VerySmartInvesting: Mixed earnings, mixed markets

Tuesday, October 26, 2010

Mixed earnings, mixed markets

Stocks began the day lower but were able to recover & hang around break even for the rest of the day. Dow was up 5, delciners over advancers 5-4 & NAZ added 6. Bank stocks fell asleep, but buying in the last hour gave the Financial Index a modest gain.

S&P 500 FINANCIALS INDEX

Value	196.06
Change	0.25 (0.1%)

The Alerian MLP Index made another run for a new record high, up 2.12 to 252.30 for a new record! REITs were soft, taking the index down 2 to the 222s & junk bond funds were mixed. Treasuries remained lower after the gov auction of $35B in 2 year notes, the 2nd of 4 note sales this week totaling $109B, drew higher-than-average demand. The securities yielded a record-low 0.40%, versus a forecast of 0.409%. The bid-to-cover ratio was 3.43X, above the average of 3.2X at the past 10 auctions. The yield on the 10 year Treasury bond shot up 8 basis points to 2.63% (a 5 week high).

Treasury Yields:

U.S. 3-month		0.12%
U.S. 2-year		0.39%
U.S. 10-year		2.63%

Alerian MLP Index --- 2 months

Dow Jones REIT Index --- 2 months

10-Year Treasury Yield Index --- 2 months

Crude oil was little changed after confidence among US consumers climbed in Oct from a 7-month low & the dollar rose in value. With thet same forces at play, gold also took the day off.

CLZ10.NYM

.....Crude Oil Dec 10

....82.58

...

0.06

(0.1%)

GCV10.CMX

.....Gold Oct 10

.......1,338.00

....

0.30 (0.0%)

** Gold Super Cycle **

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Enterprise Products Partners (EPD), the largest MLP, reported Q3 profit rose 75% to $371.9M as revenue increased 19% to $8.07B. Earnings per unit rose to 47¢ from 36¢ last year. CEO Michael Creel said, "During the third quarter of 2010, we continued to see strong volumes across our integrated midstream system, which operated at or near record levels." The units gained 53¢ after doubling off its lows 2 years ago.

Enterprise Announces Results for Third Quarter 2010Business Wire

Enterprise Products --- 2 years

Ford (F) reported record Q3 net income of $1.69B which topped the previous Q3 high of $1.13B set in 1997. Good cash flow is allowing Ford to pay down debt faster than planned as new models boost its US market share. Excluding some items, profit was 48¢, beating the 38¢ forecasted & is sharply above 26¢ last year. The stock rose 21¢ to 14.36, a 6 year high.

Ford Posts $1.69 Billion Third-Quarter Profit on Gains in U.S.at Bloomberg

To learn more about Ford

Click here!

Ford --- 1 decade

Bristol Myers Squibb (BMY), Texas Instruments (TXN) & US Steel (X) fell after reporting earnings that were disappointing while Ford shot up after a great report. MLP reports are coming in, but they are always difficult to understand because earnings per unit is not the metric used for declaring distributions (i.e. distributions can be raised even though earnings declined). In the case of EPD, earnings per unit in Q3 were 47¢ vs a 58¼¢ distribution declared for Q4. Dow has been huffing & puffing, trying to break thru to a new yearly high. Banks (which are supposed to be market leaders) have been going sideways for months, representing a major drag. They will have to rise if the bulls are serious about taking Dow to new heights.

Dow Jones Industrials --- 2 months