Dow rose 37, advancers over decliners 3-2 & NAZ added 3. The MLP index gained 4+ to the 217s & the REIT index slid fractionally lower to the 395s. Junk bond funds did little & Treasuries saw modest buying. Oil continued climbing above 60 & gold about even at 1479.
AMJ (Alerian MLP Index tracking fund)
Construction of new homes rose again in Nov while applications for building permits rose to the highest level in 12 years, both encouraging signs of a rebound in the housing market. The Commerce Dept said that builders started construction on a seasonally adjusted annual rate of 1.37M homes in Nov, an increase of 3.2% from Oct. Applications for building permits increased 1.4% last month to a seasonally adjusted rate of 1.48M. That was the highest level for building permits since 2007. US housing construction increases 3.2% in Nov. Construction of single-family homes rose 2.4% last month while construction of new apartments was up 4.9%. Housing has been on a rebound over the past several months, helped by the Federal Reserve which cut its policy rate 3 times this year in the face of a slowdown in global growth & uncertainties from Pres Trump's trade policies. The Fed's rate cuts have contributed to a drop in mortgage rates with the 30-year rate now almost a full percentage point below where it was a year ago. Economists are forecasting that the rebound in housing will continue, helping to support economic growth next year. although there are still concerns that housing is being held back by constraints such as a lack of available land in many areas and a shortage of construction workers.
Eli Lilly (LLY) forecast a higher-than-expected profit for 2020, citing growing demand for its medicines including diabetes drug Trulicity & psoriatic arthritis treatment Taltz. The drugmaker said it expects EPS of $6.70-6.80 on an adjusted basis for the next year. Analysts were expecting $6.63. LLY has been banking on drugs such as Trulicity & Taltz as it faces competition from cheap generic versions of its older medicines. However, sales from its newer drugs have been rocky in the last few qtrs. Trulicity sales have been crimped by high rebates that drugmakers pay to middlemen, such as pharmacy benefit managers, in order to make sure patients have access to their products. LLY sees the possibility for 2 product approvals & up to 3 new launches in 2020. For fiscal year 2020, the company forecast sales of $23.6-24.1B while analysts were expecting sales of $23.52B. CEO David Ricks said the company is expanding its arsenal of medicines focused on diabetes, oncology, immunology & neuroscience. The drugmaker also cut its forecast for 2019 EPS by 2 pennies to $8.57-8.67, due to a charge related to the repurchase of debt & additional charges from global cost reduction initiatives. The stock went up 2.24.
If you would like to learn more about LLY, click on this link:
club.ino.com/trend/analysis/stock/LLY?a_aid=CD3289&a_bid=6ae5b6f7
Eli Lilly sees higher-than-expected 2020, citing growing demand for its medicines
Dallas Fed Pre Robert Kaplan said that he had penciled in no changes to interest rates next year. His stance was in line with the central bank's projections released last week which showed the median member of its policy making group expected the Fed to stand pat. He also said the central bank would not restart the balance sheet runoff that got underway from Q4-2017 to this Sep, in comments made at the Council of Foreign Relations. Kaplan took the time to outline the forces weighing down global & US economic growth, & underlined the need for structural reforms to combat several trends - technological development, slowing workforce growth, the reversal of globalization & excessive leverage. “Integrating with the rest of the world is an enormous opportunity. The narrative that you lost your job because of immigrants or a lousy trade deal may have been true 15 years ago, but now its about technology-based disruption,” he added. Kaplan said these challenges were not something the central bank could resolve & that it was up to companies, the gov & politicians to jump start the policies needed to re-accelerate growth. He emphasized that monetary policymakers had their limitations & had picked up too much of the slack for bolstering the economy. He said he felt that the central bank should tolerate a temporary overshoot of inflation. At the same time, he didn't want the review to lead to perceived commitments on what actions the Fed would end up undertake. The central bank's policy review is set to end in the middle of next year. Kaplan did not expect stresses returning to the repo market, where banks & hedge funds borrow & lend funds on a short-term basis in return for high quality collateral like Treasuries. Since Sep, the central bank is carrying out $60B of Treasury bill purchases every month & is providing around $500B of repos to help market participants to stay funded through the turn of the year. “We will get through year-end. We’ll settle down this volatility [in repo markets],” he said.
The Dow has advanced 400 in the last 5 trading days & needs time to rest. The trade deals sound good, but they will need more work before they are final. Congress is supposed to approve USMCA in a couple of days. In the mean time safe haven gold is at the upper end of its trading range in the last 5 weeks while the Dow has been setting new records.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 60.66 | +0.45 | +0.8% |
| GC=F | Gold | 1,481.20 | +0.70 | +0.1% |
Construction of new homes rose again in Nov while applications for building permits rose to the highest level in 12 years, both encouraging signs of a rebound in the housing market. The Commerce Dept said that builders started construction on a seasonally adjusted annual rate of 1.37M homes in Nov, an increase of 3.2% from Oct. Applications for building permits increased 1.4% last month to a seasonally adjusted rate of 1.48M. That was the highest level for building permits since 2007. US housing construction increases 3.2% in Nov. Construction of single-family homes rose 2.4% last month while construction of new apartments was up 4.9%. Housing has been on a rebound over the past several months, helped by the Federal Reserve which cut its policy rate 3 times this year in the face of a slowdown in global growth & uncertainties from Pres Trump's trade policies. The Fed's rate cuts have contributed to a drop in mortgage rates with the 30-year rate now almost a full percentage point below where it was a year ago. Economists are forecasting that the rebound in housing will continue, helping to support economic growth next year. although there are still concerns that housing is being held back by constraints such as a lack of available land in many areas and a shortage of construction workers.
US housing construction increases 3.2% in November
Eli Lilly (LLY) forecast a higher-than-expected profit for 2020, citing growing demand for its medicines including diabetes drug Trulicity & psoriatic arthritis treatment Taltz. The drugmaker said it expects EPS of $6.70-6.80 on an adjusted basis for the next year. Analysts were expecting $6.63. LLY has been banking on drugs such as Trulicity & Taltz as it faces competition from cheap generic versions of its older medicines. However, sales from its newer drugs have been rocky in the last few qtrs. Trulicity sales have been crimped by high rebates that drugmakers pay to middlemen, such as pharmacy benefit managers, in order to make sure patients have access to their products. LLY sees the possibility for 2 product approvals & up to 3 new launches in 2020. For fiscal year 2020, the company forecast sales of $23.6-24.1B while analysts were expecting sales of $23.52B. CEO David Ricks said the company is expanding its arsenal of medicines focused on diabetes, oncology, immunology & neuroscience. The drugmaker also cut its forecast for 2019 EPS by 2 pennies to $8.57-8.67, due to a charge related to the repurchase of debt & additional charges from global cost reduction initiatives. The stock went up 2.24.
If you would like to learn more about LLY, click on this link:
club.ino.com/trend/analysis/stock/LLY?a_aid=CD3289&a_bid=6ae5b6f7
Eli Lilly sees higher-than-expected 2020, citing growing demand for its medicines
Dallas Fed Pre Robert Kaplan said that he had penciled in no changes to interest rates next year. His stance was in line with the central bank's projections released last week which showed the median member of its policy making group expected the Fed to stand pat. He also said the central bank would not restart the balance sheet runoff that got underway from Q4-2017 to this Sep, in comments made at the Council of Foreign Relations. Kaplan took the time to outline the forces weighing down global & US economic growth, & underlined the need for structural reforms to combat several trends - technological development, slowing workforce growth, the reversal of globalization & excessive leverage. “Integrating with the rest of the world is an enormous opportunity. The narrative that you lost your job because of immigrants or a lousy trade deal may have been true 15 years ago, but now its about technology-based disruption,” he added. Kaplan said these challenges were not something the central bank could resolve & that it was up to companies, the gov & politicians to jump start the policies needed to re-accelerate growth. He emphasized that monetary policymakers had their limitations & had picked up too much of the slack for bolstering the economy. He said he felt that the central bank should tolerate a temporary overshoot of inflation. At the same time, he didn't want the review to lead to perceived commitments on what actions the Fed would end up undertake. The central bank's policy review is set to end in the middle of next year. Kaplan did not expect stresses returning to the repo market, where banks & hedge funds borrow & lend funds on a short-term basis in return for high quality collateral like Treasuries. Since Sep, the central bank is carrying out $60B of Treasury bill purchases every month & is providing around $500B of repos to help market participants to stay funded through the turn of the year. “We will get through year-end. We’ll settle down this volatility [in repo markets],” he said.
Fed’s Kaplan says he penciled in no changes to interest rates next year
The Dow has advanced 400 in the last 5 trading days & needs time to rest. The trade deals sound good, but they will need more work before they are final. Congress is supposed to approve USMCA in a couple of days. In the mean time safe haven gold is at the upper end of its trading range in the last 5 weeks while the Dow has been setting new records.
Dow Jones Industrials
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