Tuesday, October 25, 2022

Markets jump on strong earnings

Dow climbed 244, advancers over decliners 5-1 & NAZ advanced 203.  The MLP index added 2 to 220 & the REIT index soared 11 to 360.  Junk bond funds went up & Treasuries were heavily purchased, driving down yields.  Oil went up to the 85s & gold rose 5 to the 1659.

AMJ (Alerian MLP index tracking fund)

 

 

 




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Home price increases in Aug slowed at the fastest pace on record as rapidly rising mortgage rates drained demand from the housing market.  Prices climbed 13.0% nationally in Aug from the previous year, down from 15.6% in Jul, the S&P CoreLogic Case-Shiller index showed.  That's the biggest deceleration in the index’s history.  "The forceful deceleration in U.S. housing prices that we noted a month ago continued in our report for August 2022," Craig Lazzara, Managing Director at S&P Dow Jone Indices, said.  "Price gains decelerated in every one of our 20 cities. These data show clearly that the growth rate of housing prices peaked in the spring of 2022 and has been declining ever since."  The 10-City composite, meanwhile, climbed 12.1% annually, down from 14.9% in Jun & the 20-City composite rose 13.1%, down from 16.0% the previous month.  The Case-Shiller index reports with a 2-month delay, meaning it may not capture the latest slowdown in the market.  Even with higher interest rates putting homeownership out of reach for Ms of Americans, prices are still steeper than just one year ago.

US home prices slowed in August at the fastest pace on record

Coca-Cola (KO), a Dow stock & Dividend Aristocrat, raised its full-year outlook, predicting that its 2-pronged strategy of hiking prices & offering more affordable options will keep driving sales growth.  Inflation is expected to keep raising expenses in 2023 & execs signalled that more price hikes could be on the way over the next 12 months.  Foreign currency is also projected to weigh on earnings & revenue next year.  Adjusted net sales rose 10% to $11.1B, topping expectations of $10.5B.  Organic revenue climbed 16%, fueled by higher prices across its portfolio.  Unit case volume, which strips out the impact of currency & price changes, grew 4% in the qtr.  Tough economic conditions will likely persist for the next 6-12 months.  Product innovation in 2023 will focus more on packaging to create more affordable options.  The beverage giant reported Q3 EPS o 65¢, up from 57¢, a year earlier.  Excluding items, EPS was 69¢.  For 2022, KO now expects adjusted EPS growth of 6-7%, up from its prior range of 5[6%.  The company also raised its outlook for organic revenue growth to 14-15% from a range of 12-13%.  The stock rose 93¢.
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Coca-Cola raises full-year outlook as earnings beat expectations

House Dems from New England say Russia's war against Ukraine & the COVID-19 pandemic have created a disruption in global energy markets that warrants the release of supplies from the Northeast Home Heating Oil Reserve (NEHHOR).  That reserve holds about 1M barrels of home heating oil & Pres Biden has the authority to release that supply under certain circumstances.  Dems led by Rep Lori Trahan, of Massachusetts, say Russia's war in Ukraine & the pandemic are reason enough to release some oil & help reduce home heating prices for New Englanders as winter approaches.  "These market strains disproportionately impact New England households many of which depend on home heating oil to heat their homes," Trahan & 18 House Dems from New England states wrote to Pres Biden.  "Families should not be forced to make hard choices about keeping loved ones warm and healthy and putting food on the table."  Under federal law, Biden has the authority to release NEHHOR supplies if there is a dislocation in the heating oil market that results in certain price changes, or if there is a regional supply shortage that could be addressed by injecting new supply.  Dems did not argue that prices are rising & instead told Biden that home heating oil supplies in the Northeast are 63% below their 5-year average.

Dems ask Biden for another oil release but only for certain area

Investors like the earnings releases while they ignore head winds & tough times ahead comments.

Dow Jones Industrials

 






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