Oil continues to fall, Lockhart predicts economy will continue to rise and Dollar Tree (DLTR) to close fewer than 300 stores

Bourbon & Bayonets / Monday, January 12th, 2015

Markets were heading lower on Monday after a drop in energy stocks continued to weigh on investors. Oil continued to fall by about 5% to $46.07. Adding to the worry, Goldman Sachs cut their short-term price forecast for oil. Tim Ghriskey, chief investment officer with Solaris Group, said, “It’s crude-related. That’s caused more selling. There’s a lot of confusion and concern about the impact of energy prices.”

There were some pretty strong statements made today about the future of the economy by the Atlanta Fed’s President, Dennis Lockhart. He said that the economy is moving forward in its recovery, which would enable the Fed to raise interest rates by the middle of 2015. The economy “is hitting on all cylinders,” he said. The statements were made to the Rotary Club of Atlanta. Lockhart predicts that the economy will continue to grow, unemployment will fall and inflation will begin to rise. If there is no bad news, this could help the Fed raise rates. He said the Fed “will either be informed by some positive indicators or the absence of negative indicators. It will be the absences of losing ground, as might be suggest by a run of core inflation numbers that are declining.”

Shares of Dollar Tree, Inc. (DLTR) were heading lower after discount store announced that it has plans to close less than 300 stores in order to appease regulators in their proposed takeover of Family Dollar (FDO). The company currently has 5,282 stores located through the United States and Canada. They have plans to finalize on an agreement with the U.S. Federal Trade Commission on how many stores they will have to close by the end of January. The current total Dollar Tree has agreed to purchase Family Dollar for is $8.5 billion in cash and stock. Brian Yarbrough, an analyst with Edward Jones, said, “I think more people are going to be leaning toward Dollar Tree after today.”

That’s all for today,

Warren Gates, Normandy Research

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