Dow vaulted an impressive 306 (closing at the high), advancers over decliners better than 2-1 & NAZ gained 112. The MLP index fell 2+ to the 274s. Junk bond funds were mixed & Treasuries crawled higher with the yield on the 10 year Treasury at 2.89%. Oil rose to the 61s & gold lost 1 to 1357 (remaining near recent highs).
AMJ (Alerian MLP index tracking)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.8296085788514433)
Cisco (CSCO) reported its first rise in quarterly revenue in more than 2 years & forecast upbeat current-qtr profit, as the network gear maker's years-long efforts to transform into a software-focused company begins to pay off. CSCO raised its buyback program by $25B, taking the total to about $31B. The company plans to bring back $67B of funds held overseas in Q3 of fiscal 2018 by taking advantage of the recent changes to the tax laws. However, the new tax laws led to an $11.1B charge, pushing the company to post a loss for Q2. Faced with sluggish demand for its traditional switches & routers business from telecom carriers, CSCO has been moving to a software- & subscription-focused model. "We are clearly seeing the results of the strategy we've articulated over the last 10 quarters," CEO Chuck Robbins said. Revenue from its infrastructure platforms category, which includes switching, routing & data center businesses, rose 2% to $6.7B. The company is also betting on subscription services for a recurring stream of revenue. CSCO has also doubled down on M&As to build up its software business. Since Robbins took charge in 2015, the company has acquired Internet-of-Things firm Jasper Technologies, software makers Broadsoft & AppDynamics, among others. The Broadsoft acquisition, which closed earlier this month, helped boost Q3 adjusted profit. The company forecast adjusted EPS of 64-66¢, above the estimate for 63¢. CSCO posted a net loss per share of $1.78, compared with EPS of 47¢ a year earlier. Excluding items, EPS was 63¢ & revenue rose 2.7% to $11.9B. Analysts had expected EPS of 59¢ on revenue of $11.8B. The stock gained 1.99.
If you would like to learn more about CSCO, click on this link:
club.ino.com/trend/analysis/stock/CSCO?a_aid=CD3289&a_bid=6ae5b6f7
Cisco repatriating $67 billion; boosting buyback program
US factory output was flat for the 2nd straight month in Jan, raising questions about the manufacturing outlook as production dropped in the aerospace, plastics & food industries. The lack of growth in manufacturing, reported by the Federal Reserve, confounded expectations for a 0.3% monthly gain. The Fed had previously estimated a small increase in output for Dec but revised the data to show no gain in that month. Overall industrial production fell 0.1% in Jan, dragged down by a 1.0% decline in mining output. Utilities output rose 0.6% last month. The industrial sector has received support over the last year from a strengthening global economy. Manufacturing output last month was held back by output declines of 0.2% at aerospace factories, 0.5% for those producing plastics & 0.4% in food industries. Output rose modestly overall for goods made to last at least 6 months, with gains in production of primary metals, computers & motor vehicles. Capacity utilization, a measure of how fully industries are deploying their resources, fell to 77.5%.
US factory output fails to grow for second straight month
US weekly jobless claims rebound from near 45-year lows
US producer prices accelerated in Jan, boosted by strong gains in the cost of gasoline & health care, offering more evidence that inflation pressures were building. The Labor Dept said the producer price index for final demand increased 0.4% last month after being unchanged in Dec. In the 12 months thru Jan, the PPI rose 2.7% after advancing 2.6% in Dec. The forecast called for the PPI rising 0.4% last month & increasing 2.5% from a year ago. A key gauge of underlying producer price pressures that excludes food, energy & trade services jumped 0.4% last month. The core PPI edged up 0.1% in Dec. It rose 2.5% in the 12 months thru Jan, the largest increase since Aug 2014. The core PPI increased 2.3% in the 12 months thru Dec. Coming on the heels of a report showing a broad increase in consumer prices in Jan, the PPI report bolsters expectations that inflation will gain steam this year even though its correlation with consumer prices has weakened. Economists believe that a tightening labor, weak $ & fiscal stimulus of a $1.5T tax cut package & increased gov spending will lift inflation toward the Fed's 2% target this year. The central bank's preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food & energy, has undershot its target since 2012. The Fed has forecast 3 interest rate increases this year, with the first hike expected in Mar. Most economists are, however, forecasting 4 rate increases this year because of rising inflation pressures. Last month, the cost of hospital outpatient care surged 1.0%, the largest increase since Aug 2014, after gaining 0.1% in Dec. Hospital inpatient care rose 0.3%. Overall, the cost of health-care services shot up 0.7% in Jan. Those costs feed into the core PCE price index. Wholesale goods prices increased 0.7% last month, after nudging up 0.1% in Dec. Gasoline prices, which rose 7.1%, accounted for nearly ½ of the increase in the cost of goods last month. Wholesale food prices fell for a 2nd straight month & core goods rose 0.2% for the 2nd consecutive month.
Gasoline, health care lift US producer prices in January
Now we are back to stocks can do no wrong. Last week's worries about higher interest rates have vanished. Although this was a choppy day, with the Dow dipping into the red slightly in the AM, investors are embracing risk once again. The next test will be to see if the bulls can rally the Dow to another record.
Dow Jones Industrials
AMJ (Alerian MLP index tracking)
Cisco (CSCO) reported its first rise in quarterly revenue in more than 2 years & forecast upbeat current-qtr profit, as the network gear maker's years-long efforts to transform into a software-focused company begins to pay off. CSCO raised its buyback program by $25B, taking the total to about $31B. The company plans to bring back $67B of funds held overseas in Q3 of fiscal 2018 by taking advantage of the recent changes to the tax laws. However, the new tax laws led to an $11.1B charge, pushing the company to post a loss for Q2. Faced with sluggish demand for its traditional switches & routers business from telecom carriers, CSCO has been moving to a software- & subscription-focused model. "We are clearly seeing the results of the strategy we've articulated over the last 10 quarters," CEO Chuck Robbins said. Revenue from its infrastructure platforms category, which includes switching, routing & data center businesses, rose 2% to $6.7B. The company is also betting on subscription services for a recurring stream of revenue. CSCO has also doubled down on M&As to build up its software business. Since Robbins took charge in 2015, the company has acquired Internet-of-Things firm Jasper Technologies, software makers Broadsoft & AppDynamics, among others. The Broadsoft acquisition, which closed earlier this month, helped boost Q3 adjusted profit. The company forecast adjusted EPS of 64-66¢, above the estimate for 63¢. CSCO posted a net loss per share of $1.78, compared with EPS of 47¢ a year earlier. Excluding items, EPS was 63¢ & revenue rose 2.7% to $11.9B. Analysts had expected EPS of 59¢ on revenue of $11.8B. The stock gained 1.99.
If you would like to learn more about CSCO, click on this link:
club.ino.com/trend/analysis/stock/CSCO?a_aid=CD3289&a_bid=6ae5b6f7
Cisco repatriating $67 billion; boosting buyback program
US factory output was flat for the 2nd straight month in Jan, raising questions about the manufacturing outlook as production dropped in the aerospace, plastics & food industries. The lack of growth in manufacturing, reported by the Federal Reserve, confounded expectations for a 0.3% monthly gain. The Fed had previously estimated a small increase in output for Dec but revised the data to show no gain in that month. Overall industrial production fell 0.1% in Jan, dragged down by a 1.0% decline in mining output. Utilities output rose 0.6% last month. The industrial sector has received support over the last year from a strengthening global economy. Manufacturing output last month was held back by output declines of 0.2% at aerospace factories, 0.5% for those producing plastics & 0.4% in food industries. Output rose modestly overall for goods made to last at least 6 months, with gains in production of primary metals, computers & motor vehicles. Capacity utilization, a measure of how fully industries are deploying their resources, fell to 77.5%.
US factory output fails to grow for second straight month
The number of Americans filing for unemployment
benefits rebounded from a nearly 45-year low last week, but remained
below a level that is associated with a tightening labor market. Initial claims for state unemployment
benefits increased 7K to a seasonally adjusted 230K for the latest week, the Labor Dept said. Claims fell to 216K in
mid-Jan, which was the lowest level since 1973. The forecast called for 230K in the latest
week. Last week marked the 154th
straight week that claims remained below the 300K threshold, which is
associated with a strong labor market. That is the longest such stretch
since 1970, when the labor market was much smaller. The labor market is near
full employment, with the jobless rate at a 17-year low of 4.1%. The tighter labor market is starting to exert upward pressure on wage
growth, which will over time add to inflation pressures. Last week, the 4-week
moving average of initial claims, considered a better measure of labor
market trends as it irons out week-to-week volatility, rose 3K to
228K. The report also
showed the number of people receiving benefits after an initial week of
aid increased 15K to 1.94M. The 4-week moving average of the continuing claims fell 5K
to 1.94M.
US weekly jobless claims rebound from near 45-year lows
US producer prices accelerated in Jan, boosted by strong gains in the cost of gasoline & health care, offering more evidence that inflation pressures were building. The Labor Dept said the producer price index for final demand increased 0.4% last month after being unchanged in Dec. In the 12 months thru Jan, the PPI rose 2.7% after advancing 2.6% in Dec. The forecast called for the PPI rising 0.4% last month & increasing 2.5% from a year ago. A key gauge of underlying producer price pressures that excludes food, energy & trade services jumped 0.4% last month. The core PPI edged up 0.1% in Dec. It rose 2.5% in the 12 months thru Jan, the largest increase since Aug 2014. The core PPI increased 2.3% in the 12 months thru Dec. Coming on the heels of a report showing a broad increase in consumer prices in Jan, the PPI report bolsters expectations that inflation will gain steam this year even though its correlation with consumer prices has weakened. Economists believe that a tightening labor, weak $ & fiscal stimulus of a $1.5T tax cut package & increased gov spending will lift inflation toward the Fed's 2% target this year. The central bank's preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food & energy, has undershot its target since 2012. The Fed has forecast 3 interest rate increases this year, with the first hike expected in Mar. Most economists are, however, forecasting 4 rate increases this year because of rising inflation pressures. Last month, the cost of hospital outpatient care surged 1.0%, the largest increase since Aug 2014, after gaining 0.1% in Dec. Hospital inpatient care rose 0.3%. Overall, the cost of health-care services shot up 0.7% in Jan. Those costs feed into the core PCE price index. Wholesale goods prices increased 0.7% last month, after nudging up 0.1% in Dec. Gasoline prices, which rose 7.1%, accounted for nearly ½ of the increase in the cost of goods last month. Wholesale food prices fell for a 2nd straight month & core goods rose 0.2% for the 2nd consecutive month.
Gasoline, health care lift US producer prices in January
Now we are back to stocks can do no wrong. Last week's worries about higher interest rates have vanished. Although this was a choppy day, with the Dow dipping into the red slightly in the AM, investors are embracing risk once again. The next test will be to see if the bulls can rally the Dow to another record.
Dow Jones Industrials
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