Thursday, January 24, 2013

Dow rises to 5 year high while a weak Apple pulls down Nasdaq

Dow gained 46, advancers over decliners 5-4 & NAZ fell 23 led by Apple (AAPL) stock plunging.  Banks were strong again, taking the Financial Index up 1+ to the 234s (a new multi year high).  The MLP index lost 3 to below 421 & the REIT index was up a fraction in the 279s (a new multi year high).  Junk bond funds were mixed to lower & Treasuries fell amid improving economic data.   Oil is back at $96 & gold lost ground as it can't get away from the $1650 trend line.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


Live 24 hours gold chart [Kitco Inc.]

Apple Has Slowest Sales Gain Since ’09 as Competition Climbs

Photo:   Bloomberg

AAPL plunged the most in more than 2 years after posting the slowest profit growth since 2003 & the weakest sales increase in 14 qtrs, fueling concern that mounting costs & competition may curtail growth.  Fiscal Q1 profit rose less than 1% to $13.1B ($13.81 per share) as sales climbed 18% to $54.5B, compared with 73% growth in the same period a year ago.  Yesterday’s results underscored the rising costs of product overhauls amid competition from Samsung in the saturating smartphone market.  Even as CEO Tim Cook guided the company to record revenue with iPad & iPhone sales, investors worry about management’s ability to keep producing hit products more than a year after the death of co- founder Steve Jobs.  AAPL suppliers also declined in Asia.  AAPL sank a massive $64 to $451.

Apple Sales Gain Slowest Since ’09 as Competition Climbs

Apple (AAPL)

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<p>               FILE - In this Jan. 3, 2013, file photo, Rep. Trent Franks, R-Ariz., center right, stands with his family for a ceremonial photo with Speaker of the House John Boehner, R-Ohio, center left, in the Rayburn Room of the Capitol after the new 113th Congress convened in Washington. The nation’s sharp disagreements over taxes and spending are on a re-routed collision course, as Senate Democrats launch a plan that includes new taxes, and House Republicans vow to speed up their plan to balance the federal budget with spending cuts alone. "The American people will have a chance to compare the two approaches," said Franks, who wants deep spending cuts and no new taxes. The only way to shrink the government, he said, "is to choke the monster."  (AP Photo/J. Scott Applewhite, File)

Photo:   Yahoo

The sharp disagreements over taxes & spending are on a re-routed collision course, as Senate Dems launch a plan that includes new taxes & House Reps vow to speed up their plan to balance the federal budget with spending cuts alone.  The new approach by the Reps  would require even deeper cuts in social programs than they pushed last year.  Liberals denounced those earlier plans as severe and unfair.  The new commitments by House & Senate members stem from the ongoing dispute over raising the federal debt ceiling.  The House just voted to postpone any showdown over the borrowing limit for 3 months but Senate Dem plan to endorse the idea, which the White House also supports.  That means the next big budget clash will occur in Mar when major, across-the-board spending cuts, which both parties dislike, are scheduled to begin unless they are replaced by a different deficit-cutting technique.  The budget mess will be around for a very long time!

Union Pacific Profit Beats Estimates as Chemical Shipments Climb

Photo:   Bloomberg
Union Pacific posted higher Q4 earnings than estimated as shipments of petroleum products & automobiles climbed.  EPS of $2.19 topped the $2.16 estimate & was 10% above $1.99 a year earlier.  Profit exceeded $1B for the 3rd consecutive qtr as a strengthening US economy boosted demand for motor vehicles and extraction of crude oil from shale formations climbed.  That helped overcome a decline in coal volumes as utilities switch to less expensive natural gas.  “There are great opportunities ahead of us in 2013 and beyond on oil-shale activity, and at the end of the day it could end up more than replacing what we lose from this point forward,” CFO Robert Knight said.  Revenue climbed 2.8% to $5.3B.  For the year, EPS was $8.27 on sales of $20.9B.  Petroleum-product shipments grew 69% from a year earlier to 62.7K carloads, helping to push chemicals revenue up 15% to $834M,  Motor vehicles & automobile parts accounted for $466M of revenue, up 14% from the same period in 2011.  But coal volume fell, with revenues declining 7.5% to $990M & agricultural-products revenue fell 8.1% to $785M after record drought struck the US Midwest last summer.  The stock slumped $1.61.
Union Pacific Profit Beats Estimates as Chemical Shipments Climb

Union Pacific (UNP)

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Stocks gave unusually strong mixed signals today.  Dow keeps forging ahead of if it didn't have a worry in the world.  But NAZ had an ugly day due to the sharp decline in AAPL stock.  This divergence can not last!  Dow is doing well on the perception that earnings are "good" & the economic recovery is fairly strong.  Housing & autos are looking a lot better than in the last few years.  But unemployment remains stuck at unacceptable levels.  And markets are ignoring the budget debt mess in DC.  The word today from the Reps indicate they they are out for a major fight.  They want to focus on out of control gov spending to reduce the massive federal deficit.  However, Dems don't want to give an inch.  Instead they want even high gov spending which will add to the deficit.  Maybe it will take a credit downgrade for the markets to pay attention.

Dow Jones Industrials

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