Friday, October 16, 2015

Markets rise cautiously on earnings

Dow gained 75, advancers over decliners 4-3 & NAZwent up 16.  The MLP index added 2+ to 345 & the REIT index rose 2+ to the 322s.  Junk bond funds were higher & Treasuries did little.  Oil is pushing on 48 & gold slid back.

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CLX15.NYM....Crude Oil Nov 15....47.20 Up ...0.82 (1.8%)

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General Electric, a Dow stock, reported a better-than-expected quarterly profit, as its businesses producing jet engines & power turbines offset declines in its oil & gas segment.  The conglomerate, which is pulling back from financial services, said its Q3 industrial revenue grew 4%, excluding the impact of foreign currency swings & acquisitions.  Orders plummeted 26% & revenue was short of some estimates.  But GE backed its full-year profit target.  The company has been in the midst of an overhaul since Apr, when it said it would divest some $200B worth of its Capital financing assets to focus on industrial manufacturing.  More recently, on Tues, it agreed to sell a $30B commercial lending and leasing unit.  As part of its retreat from financing, GE said expects to retire as much as 7% of its outstanding floated shares by mid-Nov, as it completes the spinoff of its former retail finance business, Synchrony Financial.  Q3 EPS fell to 25¢.  Excluding special items, EPS of 29¢ exceeded the estimate by 3¢.  Revenue slipped 1.3BB, with revenue in its oil & gas segment dropping 16% amid weakness in crude prices.  Revenue in its aviation segment increased 5%, while revenue in its power & water division, its biggest segment, grew 1%.  The stock rose 94¢.  If you would like to learn more about GE, click on this link:

GE Industrial Profit Rises, Helped by Aviation

General Electric (GE)

Honeywell reported a better-than-expected quarterly profit as costs fell.  The company has been cutting jobs & selling or merging businesses to reduce costs & boost efficiency.  Expenses fell about 7% to $6.65B in Q3, while operating margins rose to 18.3% from 16.2% a year earlier.  However revenue fell 5%, missing expectations, hurt by a strong dollar.  It also cut its 2015 revenue forecast to $38.7B from $39.0-$39.6B.  Sales fell 2% in the aerospace business, its largest, & 3% in its automation & controls business.  Excluding the impact of a strong dollar, sales rose about 2% in the aerospace business & 3% in the automation & controls business.  EPS rose to $1.60 from $1.47 a year earlier.  Revenue fell to $9.61B.  Analysts had expected EPS of $1.55& revenue of $9.85B.  The stock lost 1.50.  If you would like to learn more about HON, click on this link:

Honeywell Profit Rises 8% as Costs Fall

Honeywell (HON)

McDonald’s, a Dow stock & Dividend Aristocrat, & franchisee owners aren’t exactly seeing eye-to-eye on all-day breakfast menu items & one former franchisee says corp headquarters is costing owners too much.  During an interview with FOX Business, former franchisee owner Kathryn Slater-Carter said: “the problem is the emperor has no clothes. A crew person told me ‘I’m not loving it, this is hell.’ There [are] a lot of problems with what they’re doing and it comes from the fact that the corporation loves to suck the money off the top and leave the operators and the crew to pick up the pieces off the bottom and it’s just not working.”  Slater-Carter blasted MCD for closing her business.  “We left because McDonald’s decided that our $2 million a year very profitable business at Ceremony Mall should be closed because they didn’t like the fact that we were pointing out some of their problems. So they decided not to renew our franchise and not to renew the lease -- so we had no business to sell and we lost our $2 million a year business -- we got nothing."  She also explained how mandates are hurting franchisees bottom line.  “That’s half the story, it costs more money and their discounting is lowering our prices… We are getting fewer dollars in and in the franchise system… the dollars off the top go to the franchisor. So they make the money and then we are left with what’s left to pay our bills and pay our crew,” she said.  The stock went up 1.13.  If you would like to learn more about MCD, click on this link:

McDonald’s Franchisee’s ‘Not Lovin’ All-Day Breakfast Menu

McDonald's (MCD)

Earnings season got off to a so-so start.  Earnings largely beat lowered earnings which had a lot to do with adjustments, not true growth.  Coming off a spectacular week, this one was not too bad.  Dow gained 100 & the bulls did not give control to the bears.  Earnings next week may not be as supportive.

Dow Jones Industrials

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