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Thursday, April 21, 2016
Markets decline, led by lower oil prices
Dow dropped 113 (finishing near the lows), decliners over advancers 3-2 & NAZ gave up 2. The MLP index added 1+ to the 296s, a new 2016 high, & the REIT index fell 5+ to 330. Junk bond funds crawled higher & Treasuries were weak. Oil retreated to the 43s & gold had a small loss.
General Motors Q1 earnings & sales beat estimates by a wide margin as it posted record results in North America & stepped toward a 15-year goal of ending losses in Europe. EPS rose to $1.26, exceeding the 99¢
estimate. Revenue increased $1.6B to $37.3B, topping the $35.6B estimate,
even as GM sold fewer vehicles worldwide. The profit rise is
partly payoff for GM's decision to forgo some low-profit fleet sales
while feeding Americans’ demand for moneymakers like sport utility
vehicles & pickups. Performance improved around the globe with the
company essentially breaking even in Europe & narrowing losses in
South America. “The
best thing we can do is continue to execute our short-term and
long-term strategy and put results on the board like we have for the
last couple of years,” CFO Chuck Stevens said. “The share
price will reflect that over time.”
The biggest U.S automaker posted record
profits last year & forecast a record again in 2016.
GM
posted record North America Q1 adjusted earnings before
interest & taxes of $2.3B, & income from the company's China
operations was steady at about $500M, thanks to growing sales of
expensive vehicles like the Chevrolet Silverado pickup in the US &
Buick Envision sport utility vehicle in China. Cadillac & Buick grew 6% & 22% in China, respectively. The stock rose 47¢. If you would like to learn more about GM, click on this link: club.ino.com/trend/analysis/stock/GM?a_aid=CD3289&a_bid=6ae5b6f7
Verizon, a Dow stock, warned that its
standoff with about 39K striking workers will put pressure on
Q2 earnings. The largest wireless carrier took a hard stance with its 2 largest labor
unions this month, forcing a strike of cable splicers, customer-service
representatives & FiOS technicians
that's now in its 2nd week. Almost all the workers are employed by
the carrier’s landline business, which has seen annual declines in the
number of lines served as well as job cuts. The
warning overshadowed an otherwise positive earnings report, as it added 640K new wireless customers & met
profit estimates in Q1. EPS excluding some items was $1.06, matching estimates. Sales were $32.2B, compared with a projection of $32.5B. Its reliance on
tablet promotions underscores the challenges of attracting new
mobile-phone users amid data giveaways & free music- &
video-streaming offers. At the same time, Verizon is facing a slowdown in
FiOS TV user growth. The stock rose 1.72. If you would like to learn more about VZ, click on this link: club.ino.com/trend/analysis/stock/VZ?a_aid=CD3289&a_bid=6ae5b6f7
Boeing, another Dow stock, tumbled after an analyst downgraded the stock to
“underperform” & said the planemaker stood little chance of fully
recovering almost $29B that’s been sunk into producing the 787
Dreamliner jet. The manufacturer has touted the
substantial cash it stands to generate from jet production to meet a
near-record order backlog & the profit to be made on the 787, its
marquee aircraft. “In the
longer term, we continue to target levels of profitability for the 787
that are consistent with our more mature production programs,” a BA
spokesman said. But the analyst, estimated that cash flowing from the
Dreamliner by 2022 will be $14B rather than the $29B
assumed in BA's outlook. To reach that
number & eliminate the almost $29B in deferred production costs
already accumulated by the 787 program, BA would need to generate a
profit of $30M for each of the 907 Dreamliners it projects
making for accounting purposes, the analyst wrote. The stock was off pennies. If you would like to learn more about BA, click on this link: club.ino.com/trend/analysis/stock/BA?a_aid=CD3289&a_bid=6ae5b6f7
For those who have forgotten, this was called a correction. While not significant at the big picture level, this could be the beginning of more such days if earnings come in lackluster or worse. Dow is still up 2K in the last 2 months, one of the biggest advances in its history.
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.6259423447970834)
...0.78 
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