Dow jumped up 140, decliners still over advancers 5-4 & NAZ fell 3. The MLP index was off fractionally in the 301s. Junk bond funds slid lower & Treasuries were higher at the close. Oil finished the day lower in the 64s & gold dropped 12 to 1344 (blamed on electronic trading) after its recent advance.
AMJ (Alerian MLP index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.3057807416467654)
US filings for unemployment benefits increased a week after plunging to the lowest level since 1973, underscoring a still historically tight jobs market, Labor Dept figures showed. Jobless claims increased by 17K to 233K (est 235K). Continuing claims fell 28K to 1.937M in the latest week. The 4-week average of initial claims, a less-volatile measure than the weekly figure, dropped to 240K from the prior week's 244K. Even with the weekly rise, claims remain near historic lows, indicating employers are reluctant to pare headcount as they struggle to find skilled workers from an ever-shrinking pool. For more than 2 years, applications for jobless benefits have been in healthy territory below the 300K level.
Union Pacific (UNP) reported a $6.1B jump in Q4 thanks to a sweeping change in US tax laws, but the profit growth was a more modest $60M when that one-time benefit is stripped away. EPS was $9.25,& without the tax changes, EPS was $1.53 (just below the $1.54 expected). Revenue grew 5% to $5.45B even though it only hauled 1% more freight. Analysts expected $5.41B revenue. CEO Lance Fritz said he expects more volume growth in 2018 that will help the railroad deliver better results. "We are optimistic the economy will favor a number of our market segments leading to another year of positive volume growth," Fritz said. The future of the North American Free Trade Agreement remains a concern because about 11% of its business involves shipments to or from Mexico. "While I still believe there is a good opportunity for the NAFTA agreement to be solidified — all three parties continue in it going forward — we have a strong eye on all of the what-ifs and contingency plans," Fritz said. One of the things that slowed some trains was the railroad's installation of positive train control, which can automatically stop a train in an emergency. The railroad is in the process of installing the system ahead of a federal deadline at the end of 2018. Fritz said most of the disruptions related to the braking system are temporary, but UNP has to debug the system as it is installed because it is a new system. For all of 2017, EPS was $13.36 & without the largely paper benefit of the tax cuts, EPS was $5.79. The stock sank 7.57 (6%).
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
Tomahawk missile maker Raytheon (RTN) reported an 8% increase in Q4 revenue, benefiting from demand for more weapons from US & its allies. A lower effective tax rate in 2018 helped the defense contractor forecast full-year EPS from continuing operations of $9.55-9.75, much higher than the estimate of $8.87. The weapons maker said 2018 net sales would be $26.4-26.9B, beating the expectation of $26.63B. The company also said it expects 2018 operating cash flow from continuing operations to be $3.6-4.0B, compared with $2.7B in 2017. US weapons makers are expected to benefit in the coming year from an increase in overall defense spending under Pres Trump's administration. Sales at Raytheon's missile systems unit, its biggest by revenue, rose 15.2% to $2.19B, helped by higher sales of medium-range air-to-air missiles, Paveway laser-guided bombs & SM-3 anti-ballistic missiles. Sales in its space & airborne systems business, its 2nd-biggest, rose 4.4% to $1.67B, helped by higher sales of airborne radars. The unit makes electronic warfare systems for tactical aircraft, helicopters & ships as well as tracking & navigation sensors used on airborne platforms. Overall sales rose to $6.78B, from $6.28B a year earlier, narrowly missing the estimate of $6.81B. However, EPS from continuing operations attributable to RTN fell to $1.35 from $1.87 per share a year earlier. RTN said Q4 profit included a provision of $171M for tax-related expense & a $1B pre-tax discretionary pension plan contribution, which was not included in its prior forecast. The stock jumped up 4.95.
If you would like to learn more about RTN, click on this link:
club.ino.com/trend/analysis/stock/RTN?a_aid=CD3289&a_bid=6ae5b6f7
Oil rose, with global benchmark Brent at one point surging above $71 a barrel for the first time since 2014 on support from a weaker $, tighter global supplies & a record run of declines in US crude inventories. The $ hit its lowest since Dec 2014 against a basket of other currencies, sliding further as comments by ECB pres boosted the € a day after Treasury Secretary Steve Mnuchin said a weaker $ was "good for us." A falling $ makes $-denominated commodities cheaper for other currency holders & tends to support oil prices. Tightening global supplies have also lifted oil, as OPEC & allies including Russia have continued supply curbs. An involuntary drop in Venezuela's production in recent months has deepened the impact of the output cuts. Brent crude, the intl oil benchmark, hit $71.28 a barrel, its highest since early Dec 2014, before retreating. West Texas Intermediate crude futures for Mar delivery rose 44¢ to $66.05 a barrel (0.7%) gain. US crude stockpiles have been dropping, underscoring the idea that global supply is rebalancing after a glut. US crude inventories fell for a record 10th straight week to the lowest since Feb 2015. The supply cuts led by OPEC & Russia started a year ago & are set to last throughout 2018. They have been somewhat offset by growing output of US shale oil, as higher prices have encouraged more investment in expanding supplies. US crude oil production is expected to surpass 10M barrels per day (bpd) next month, on the way to a record ahead of previous forecasts, according to the Energy Information Administration.
Oil hits $71 for first time since 2014 on tighter supply and weak dollar
The stock market continued mixed with those guys in Davos awaiting Trump's comments on intl trade. While he is expected to promote "America First" in his speech, the details of what he says will move markets. Gold, which has done well recently sank back, but that seems to be due to technical factors which can't not be counted on to continue. Home Depot (HD), a Dow stock, will give employees up to a $1K bonus related to tax reform. The popular stock averages keep doing well, at or very close to record highs with the Dow up more than 8K since the election.
Dow Jones Industrials
AMJ (Alerian MLP index tracking fund)
US filings for unemployment benefits increased a week after plunging to the lowest level since 1973, underscoring a still historically tight jobs market, Labor Dept figures showed. Jobless claims increased by 17K to 233K (est 235K). Continuing claims fell 28K to 1.937M in the latest week. The 4-week average of initial claims, a less-volatile measure than the weekly figure, dropped to 240K from the prior week's 244K. Even with the weekly rise, claims remain near historic lows, indicating employers are reluctant to pare headcount as they struggle to find skilled workers from an ever-shrinking pool. For more than 2 years, applications for jobless benefits have been in healthy territory below the 300K level.
Union Pacific (UNP) reported a $6.1B jump in Q4 thanks to a sweeping change in US tax laws, but the profit growth was a more modest $60M when that one-time benefit is stripped away. EPS was $9.25,& without the tax changes, EPS was $1.53 (just below the $1.54 expected). Revenue grew 5% to $5.45B even though it only hauled 1% more freight. Analysts expected $5.41B revenue. CEO Lance Fritz said he expects more volume growth in 2018 that will help the railroad deliver better results. "We are optimistic the economy will favor a number of our market segments leading to another year of positive volume growth," Fritz said. The future of the North American Free Trade Agreement remains a concern because about 11% of its business involves shipments to or from Mexico. "While I still believe there is a good opportunity for the NAFTA agreement to be solidified — all three parties continue in it going forward — we have a strong eye on all of the what-ifs and contingency plans," Fritz said. One of the things that slowed some trains was the railroad's installation of positive train control, which can automatically stop a train in an emergency. The railroad is in the process of installing the system ahead of a federal deadline at the end of 2018. Fritz said most of the disruptions related to the braking system are temporary, but UNP has to debug the system as it is installed because it is a new system. For all of 2017, EPS was $13.36 & without the largely paper benefit of the tax cuts, EPS was $5.79. The stock sank 7.57 (6%).
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
Tax cuts boost Union Pacific 4Q as railroad chugs along
Tomahawk missile maker Raytheon (RTN) reported an 8% increase in Q4 revenue, benefiting from demand for more weapons from US & its allies. A lower effective tax rate in 2018 helped the defense contractor forecast full-year EPS from continuing operations of $9.55-9.75, much higher than the estimate of $8.87. The weapons maker said 2018 net sales would be $26.4-26.9B, beating the expectation of $26.63B. The company also said it expects 2018 operating cash flow from continuing operations to be $3.6-4.0B, compared with $2.7B in 2017. US weapons makers are expected to benefit in the coming year from an increase in overall defense spending under Pres Trump's administration. Sales at Raytheon's missile systems unit, its biggest by revenue, rose 15.2% to $2.19B, helped by higher sales of medium-range air-to-air missiles, Paveway laser-guided bombs & SM-3 anti-ballistic missiles. Sales in its space & airborne systems business, its 2nd-biggest, rose 4.4% to $1.67B, helped by higher sales of airborne radars. The unit makes electronic warfare systems for tactical aircraft, helicopters & ships as well as tracking & navigation sensors used on airborne platforms. Overall sales rose to $6.78B, from $6.28B a year earlier, narrowly missing the estimate of $6.81B. However, EPS from continuing operations attributable to RTN fell to $1.35 from $1.87 per share a year earlier. RTN said Q4 profit included a provision of $171M for tax-related expense & a $1B pre-tax discretionary pension plan contribution, which was not included in its prior forecast. The stock jumped up 4.95.
If you would like to learn more about RTN, click on this link:
club.ino.com/trend/analysis/stock/RTN?a_aid=CD3289&a_bid=6ae5b6f7
Raytheon's quarterly revenue rises 8%
Oil rose, with global benchmark Brent at one point surging above $71 a barrel for the first time since 2014 on support from a weaker $, tighter global supplies & a record run of declines in US crude inventories. The $ hit its lowest since Dec 2014 against a basket of other currencies, sliding further as comments by ECB pres boosted the € a day after Treasury Secretary Steve Mnuchin said a weaker $ was "good for us." A falling $ makes $-denominated commodities cheaper for other currency holders & tends to support oil prices. Tightening global supplies have also lifted oil, as OPEC & allies including Russia have continued supply curbs. An involuntary drop in Venezuela's production in recent months has deepened the impact of the output cuts. Brent crude, the intl oil benchmark, hit $71.28 a barrel, its highest since early Dec 2014, before retreating. West Texas Intermediate crude futures for Mar delivery rose 44¢ to $66.05 a barrel (0.7%) gain. US crude stockpiles have been dropping, underscoring the idea that global supply is rebalancing after a glut. US crude inventories fell for a record 10th straight week to the lowest since Feb 2015. The supply cuts led by OPEC & Russia started a year ago & are set to last throughout 2018. They have been somewhat offset by growing output of US shale oil, as higher prices have encouraged more investment in expanding supplies. US crude oil production is expected to surpass 10M barrels per day (bpd) next month, on the way to a record ahead of previous forecasts, according to the Energy Information Administration.
Oil hits $71 for first time since 2014 on tighter supply and weak dollar
The stock market continued mixed with those guys in Davos awaiting Trump's comments on intl trade. While he is expected to promote "America First" in his speech, the details of what he says will move markets. Gold, which has done well recently sank back, but that seems to be due to technical factors which can't not be counted on to continue. Home Depot (HD), a Dow stock, will give employees up to a $1K bonus related to tax reform. The popular stock averages keep doing well, at or very close to record highs with the Dow up more than 8K since the election.
Dow Jones Industrials
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