Dow soared 177, advancers over decliners 2-1 & NAZ gained 47. The MLP index was fractionally lower to 257 & the REIT index recovered 3+ to the 385s. Junk bond funds were little changed & Treasuries remained weak. Oil climbed in the 56s (more below) & gold dropped 9 to 1417.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
American trade negotiators will soon head to China for face-to-face talks as the 2 largest economies try to strike a deal. US officials will travel to China for discussions sometime between Fri, the start of a 6-week congressional recess in DC, & Thurs, Aug 1. While the talks represent a critical next step after a truce reached between the countries' leaders in Jun, a deal is not viewed as near. Pres Trump has signaled that he'd be willing to relax restrictions on China’s Huawei in exchange for purchases of US agricultural products. Longer-term, US officials have suggested they could roll back the tariffs in exchange for Beijing making the deal legally binding, something it backtracked on in May. White House officials are now suggesting that getting China to agree to the latter could take several months at least, even though Trump remains inclined to ink an eventual deal. In the meantime, the administration could shift its focus to ratifying the US-Mexico-Canada Agreement. Trump sees approving his replacement for the North American Free Trade Agreement as a major economic & political priority. US Trade Representative Robert Lighthizer is using the remaining days of the congressional session to meet with lawmakers about the deal. The White House is expected to send the implementing legislation to Capitol Hill in Sep, setting up a vote on the deal this fall. Investors have watched the China talks closely. A widening trade war between DC & Beijing would risk more damage to American companies & the global economy. The Trump administration has put tariffs on $250B in Chinese goods, & threatened to put duties on even more products. Beijing has slapped tariffs on $110B in American goods. Both the US & China have taken steps to deescalate tension in recent days. Trump agreed to make “timely” decisions about whether to allow American tech companies to sell to blacklisted Chinese firm Huawei. Meanwhile, Chinese state media reported that China had taken steps to start following through on its promise to buy more US agricultural goods. Trump sees the step as important to reaching an agreement as American farmers take a hit from tariffs on crops.
US, China in-person trade talks expected next week; White House eyes longer-term timeline for deal
Dow stock United Technologies (UTX) reported better-than-expected quarterly earnings & raised its full-year sales & profit forecasts, driven by an increase in demand for aircraft parts & spares. The company, which makes the Pratt & Whitney aircraft engines & is on track to spin off its Otis elevator & Carrier air conditioner units, is seeking to bolster its defense offering amid rising US gov spending. UTX sales in its Collins aerospace unit, its biggest, surged about 66% to $6.58B in Q2, benefiting from the acquisition of aero parts maker Rockwell Collins. A growing fleet of aircraft also lifted demand for spare parts. The unit makes engine components, interior & exterior aircraft lighting, landing gear, wheels & brakes. The company raised its 2019 forecast for adjusted EPS to $7.90-8.05, from $7.80-8.00. UTX now expects full-year sales, excluding the impact of foreign currency translation & some other items, to rise 4-5%, up from 3-5% forecast previously. EPS attributable to shareholders fell to $2.20 in Q2, from $2.56 a year earlier. Net sales rose to $19.63B from $16.71B. Analysts had expected Q2 EPS of $2.05 on revenue of $19.55B. The stock added 1.99.
If you would like to learn more about UTX, click on this link:
club.ino.com/trend/analysis/stock/UTX?a_aid=CD3289&a_bid=6ae5b6f7
United Tech profit beats on higher demand for aircraft parts
Lockheed Martin (LMT) turned in Q2 earnings that were above what was anticipated from the world's largest defense contractor. The company also raised its 2019 forecast for both its top & bottom lines. LMT now expects full year EPS of $20.85-21.15, with revenue expected of $58.25-59.75B. All 4 of the business units – Aeronautics, Missiles & Fire Control, Rotary & Mission Systems & Space – delivered year-over-year increases in operating profit for this qtr. The order backlog grew “to a new record level,” CEO Marillyn Hewson said, with $136.7B in total orders booked. The company kept language regarding “economic, industry, business and political conditions including their effects on governmental policy” that could prevent the sale or delivery of the corp's products to its list of factors that may affect any forward-looking statements. It said gov actions include delays from Congress on export approvals for Saudi Arabia, the UAE & Turkey. Turkey was one of the founding intl partners of the F-35, which is, America's most expensive weapons platform. But the fighter jet will no longer be sold to Turkey on the heels of a multi-B $ deal between Russia & Turkey. The nation's top defense contractor also said trade policies or sanctions could impact business as well as the White House's recent decision to suspend Turkey's role in the F-35 program. LMT previously expected to deliver 131 F-35s this year. “Over the last several months we’ve been working to establish alternative sources of supply in the United States to quickly accommodate Turkey’s current contributions to the program,” LMT said. The stock crawled up 17¢ after being lower all day.
If you would like to learn more about LMT, click on this link:
club.ino.com/trend/analysis/stock/LMT?a_aid=CD3289&a_bid=6ae5b6f7
Lockheed Martin posts strong quarterly results and raises its forecast
Analysts expect the Energy Information Administration tomorrow to report a fall in supplies of US crude, stretching their declines to a 6th consecutive week, the longest streak in 18 months. The gov report is likely to show that crude stocks declined 4.4M barrels for the week ended Jul 19. Among the petroleum products, gasoline stockpiles were seen 1.1M barrels lower for last week, but distillate supplies, which include heating oil, were forecast to climb by 1.7M barrels. The expected fall in crude supplies follows output declines tied to Hurricane Barry, which passed thru the Gulf of Mexico earlier this month. The hurricane resulted in a peak reduction of about 1.3M barrels a day (70%) in Gulf oil production on Jul 13. Output had gradually recovered to a loss of just 63K barrels of oil per day on Juy 20.
U.S crude supplies poised to post longest stretch of weekly declines in 18 months
Earnings from real corps (not just banks) have started on the right foot. However, the big news story was restarting trade talks with China. That is getting just about everybody's attention. Of course, words are cheap. More importantly, a lot of work still needs to be done. But the IMF report today is a reminder that the economy in China is being pinched harder in trade than the US. The Dow closed at a new record high, making the bulls happy while safe investments in gold & Treasuries are trading a little lower.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Since the US-China trade war began more than a year ago, Pres Trump has maintained that Bs of $s in tariffs are hurting Beijing
more than the US – & today, that argument received
some support from the IMF. In
its update to the biannual World Economic Outlook, the IMF upgraded its forecast of US growth to 2.6% from 2.3%, while lowering its outlook for Chinese growth. It also noted
that growth was "better than expected" in the US. But
in the country-by-country evaluation, the IMF said it expects the
effect of tit-for-tat tariffs & weakening external demand to add
pressure to China's already-cooling economy. Growth is forecast at 6.2% in 2019, & 6.0% in 2020 – about 0.1 percentage
point lower, compared to the IMF's Apr outlook. Overall, however, global growth is expected to remain relatively
sluggish, thanks to lingering uncertainties including the US-China
trade war, the escalating technology tensions & mounting
disinflationary pressures. The Fund said it expects global growth to dip in
the year ahead, forecasting 3.2% in 2019 & rising slightly to
3.5% next year. That’s 0.1 percentage point lower than the Apr
projection. “GDP releases so far this year,
together with generally softening inflation, point to
weaker-than-anticipated global activity,” the report said. “Investment
and demand for consumer durables have been subdued across advanced and
emerging market economies.”
TRUMP'S TRADE WAR HURTING CHINA MORE THAN US, IMF SAYS
American trade negotiators will soon head to China for face-to-face talks as the 2 largest economies try to strike a deal. US officials will travel to China for discussions sometime between Fri, the start of a 6-week congressional recess in DC, & Thurs, Aug 1. While the talks represent a critical next step after a truce reached between the countries' leaders in Jun, a deal is not viewed as near. Pres Trump has signaled that he'd be willing to relax restrictions on China’s Huawei in exchange for purchases of US agricultural products. Longer-term, US officials have suggested they could roll back the tariffs in exchange for Beijing making the deal legally binding, something it backtracked on in May. White House officials are now suggesting that getting China to agree to the latter could take several months at least, even though Trump remains inclined to ink an eventual deal. In the meantime, the administration could shift its focus to ratifying the US-Mexico-Canada Agreement. Trump sees approving his replacement for the North American Free Trade Agreement as a major economic & political priority. US Trade Representative Robert Lighthizer is using the remaining days of the congressional session to meet with lawmakers about the deal. The White House is expected to send the implementing legislation to Capitol Hill in Sep, setting up a vote on the deal this fall. Investors have watched the China talks closely. A widening trade war between DC & Beijing would risk more damage to American companies & the global economy. The Trump administration has put tariffs on $250B in Chinese goods, & threatened to put duties on even more products. Beijing has slapped tariffs on $110B in American goods. Both the US & China have taken steps to deescalate tension in recent days. Trump agreed to make “timely” decisions about whether to allow American tech companies to sell to blacklisted Chinese firm Huawei. Meanwhile, Chinese state media reported that China had taken steps to start following through on its promise to buy more US agricultural goods. Trump sees the step as important to reaching an agreement as American farmers take a hit from tariffs on crops.
US, China in-person trade talks expected next week; White House eyes longer-term timeline for deal
Dow stock United Technologies (UTX) reported better-than-expected quarterly earnings & raised its full-year sales & profit forecasts, driven by an increase in demand for aircraft parts & spares. The company, which makes the Pratt & Whitney aircraft engines & is on track to spin off its Otis elevator & Carrier air conditioner units, is seeking to bolster its defense offering amid rising US gov spending. UTX sales in its Collins aerospace unit, its biggest, surged about 66% to $6.58B in Q2, benefiting from the acquisition of aero parts maker Rockwell Collins. A growing fleet of aircraft also lifted demand for spare parts. The unit makes engine components, interior & exterior aircraft lighting, landing gear, wheels & brakes. The company raised its 2019 forecast for adjusted EPS to $7.90-8.05, from $7.80-8.00. UTX now expects full-year sales, excluding the impact of foreign currency translation & some other items, to rise 4-5%, up from 3-5% forecast previously. EPS attributable to shareholders fell to $2.20 in Q2, from $2.56 a year earlier. Net sales rose to $19.63B from $16.71B. Analysts had expected Q2 EPS of $2.05 on revenue of $19.55B. The stock added 1.99.
If you would like to learn more about UTX, click on this link:
club.ino.com/trend/analysis/stock/UTX?a_aid=CD3289&a_bid=6ae5b6f7
United Tech profit beats on higher demand for aircraft parts
Lockheed Martin (LMT) turned in Q2 earnings that were above what was anticipated from the world's largest defense contractor. The company also raised its 2019 forecast for both its top & bottom lines. LMT now expects full year EPS of $20.85-21.15, with revenue expected of $58.25-59.75B. All 4 of the business units – Aeronautics, Missiles & Fire Control, Rotary & Mission Systems & Space – delivered year-over-year increases in operating profit for this qtr. The order backlog grew “to a new record level,” CEO Marillyn Hewson said, with $136.7B in total orders booked. The company kept language regarding “economic, industry, business and political conditions including their effects on governmental policy” that could prevent the sale or delivery of the corp's products to its list of factors that may affect any forward-looking statements. It said gov actions include delays from Congress on export approvals for Saudi Arabia, the UAE & Turkey. Turkey was one of the founding intl partners of the F-35, which is, America's most expensive weapons platform. But the fighter jet will no longer be sold to Turkey on the heels of a multi-B $ deal between Russia & Turkey. The nation's top defense contractor also said trade policies or sanctions could impact business as well as the White House's recent decision to suspend Turkey's role in the F-35 program. LMT previously expected to deliver 131 F-35s this year. “Over the last several months we’ve been working to establish alternative sources of supply in the United States to quickly accommodate Turkey’s current contributions to the program,” LMT said. The stock crawled up 17¢ after being lower all day.
If you would like to learn more about LMT, click on this link:
club.ino.com/trend/analysis/stock/LMT?a_aid=CD3289&a_bid=6ae5b6f7
Lockheed Martin posts strong quarterly results and raises its forecast
Analysts expect the Energy Information Administration tomorrow to report a fall in supplies of US crude, stretching their declines to a 6th consecutive week, the longest streak in 18 months. The gov report is likely to show that crude stocks declined 4.4M barrels for the week ended Jul 19. Among the petroleum products, gasoline stockpiles were seen 1.1M barrels lower for last week, but distillate supplies, which include heating oil, were forecast to climb by 1.7M barrels. The expected fall in crude supplies follows output declines tied to Hurricane Barry, which passed thru the Gulf of Mexico earlier this month. The hurricane resulted in a peak reduction of about 1.3M barrels a day (70%) in Gulf oil production on Jul 13. Output had gradually recovered to a loss of just 63K barrels of oil per day on Juy 20.
U.S crude supplies poised to post longest stretch of weekly declines in 18 months
Earnings from real corps (not just banks) have started on the right foot. However, the big news story was restarting trade talks with China. That is getting just about everybody's attention. Of course, words are cheap. More importantly, a lot of work still needs to be done. But the IMF report today is a reminder that the economy in China is being pinched harder in trade than the US. The Dow closed at a new record high, making the bulls happy while safe investments in gold & Treasuries are trading a little lower.
Dow Jones Industrials
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