Wednesday, January 9, 2013

Higher markets after Alcoa earnings

Dow was up 71, advancers ahead of decliners 2-1 & NAZ added 15.  The Financial Index was up a fraction to the 229s, very near its multi year highs.  MLPs continue on fire as the index rose another 1+ to the 408s & the REIT index was up a fraction to the 273s.  Junk bond funds rose & Treasuries were flattish.  Oil & gold fluctuated

AMJ (AlerianMLP Index tracking fund)

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CLG13.NYM...Crude Oil Feb 13...93.39 ...Up 0.24 (0.3%)

GCF13.CMX...Gold Jan 13......1,659.50 ...Down 2.00  (0.1%)

German Industrial Production Rose Less Than Forecast in November

Photo:   Bloomberg

German industrial production increased less than predicted in Nov as the euro area’s recession left its mark on the largest economy in Europe.  Production rose 0.2% from Oct, when it fell a revised 2%, the Economy Ministry in Berlin said.  That’s the first increase in 4 months.  The forecast was for a gain of 1%.  From a year earlier, production fell 2.9% when adjusted for working days.  The Bundesbank predicts the German economy will stagnate in Q1 after a marked contraction at the end of last year.  In Germany, “industrial production has stabilized” after “the weak start into the final quarter of 2012,” the ministry said.   While Q4 output will remain below Q3 levels, “the development of orders and the slight improvement of sentiment indicators speak for a somewhat more favorable production outlook in the new year.”

German Industrial Production Rises Less Than Forecast

Alcoa Sees Aluminum Use Climbing on China Recovery

Photo:   Bloomberg

Alcoa, a Dow stock & the largest US aluminum producer, sees global demand growth for the commodity recovering 7% in 2013 as China’s economic rebound drives demand for cans, transport & office buildings.  Aerospace demand will increase by as much as 10% as planemakers face record backlogs, the company said.  It also predicted aluminum consumption may climb 19% in China’s heavy-truck & trailer industry, while US commercial building & construction expands for the first time in 4 years.  “The fundamentals are pretty positive,” CEO Klaus Kleinfeld said.  “We will absolutely see the rebound” in aluminum prices.  Demand in China, the world’s largest aluminum user, will grow 11% this year to 23M metric tons as stimulus spending announced by the country’s new leadership begins to show its effect.  He also forecast an acceleration of consumption in Brazil, India & Russia.  Global demand advanced 6% last year, according to AA.  Its Q4 sales fell to $5.9B from $5.99B, beating the $5.6 billion estimates.  EPS was 21¢, compared with a loss of 18¢ a year earlier.  Profit excluding a gain on the sale of a power plant & other one-time items was 6¢, matching the forecast.  The company achieved $1.3B in productivity & overhead savings in 2012, surpassing its $850ZM target.  AA saw better prices & volumes at its global rolled-products division, which produces aluminum sheets for airplane wings, beverage cans & car parts.  The unit’s shipments rose 10% to 448M tons & 3rd-party sales gained 4.7% to $1.77B.  Still, worldwide aluminum supply will exceed demand by 535M tons this year.  The stock slipped a penny.

Alcoa Sees Aluminum Use Climbing on China Recovery: Commodities

Alcoa (AA)

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General Motors,the largest US automaker, expects a “modest” US market share gain this year as it introduces new models, its CEO said.  Sales will increase faster than US industrywide deliveries & 2013 & 2014 “will be good years” for the company, Dan Akerson said.  GM is introducing 13 new Chevrolet models this year in the US while fighting to end losses in Europe & managing operations in China, the company’s biggest market, where the economy is slowing.  GM is also pushing the company to improve operating margins & revamping corp structure to align its business around Chevrolet & Cadillac brands globally & away from regional operations.  Last year, US market share last year fell to 17.9%, an 88-year-low, as some competitors, including Toyota (TM), rebounded from production constraints following natural disasters in 2011.  GM is refreshing 70% of its US lineup over 1½ years.  Akerson said the European vehicle market is weakening & Germany is slipping into recession.  GM has said it expects to report a loss of $1.5-$1.8B in Europe for 2012 after posting losses in the region since 1999 totaling $17.3B as of Sep 30.  In Oct it said it expects “slightly better” results this year & intends to end losses by 2015.  The stock gained 51¢.

GM Expects ‘Modest’ U.S. Market Share Gain in 2013: CEO

General Motors (GM)

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The reaction to the first major earnings report was favorable.  Now comes bank numbers.  MLPs are still in demand with the index up almost 30 in 7 trading days.  Next week Q1 distribution announcements will be announced which should feature more increases.  DC remains fairly quiet, at least on budget matters.  I like the way politicos simply toss around huge sums, $1T is just a number.  Meanwhile, salary checks are being pinched with higher Social Security taxes which could be a significant drag on the economy..  

Dow Jones Industrials

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