Dow gained 71 (but off the highs), advancers only modestly ahead of decliners & NAZ slid back 7. The MLP index recovered 3+ to the 365s & the REIT index lost 2 to the 347s. Junk bond funds drifted lower & Treasuries were little changed. Oil rose in the 52s & gold dropped 10 to 1268.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2051462907701762)
House Reps narrowly adopted a budget resolution unlocking a fast-track process to achieve their long-sought goal of cutting taxes by the end of the year. The next step will be releasing a draft tax measure next Wed. The 216-212 vote allows Congress to enact tax cuts later that increase the federal deficit by up to $1.5T over 10 years. The bill could pass the Senate with just 50 votes, plus a tie-breaker from VP Mike Pence, bypassing the need for any Dem support. "Big news - Budget just passed!" Pres Trump wrote on Twitter minutes after the vote. House Ways & Means Chairman Kevin Brady said the budget "just provided the legislative runway" for the tax bill his committee will consider during the week of Nov 6. While Reps haven't outlined a full plan, their tax framework calls for doubling the standard deduction for individuals & reducing the current 7 income brackets to 3 -- 12%, 25% & 35%, with a possible 4th bracket for top earners. Those tax cuts may be funded by limiting the deduction for state & local income & property taxes, an idea opposed by some GOP moderates from high-tax states. An unusual coalition of 20 Reps joined all Dems in opposing the budget. The moderates now will reserve their fight for the tax bill itself. Reps are determined to enact a tax-cut plan, especially after spending much of the year trying to use the same fast-track process to repeal Obamacare.
House Adopts Budget, Setting Up Release of Tax Bill Next Week
Contracts to buy previously owned homes were flat in Sep & activity declined on an annual basis for the 5th time in the last 6 months as demand for properties continued to exceed supply. The National Association of Realtors said its Pending Home Sales Index, based on contracts signed last month, was unchanged with a reading of 106.0 (the Aug index was revised lower). The forecast called for pending home sales edging up 0.2%. Pending home contracts are viewed as a forward-looking indicator for the state of the housing market because they become sales one or 2 months later. Although the economy continues to strengthen, the housing sector has faltered this year. Home sales have weakened amid tight inventories while builders have cited shortages of land & labor as a curb on construction. Compared to one year ago, pending sales fell 3.5% overall & there were annual declines across all 4 of the nation's regions. "Activity is falling further behind last year's pace because new listings aren't keeping up with what's being sold," NAR chief economist Lawrence Yun said. He added the situation will likely be further exacerbated as inventory starts to decline heading into the winter months.
UPS (UPS) expects another record holiday season, with deliveries up 5% over last year, as online shopping continues to grow. The company expects to deliver more than 750M packages between Thanksgiving & Dec 31 & expects to haul at least 30M packages on 17 of the last 21 delivery days before Christmas. UPS issued its holiday forecast as it reported Q3 earnings of $1.26B, & just a day after it announced rate increases averaging 4.9% for many services beginning Dec 24 (more than double the 2.2% rate of inflation). CEO David Abney defended the price hike, saying it is needed to provide deliveries in the age of e-commerce. UPS expects to increase spending on more highly automated package-handling facilities, airplanes & other investments to meet rising volumes driven largely by e-commerce. For the upcoming Christmas season, UPS said it is working with shippers to handle more packages. It also hopes that additional Sat operations & peak-day surcharges will help it tamp down the spikes in shipments on certain days. The company also plans to add 95K seasonal workers, the same as last year, & use more automation. Q3 EPS were nearly flat with the same period last year. Adjusted to exclude one-time items, UPS said EPS would have been $1.45, a penny better than expected. Revenue rose 7% to $15.98B, beating the forecast of $15.61B. UPS expects full-year EPS of $5.85-6.10. The stock gained 78¢.
If you would like to learn more about UPS, click on this link:
club.ino.com/trend/analysis/stock/UPS?a_aid=CD3289&a_bid=6ae5b6f7
Union Pacific (UNP) delivered a 6% improvement in Q3 profit even though it hauled 1% less freight & dealt with disruptions from Hurricane Harvey. The railroad had EPS of $1.50, up from $1.36 a year ago. One-time events related to Hurricane Harvey, laying off 800 workers, a land sale & a lawsuit settlement created a net 5¢ drag on EPS in the qtr. The forecast was for EPS of $1.49. Revenue of $5.41B topped the $5.31B estimate. CEO Lance Fritz said he's optimistic about the railroad's prospects next year as the economy is expected to continue growing slowly & the truck market is likely to be tight. The layoffs & other cost cuts UNP made this year should help it remain competitive. "We think that decision made us much more agile," Fritz said about the layoffs. The stock jumped up 6.20.
If you would like to learn more about UNP, click on this link:
club.ino.com/trend/analysis/stock/UNP?a_aid=CD3289&a_bid=6ae5b6f7
Pickup trucks helped Ford to a strong finish in Q3 despite lower global sales. The automaker's EPS was 39¢ handily beat expectations of 33¢. Revenue rose 1% to $36.45B. Automotive revenue of $33.6B also topped forecasts. Ford also cited cost-cutting measures, including lower spending on engineering & marketing during the qtr. "We do believe these are indications of us improving our fitness," CEO Jim Hackett said. With those results under its belt, Ford raised its full-year EPS estimate to $1.75-1.85, up from $1.65-1.85. That compares to $1.76 in 2016. Overall sales fell 2% to 1.5M cars & trucks. Sales were lower in China, North America & the Middle East; they rose in Europe & South America. But the company earned more thanks to booming sales of high-margin trucks, which got an added boost after the season's hurricanes. US sales of F-Series pickups were up 14%. Ford said buyers paid an average of $45,400 per truck, up $2800 from the same period a year ago. CFO Bob Shanks said more buyers are springing for luxury packages on their trucks to get extras like heated seats & 360-degree cameras. That pumped North American pretax profits to $1.7B, up 33% from a year ago. Ford lost $86M in Europe as dealers changed over to the new Fiesta subcompact. But Shanks said that will reverse to a profit in Q4. Ford also lost money in the Middle East & South America, but pretax profit in Asia more than doubled to $289M. The stock rose 23¢.
If you would like to learn more about Ford, click on this link:
club.ino.com/trend/analysis/stock/F?a_aid=CD3289&a_bid=6ae5b6f7
While the Dow is doing well, the rest of the stock market had tough sledding. NAZ was weak & market breadth remains drab. Earnings have been fairly good. More importantly, adopting the budget by the House was a critical step for tax reform. But that road is a very long & an ambitious one, & the road looks to be very bumpy. The popular stock averages remain near record highs, but all is not well behind these lofty elevations.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
House Reps narrowly adopted a budget resolution unlocking a fast-track process to achieve their long-sought goal of cutting taxes by the end of the year. The next step will be releasing a draft tax measure next Wed. The 216-212 vote allows Congress to enact tax cuts later that increase the federal deficit by up to $1.5T over 10 years. The bill could pass the Senate with just 50 votes, plus a tie-breaker from VP Mike Pence, bypassing the need for any Dem support. "Big news - Budget just passed!" Pres Trump wrote on Twitter minutes after the vote. House Ways & Means Chairman Kevin Brady said the budget "just provided the legislative runway" for the tax bill his committee will consider during the week of Nov 6. While Reps haven't outlined a full plan, their tax framework calls for doubling the standard deduction for individuals & reducing the current 7 income brackets to 3 -- 12%, 25% & 35%, with a possible 4th bracket for top earners. Those tax cuts may be funded by limiting the deduction for state & local income & property taxes, an idea opposed by some GOP moderates from high-tax states. An unusual coalition of 20 Reps joined all Dems in opposing the budget. The moderates now will reserve their fight for the tax bill itself. Reps are determined to enact a tax-cut plan, especially after spending much of the year trying to use the same fast-track process to repeal Obamacare.
House Adopts Budget, Setting Up Release of Tax Bill Next Week
Contracts to buy previously owned homes were flat in Sep & activity declined on an annual basis for the 5th time in the last 6 months as demand for properties continued to exceed supply. The National Association of Realtors said its Pending Home Sales Index, based on contracts signed last month, was unchanged with a reading of 106.0 (the Aug index was revised lower). The forecast called for pending home sales edging up 0.2%. Pending home contracts are viewed as a forward-looking indicator for the state of the housing market because they become sales one or 2 months later. Although the economy continues to strengthen, the housing sector has faltered this year. Home sales have weakened amid tight inventories while builders have cited shortages of land & labor as a curb on construction. Compared to one year ago, pending sales fell 3.5% overall & there were annual declines across all 4 of the nation's regions. "Activity is falling further behind last year's pace because new listings aren't keeping up with what's being sold," NAR chief economist Lawrence Yun said. He added the situation will likely be further exacerbated as inventory starts to decline heading into the winter months.
US pending home sales flat in September
UPS (UPS) expects another record holiday season, with deliveries up 5% over last year, as online shopping continues to grow. The company expects to deliver more than 750M packages between Thanksgiving & Dec 31 & expects to haul at least 30M packages on 17 of the last 21 delivery days before Christmas. UPS issued its holiday forecast as it reported Q3 earnings of $1.26B, & just a day after it announced rate increases averaging 4.9% for many services beginning Dec 24 (more than double the 2.2% rate of inflation). CEO David Abney defended the price hike, saying it is needed to provide deliveries in the age of e-commerce. UPS expects to increase spending on more highly automated package-handling facilities, airplanes & other investments to meet rising volumes driven largely by e-commerce. For the upcoming Christmas season, UPS said it is working with shippers to handle more packages. It also hopes that additional Sat operations & peak-day surcharges will help it tamp down the spikes in shipments on certain days. The company also plans to add 95K seasonal workers, the same as last year, & use more automation. Q3 EPS were nearly flat with the same period last year. Adjusted to exclude one-time items, UPS said EPS would have been $1.45, a penny better than expected. Revenue rose 7% to $15.98B, beating the forecast of $15.61B. UPS expects full-year EPS of $5.85-6.10. The stock gained 78¢.
If you would like to learn more about UPS, click on this link:
club.ino.com/trend/analysis/stock/UPS?a_aid=CD3289&a_bid=6ae5b6f7
UPS predicts record holiday deliveries, defends price hike
Union Pacific (UNP) delivered a 6% improvement in Q3 profit even though it hauled 1% less freight & dealt with disruptions from Hurricane Harvey. The railroad had EPS of $1.50, up from $1.36 a year ago. One-time events related to Hurricane Harvey, laying off 800 workers, a land sale & a lawsuit settlement created a net 5¢ drag on EPS in the qtr. The forecast was for EPS of $1.49. Revenue of $5.41B topped the $5.31B estimate. CEO Lance Fritz said he's optimistic about the railroad's prospects next year as the economy is expected to continue growing slowly & the truck market is likely to be tight. The layoffs & other cost cuts UNP made this year should help it remain competitive. "We think that decision made us much more agile," Fritz said about the layoffs. The stock jumped up 6.20.
If you would like to learn more about UNP, click on this link:
club.ino.com/trend/analysis/stock/UNP?a_aid=CD3289&a_bid=6ae5b6f7
Union Pacific's 3Q profit grows 6 percent despite challenges
Pickup trucks helped Ford to a strong finish in Q3 despite lower global sales. The automaker's EPS was 39¢ handily beat expectations of 33¢. Revenue rose 1% to $36.45B. Automotive revenue of $33.6B also topped forecasts. Ford also cited cost-cutting measures, including lower spending on engineering & marketing during the qtr. "We do believe these are indications of us improving our fitness," CEO Jim Hackett said. With those results under its belt, Ford raised its full-year EPS estimate to $1.75-1.85, up from $1.65-1.85. That compares to $1.76 in 2016. Overall sales fell 2% to 1.5M cars & trucks. Sales were lower in China, North America & the Middle East; they rose in Europe & South America. But the company earned more thanks to booming sales of high-margin trucks, which got an added boost after the season's hurricanes. US sales of F-Series pickups were up 14%. Ford said buyers paid an average of $45,400 per truck, up $2800 from the same period a year ago. CFO Bob Shanks said more buyers are springing for luxury packages on their trucks to get extras like heated seats & 360-degree cameras. That pumped North American pretax profits to $1.7B, up 33% from a year ago. Ford lost $86M in Europe as dealers changed over to the new Fiesta subcompact. But Shanks said that will reverse to a profit in Q4. Ford also lost money in the Middle East & South America, but pretax profit in Asia more than doubled to $289M. The stock rose 23¢.
If you would like to learn more about Ford, click on this link:
club.ino.com/trend/analysis/stock/F?a_aid=CD3289&a_bid=6ae5b6f7
Ford's net income jumps in 3Q on truck sales
While the Dow is doing well, the rest of the stock market had tough sledding. NAZ was weak & market breadth remains drab. Earnings have been fairly good. More importantly, adopting the budget by the House was a critical step for tax reform. But that road is a very long & an ambitious one, & the road looks to be very bumpy. The popular stock averages remain near record highs, but all is not well behind these lofty elevations.
Dow Jones Industrials
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