Tuesday, April 20, 2021

Markets edge lower when earnings are shrugged off

Dow sank 290, decliners over advancers about 3-1 & NAZ declined 167.  The MLP index lost 3+ to the 167s & the REIT index gained 3+ to 424.  Junk bond funds inched higher & Treasuries rose in price.  Oil dropped 1+ to the 61s & gold went up 5 to 1775 while stocks were being sold. 

AMJ (Alerian MLP index tracking fund)

CL=FCrude Oil63.40

GC=FGold    1,776.90


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Procter & Gamble (PG), a Dow stock & Dividend Aristocrat, this fall will start charging more for household staples & biggest consumer-products.  The company cited rising costs for raw materials, such as resin & pulp, & higher expenses to transport goods.  Organic sales grew 4% in the qtr, with the biggest gains in the & fabric & home-care units.  The results mark its slowest overall organic sales increase since 2018, following a year in which the Covid-19 pandemic created high demand for products such as cleaning supplies, paper towels & toilet paper.  "It's a different situation, as everywhere in the world countries are in very different places as far as coming out of the pandemic," operating chief Jon Moeller said.  "There is very strong consumption across the board."  While sales are cooling for some products, he said, demand is recovering for others, such as beauty products & supplies sold directly to businesses that are reopening after widespread shutdowns.  Net sales rose 5% to $18.1B, above the consensus forecast of $18B.  Volume was flat for the first time in years, while price & mix both increased 2%.  EPS was $1.26, up from $1.12 a year earlier.  The company maintained its forecast of organic sales growth of 5-6% for the fiscal year that ends Jun 30.  The stock went up 1.28.
If you would like to learn more about PG, click on this link:

Procter & Gamble will raise prices in September

Johnson & Johnson (JNJ), a Dow stock & Dividend Aristocrat, reported $100M in Q1 sales of its Covid-19 vaccine that’s on hold in the US while federal health regulators investigate a rare blood-clotting issue.  The company also reported earnings & revenue that beat expectations.  Adjusted EPS: $2.59 was vs $2.34 expected & revenue was $22.3B vs $21.9B expected.  The pharmaceutical business, which developed the single-shot Covid vaccine, generated $12.2B in revenue, a 9.6% year-over-year increase.  The results were driven by sales of the company’s multiple myeloma drug Darzalex & Stelara, a treatment for Crohn's disease.  The consumer unit, which makes products such as Neutrogena face wash & Listerine, generated $3.5B in revenue, down 2.3% from a year earlier.  Execs said the decline is due to an “unfavorable comparison” to last year when people were stockpiling on over-the counter- products due to the virus.  Its medical device unit generated $6.6B, a 7.9% increase, as the pandemic recovery improves.  The unit was hit hard last year as the pandemic forced hospitals to postpone elective surgeries & Americans stayed home.  CFO Joseph Wolk said that its 3 business segments are “healthier” than they were entering the pandemic last year.  The company raised its earnings & revenue guidance for the year.  JNJ now expects full-year EPS of $9.42-9.57, compared with its previous forecast of $9.40-9.60.  It expects revenue of $90.6-91.6B, compared with its prior forecast of $90.5-91.7B.  The stock rose 4.08.
If you would like to learn more about JNJ, click on this link:

Johnson & Johnson reports $100 million in quarterly sales from Covid vaccine

International Business Machines (IBM), another Dow stock, shares rallied as the tech giant not only topped estimates & broke a streak of declining revenue levels but forecast a return to pre-COVID-19 growth levels.  CFO James Kavanaugh said “going forward we are very confident in getting back in second quarter to our pre-pandemic levels of growth.”  “By the way, our backlog run-out in the next 90 days already shows that,” Kavanaugh added.  He said, “the average of analyst revenue estimates for the second quarter look reasonable.”  The forecast called for revenue of $18.3B for Q2 (a gain of 0.8%).  IBM said it expects ” to grow revenue for the full-year 2021 based on mid-April 2021 foreign exchange rates.”  The forecast expects full-year revenue of $74.1B (a gain of 0.6% ) from 2020.  “Last quarter, also talked about how the events of the last year have increased the needs for our clients to accelerate their digital transformations,” said CEO Arvind Krishna.  “This is continuing and the overall spend environment is improving, while there are some clear differences by geography and industry.”  The company reported Q1 EPS of $1.06 a share, compared with $1.31 in the year-ago period.  Adjusted EPS, which exclude stock-based compensation expenses & other items, was $1.77, compared with $1.84 in the year-ago period.  Revenue rose to $17.7B from $17.6B in the year-ago qtr, snapping a 4-qtr streak of sales declines.  Analysts had estimated $1.69 & a decline in revenue to $17.3B.  The stock gained 5.83.
If you would like to learn more about IBM, click on this link:

IBM surprises with revenue gain, see growth returning to pre-COVID-19 levels

Stocks are in trouble when higher earnings can't get no respect.  That's the case today.  The chart below shows the Dow has had an astounding 2300 advance since the start of Mar.  Maybe it's time for a rest along with profit taking.

Dow Jones Industrials


Monday, April 19, 2021

Markets decline after last week's advance

Dow dropped 123, decliners over advancers better than 2-1 & NAZ sank 137.  The MLP index was off fractionally to 170 & the REIT index dipped 1 to 420.  Junk bond funds did little & Treasuries were also sold.  Oil was higher in the 63s & gold fell 9 to 1770 (more on both below),

AMJ (Alerian MLP Index tracking fund)

Live 24 hours gold chart [Kitco Inc.]

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US health officials have confirmed fewer than 6K cases of Covid-19 in fully vaccinated Americans, Centers for Disease Control & Prevention Director Dr Rochelle Walensky.  That represents just 0.007% of the 84M Americans with full protection against the virus.  Despite the breakthrough infections, none of the patients has died or gotten severely ill, indicating the vaccines are working as intended, she added.  “With any vaccine, we expect such rare cases, but so far out of more than 84 million people who were fully vaccinated, we have only received reports of less than 6,000 breakthrough cases,” Walensky told reporters.  Breakthrough cases occur when someone contracts the virus more than 14 days after their 2nd shot, she added.  The CDC chief acknowledged that the number could be an underestimate.  “Although this number is from 43 states and territories and likely and underestimate, it still makes a really important point, these vaccines are working. Of the nearly 6,000 cases, approximately 30% had no symptoms at all,” Walensky said. 

CDC says fewer than 6,000 Americans have contracted Covid after being fully vaccinated

Gold futures finished lower, giving back a portion of recent gains after posting the biggest weekly climb since Dec.  Jun gold lost $9 (0.5%) to settle at $1770 an ounce.  The metal ended Fri with a weekly rise of about 2%, marking its biggest weekly advance since the period ended Dec 18, 2020.  Some strategists pointed to growing tensions between Russia & the US as a catalyst that could ultimately flip precious metals higher, as well as lingering concerns about COVID vaccine rollouts globally.

Gold prices end lower after biggest weekly rise since December

Oil futures gained, finding some support from reports of a production halt at some Libyan oil fields, as traders mulled the latest signals for crude demand outlook, as well as prospects for global supplies.  Likely providing some support, a report that production in several of Libya's major eastern oil fields have been shut down.  A spokesman for state-owned National Oil Corp of Gulf Oil said it halted pumping at its fields because of the government’s failure to send federal funds since Sep for operations. S&P Global Platts said the subsidiary known as Agoco operates 8 oil fields with a total capacity of 250K barrels per day.  West Texas Intermediate crude for May rose 25¢ to settle at $63.38 a barrel.  Jun Brent crude, the global benchmark, added 28¢ at $67.05 a barrel.  Prices for both crude benchmarks ended Fri with gains of more than 6% for the week, getting a lift in part from a strong economic report from China & a higher demand forecast from the Intl Energy Agency.  Analysts said a weaker tone for the $ today helped offset pressure on crude.  A softer $ can be a positive for commodities priced in $s, making them cheaper to users of other currencies.

Oil prices gain as traders mull demand cues, supply prospects

Yes, this was a dreary day for stocks.  There is a lot  of stumbling fighting the virus even with all the vaccine shots being administered.  Overall, the economy is sort of recovering but the process is not going very well.

Dow Jones Industrials

Markets slump as virus cases remain elevated

Dow declined 176, decliners over advancers about 3-1 & NAZ gave back 131.  The MLP index was flattish near 171 & the REIT index fell 1 to the 418s.  Junk bond funds crawled higher & Treasuries saw limited selling.  Oil fluctuated in the low 63s & gold was off off 4 to 1773 after recent strength.

AMJ (Alerian MLP index tracking fund)

CL=FCrude Oil63.37

GC=FGold   1,774.00 
-6.20 -0.4%



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Coca-Cola (KO), a Dow stock & Dividend Aristocrat, trounced estimates for quarterly profit & revenue, fueled by strong demand for its sodas as vaccine rollouts & relaxed restrictions in Asia encouraged consumers to return to their pre-pandemic routines.  Volumes, a key demand indicator, returned to 2019 levels in Mar.  "We are encouraged by improvements in our business, especially in markets where vaccine availability is increasing and economies are opening up," CEO James Quincey said.  Consumers bought more sodas in China & India offsetting weakness in the US & Western Europe, where restrictions were more stringent & consumers preferred to snack or cook more at home.  The company heavily depends on away-from-home channels such as sporting events, restaurants & theaters to generate its sales.  Unit case volume was flat in Q1, after declining for all of last year, while organic sales grew 6%.  Net revenue rose about 5% to $9B - the first increase after 4 qtrs of declines - above the average estimate of $8.6B.  Excluding one-time items, EPS rose to 55¢ compared with estimates of 50¢.  The stock went up 51¢.
If you would like to learn more about KO, click on this link:

Coca-Cola results lifted by vaccine rollouts as restaurants, venues reopen

The US will see a significant reduction in new coronavirus infections in the coming weeks, Dr Scott Gottlieb predicted.  “I think we’re going to start to see the pandemic roll over in the US, in terms of cases coming down,” he added.  However, the former Food & Drug Administration chief cautioned that, even if the top-line number of new infections falls, “we’re still going to have outbreaks in some parts of the country.”  “We’re never going to virtually eliminate this virus,” said Gottlieb, reiterating a concern he raised Fri when he warned that vaccine hesitancy in the US makes it unlikely that the nation will eradicate Covid like it’s done with other diseases, such as polio & smallpox.  “But I think you’re going to start to see cases come down quite dramatically as we get into May,” said Gottlieb.  Today, the 7-day average of daily new coronavirus cases in the US was about 67K, according to Johns Hopkins University.  That figure is down slightly from one week ago, although it represents an increase from levels seen in late Mar & on par with last summer's surge.  Deaths from the disease have fallen more considerably in the US.  The 7-day average of daily new Covid deaths today was 723, which is down 25% compared with one week ago.

Dr. Gottlieb sees U.S. Covid cases falling ‘quite dramatically’ in coming weeks

Centers for Disease Control & Prevention (CDC) data shows 3.5M vaccine doses reported administered across the US.  The 7-day average of daily shots given has held above 3M for 12 straight days.  ½ of all American adults have now received at least one dose of a Covid vaccine, according to the CDC.  The milestone comes as Pres Biden's deadline arrives for states to expand their vaccine eligibility requirements.  Biden asked states to open appointments to all US adults by Apr 19.  Biden said in a video that states have met that deadline & encouraged Americans to get the vaccine.  The nationwide level of daily new coronavirus cases remains elevated at an average of about 67K per day, up 26% from last month's lows but down slightly from one week ago.  The US is reporting an average of more than 3M daily vaccine doses administered over the past 7 days, according to CDC data & the CDC reported that ½ of all US adults have gotten at least one shot.  Of those aged 65 & older, 81% have received one dose or more & roughly 2/3 are fully vaccinated.  Nearly 40% of the total US population, including those not currently eligible for available vaccines, has received at least one dose of a Covid vaccine, CDC data shows & more than 25% is fully vaccinated.

U.S. vaccinations hold steady as deadline arrives to expand eligibility

The Dow chart below shows an impressive rally this year.  Investors may be taking a break today to assess the vaccine data.  While it looks good, improvements in living conditions seem to be limited with inconstant messaging from the "experts."

Dow Jones Industrials