Dow advanced 197, decliners slightly ahead of advancers & NAZ lost 1. The MLP index rose 1+ to the 273s & the REIT index fell 1+ to the 347s. Junk bond funds inched up & Treasuries crawled higher, bringing lower yields. Oil rose in the 68s (more below) & gold slid back 1 to 1224.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.8116015171332475)
White House to offer US farmers billions to ease trade pain
club.ino.com/trend/analysis/stock/VZ?a_aid=CD3829&a_bid=6ae5b6f7
Whirlpool (WHR), the US based washing machine giant who was once in favor of stricter trade controls for its own industry, plummeted after executives blamed rising steel & aluminum costs for diminished quarterly earnings. "Global steel cost has risen substantially and, particularly in the US, they have reached unexplainable levels," CEO Marc Bitzer said. The company was a major advocate for legislation to protect against what Bitzer last year called a "long story of dumping" by foreign competitors in the washing machine business. Bitzer said during Q4 that the White House had "put an end" to this alleged dumping, saying it was "encouraging that finally trade laws are being enforced." "As the next couple months unfold, we will see a lot more clarity" for how tougher trade laws will impact the company's bottom-line, Bitzer said on Jan 25. Now the company cites US tariffs on steel & aluminum as contributing to the increased cost in its raw materials. 3 months after calling the gov's actions on trade an "incredible" outcome, Bitzer said on Q1 earnings call in Apr that costs "have risen substantially and, as a result, we're revising our raw material inflation guidance for 2018." Yesterday, WHR again raised its guidance for costs of steel & aluminum in its Q2 report, while the company again adjusted its expected 2018 profits downward. Bitzer at times on the conference call downplayed the effects of the tariffs, saying the impact was "almost the same order" as impacts from a freight shortage in Q2. Instead, he focused on the price of steel. "U.S. steel is 50 percent more expensive than the rest of the world and simply cannot be explained by the input cost," Bitzer said. Washing machines are one example of how tariffs can have unexpected & adverse effects on the domestic companies the policies attempt to protect. WHR also noted the hit taken by its suppliers. "We are impacted by the tariffs, as we are an import of record of our suppliers who have to basically pay the tariffs," he said. Bitzer expects "the U.S. industry to recover" in H2, but WHR still lowered its full year profit forecast. The company now expects 2018 adjusted EPS of $14.20-14.80, down from its previously guidance of $14.50-15.50, citing primarily the rising costs of steel & aluminum. The stock tumbled almost 21 (14%).
If you would like to learn more about WHR, click on this link:
club.ino.com/trend/analysis/stock/WHR?a_aid=CD3829&a_bid=6ae5b6f7
Whirlpool plunges 14% as tariffs wreak havoc with costs and suppliers
Shares of Eli Lilly (LLY) rose after the pharmaceutical company surpassed Q2 estimates & announced it would file an IPO for its animal health unit. In the qtr, LLY reported a net loss per share of 25¢. After stripping special items like charges related to business development transactions, EPS was $1.50, eclipsing the $1.30 estimate. In the year-earlier qtr, EPS was 95¢. Revenue of $6.36B was up 9% from the year-ago qtr & above the estimates for $6.05B. Investors welcomed the company's decision to file an IPO for a less than 20% stake in its Elanco Animal Health unit, whose portfolio includes treatments for livestock and pets. Following the offering, LLY plans to divest its remaining ownership through a tax-efficient transaction. The unit's sluggish sales had weighed on LLY previously, prompting it to perform a strategic review. LLY has approved a plan to buy back $8B in stock. The company hiked its full-year adjusted earnings forecast to $5.40-5.50, up from the previous forecast of $5.10-5.20. The estimates reflect its decision not to increase US list prices for the rest of the year, CEO Dave Ricks said. LLY joins a handful of other companies that have pledged not to increase drug prices for the rest of the year in response to Pres Trump's pressure. His administration unveiled a blueprint in May aimed at lowering drug prices. "We're sensitive to the debate going on," Ricks said. "We know consumers want us to restrain, and we really need to see what comes out of this blueprint, which is potentially a sweeping set of reforms that Secretary Azar and the administration's rolled out." The stock jumped up 4.46.
If you would like to learn more about LLY, click on this link:
club.ino.com/trend/analysis/stock/LLY?a_aid=CD3829&a_bid=6ae5b6f7
Eli Lilly shares rise after animal health IPO, earnings beat
Harley-Davidson (HOG) expects to incur $45-55M in increased costs this year because of the ongoing global trade conflict. The company projects that steel & aluminum tariffs will add $15-20M to its costs & European tariffs an additional $30-35M, CFO John Olin said. "As we move forward, we can’t eat the whole $45 to $50 million, or can’t cover it in other parts of our business and for that we are bringing down our guidance by the 50 basis points," Olin added. If HOG is unable to mitigate the impact of the tariffs by 2019, Olin said the annual impact would be $90-100M, representing the majority of its profit in the EU market. Last month, the company entered the front line of the trade war when it announced plans to move production for European markets overseas to avoid EU tariffs that increased to 31% from 6%. The company still has not determined which one of its overseas facilities will manufacture its European bikes. "We made the best decision given the circumstances, the best decision for our customers, business and dealers in this critical market," CEO Matt Levatich said. He also said was "keenly aware of the headwinds," the company is facing. The company is working with all of the govs it can, including the Trump administration, to have the tariffs removed. In the latest qtr EPS fell to $1.45 from $1.48 a year ago. Excluding manufacturing optimization costs, EPS was $1.52. The forecast was for $1.34. Its top-line results for the quarter also beat estimates but were down from the year-ago period. HOG reported $1.53B in revenue, outpacing estimates of $1.41B. Shipments during the qtr dropped 11.3%, but the company still expects to ship 231K-236K bikes in 2018. Revenue from motorcycles fell 3.3% from the same qtr a year ago. The intl retail motorcycle sales rose 0.7% in Q2 from a year earlier, but US retail sales were down 6.4%. Asked whether the company's announcement to move some of its production overseas has affected US retail sales, Olin said: "We do not believe that retail sales were dramatically affected by the tariffs. We do not believe that our shipments were not affected. Where we recognize revenue is when it arrives in our dealership in Europe." The stock tumbled went up 3.19.
If you would like to learn more about HOG, click on this link:
club.ino.com/trend/analysis/stock/HOG?a_aid=CD3829&a_bid=6ae5b6f7
Harley-Davidson shares surge 9% on earnings beat, puts this year's tariff hit at $45 million to $55 million
Oil prices rose as the market shifted focus to the possibility of increased Chinese demand, drawing attention away from trade tensions between that country & the US after a series of tariffs imposed by both countries. US light crude ended the session up 63¢ (nearly 1%) at $68.64 & Brent crude oil was up 47¢ at $73.53. Both oil benchmarks have fallen this month as crude supplies from Russia, Saudi Arabia & other members of OPEC have increased & unscheduled production losses have eased. Market sentiment has been driven by geopolitical worries: fears that supply could be disrupted by confrontation in the Middle East or that the US trade dispute with its major trading partners could dampen global growth. Iran, OPEC's 3rd-largest producer pumping 3.75M barrels a day, has come under increasing US pressure, with the administration of Pres Trump pushing countries to cut all imports of Iranian oil by Nov. This week, Iran renewed threats to close the Strait of Hormuz, the entrance to the Persian Gulf & the world's busiest sea lane for crude shipments. Trump countered that Iran would face consequences of historic proportions if it continued to lob threats at the US.
US crude rises 63 cents, settling at $68.52, as oversupply and trade tension fears ease
Today's advance was tempered by caution as tech stocks on the NAZ stalled & market breadth was negative. Earnings reports were generally good but trade tensions are haunting any advance. News from WHR & HOG about intl trade was chilling. The chart below shows that the Dow has not been able to shake the trading range it has been stuck in for most of this year. Its performance may become uneven with new earnings reports.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The Trump administration was set to announce $B in aid for farmers to help protect
them from the repercussions of trade spats between the US &
China, the EU & others, according to a leaker. The story is White House was readying $12B in assistance. The plan, also reported the
administration will pay for Bs in trade-related aid thru the
Dept of Agriculture's (USDA) broad authority & 2 commodity
support programs in a farm bill under consideration in Congress. The USDA did not immediately comment. Farmers
have been a particular target in the current clash over trade policy as
other countries seek to retaliate for Pres Trump's duties
on Chinese goods as well as on steel & aluminum imports from the
EU, Canada & Mexico. Those affected economies have in turn
targeted US agricultural products, including soybeans, dairy, meat,
produce & liquor. Some manufacturers will
view the subsidies to farmers as "frustrating," according to a
representative of a manufacturing coalition working on trade issues. Manufacturers, particularly any who use steel or aluminum, have also been hit hard
by the effects of Trump's decision to levy tariffs on the 2 metals. Trump, who has long praised American farmers, defended his trade actions.
White House to offer US farmers billions to ease trade pain
Verizon (VZ), a Dow stock, reported
better-than-expected quarterly profit & revenue, as the #1 US wireless carrier attracted more subscribers with unlimited data
plans. VZ added 398K subscribers who pay a monthly bill on a net basis,
beating the estimate of 352K subscribers. The company has been
investing heavily in building its 5G network & plans to roll out the
service in 3-5 US markets in 2018. The company also named its
Chief Technology Officer Hans Vestberg as its new CEO beginning Aug 1, in a move that signaled the
company's focus on the network. EPS fell to $1 versus $1.07 a year earlier. Total operating revenue rose to $32.20B from $30.55B a year ago (above estimates for $31.78B). On an adjusted basis EPS was $1.20, beating estimates of $1.14. The stock rose 76¢.
If you would like to learn more about VZ, click on this link:club.ino.com/trend/analysis/stock/VZ?a_aid=CD3829&a_bid=6ae5b6f7
Verizon quarterly revenue jumps on more subscribers
Whirlpool (WHR), the US based washing machine giant who was once in favor of stricter trade controls for its own industry, plummeted after executives blamed rising steel & aluminum costs for diminished quarterly earnings. "Global steel cost has risen substantially and, particularly in the US, they have reached unexplainable levels," CEO Marc Bitzer said. The company was a major advocate for legislation to protect against what Bitzer last year called a "long story of dumping" by foreign competitors in the washing machine business. Bitzer said during Q4 that the White House had "put an end" to this alleged dumping, saying it was "encouraging that finally trade laws are being enforced." "As the next couple months unfold, we will see a lot more clarity" for how tougher trade laws will impact the company's bottom-line, Bitzer said on Jan 25. Now the company cites US tariffs on steel & aluminum as contributing to the increased cost in its raw materials. 3 months after calling the gov's actions on trade an "incredible" outcome, Bitzer said on Q1 earnings call in Apr that costs "have risen substantially and, as a result, we're revising our raw material inflation guidance for 2018." Yesterday, WHR again raised its guidance for costs of steel & aluminum in its Q2 report, while the company again adjusted its expected 2018 profits downward. Bitzer at times on the conference call downplayed the effects of the tariffs, saying the impact was "almost the same order" as impacts from a freight shortage in Q2. Instead, he focused on the price of steel. "U.S. steel is 50 percent more expensive than the rest of the world and simply cannot be explained by the input cost," Bitzer said. Washing machines are one example of how tariffs can have unexpected & adverse effects on the domestic companies the policies attempt to protect. WHR also noted the hit taken by its suppliers. "We are impacted by the tariffs, as we are an import of record of our suppliers who have to basically pay the tariffs," he said. Bitzer expects "the U.S. industry to recover" in H2, but WHR still lowered its full year profit forecast. The company now expects 2018 adjusted EPS of $14.20-14.80, down from its previously guidance of $14.50-15.50, citing primarily the rising costs of steel & aluminum. The stock tumbled almost 21 (14%).
If you would like to learn more about WHR, click on this link:
club.ino.com/trend/analysis/stock/WHR?a_aid=CD3829&a_bid=6ae5b6f7
Whirlpool plunges 14% as tariffs wreak havoc with costs and suppliers
Shares of Eli Lilly (LLY) rose after the pharmaceutical company surpassed Q2 estimates & announced it would file an IPO for its animal health unit. In the qtr, LLY reported a net loss per share of 25¢. After stripping special items like charges related to business development transactions, EPS was $1.50, eclipsing the $1.30 estimate. In the year-earlier qtr, EPS was 95¢. Revenue of $6.36B was up 9% from the year-ago qtr & above the estimates for $6.05B. Investors welcomed the company's decision to file an IPO for a less than 20% stake in its Elanco Animal Health unit, whose portfolio includes treatments for livestock and pets. Following the offering, LLY plans to divest its remaining ownership through a tax-efficient transaction. The unit's sluggish sales had weighed on LLY previously, prompting it to perform a strategic review. LLY has approved a plan to buy back $8B in stock. The company hiked its full-year adjusted earnings forecast to $5.40-5.50, up from the previous forecast of $5.10-5.20. The estimates reflect its decision not to increase US list prices for the rest of the year, CEO Dave Ricks said. LLY joins a handful of other companies that have pledged not to increase drug prices for the rest of the year in response to Pres Trump's pressure. His administration unveiled a blueprint in May aimed at lowering drug prices. "We're sensitive to the debate going on," Ricks said. "We know consumers want us to restrain, and we really need to see what comes out of this blueprint, which is potentially a sweeping set of reforms that Secretary Azar and the administration's rolled out." The stock jumped up 4.46.
If you would like to learn more about LLY, click on this link:
club.ino.com/trend/analysis/stock/LLY?a_aid=CD3829&a_bid=6ae5b6f7
Eli Lilly shares rise after animal health IPO, earnings beat
Harley-Davidson (HOG) expects to incur $45-55M in increased costs this year because of the ongoing global trade conflict. The company projects that steel & aluminum tariffs will add $15-20M to its costs & European tariffs an additional $30-35M, CFO John Olin said. "As we move forward, we can’t eat the whole $45 to $50 million, or can’t cover it in other parts of our business and for that we are bringing down our guidance by the 50 basis points," Olin added. If HOG is unable to mitigate the impact of the tariffs by 2019, Olin said the annual impact would be $90-100M, representing the majority of its profit in the EU market. Last month, the company entered the front line of the trade war when it announced plans to move production for European markets overseas to avoid EU tariffs that increased to 31% from 6%. The company still has not determined which one of its overseas facilities will manufacture its European bikes. "We made the best decision given the circumstances, the best decision for our customers, business and dealers in this critical market," CEO Matt Levatich said. He also said was "keenly aware of the headwinds," the company is facing. The company is working with all of the govs it can, including the Trump administration, to have the tariffs removed. In the latest qtr EPS fell to $1.45 from $1.48 a year ago. Excluding manufacturing optimization costs, EPS was $1.52. The forecast was for $1.34. Its top-line results for the quarter also beat estimates but were down from the year-ago period. HOG reported $1.53B in revenue, outpacing estimates of $1.41B. Shipments during the qtr dropped 11.3%, but the company still expects to ship 231K-236K bikes in 2018. Revenue from motorcycles fell 3.3% from the same qtr a year ago. The intl retail motorcycle sales rose 0.7% in Q2 from a year earlier, but US retail sales were down 6.4%. Asked whether the company's announcement to move some of its production overseas has affected US retail sales, Olin said: "We do not believe that retail sales were dramatically affected by the tariffs. We do not believe that our shipments were not affected. Where we recognize revenue is when it arrives in our dealership in Europe." The stock tumbled went up 3.19.
If you would like to learn more about HOG, click on this link:
club.ino.com/trend/analysis/stock/HOG?a_aid=CD3829&a_bid=6ae5b6f7
Harley-Davidson shares surge 9% on earnings beat, puts this year's tariff hit at $45 million to $55 million
Oil prices rose as the market shifted focus to the possibility of increased Chinese demand, drawing attention away from trade tensions between that country & the US after a series of tariffs imposed by both countries. US light crude ended the session up 63¢ (nearly 1%) at $68.64 & Brent crude oil was up 47¢ at $73.53. Both oil benchmarks have fallen this month as crude supplies from Russia, Saudi Arabia & other members of OPEC have increased & unscheduled production losses have eased. Market sentiment has been driven by geopolitical worries: fears that supply could be disrupted by confrontation in the Middle East or that the US trade dispute with its major trading partners could dampen global growth. Iran, OPEC's 3rd-largest producer pumping 3.75M barrels a day, has come under increasing US pressure, with the administration of Pres Trump pushing countries to cut all imports of Iranian oil by Nov. This week, Iran renewed threats to close the Strait of Hormuz, the entrance to the Persian Gulf & the world's busiest sea lane for crude shipments. Trump countered that Iran would face consequences of historic proportions if it continued to lob threats at the US.
US crude rises 63 cents, settling at $68.52, as oversupply and trade tension fears ease
Today's advance was tempered by caution as tech stocks on the NAZ stalled & market breadth was negative. Earnings reports were generally good but trade tensions are haunting any advance. News from WHR & HOG about intl trade was chilling. The chart below shows that the Dow has not been able to shake the trading range it has been stuck in for most of this year. Its performance may become uneven with new earnings reports.
Dow Jones Industrials
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