contracted.

Gross domestic product grew 0.2% in the euro zone during the first quarter compared with the final three months of 2013, the European Union’s statistics agency Eurostat said Thursday, well short of the 0.4% quarterly gain expected by economists.

Last quarter’s rise translates into growth of 0.8% in annualized terms, little changed from the fourth quarter. That masked a deepening divergence among the 18-member euro zone. Of the 13 euro members reporting GDP Thursday, only six expanded and some of those were small economies such as Latvia, Slovakia and Belgium.

Germany’s statistics agency Thursday said that in the three months to March, gross domestic product was 0.8% up on the last three months of 2013. That was the most rapid expansion since the first quarter of 2011, and double the rate of growth recorded in the final quarter of last year.

De Statis said domestic consumption was the main driver of growth, and particularly spending by households and the government. Foreign trade put a damper on growth, and preliminary calculations show exports fell while imports picked up.

In the first three months of 2014, the euro zone’s second-largest economy failed to grow on a quarter-on-quarter basis, data from the French national statistics bureau, Insee showed. The French economy had grown 0.2% in the final quarter of last year and economists polled by The Wall Street Journal expected a slightly smaller slowdown to 0.1% growth in the first quarter.

Economists had expected Italy’s economy to grow by 0.2%, an acceleration from the 0.1% expansion recorded in the previous quarter, Instead, it contracted by 0.1%.

The GDP figures from Insee on Thursday indicate that Mr. Hollande’s policies still haven’t had an impact as investment by nonfinancial companies fell 0.5% in the first quarter from the previous quarter.

Consumer spending, which has steadied the French economy during the euro zone slump, also fell 0.5% over the same period, indicating rising unemployment and sales tax increases are weighing on households.

Elsewhere in Europe, growth was mixed in the first three months of the year. Within the euro zone, Austria slowed, with its economy expanding by 0.3% compared with a 0.4% rate of growth in the fourth quarter of last year. (…) (Chart from FT)

French Policies Impede Investment, Says CEO of Engineering Firm Higher taxes, complex labor laws and a string of policy U-turns during French President François Hollande’s first two years in office mean there is too much risk to invest, said the CEO of engineering company Ervor.
Japan’s GDP Growth Picks Up Japan’s economy regained momentum in the first quarter of this year, despite sluggish growth in the global economy, as domestic demand fired on all cylinders before a major consumption tax rise and employment improved.

Gross domestic product, the broadest measure of goods and services in the economy, grew at a seasonally adjusted annual rate of 5.9% in the first quarter, the Cabinet Office said Thursday.

A rush in purchasing ahead of the April 1 sales tax increase to tackle the nation’s fiscal woes–the first major tax raise in 17 years–fueled the growth of personal consumption expenditures. That in turn prompted businesses to increase production and capital spending, creating jobs and increasing overtime pay.

Private consumption, up an annualized 8.5%, was so strong it helped the economy shrug off the effects of stalling growth in the U.S., Japan’s No. 1 export destination, during the quarter.

But the front-loading of personal consumption in the first quarter has prepared the ground for a pullback in the second. Retail sales for April and early May have already showed a slowdown in personal consumption, especially in consumer durables such as autos, refrigerators and TVs. Yet some retailers say the declines weren’t as bad as expected.

OIL

Andrey Kryuchenkov of VTB Capital said that the price of Brent for delivery in June is at a high premium to that in the next available month — a condition known as backwardation and which indicates a well-supplied market.

Yet:

  • OPEC May Struggle to Meet Demand The Organization of the Petroleum Exporting Countries may struggle to catch up with rising oil demand, an energy watchdog said as it upgraded consumption forecasts.

In its monthly oil market report, the International Energy Agency—which advises industrialized nations on energy matters—said that “while OPEC has more than enough capacity to deliver, it remains to be seen whether it will manage to overcome the above‐ground hurdles that have plagued some of its member countries lately.”

Outages in countries like Libya and Nigeria and sanctions on Iran have kept the output of the OPEC below its target of 30 million barrels a day in recent months.

After hitting five-month lows in March, OPEC crude oil production rebounded by 405,000 barrels a day to 29.90 million barrels a day in April due to higher Iraqi and Saudi production, the agency said. But that is still much lower than its estimated demand for the group’s oil, which was raised by 140,000 barrels a day to 30.7 million barrels a day for the second half of this year. The OPEC demand forecast also includes changes in stocks.

The IEA also upgraded its forecast of global oil demand for 2014 by 65,000 barrels a day due to stronger consumption in the U.S. and upward revisions in Japan, Germany and the U.K. The agency now expects global oil demand to average 92.8 million barrels a day this year.

Iran’s oil exports fell in March having reached a 20-month peak two months earlier, a global energy watchdog said on Thursday, potentially easing concerns that Tehran could breach a six-month cap agreed with the West in a broader deal over its nuclear program.

In its monthly market report, the International Energy Agency said that “estimated April import volumes [by foreign buyers of Iranian oil] were down by about 180,000 barrels a day to 1.11 million barrels a day.”

The export numbers, which include condensates, compared with 1.29 million barrels a day in March and a 20-month peak of 1.58 million barrels a day in February, it said. Condensates exports stood at around 230,000 barrels a day in April compared with 150,000 barrels a day in March, the agency said.

The IEA’s data confirmed statements by Iran’s deputy oil minister for international affairs Ali Majedi made to The Wall Street Journal last week that crude exports—which exclude condensates—averaged 1.2 million barrels a day in the past three months. That number—which excludes condensates—suggested a reduction from February levels of 1.3 million barrels a day.

In November, Iran agreed to cap its crude exports—excluding condensates—to 1 million barrels a day on a six-month average. The commitment is part of a broader interim deal with six world powers over its nuclear program.

Some countries such as India have reduced their intake of oil from Iran as they seek to adjust to U.S. sanctions limiting their imports of Iranian oil.

On an average basis, Iran’s oil exports, however, have been higher this year. Iran’s Oil Minister Bijan Zanganeh said earlier Thursday that oil exports amounted to 1.5 million barrels a day on average. That contrasts with a low of about 700,000 barrels a day in October, according to IEA estimates.

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END OF EARNINGS SEASON
  • Wal-Mart Offers Weak Outlook Wal-Mart offered a weak earnings forecast for the current quarter and posted another drop in U.S. sales in the latest period, its fifth consecutive quarterly decline.

Bentonville, Ark.-based Wal-Mart pointed to investments in e-commerce, headwinds from higher health-care costs in the U.S. and increased investments in Sam’s Club membership programs for the potential drop in profit, echoing its previous warnings.

Traffic at U.S. stores dropped 1.4% in the latest period, the sixth consecutive decline. Meanwhile, sales at Wal-Mart locations in the U.S., excluding newly opened or closed stores, fell 0.1% though the company said a solid start to spring and a strong Easter drove sales in the second half of the quarter.

Wal-Mart posted a profit of $3.59 billion, or $1.11 a share, down from $3.78 billion, or $1.14 a share, a year earlier. Earnings from continuing operations came in at $1.10 a share, hit by three cents a share by severe winter weather.

The company in February projected earnings of $1.10 to $1.20 a share, a range that fell below consensus views at the time.

For the current quarter, Wal-Mart said it expects earnings of $1.15 to $1.25 a share, below analysts’ expectations of $1.28 and compared with $1.24 a year earlier. Sales at its namesake U.S. locations are expected to be relatively flat.

Kohl’s Corp. KSS -3.33% said fiscal first-quarter earnings fell 15%, as the retailer recorded lower sales, though margins improved slightly. Same-store sales fell 3.4%, missing analysts’ expectations for 0.2% growth.

Obama to Speed Infrastructure Permits President Barack Obama on Wednesday announced plans to speed up permits for building roads, bridges and other infrastructure.

Nope, this is not a headline from 2009…