Tuesday, October 22, 2013

Higher markets on speculation the Federal Reserve will continue buying bonds

Dow gained 75 (losing some strength in the PM), advancers ahead of decliners 5-2 & NAZ rose 9.  The MLP index was up 2+ to the 461s (5 under its record high) & the REIT index rose 2+ to the 284s.  Junk bond funds were up about 1% & the Treasury 10-year note yield fell to a 3 month low after payrolls climbed less than projected in Sep, indicating the US economy had little momentum leading up to the federal gov shutdown.  Oil fell below $98 a barrel on speculation that the gov will report US supplies rose to a 3 month high & gold rose to a 3 week high after payrolls climbed less than projected, increasing speculation that the Federal Reserve will maintain monetary stimulus to boost the economy. 

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLX13.NYMCrude Oil Nov 1397.59 Down 1.63 (1.6%)

Live 24 hours gold chart [Kitco Inc.]

Apple CEO Tim Cook

Photo:   Bloomberg

Apple showed off a slimmer & faster tablet called the iPad Air & said it will give away Macintosh operating & work software free to its users.  The surprise offer will be available to all users of MacBooks & Mac computers & it also unveiled a new line of Mac notebooks & computers.  Mac OS & iWork software suite, which compete with Microsoft's (MSFT) Excel, Word & other applications, will now be offered free to all users.  "We are turning the industry on its ear, but this is not why we're doing it,"  CEO Tim Cook said at its new product event.  "We want our customers to have our latest software."  The iPad Air is about 20% thinner than the previous generation of tablets, starting at $499.  But the new tablets would face stiff competition from rival devices in coming months.  "Our competition is different: they're confused," Cook said.  "Now they're trying to make PCs into tablets and tablets into PCs. Who knows what they'll do next?"  "We have a very clear direction and a very ambitious goal. We still believe deeply in this category and we're not slowing down on our innovation."  This event was well advertised & the stock lost 1+.

Apple Unveils New IPads Amid Crowded Tablet Market

Apple (AAPL)

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Radioshack posted a 7th straight quarterly net loss & said it received commitments for $835M in new 5-year financing to boost liquidity amid a turnaround effort.  The EPS loss widened to $1.11, trailing the average loss of 37¢ expected.  The company ended the fiscal Q3 with total liquidity of $613M.  CEO Joe Magnacca had sought new financing to give vendors the confidence to supply him with exclusive products to distinguish its offerings from rivals’ merchandise.  Sales have declined as it lost customers to the competition & a stockpile of unwanted inventory forced it to sell merchandise at steep discounts.  Gross margin narrowed to 30.1% from 38% a year earlier.  The company continues to have “ample liquidity,” with the new financing giving “us the time we need to complete our work” including remodeling stores, Magnacca said.  During the qtr, the retailer accelerated its effort to reduce slow-selling & duplicate merchandise, leading to an increase in costs of goods sold.  A year earlier, the company posted an EPS loss of 47¢.  At the heart of Magnacca’s turnaround strategy is “Let’s Play!” -- an effort to make the retailer “a neighborhood technology playground.”  Prototype stores have a cleaner look, a change from the tangled collection of cables, cords, adapters, & batteries that many customers associate with RadioShack.  Magnacca plans to reduce the number of stocked items at stores to 3K from 4K.  The stock fell 63¢

RadioShack Gets $835 Million Financing Amid Quarterly Loss

Radioshack (RSH)

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Delta Air Lines posted Q3 profit that beat estimates as more people flew at higher fares & fuel prices declined.  Excluding some costs & gains, EPS was $1.41, exceeding the $1.35 forecast.  The #2 airline, has been working to control costs under a 2012 plan to cut $1B over 2 years, with steps such as retiring older jets & replacing inefficient 50-seaters with larger planes.  Rising ticket prices are helping reap more revenue from each passenger flown a mile.  DAL forecast an operating margin improvement in a range of 7-9% this qtr, up from a year earlier.  It said the temporary shutdown of the US gov this month reduced Oct revenue by as much as $25M.  The stock has had an excellent run this year & gained another 80¢ today.

Delta Air Beats Profit Estimates as Rising Fares Boost Revenue

Delta Air Lines (DAL)

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Stocks were feeling good again today.  The S&P 500 reached a new record high & the Dow is only 200 below setting a new record.  Earnings reports are coming in so-so but that is good enough to bring out buyers.  Buyers are less concerned with earnings & health of the economic recovery.  Instead they are more concerned with the Federal Reserve & how it behaves.

Dow Jones Industrials

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