Dow rose 238, advancers over decliners 2-1 & NAZ gained 114. The MLP index fell fractionally in the 238s & the REIT index was pennies to the 321s. Junk bond funds fluctuated & Treasury yields were lower with the 10 year yield down to 2.99%. Oil was up pennies in the 68s (more below) & gold fell 3 to 1318.
AMJ (Alerian MLP index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.06954979995823973)
Pressing on in spite of tariffs is the prevailing policy of manufacturers across America's Great Plains, judging by a new batch of data. Orders rose to the highest since 2003. Production & shipments were also up. The Federal Reserve Bank of Kansas City's regional factory index advanced to a record 26 this month even as a trade war loomed. “Factory activity accelerated in April despite concerns among many firms about changes in international trade policy,” said Chad Wilkerson, VP & economist at the Kansas City Fed. Comments from unnamed survey participants were restrained:
Consumers in the world's 2nd largest economy, China, are buying fewer smartphones, which could pose revenue challenges for some of the largest tech companies. Smartphone shipments in the country fell by 21% in Q1, their largest decline ever, according to a new report by tech analysis firm Canalys. They are expected to remain sluggish throughout the rest of 2018. Apple (AAPL, a Dow & NAZ stock) was squeezed out of the top 4 vendors in China, falling to the 6th spot, as the country's own brands – Huawei, Oppo, Vivo & Xiaomi – increasingly dominated among consumers. Together, these 4 companies accounted for more than 73% of shipments in Q1. Xiaomi & Huawei even managed to grow their shipments, bucking the overall trend. Canalys said iPhone shipments saw a “significant decline,” as Chinese consumers shied away from its higher-priced models, favoring more affordable options from Huawei or Oppo. Meanwhile, Samsung saw its shipments halved year-over-year. The South Korean technology giant, however, posted another qtr of record results. AAPL CEO Tim Cook met with Pres Trump at the White House on yeterday, where the pair discussed trade amid growing uncertainty about the future economic relationship between DC & Beijing. AAPL manufactures many of its products in China, which is also a big market for the iPhone maker. There are concerns that escalation in the tit-for-tat tariff conflict between the 2 countries could have an impact on the bottom-line for companies that deal heavily with China. AAPL stock gained 57¢.
Union Pacific (UNP) Q1 earnings chugged ahead 22% as the railroad hauled 2% more freight & increased its prices. The railroad had EPS of $1.68, up from $1.32 a year ago. That's better than the $1.65 predicted. CEO Lance Fritz said congestion had eased along the railroad in recent weeks & he is optimistic about the year ahead. "With the economy favoring a number of our market segments, we are well positioned to benefit from another year of positive volume growth and solid core pricing gains," Fritz added. But officials did back off the railroad's long-term targets for cutting costs & improving efficiency because the congestion this qtr created roughly $40M in additional expenses. Fritz said the railroad remains committed to becoming more efficient but won't hit its 2019 target. A new goal will be announced at the investor conference at the end of May. The stock fell 3.88.
More deliveries & higher revenue per package boosted Q1 profit at UPS, but the company was hampered by rising costs as it upgrades its network to keep up with online shopping. United Parcel Service (UPS) earned $1.35B in the qtr, up 15% from a year earlier, topping forecasts. Revenue grew by 10%, with double-digit gains in the intl & freight businesses & a smaller pickup in the core US package-delivery unit. Operating profit fell, however, in the domestic-package business, which UPS blamed on bad weather, the startup of Sat service, & investments in new facilities & automation to help meet the growing demand for delivery of online purchases by consumers. CEO David Abney said that those investments will eventually pay off, but "you put the cost in before you get the benefit." "The underlying business performed as expected," he added. "We were not disappointed in the U.S. operation." Analysts continued to caution about "cost creep" at UPS. UPS has benefited from the dramatic growth of online shopping, but delivering all those packages from retailers to consumers has put pressure on its networks, especially around Christmas. UPS is trying to reduce the cost of delivering to homes, which is more expensive than delivering to businesses because homes are farther apart. UPS said EPS equaled $1.55, a penny better than the forecast. Revenue of $17.11B topped the prediction for $16.44B. UPS left unchanged its forecast for full-year earnings of $7.03-7.37. The stock rose 4.62.
Crude settled near a 3-year high as investors gauged the potential of a US exit from the Iran nuclear deal. Futures ended the session 0.2% higher, closing above $68 a barrel for a 3rd time this week. French Pres Macron's prediction that the US will pull out of the Iran nuclear accord stoked concerns about a renewal of sanctions that would slash crude exports from OPEC's 3rd-largest producer. Defense Secretary Mattis said that there’s been no decision on the nuclear deal. Focus within the oil market remains on whether Pres Trump will decide to reimpose sanctions on Iran in coming weeks. Meanwhile, the US benchmark crude has averaged around $66 a barrel so far this month & analysts & traders are bullish on US futures as OPEC trims output against a backdrop of record American crude output. West Texas Intermediate crude for Jun delivery rose 14¢ to settle at $68.19 a barrel. Brent crude for Jun delivery rose 74¢ to end the session at $74.74. The global benchmark crude traded at a $6.55 premium to WTI.
The ECB maintained its pledge to move slowly in removing euro-area stimulus, setting the stage for Pres Draghi to face questions over a recent spate of weaker-than-expected economic data. Policy makers reiterated that they'll continue buying €30B ($36B) of assets a month until at least the end of Sep, while linking the conclusion of quantitative easing to a sustained adjustment in inflation. They kept interest rates unchanged & repeated that they expect borrowing costs to stay at present levels until well past the end of net bond purchases. The institution also repeated that additional support will come from its policy of reinvesting maturing debt. The unchanged decision comes a few days after Draghi acknowledged at the IMF meetings that while the euro area's growth may have come off the boil, the economic expansion will continue. The key question facing the ECB pres is whether the subdued momentum warrants further caution as policy makers prepare to potentially phase out bond buying later this year. Growth concerns come on top of risks emanating from global trade restrictions & a stronger €, which threaten to undermine the region's export-heavy economy.
Buyers returned to bid prices up, but longer term conditions changed little. Profits have been choppy & new rules on intl trade are still being written. Then the powers will have to agree. For the time being earnings are coming in stronger & that may control the stock market tomorrow. Dow continues not far from 24K. Facebook (FB) jumped 14+ on good earnings but the latest word on the outlook for smartphones is chilling for AAPL.
Dow Jones Industrials
AMJ (Alerian MLP index tracking fund)
Pressing on in spite of tariffs is the prevailing policy of manufacturers across America's Great Plains, judging by a new batch of data. Orders rose to the highest since 2003. Production & shipments were also up. The Federal Reserve Bank of Kansas City's regional factory index advanced to a record 26 this month even as a trade war loomed. “Factory activity accelerated in April despite concerns among many firms about changes in international trade policy,” said Chad Wilkerson, VP & economist at the Kansas City Fed. Comments from unnamed survey participants were restrained:
- “Trade talks with China decreased our profitability. We’ve recovered most of that now, but short term impact is real and continues to linger.”
- “Looking at manufacturing our product in Mexico. Any additional tariffs on Chinese products will impact the number of employees due to lost sales.”
- “Markets are expanding across many segments/verticals. We will win share by lead time and availability. We could grow significantly more if we had available engineers and direct labor.”
- “Initially, the future prospect of higher steel and aluminum prices forced manufacturers, such as ours, to buy material in advance of the need, otherwise face a price increase. That caused a run on available material, to which now there is a shortage. This is causing raw material cost increases to which we are having to absorb. We expect a negative short term effect on profitability until we can hopefully pass on the higher cost to our customers. In the meantime imported material costs are not changing and are negatively effecting competitiveness of domestically produced products"
Fed Data Suggest Factories Could Be Shrugging Off Tariffs
Consumers in the world's 2nd largest economy, China, are buying fewer smartphones, which could pose revenue challenges for some of the largest tech companies. Smartphone shipments in the country fell by 21% in Q1, their largest decline ever, according to a new report by tech analysis firm Canalys. They are expected to remain sluggish throughout the rest of 2018. Apple (AAPL, a Dow & NAZ stock) was squeezed out of the top 4 vendors in China, falling to the 6th spot, as the country's own brands – Huawei, Oppo, Vivo & Xiaomi – increasingly dominated among consumers. Together, these 4 companies accounted for more than 73% of shipments in Q1. Xiaomi & Huawei even managed to grow their shipments, bucking the overall trend. Canalys said iPhone shipments saw a “significant decline,” as Chinese consumers shied away from its higher-priced models, favoring more affordable options from Huawei or Oppo. Meanwhile, Samsung saw its shipments halved year-over-year. The South Korean technology giant, however, posted another qtr of record results. AAPL CEO Tim Cook met with Pres Trump at the White House on yeterday, where the pair discussed trade amid growing uncertainty about the future economic relationship between DC & Beijing. AAPL manufactures many of its products in China, which is also a big market for the iPhone maker. There are concerns that escalation in the tit-for-tat tariff conflict between the 2 countries could have an impact on the bottom-line for companies that deal heavily with China. AAPL stock gained 57¢.
If you would like to learn more about AAPL, click on this link:
Apple iPhone sales suffer in China as demand sees record decline
Union Pacific (UNP) Q1 earnings chugged ahead 22% as the railroad hauled 2% more freight & increased its prices. The railroad had EPS of $1.68, up from $1.32 a year ago. That's better than the $1.65 predicted. CEO Lance Fritz said congestion had eased along the railroad in recent weeks & he is optimistic about the year ahead. "With the economy favoring a number of our market segments, we are well positioned to benefit from another year of positive volume growth and solid core pricing gains," Fritz added. But officials did back off the railroad's long-term targets for cutting costs & improving efficiency because the congestion this qtr created roughly $40M in additional expenses. Fritz said the railroad remains committed to becoming more efficient but won't hit its 2019 target. A new goal will be announced at the investor conference at the end of May. The stock fell 3.88.
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=6ae5b6f7Union Pacific railroad's 1Q profit climbs 22 percent
More deliveries & higher revenue per package boosted Q1 profit at UPS, but the company was hampered by rising costs as it upgrades its network to keep up with online shopping. United Parcel Service (UPS) earned $1.35B in the qtr, up 15% from a year earlier, topping forecasts. Revenue grew by 10%, with double-digit gains in the intl & freight businesses & a smaller pickup in the core US package-delivery unit. Operating profit fell, however, in the domestic-package business, which UPS blamed on bad weather, the startup of Sat service, & investments in new facilities & automation to help meet the growing demand for delivery of online purchases by consumers. CEO David Abney said that those investments will eventually pay off, but "you put the cost in before you get the benefit." "The underlying business performed as expected," he added. "We were not disappointed in the U.S. operation." Analysts continued to caution about "cost creep" at UPS. UPS has benefited from the dramatic growth of online shopping, but delivering all those packages from retailers to consumers has put pressure on its networks, especially around Christmas. UPS is trying to reduce the cost of delivering to homes, which is more expensive than delivering to businesses because homes are farther apart. UPS said EPS equaled $1.55, a penny better than the forecast. Revenue of $17.11B topped the prediction for $16.44B. UPS left unchanged its forecast for full-year earnings of $7.03-7.37. The stock rose 4.62.
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=6ae5b6f7UPS reports 15 percent rise in 1Q profit
Crude settled near a 3-year high as investors gauged the potential of a US exit from the Iran nuclear deal. Futures ended the session 0.2% higher, closing above $68 a barrel for a 3rd time this week. French Pres Macron's prediction that the US will pull out of the Iran nuclear accord stoked concerns about a renewal of sanctions that would slash crude exports from OPEC's 3rd-largest producer. Defense Secretary Mattis said that there’s been no decision on the nuclear deal. Focus within the oil market remains on whether Pres Trump will decide to reimpose sanctions on Iran in coming weeks. Meanwhile, the US benchmark crude has averaged around $66 a barrel so far this month & analysts & traders are bullish on US futures as OPEC trims output against a backdrop of record American crude output. West Texas Intermediate crude for Jun delivery rose 14¢ to settle at $68.19 a barrel. Brent crude for Jun delivery rose 74¢ to end the session at $74.74. The global benchmark crude traded at a $6.55 premium to WTI.
The ECB maintained its pledge to move slowly in removing euro-area stimulus, setting the stage for Pres Draghi to face questions over a recent spate of weaker-than-expected economic data. Policy makers reiterated that they'll continue buying €30B ($36B) of assets a month until at least the end of Sep, while linking the conclusion of quantitative easing to a sustained adjustment in inflation. They kept interest rates unchanged & repeated that they expect borrowing costs to stay at present levels until well past the end of net bond purchases. The institution also repeated that additional support will come from its policy of reinvesting maturing debt. The unchanged decision comes a few days after Draghi acknowledged at the IMF meetings that while the euro area's growth may have come off the boil, the economic expansion will continue. The key question facing the ECB pres is whether the subdued momentum warrants further caution as policy makers prepare to potentially phase out bond buying later this year. Growth concerns come on top of risks emanating from global trade restrictions & a stronger €, which threaten to undermine the region's export-heavy economy.
Buyers returned to bid prices up, but longer term conditions changed little. Profits have been choppy & new rules on intl trade are still being written. Then the powers will have to agree. For the time being earnings are coming in stronger & that may control the stock market tomorrow. Dow continues not far from 24K. Facebook (FB) jumped 14+ on good earnings but the latest word on the outlook for smartphones is chilling for AAPL.
Dow Jones Industrials
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