Dow fell 173, decliners over advancers 3-2 & NAZ was off 17. The MLP index lost 2+ to the 148s & the REIT index fell 1 to 373. Junk bond funds were sold & Treasuries rose in price. Oil drifted lower to the 52s & gold declined 8 to 1857.
AMJ (Alerian MLP index tracking fund)
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IBM (IBM) expects to return to revenue growth this year, even as corp
customers focus on preserving cash during the coronavirus pandemic
drove a 4.6% revenue decline in 2020. IBM has reported lower sales
every qtr in 2020, underscoring the challenges ahead for CFO Arvind Krishna, who took over during the pandemic. In the latest qtr, revenue fell to $20.4B from $21.8B a year earlier. The forecast called for EPS of $1.81 in adjusted profit & $20.7B in revenue. IBM,
which had suspended financial projections last year over uncertainty
about the pandemic's business impact, said it expects revenue
to grow this year & anticipates $11-12B in adjusted
free cash flow for the year. "The actions we are taking to focus on hybrid cloud and AI will take
hold, giving us confidence we can achieve revenue growth in 2021," Krishna said. Cloud revenue rose 10% in Q4 & 19% for the year. Q4 profit fell to $1.36B ($1.51 a share) from
$3.67B ($4.11 a share) a year earlier. On an adjusted basis,
profit from continuing operations was $2.07 a share. The results include
a roughly $2B charge before taxes. The stock tumbled 13.32 (10%).
If you would like to learn more about IBM, click on this link:
club.ino.com/trend/analysis/stock/IBM?a_aid=CD3289&a_bid=6ae5b6f7
IBM pledges return to growth in 2021 after another sales drop
Pandemic-driven demand sent total 2020 home sales to the highest level since 2006. Still, even the most avid buyers are bumping up against barriers in today's housing market. Record low supply & record high prices are limiting the exceptionally high demand. Closed sales of existing homes in Dec increased just 0.7% from Nov to a seasonally adjusted annualized rate of 6.76M units, according to the National Association of Realtors. Sales were 22% stronger than in Dec 2019. As unexpected as a global pandemic was, so too was the reaction of homebuyers. After plummeting in Mar & Apr, sales suddenly began to climb. Total year-end sales volume ended at 5.64M units, the highest level since 2006 & far stronger than predicted before the pandemic. Buyers were driven by a desire for larger, suburban homes with dedicated spaces for working & schooling. “Home sales could possibly reach 8 million if we had more inventory,” said Lawrence Yun, chief economist for the Realtors. “Mortgage rates should remain very low throughout 2021, although we may have seen the lowest already.” Strong demand exacerbated what was already low inventory of homes for sale at the start of the year. At the end of Dec, inventory stood at just 1.07M homes for sale, down 23% year over year. At the current sales place, that represents a 1.9-month supply. That is the lowest number of homes since the Realtors began tracking this metric in 1982. Low supply & strong demand continued to raise the heat under home prices. The median price of an existing home sold in Dec was $310K, a 12.9% increase compared with Dec 2019 & the highest Dec median price on record. Part of the sharp increase in the median price is that home sales are stronger on the higher end of the market, where there is more supply. Sales of homes priced below $100K were down 15% annually in Dec, while sales of homes priced $500-750K were up 65% annually. Sales of M-$-plus homes were up 94% from one year ago. Steep competition for homes also has more buyers making all-cash offers. First-time buyers made up 31% of sales. They usually make up about 40% historically. It also took just 21 days on average to sell a home in Dec. “It is unusual, because every year during the holiday season we would see days on market increase, but not this year,” said Yun.
Existing home sales in 2020 hit highest point since 2006, but listings are at record low
CSX (CSX) railroad reported relatively flat Q4 earnings even though it hauled 4% more freight as the ecoomy continued to rebound from last year's widespread virus-related shutdowns. The railroad had EPS of 99¢, down
slightly from last year's 99¢. But
this qtr's results were hurt by a $48M charge related to the
early retirement of debt. Without that, CSX would have reported earnings
per share of $1.04. Results topped expectations for EPS of $1. Freight railroad posted revenue of $2.83B in
the period, also beating forecasts of $2.75B. The railroad cut its quarterly expenses 7% to $1.6B as fuel & labor costs both decreased. Strong
demand for deliveries of shipping containers — known as intermodal
shipments — which were up 11%, helped offset weakness in nearly every
other category of freight in the qtr. Volume was positive overall
for the first time since before the pandemic began. In last year's Q2, volume fell 20% when many businesses were shut down as
officials sought to limit the spread of COVID-19. CEO Jim Foote said he expects the economy & rail shipments to grow in
2021 — especially in H2 — but it is hard to
tell now how much growth there will be. Railroad officials said only
that they expect volume to grow more than the overall US economy — in
terms of GDP — will this year. “It’s
difficult to really draw a clear line of sight to the economy other than
it seems to be continuing to improve,” Foote added. “All of this I
believe is related to getting the virus under control. We’re optimistic,
but really we have to take it day by day.” In a sign of that optimism, officials at the railroad said they are
increasing their hiring a bit at the start of the year to make sure they
will have trained employees in place to handle any growth in H2. The stock fell 2.48 (3%).
If you would like to learn more about CSX, click on this link:
club.ino.com/trend/analysis/stock/CSX?a_aid=CD3289&a_bid=6ae5b6f7
CSX profit slips, but railroad hauls 4% more freight
Today's decline is not significant after the recent rally. However, next week Q4 GDP will be reported & that is likely to be glum, showing little or even no growth. Some areas of service sector, a major part of the economy, are still struggling as they have a tough fight against the virus. The 2 earnings reports above are not encouraging.
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