Author: Dennes Lupastean, LSW Investing
Covestor model: Macro Themes
For the seventh consecutive month, the Dow Jones Industrial Average had a gain. In April, the index increased slightly more than one point, but nonetheless higher than it started. The S&P 500 dropped during April, its first losing month since November. On May 1, the Dow marked its highest close since late 2007.
Much of the momentum that the economy picked up during the first quarter has slowed, and as the summer months approach many variables are in play for the remainder of the year. Among the wild cards are the U.S. general election, the direction of oil and commodity prices and the struggles of the U.S., Europe and Japan with their sovereign debt challenges. Recent news that Spain is back in a recession has caused some concern among global investors.
Comments by U.S. Federal Reserve members suggest QE3 remains unlikely, despite economic uncertainty. In their first comments since their monetary policy-setting meeting, central bankers appeared in strong agreement that expanding the balance sheet with more bond buying is pretty unlikely.
In economic news, U.S. factory orders fell 1.5% in March, the biggest loss in 3 years. Transportation equipment sales tumbled 12.6 percent in March on weak orders for civilian aircrafts.
Furthermore, the US economy grew at a 2.2% pace, which was less than forecasted: The Commerce Department reported that GDP increased at an annual rate of 2.2% in the first quarter of 2012, down from the fourth quarter of 2011 3.0% rate. While that was below economists’ expectations for a 2.5 percent pace, a rise in consumer spending took some of the sting from the report. However, growth was still stronger than analysts’ predictions early in the quarter for an increase below 1.5 percent.
Gold Resource Corporation (GORO) announced the preliminary resource estimate results from drilling data at the La Arista vein system. Measured and indicated resources include approximately 1.4 million gold equivalent ounces at 1 gram gold equivalent cutoff. Management also increased its monthly dividend by 20% to $0.06 per common share due to record first quarter production and positive outlook for production trajectory of the Aquila Project.
BreitBurn Energy announced a $98 million deal to buy property by Legacy Energy located in the Big Horn Basin of Wyoming. Management expects the purchase to be accretive to its cash flow.
Teekay LNG Partners (TGP) announced a 7% increase to cash distribution. The increase in the distribution is based primarily on the successful accretive acquisition of the Maersk LNG fleet through a joint venture with Marubeni Corporation (JP: 8002). Management is actively monitoring the market for more accretive opportunities to grow the portfolio.
