Friday, October 25, 2013

Markets crawl higher on earnings reports

Dow went up 61, advancers ahead of decliners 5-4 & NAZ rose 14.  The MLP index was fractionally higher in the 462s & the REIT index jumped 2+ to the 287s.  Junk bond funds went up & Treasuries had small gains.  Oil rose for a 2nd day as orders for durable goods increased the most in 3 months.  Gold inched higher.

AMJ (Alerian MLP Index tracking)

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Treasury yields:

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U.S. 10-year


CLZ13.NYM...Crude Oil Dec 13...97.93 Up ...0.82 (0.8%)

Live 24 hours gold chart [Kitco Inc.]

The pres discussed upcoming budget talks with top Senate & House Dems before heading to New York City.  A White House spokesman said that the pres reiterated a shared commitment to focus on growing the economy & creating jobs for middle-class families.  Senate Majority Leader Harry Reid, House Dem Leader Nancy Pelosi, Senate Budget Committee Chairwoman Patty Murray & Chris Van Hollen, the House Budget Committee's top Dem, were on the call.  Where were the Reps?  A larger group of Rep & Dem senators & House members meet next week is to begin hammering out a budget deal to fund gov operations thru next Sep.  A temporary funding measure that allowed the gov to fully reopen last week is set to expire in early Jan.

Obama discusses budget with Senate, House Dems Associated Press

  • FILE - In this Monday, Jan. 28, 2013, file photo, a UPS truck arrives for a delivery Miami Springs, Fla. United Parcel Service Inc. reports quarterly earnings on Friday, Oct. 25, 2013. (AP Photo/Alan Diaz, File)
Photo:   Yahoo

UPS more than doubled its profit from a year ago, when Big Brown took a hit from pension-restructuring costs.  UPS delivered more than 1B packages, an increase of 4.6%, led by gains in intl-export & US ground shipments.  The US business was helped by growth in online retailing, although a slowing in the financial-services industry cut into next-day-air letter deliveries.  Overseas, volume rose due to growth in European exports.  But Asia was flat as intl customers continued to shift from priority air service to cheaper but slower delivery options.  UPS has been trimming cargo flights from Asia.  "Our third-quarter results improved from the first half of the year even though our business faced similar market dynamics," CEO Scott Davis said.  The company plans to hire 55K workers to handle the holiday-season crush, about the same as the last 2 years.  It expects daily volume to rise 8% over 2012 & UPS believes that the busiest day will be Mon, Dec 16, when it expects to pick up more than 34M packages.  EPS was $1.16, a penny better than expected & an improvement over 48¢ earned a year ago.  The 2012 figure would have been $1.06 per share without a $559M pension-restructuring charge.  Revenue rose 3.4% to $13.52B.  Expenses declined 4.8%, as spending on compensation & benefits fell 8.1% without the big pension hit.  The company stood by its forecast of full-year EPS of $4.65-$4.85 per share.  CFO Kurt Kuehn said that was based on the assumption of "growth in the U.S. economy, but not outsized growth, and still-emerging recovery in Europe."  Analysts expect $4.74.  The stock went up 1.13.

UPS Beats Estimates on U.S. Package Volume, Higher Prices

United Parcel Service (UPS)

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Simon Porperty reported a 12% gain in Q3 funds from operations (FFO) & raised its 2013 FFO forecast as demand for space in outlet centers climbed.  FFO rose to $2.21 from $1.99 a year earlier.  The estimate was $2.16.  The REIT declared a $1.20 div, a 5% boost from Q3 & a 9.1% above last year.  SPG is benefiting as retailers seek space in outlet centers, where brand-name items are sold at a discount.  Rents & occupancies also are increasing at regional malls, where tenants are competing for limited space.  The company is renovating & expanding its properties & developing new outlet centers to boost growth.  It has stakes in Paris-based Klepierre & McArthurGlen Group (Europe's, biggest outlet-center operator).  Simon’s revenue increased about 6% from a year earlier to $1.3B & & occupancy at the US properties climbed to 95.5% from 94.6%.  12-month trailing tenant sales per square foot rose 3% to $579 a square foot.  The base minimum rent climbed 3.5% to $41.73 from $40.33 in Q3.  Its estimate of FFO for the year was raised to $8.72-$8.78, up from a Jul forecast of $8.60-$8.70 & compares with the analyst forecast of $8.75.  The stock lost 96¢.

Simon Boosts Dividend After Third-Quarter FFO Rises 12%

Simon Property (SPG)

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Stocks eked out gains on indecisive trading.  Earnings continue mixed with some of the biggest companies giving less than optimistic signals about Q4 & next year.  Market averages had a good week (Dow was up 150, taking it near a new record) on this unspectacular news.  Those politicos in DC have to come up with an agreement to fund gov operations for the balance of the fiscal year & that agreement seems far, far away.  In the meantime, enjoy you paper profits.

Dow Jones Industrials

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