Dow lost ground again (down 44), advancers over decliners almost 2-1 & NAZ added 28. The MLP index jumped 6 to almost 460 (high end of its trading range for months) & the REIT index gained 2+ to the 273s. Junk bond funds rose & Treasuries did little. Oil had a good day & gold slipped back.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Verizon, a Dow stock & owner of the biggest US wireless network, is studying how to respond to intensifying price competition, potentially leading to moves that may reduce its profit margins. After reporting Q4 wireless margin of 47%, up 5.6 percentage points from a year earlier, VZ said it may make adjustments to contend with the no-contract plans, lower roaming fees & other discounts offered by rivals. “We are prepared to respond where we see a need to respond,” said CFO Fran Shammo, but he declined to discuss how Q1 is going so far. With its cheaper plans & buyout offers to customers that switch from other carriers, T-Mobile (TMUS) has added more than 2M monthly subscribers in the past 3 qtrs, compared with 3.4M at VZ. The smaller carrier’s growing influence overshadowed Q4 profit at VZ, which beat the estimates as customers’ wireless bills increased. Q4 EPS was 66¢, leaving out one-time expenses, beating the estimate by a penny. Wireless results beat estimates for subscribers, spending & profits, while 1.6M new monthly subscribers were down from a record 2.1M a year earlier.& beat the estimate of 1.3M. The average mobile-phone bill increased 7.1% to $157.21, above the $156.38 average estimate. The wireless division’s 47% profit margin compared with an estimate of 46.4%. VZ expects to close its $130B deal with Vodafone for full ownership of Verizon Wireless in a month which will give VZ full control of the largest & most profitable US carrier. In a separate transaction announced today, VZ agreed to acquire Intel's (INTC), another Dow stock, pay-TV startup, gaining technology for video service over high-speed internet connections. Total sales rose 3.4% to $31.1B, above the estimate of $31B. Net income attributable to VZ was $5.07B (EPS of $1.77) compared with a net loss of $4.23B ($1.48 per share), a year earlier when results included a non-cash pension adjustment. The stock fell 66¢.
Verizon Mobile Profit Under Threat as Price War Escalates
Photo: Bloomberg
China's benchmark money-market rate fell while stocks rebounded as the central bank added more than 255B yuan ($42B) to the financial system & expanded a loan facility to meet Lunar New Year demand for cash. The 7 day repurchase rate, a gauge of interbank funding availability, dropped 88 basis points to 5.44% after surging 153 basis points yesterday, the most in 7 months. The Shanghai Composite Index climbed almost 1% today, after closing below 2K yesterday for the first time since Jul. The People’s Bank of China (PBOC) added funds to large commercial banks yesterday using its Standing Lending Facility & conducted 255B yuan of reverse-repurchase agreements today. The monetary authority is also allowing small & medium-sized banks in 10 regions to tap its SLF on a trial basis before the week-long Lunar New Year holiday starts Jan 31. The banking system market is still vulnerable so the PBOC has to provide cash to ease the shortfall, at least before the Lunar New Year & the amount was more than expected.
Delta Air Lines posted Q4 profit that topped the estimates & forecasted an operating margin of as much as 8% in Q1. The airline expects revenue from each seat flown a mile in Q1 to climb 3-4% from a year earlier. Q4 EPS, excluding some items, more than doubled to 65¢, on increased holiday travel, higher fares & lower fuel prices, & beat the 63¢ estimate. Sales rose 5.5% to $9.08B, beating the estimate of $9.04B. Net income was $8.48B, including an $8B non-cash gain from the reversal of a tax valuation allowance. Passenger traffic at DAL & its regional partners rose 6.9% in Dec, which included Christmas & return Thanksgiving travel. Average fare per mile on the main jet fleet rose 4.5% in Q4, while total fuel spending on that basis fell 7%. The company forecast a Q1 jet-fuel price of $2.97-$3.02 a gallon. DAL last year began a share buyback program & reinstated a div after a decade-long break. The changes, along with a $10B debt-reduction plan, helped DAL regain a spot in the S&P 500 after being dropped in 2005 ahead of its bankruptcy filing. In 2013, DAL paid $100M in divs & spent $250M repurchasing stock. The stock went up 1.01.
Delta Profit Beats Estimates on Holiday Travel
After a long weekend, not very much was accomplished. Dow remains lower in Jan, reflecting an underlying current of unease about earnings season. There has been little to cheer about other than earnings that beat lowered expectations & accounting adjustments. The fundamental business of business is growing revenue. As expected, that has been hard to come by. The goings on in DC have gotten less attention this year, but the massive task of raising the debt ceiling must be done is a few weeks (as earnings season winds down). Dow is still headed for down 1st day, 1st week & 1st month. That's called a bad start, especially for an overbought market.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.03% | |
U.S. 2-year |
0.37% | |
U.S. 10-year |
2.82% |
| CLG14.NYM | ....Crude Oil Feb 14 | ....94.96 |  ...0.59 | (0.6%) |
Verizon, a Dow stock & owner of the biggest US wireless network, is studying how to respond to intensifying price competition, potentially leading to moves that may reduce its profit margins. After reporting Q4 wireless margin of 47%, up 5.6 percentage points from a year earlier, VZ said it may make adjustments to contend with the no-contract plans, lower roaming fees & other discounts offered by rivals. “We are prepared to respond where we see a need to respond,” said CFO Fran Shammo, but he declined to discuss how Q1 is going so far. With its cheaper plans & buyout offers to customers that switch from other carriers, T-Mobile (TMUS) has added more than 2M monthly subscribers in the past 3 qtrs, compared with 3.4M at VZ. The smaller carrier’s growing influence overshadowed Q4 profit at VZ, which beat the estimates as customers’ wireless bills increased. Q4 EPS was 66¢, leaving out one-time expenses, beating the estimate by a penny. Wireless results beat estimates for subscribers, spending & profits, while 1.6M new monthly subscribers were down from a record 2.1M a year earlier.& beat the estimate of 1.3M. The average mobile-phone bill increased 7.1% to $157.21, above the $156.38 average estimate. The wireless division’s 47% profit margin compared with an estimate of 46.4%. VZ expects to close its $130B deal with Vodafone for full ownership of Verizon Wireless in a month which will give VZ full control of the largest & most profitable US carrier. In a separate transaction announced today, VZ agreed to acquire Intel's (INTC), another Dow stock, pay-TV startup, gaining technology for video service over high-speed internet connections. Total sales rose 3.4% to $31.1B, above the estimate of $31B. Net income attributable to VZ was $5.07B (EPS of $1.77) compared with a net loss of $4.23B ($1.48 per share), a year earlier when results included a non-cash pension adjustment. The stock fell 66¢.
Verizon Mobile Profit Under Threat as Price War Escalates
Verizon (VZ)
China's benchmark money-market rate fell while stocks rebounded as the central bank added more than 255B yuan ($42B) to the financial system & expanded a loan facility to meet Lunar New Year demand for cash. The 7 day repurchase rate, a gauge of interbank funding availability, dropped 88 basis points to 5.44% after surging 153 basis points yesterday, the most in 7 months. The Shanghai Composite Index climbed almost 1% today, after closing below 2K yesterday for the first time since Jul. The People’s Bank of China (PBOC) added funds to large commercial banks yesterday using its Standing Lending Facility & conducted 255B yuan of reverse-repurchase agreements today. The monetary authority is also allowing small & medium-sized banks in 10 regions to tap its SLF on a trial basis before the week-long Lunar New Year holiday starts Jan 31. The banking system market is still vulnerable so the PBOC has to provide cash to ease the shortfall, at least before the Lunar New Year & the amount was more than expected.
Delta Air Lines posted Q4 profit that topped the estimates & forecasted an operating margin of as much as 8% in Q1. The airline expects revenue from each seat flown a mile in Q1 to climb 3-4% from a year earlier. Q4 EPS, excluding some items, more than doubled to 65¢, on increased holiday travel, higher fares & lower fuel prices, & beat the 63¢ estimate. Sales rose 5.5% to $9.08B, beating the estimate of $9.04B. Net income was $8.48B, including an $8B non-cash gain from the reversal of a tax valuation allowance. Passenger traffic at DAL & its regional partners rose 6.9% in Dec, which included Christmas & return Thanksgiving travel. Average fare per mile on the main jet fleet rose 4.5% in Q4, while total fuel spending on that basis fell 7%. The company forecast a Q1 jet-fuel price of $2.97-$3.02 a gallon. DAL last year began a share buyback program & reinstated a div after a decade-long break. The changes, along with a $10B debt-reduction plan, helped DAL regain a spot in the S&P 500 after being dropped in 2005 ahead of its bankruptcy filing. In 2013, DAL paid $100M in divs & spent $250M repurchasing stock. The stock went up 1.01.
Delta Profit Beats Estimates on Holiday Travel
Delta Air Lines (DAL)
After a long weekend, not very much was accomplished. Dow remains lower in Jan, reflecting an underlying current of unease about earnings season. There has been little to cheer about other than earnings that beat lowered expectations & accounting adjustments. The fundamental business of business is growing revenue. As expected, that has been hard to come by. The goings on in DC have gotten less attention this year, but the massive task of raising the debt ceiling must be done is a few weeks (as earnings season winds down). Dow is still headed for down 1st day, 1st week & 1st month. That's called a bad start, especially for an overbought market.
Dow Jones Industrials
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