Monday, May 20, 2013

Markets fluctuate but gold pops in late day trading

Dow lost 19, advancers ahead of decliners 4-3 & NAZ fell 2.  The MLP index was up 1+ to over 460 & the REIT index was fractionally higher to the 313s.  Junk  bond funds were mixed to higher & Treasuries did little.  Oil & gold rebounded.  Buying in gold was helped by a rumor of a potential US downgrade this year.

AMJ (Alerian MLP Index tracking fund)

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CLM13.NYM....Crude Oil Jun 13....96.87 Up ....0.85  (0.9%)

Live 24 hours gold chart [Kitco Inc.]

GM Seen Extending Rise Past IPO Price With 20 New Vehicles

Photo:   Bloomberg

General Motor's redesigned full-size pickups are bolstering confidence that its shares will keep climbing after topping their IPO price for the first time in 2 years.  Optimism is growing as the Treasury sells down its stake, helping facilitate the stock’s possible return to the S&P 500 Index.  GM also plans to introduce about 20 new vehicles in the US this year, including profitable Chevrolet Silverado & GMC Sierra pickups.  The shares are rated "buy" by 79% of analysts surveyed & hold by the remainder.  14 analysts have target prices of higher than $33 within a year, & the average of 20 targets is $37.10.  The rising share price is “validation” that “we’ve got to keep on strategy and keep what we’re doing and good things happen,” Mark Reuss, president of GM North America, said today.  “Any sort of silver bullets or parlor tricks don’t work in this business.”  GM’s revival has attracted investors such as Warren Buffett's Bershire Hathaway (BRK.A) & David Einhorn’s Greenlight Capital.  BRK.A purchased 10M GM shares in Q1 of last year & has increased its holding to 25M shares thru Q4.  Greenlight reported a stake of 21.2M shares.  The stock rose 27¢ to $33.69.

GM Back Above IPO Price With Buffett to Einhorn Investing

General Motors (GM)

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Campbell Soup reported fiscal Q3 results that beat expectations as a colder winter & better ads helped boost soup sales, offsetting a decline in its V8 drinks.  The company has been trying to reinvigorate its namesake business with new flavors & packaging targeted at customers in their 20s & 30s.  During the period, sales for its US soup business rose 14% from a year ago, reflecting gains in all 3 categories: condensed soups, ready-to-serve soups & broths.  "Colder weather clearly helped soup sales," CEO Denise Morrison said.  Even as it works on improving the image of its soups, however, the US beverage business is also being plagued by a trend toward fresher foods.  Sales in the unit, which includes its shelf-stable V8 juices, fell 5%.  The company expects to reverse declines in its beverage business by taking "a page from the playbook" it used for its soup business.  For the qtr, EPS was 57¢, up from 55¢ a year ago, & revenue rose 15% to $2.09B.  Not including one-time restructuring charges, EPS was 62¢.  Analysts expected EPS of 56¢ on revenue of $2.04B.  The company now expects sales to grow at the high end of its 10-12% range & adjusted EPS growth is expected to exceed the previous guided range of 3-5%.  The stock was off 1.87 (4%).

Campbell posts stronger soup sales but V8 declines AP

Campbell Soup (CPB)

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The Boeing Co. 787 Dreamliner

Photo:   Bloomberg

The 787 Dreamliner from Boeing, a Dow stock, is poised to clear another hurdle in restoring its image as United Airlines (UAL), the only US operator, resumes flights after the jet’s lithium-ion battery flaws forced a 3-month grounding.  United Flight 1 took off from Houston & arrived at Chicago with the CEOs of BA & UAL both on board.  Qatar Airways, Ethiopian Airlines Enterprise & Air India are the only carriers whose 787s are flying commercially.  BA & UAL, both based in Chicago, reinforced the flight’s importance by putting their CEOs aboard.  “If you want to be the world’s leading airline, which is what we at United are working for, you’ve got to have the world’s leading airplane,” Smisek (CEO for UAL) told reporters & passengers at the Houston Airport.  “We’re delighted to have the 787 back in service. It’s a terrific airplane. Our customers love it.”  UAL stock slipped 45¢ & BA was off 20¢.

Boeing Seeks Exit From Dreamliner Battery Nightmare as 787 Resumes Flights

United Continental Holdings (UAL)

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Stocks just marked time today with no significant news.  But the goings on in DC are getting exciting as 3 major scandals are popping at once.  With attention diverted, the politicos will leave federal budget cuts in place for months, maybe into the next fiscal year which begins in Oct.  The cuts are modest compared with huge macro numbers, but on the margin they will pinch GDP growth.  The economy is wrapping its 4th year of recovery from the recession & the recovery has been anemic, causing low interest rates to drone on for another year (if not more).

Dow Jones Industrials

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