Dow slid back 5, advancers over decliners 3-2 & NAZ gained 14. The MLP index rose a fraction to 340 & the REIT index added 4+ to the 326s. Junk bond funds were higher & Treasuries headed lower. Oil & gold were higher.
AMJ (Alerian MLP Index tracking fund)
New-home construction in the US climbed in Sep, a sign residential real estate will bolster the economy. Housing starts increased 6.5% to a 1.21M annualized rate, more than forecast & the 2nd-highest level in 8 years, according to the Commerce Dept. But a drop in building permits indicates the rebound will be slow to materialize. American consumers, powered by an improving job market, are keeping the US afloat as they continue to spend on big-ticket items such as homes and cars. A pickup in wage gains would give even more households the ability to save for a down payment, helping to sustain momentum in the housing industry. The increase in starts was mainly propelled by gains in work on multifamily homes, such as apartment buildings, which rose 18.3% to a 466K pace. The advance highlights increasing demand for rentals. Construction of single-family houses went up 0.3% to a 740K rate. Building permits declined 5% to a 1.1M pace, the fewest since Mar. The decrease was also concentrated in multifamily, showing that these data can be volatile. Applications for single-family projects fell 0.3% to a 697K pace, suggesting this part of the market will plateau in coming months. Those for multifamily developments dropped 12.1% to a 406K rate. 3 of 4 regions had an increase in starts, paced by a 25.4% jump in the West.
IBM, a Dow stock, posted a bigger-than-expected drop in revenue & cut its full-year profit forecast, as a stronger US dollar accentuated weakness in demand from China & emerging markets. It was the 14th qtr in a row that IBM has posted a reduction in revenue, as it gets rid of low-margin businesses, but has so far failed to make up the shortfall with newer initiatives in the more lucrative area of cloud computing. China was particularly hard hit, with fewer big deals causing revenue from that country to fall 17%, IBM's CFO said. Sales in Brazil, Russia, India & China combined were down 30%. IBM, which gets more than ½ its business from overseas, said overall revenue from continuing operations was cut 9% by a strong US dollar, which is up about 17% from a year ago against a basket of currencies. Total revenue fell 13.9% to $19.28B, below the forecast of $19.62B. CFO Martin Schroeter pointed to weakness in its consulting & storage businesses for the revenue shortfall, after taking currency moves & discontinued business into account. "I would characterize it as the consulting and systems integration business moving away from these large, packaged applications and the storage business moving to flash and to the cloud," Schroeter said. IBM lowered its full-year 2015 operating EPS forecast to $14.75-$15.75 from $15.75-$16.50. Analysts were expecting $15.68. EPS from continuing operations fell to $3.02 from $3.46 a year earlier. Consolidated EPS rose tor $3.01 frim 2 pennies a year earlier. Last year profit was hurt by non recurring pre-tax charge of $3.3B, net of tax, for discontinued operations. Excluding items, EPS was 3.34 from continuing operations, beating the estimate of $3.30. The stock plunged 8.05. If you would like to learn more about IBM, click on this link:
club.ino.com/trend/analysis/stock/IBM?a_aid=CD3289&a_bid=6ae5b6f7
IBM revenue falls more than expected, cuts profit forecastReuters
United Technologies, another Dow stock, reported a drop in quarterly profit that still beat expectations, & its chief executive said the company would announce a significant restructuring before the end of the year. The conglomerate, which also revealed plans to buy back $12B of shares, will announce "significant additional restructuring actions" in Q4, CEO Greg Hayes told analysts. "We have seen some opportunities to do some longer-term structural cost reduction," Hayes added. UTX backed its profit forecast for 2015 after cutting it 3 times earlier in the year. Including $4B in repurchases made so far this year, UTX expects to complete $16B of share repurchases thru 2017. "There is such a disconnect between the trading price and the intrinsic value that we find that doing share buyback is the best M&A that we can do in the short run," Hayes said. For Q3, EPS from continuing operations declined to 1.61 from 1.93. Analysts, were expecting 1.55. Revenue fell 5.7% to $13.79B, about $770M below expectations. Sales fell 1%, excluding the negative impact from currency swings. The company cited a delay in jet engine deliveries for its Pratt & Whitney division that it expects to recover in Q4. The board authorized a $12B share repurchase program, including a $6B accelerated share repurchase using proceeds from selling its Sikorsky helicopter unit (expected to close in Q4). The stock rose 4.06. If you would like to learn more about UTX, click on this link:
club.ino.com/trend/analysis/stock/UTX?a_aid=CD3289&a_bid=6ae5b6f7
United Tech profit beats forecasts; plans $12 bln share buybackReuters
Earnings are coming but they are less than impressive. UTX has a nice gain that is from restructuring, not an improved business. Expect more of that kind of performance when beating lower expectations is considered "good." Dow continues to stay above 17K, holding the gains from week 1 in Oct.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLX15.NYM | ...Crude Oil Nov 15 | ...46.06 |  ...0.17 | (0.4%) |
| GCV15.CMX | ...Gold Oct 15 | ......1,179.10 | ...5.80 | (0.5%) |
New-home construction in the US climbed in Sep, a sign residential real estate will bolster the economy. Housing starts increased 6.5% to a 1.21M annualized rate, more than forecast & the 2nd-highest level in 8 years, according to the Commerce Dept. But a drop in building permits indicates the rebound will be slow to materialize. American consumers, powered by an improving job market, are keeping the US afloat as they continue to spend on big-ticket items such as homes and cars. A pickup in wage gains would give even more households the ability to save for a down payment, helping to sustain momentum in the housing industry. The increase in starts was mainly propelled by gains in work on multifamily homes, such as apartment buildings, which rose 18.3% to a 466K pace. The advance highlights increasing demand for rentals. Construction of single-family houses went up 0.3% to a 740K rate. Building permits declined 5% to a 1.1M pace, the fewest since Mar. The decrease was also concentrated in multifamily, showing that these data can be volatile. Applications for single-family projects fell 0.3% to a 697K pace, suggesting this part of the market will plateau in coming months. Those for multifamily developments dropped 12.1% to a 406K rate. 3 of 4 regions had an increase in starts, paced by a 25.4% jump in the West.
Housing Starts Rise as Construction Underpins U.S. Economy
IBM, a Dow stock, posted a bigger-than-expected drop in revenue & cut its full-year profit forecast, as a stronger US dollar accentuated weakness in demand from China & emerging markets. It was the 14th qtr in a row that IBM has posted a reduction in revenue, as it gets rid of low-margin businesses, but has so far failed to make up the shortfall with newer initiatives in the more lucrative area of cloud computing. China was particularly hard hit, with fewer big deals causing revenue from that country to fall 17%, IBM's CFO said. Sales in Brazil, Russia, India & China combined were down 30%. IBM, which gets more than ½ its business from overseas, said overall revenue from continuing operations was cut 9% by a strong US dollar, which is up about 17% from a year ago against a basket of currencies. Total revenue fell 13.9% to $19.28B, below the forecast of $19.62B. CFO Martin Schroeter pointed to weakness in its consulting & storage businesses for the revenue shortfall, after taking currency moves & discontinued business into account. "I would characterize it as the consulting and systems integration business moving away from these large, packaged applications and the storage business moving to flash and to the cloud," Schroeter said. IBM lowered its full-year 2015 operating EPS forecast to $14.75-$15.75 from $15.75-$16.50. Analysts were expecting $15.68. EPS from continuing operations fell to $3.02 from $3.46 a year earlier. Consolidated EPS rose tor $3.01 frim 2 pennies a year earlier. Last year profit was hurt by non recurring pre-tax charge of $3.3B, net of tax, for discontinued operations. Excluding items, EPS was 3.34 from continuing operations, beating the estimate of $3.30. The stock plunged 8.05. If you would like to learn more about IBM, click on this link:
club.ino.com/trend/analysis/stock/IBM?a_aid=CD3289&a_bid=6ae5b6f7
IBM revenue falls more than expected, cuts profit forecastReuters
International Business Machines (IBM)
United Technologies, another Dow stock, reported a drop in quarterly profit that still beat expectations, & its chief executive said the company would announce a significant restructuring before the end of the year. The conglomerate, which also revealed plans to buy back $12B of shares, will announce "significant additional restructuring actions" in Q4, CEO Greg Hayes told analysts. "We have seen some opportunities to do some longer-term structural cost reduction," Hayes added. UTX backed its profit forecast for 2015 after cutting it 3 times earlier in the year. Including $4B in repurchases made so far this year, UTX expects to complete $16B of share repurchases thru 2017. "There is such a disconnect between the trading price and the intrinsic value that we find that doing share buyback is the best M&A that we can do in the short run," Hayes said. For Q3, EPS from continuing operations declined to 1.61 from 1.93. Analysts, were expecting 1.55. Revenue fell 5.7% to $13.79B, about $770M below expectations. Sales fell 1%, excluding the negative impact from currency swings. The company cited a delay in jet engine deliveries for its Pratt & Whitney division that it expects to recover in Q4. The board authorized a $12B share repurchase program, including a $6B accelerated share repurchase using proceeds from selling its Sikorsky helicopter unit (expected to close in Q4). The stock rose 4.06. If you would like to learn more about UTX, click on this link:
club.ino.com/trend/analysis/stock/UTX?a_aid=CD3289&a_bid=6ae5b6f7
United Tech profit beats forecasts; plans $12 bln share buybackReuters
United Technologies (UTX)
Earnings are coming but they are less than impressive. UTX has a nice gain that is from restructuring, not an improved business. Expect more of that kind of performance when beating lower expectations is considered "good." Dow continues to stay above 17K, holding the gains from week 1 in Oct.
Dow Jones Industrials
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