Tuesday, September 30, 2014

Markets slide lower amid economic data

Dow lost 28, decliners over advancers amost 3-2 & NAZ fell back 12.  The Alerian MLP index rose 2+ to the 531s, & the REIT index fell 1+ to the 292s.  Junk bond funds went up from bargain hunting & Treasuries pulled back after its recent run.  Oil sunk below 90 & gold fell to the lowest since Jan as the outlook for higher US interest rates & a stronger dollar cut demand for precious metals as hedges against inflation.

AMJ (Alerian MLP Index tracking fund)

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CLF15.NYM....Crude Oil Jan 15....89.76 Down ...3.02  (3.3%)

Live 24 hours gold chart [Kitco Inc.]

Microsoft, a Dow stock, showed a first glimpse of its newest Windows operating system, touting new features such as a custom application store & added security, seeking to woo businesses that shunned the previous version as confusing & hard to use.  Called Windows 10, the software restores the Start menu & will let corps tailor the app store for their own users, Windows chief Terry Myerson said.  The new system, designed to run on mobile & desktop devices, will also separate corp & personal data on individual machines to bolster security, he added.  “Windows 10 embodies what our consumer and enterprise customers are demanding and what we will deliver,” Myerson said.  “It will run on the smallest Internet of things and data centers worldwide.”  The Windows group is refocusing on corp customers, seeking to revive sales growth as CEO Satya Nadella also steers the company to develop applications & services for rival operating systems & pushes more internet-based cloud-computing services.  The company will start rolling out previews of the new software tomorrow, & the system will be widely available in mid-2015, Myerson said.  MSFT wants Windows to be at the center of people’s digital lives, where all content can be portable & users can toggle easily between phones, tablets, laptops & PCs.  The stock fell pennies.  If you would like to learn more about MSFT, click on this link:
Microsoft Gives First Glimpse of Newest Windows Software

Microsoft (MSFT)

EBay is splitting off its PayPal division, throwing the business into direct competition with Apple (AAPL) & Google (GOOG) as consumers step up the use of smartphones & computers to pay for goods & services.  An independent PayPal, which could fetch about $47B based on rivals’ valuations & would have more latitude to forge alliances with retailers as other financial firms seek to turn their products into tools for digital payments.  In addition to PayPal, EBAY’s marketplaces business could also become an attractive takeover target.  EBAY bought PayPal in 2002 to add online-payment services.  The unit, which almost tripled sales in the 5 years ended in 2012, has since become a growth engine for the company.  The competitive landscape has also changed dramatically since EBay bought PayPal.  Like much of the computing industry, the business of online payments is increasingly moving to mobile devices, where PayPal isn’t as dominant.  Mobile payments in the US are projected to total $118B by 2018, up from $3.5B this year.  The split would value PayPal at $47B, applying a multiple of 1.8 times trailing 12-month revenue.  The stock shot up 3.97.  If you would like to learn more about EBAY, click on this link:

EBay Plans to Split Off PayPal, Bowing to Icahn After Clash

eBay (EBAY)

Johnson & Johnson, a Dow stock & Dividend Aristocrat, will acquire Alios BioPharma, a developer of viral disease therapies.  JNJ will pay $1.75B in cash for closely held Alios.  Alios is developing treatments for influenza, rhinoviruses & respiratory syncytial virus, which causes infections in infants & has no approved preventative therapy.  Alios’s compound “AL-8176 complements our existing early stage portfolio for RSV which aims to prevent and treat this disease, the leading cause of acute lower respiratory infection in children under the age of five,” said William Hait, JNJ global head of R&D.  JNJ has raised its earnings forecast for the year for 2 consecutive qtrs with help from its hepatitis C drug Olysio, which generated $831M in sales in Q2.  The pill has led JNJ’s drug business to become the company’s biggest unit.  The stock inched up pennies.  If you would like to learn more about JNJ, click on this link:

Johnson & Johnson Will Acquire Alios Biopharma for $1.75 Billion

Johnson & Johnson (JNJ)

Stocks were largely marking time on the last day of the month & qtr when it's difficult to analyze movements.  Money managers were adjusting portfolios to make their results look good.  In Sep, Dow was down 56 & in Q3 Dow went up 220.  YTD it's up 470, an amazing gain after the horrible Jan.  The economic demand behind this advance remains fuzzy at best with continual reminders that housing is stumbling & overseas market are not doing well along with numerous military conflicts around the world.

Dow Jones Industrials

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Markets fluctuate after consumer confidence data

Dow added 29, decliners just ahead of advancers & NAZ climbed 6.  The MLP index was off 2+ to the 526s & the REIT index slipped pennies in the 294s.  Junk bond funds were mixed & Treasuries inched higher.  Oil is heading for the biggest quarterly decline in more than 2 years as ample supply shielded the market from the risk of disruption from conflict in the MidEast & gold continues to sell off, near multi year lows.

AMJ (Alerian MLP Index tracking fund)

CLF15.NYM....Crude Oil Jan 15...92.59 Down ...0.19  (0.2%)

GCQ15.CMX...Gold Aug 15....1,208.00 Down ...13.60  (1.1%)

The Conference Board’s consumer confidence index fell to 86 in Sep from 93.4 a month earlier.  The forecast called for a reading of 92.5 & estimates ranged from 88.7 to 95.  The measure averaged 96.8 during the last expansion & 53.7 during the recession that ended in Jun 2009.

Consumer Confidence Index in U.S. Decreased to 86 in September

A Chinese manufacturing gauge fell from an initial reading a week ago as a property slump weighs on the economy.  The Purchasing Managers' Index from HSBC Holdings & Markit Economics for Sep was at 50.2, lower than the preliminary figure of 50.5 & unchanged from Aug.  Numbers above 50 signal expansion.  Estimates for this year’s GDP growth after data have been  cut as industrial profits, factory output & credit showed a deteriorating outlook.  While the gov has set an expansion target of about 7.5% for this year, Premier Li Keqiang & other policy makers have insisted for months they don’t need strong stimulus measures.  One bright spot in data for Aug, export growth, was reflected in today’s report, which showed a stronger expansion of total new business, driven by the fastest rise in new export orders for 4½ years.  China's trade surplus climbed to a record in Aug as exports rose on the back of increased shipments to the US & Europe.  This is the 7th straight month that the final PMI reading was below the preliminary figure.  Strength in external shipments is helping offset the drag from property:  New-home prices fell in all except 2 of the 70 cities monitored by the gov last month, the most since Jan 2011.  A home-price expectation index among urban households declined in Q3.  A separate manufacturing index from the National Bureau of Statistics & China Federation of Logistics & Purchasing is scheduled to be published tomorrow.  That figure declined to 51.1 in Aug from 51.7 in Jul & the estimate for Sep was 51.0.

China Factory Gauge Falls From Initial Reading

Walgreen, a Dividend Aristocrat, fiscal year sales rose to a record $76.4B after the company’s prescription drug business grew, especially from the US gov.  The pharmacy business has expanded as more people in an aging population join Medicare.  The company filled a record 856M prescriptions in fiscal 2014.  Excluding one-time items, fiscal Q4 EPS was 74¢, matching the estimate.  WAG reported a net loss 25¢ a share, compared with EPS or 69¢ a year earlier.  “Our fourth-quarter performance was in line with our expectation, recognizing we have much more to do,” said CEO Greg Wasson.  The chain is in the middle of its biggest deal ever, the purchase of the rest of European health beauty chain Alliance Boots for $15.3B after buying a stake in the company in 2012.  The company said the deal will save the combined business $650M next fiscal year, up from $491M this fiscal year.  Investors have also pressured WAG to boost a $3B share buyback the company announced in Aug.  “We will continue to discuss our capital allocation policies with our board and will make any changes when appropriate,” CFO Tim McLevish said.  Q4 sales grew 6.2% to $19.1B, while same-store sales rose 5.4%.  For the full fiscal year, sales grew 5.8%.  The stock fell 60¢.  If you would like to learn more about WAG, click on this link:

Walgreen Says Sales Reach Record as Prescription Drugs Expand

Walgreen (WAG)

There was selling at the opening, but buyers returned to give the markets a lift.  Nothing dramatic is going on, but the underlying feeling is not positive.  Economic data is uneven to negative in the US & overseas, & military conflicts will sap what strength there is presently.  Then there is Janet Yellen & the threat of higher interest rates next year.  That spells lots of worries for the bulls to think about.

Dow Jones Industrials

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