Tuesday, October 3, 2017

Higher markets ahead of earnings season

Dow shot up another 67 to yet one more record, decliners slightly ahead of advancers & NAZ added 4.  The MLP index did little in the 284s & the REIT index was fractionally lower in the 349s.  Junk bond funds fluctuated & Treasuries were even.  Oil slid lower (more below) & gold was off a tad at 1274.

AMJ (Alerian MLP Index tracking fund)

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Detroit's Big Three automakers said they booked mostly stronger US sales in Sep, as the industry seeks its first monthly gain of 2017 amid a wave of Labor Day deals.  General Motors (GM), the nation's largest automaker, reported a 12% increase in monthly sales versus Sep 2016.  The company sold 279K vehicles, driven by crossover & truck sales at Chevrolet & GMC.  “The overall strength of the U.S. economy is the main force driving the market,” GM Chief Economist Mustafa Mohatarem said, adding that the recovery from Hurricanes Harvey & Irma will also spur new- & used-vehicle sales.  “With the U.S. economy strengthening, retail sales should remain strong for the foreseeable future.”  Ford (F) also saw a big boost from pickup trucks.  Sales of F-Series trucks surged 21.4%.  Total sales rose 8.7% year-over-year to 222K.  Fiat Chrysler’s (FCAU) sales dropped 10%, reflecting double-digit declines for Chrysler, Dodge & Fiat.  Ram truck sales largely remained level.

GM, Ford boost September U.S. sales

Demand for homes boosted Lennar (LEN) Q3 revenue and profit, topping Wall expectations.  EPS rose to $1.06 & revenue surged 15% to $3.26B.  The estimate was for EPS of $1.01 on $3.22B in revenue.  Deliveries of new homes rose 12% during the qtr, while new orders jumped 8%.  The value of those new orders rose 14% to $2.9B.  "These results were supported by strong demand for homes, low unemployment, favorable interest rates and increased consumer confidence which are all signs of a very healthy homebuilding market," said CEO Stuart Miller.  The stock went up 1.60.

Lennar 3Q profit rises on home demand

Oil eased, as speculators took profits on some large positions that have built up in the last couple of weeks, but the prospect of gradually ebbing oversupply lent support.  Dec Brent crude futures were down 27¢ at $55.85 a barrel, having lost almost 2.5% on yesterday.  US crude futures fell 24¢ to $50.34.  Money managers have pushed their bullish bets on the Brent crude market to a record high in the last week, encouraged by signs of rebalancing between supply & demand.  But when positioning becomes too stretched, this can lead to abrupt shifts in the price.  Oil prices climbed last week on tension in Iraqi Kurdistan after the region's independence vote, with Turkey threatening to close a pipeline that brings oil from the region in northern Iraq to the Mediterranean.  Turkey has not carried out the threat, analysts said.  The recent rally had also been driven by signs that a 3-year crude glut is easing, helped by a production-cutting deal among global producers led by OPEC.  However, Middle Eastern oil producers are concerned the price rise will stir US shale producers into more drilling & push prices lower again.  Key OPEC producers consider a price above $60 as encouraging too much shale output.  Offering a small boost was the expected drop in supply next month of the 4 largest North Sea crude grades that underpin the dated Brent benchmark.
Not much happening in the stock market as traders wait for reports on Sep business activity.  While officials are learning more about the Las Vegas tragedy, activity in DC is getting little attention.  But those guys have a lot to get done before year-end.  Hard to believe, but the Dow looks like it wants to top 23K very soon.  It seems like yesterday it was aiming to go over 20K.

Dow Jones Industrials

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