Monday, April 13, 2015

Markets rise ahead of bank earnings

Dow went up 45, advancers over decliners 4-3 & NAZ added 26 (going over 5K).  The MLP index inched up pennies in the 438s & the REIT index was fractionally higher to the 332s.  Junk bond funds were mixed & Treasuries gained.  Oil climbed higher & gold was off a tad.

AMJ (Alerian MLP Index tracking fund)

CLK15.NYM...Crude Oil May 15...52.96 Up ...1.32 (2.6%)

GCJ15.CMX....Gold Apr 15.......1,204.80 Up ...0.20 (0.0%)

China's export sales contracted 15% in Mar, a shock outcome that deepens concern about sputtering Chinese economic growth.  The tumble in exports, the worst in about a year, compared with expectations for a 12% rise & could heighten worries about how a rising yuan has hurt demand for Chinese goods & services abroad.  The yuan's strength was one factor in the 19.1% on-year decline in exports for Mar to the EU & 24.8% drop to Japan.  In a sign that domestic demand was also tepid, imports shrank 12.7% last month from a year ago, the General Administration of Customs said.  By volume, coal imports plunged more than 40% in Q1.  The Mar fall in imports was in line with forecasts, unlike the one for exports.  Buffeted by lukewarm foreign & domestic demand, China's trade sector has wobbled in the past year on the back of the country's cooling economy, unsettling policymakers.  Chinese Vice Premier Wang Yang said earlier this month that authorities must arrest China's export slowdown lest it further dampens economic growth.  Anemic growth in the trade sector could hurt jobs, which the gov wants to protect for fear that widespread unemployment could fuel social discontent & trigger unrest.  So far, the labor market appears to be holding up well, despite signs that economic growth is steadily grinding to its lowest in a quarter of a century of around 7%.  Last month's trade performance left China with a surplus of $3.1B, much smaller than the poll forecast for a $45.4B trade gap.  On a quarterly basis, exports fared better than imports.  Export sales were up 4.7% in Q1 compared with a year ago, improving from a 3.4% fall seen in Q1 last year.  But imports crumbled 17.6% from a year ago, reversing the 1.6% increase in Q!-2014.  Yet a breakdown of the data showed exports in Mar were clearly crimped by a stronger yuan, which is pegged to a rising dollar.

China March Exports Shrink 15%, Badly Miss Expectations

Hedge fund Jana Partners is pressing Qualcomm to spin off its "essentially worthless" chip unit from its patent-licensing business as one of several steps to "restore investor confidence" in the company & unlock shareholder value.  Jana also wants QCOM to cut costs, accelerate a share buyback, improve disclosures & refresh its board.  "We believe that the board and management recognize the need to address its historical underperformance and improve investor perceptions of the company," Jana said.  Jana has invested $2B in QCOM, making it one of the company's largest shareholders.  The company has a market value of $114B & said last month it would buy back up to $15B of shares & raise its quarterly div.  QCOM also said it would continue to return at least 75% of its free cash flow to shareholders annually.  While the majority of revenue comes from selling baseband chips that enable phones to communicate with carrier networks, most of its profit comes from licensing patents for its widespread CDMA cellphone technology.  The stock went up 1.41.  If you would like to learn more about QCOM, click on this link:

Qualcomm Under Pressure by Jana to Spin off Chip Unit


Consumers flocked to Apple stores around the world on Fri to get the first close-up look at the smartwatch, which the company expects will be its next runaway hit.  CEO Tim Cook's first new major product & the company's first foray into the personal luxury goods market, was available for pre-order online & to try out in stores, but not to take home.  On Apr 24, consumers will be able to buy it online or by appointment in shops including trendy fashion boutiques in Paris, London & Tokyo, part of the strategy of positioning the wearable computer as a must-have accessory.  Testing AAPL's mastery of consumer trends, the watch is an untried concept for the company.  It straddles a technology market accustomed to rapid obsolescence & luxury goods whose appeal lies in their enduring value.  Based on recent customer interest at its stores, AAPL expects demand for the watch, which allows users to check email, listen to music & make phone calls when paired with an iPhone, to exceed availability at launch.  Reviewers this week praised the watch, which also helps users monitor their health & exercise, as "beautiful" & "stylish" but gave it poor marks for relatively low battery life & slow-loading apps.  Sales estimates for 2015 vary widely: 8- 40M units.  By comparison, the company sold nearly 200M iPhones last year.   The stock rose $1.  If you would like to learn more about AAPL, click on this link:

Apple Watch Sees Strong Overseas Turnout

Apple (AAPL)

There is little going on with bank earnings coming in this week.  Some of the biggest banks will report & expectations are high.  All popular stock averages are close to setting new record highs.  With that level of optimism, there is greater probability they will surprise on the negative side (below expectations).  A difficult winter will be a drag in the US & overseas business continues to be less than spectacular, shown above from China data.

Dow Jones Industrials

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