Financial Review

20K

…..Dow, S&P 500 and Nasdaq all hit record highs. Trump will build a wall. Also, an end to sanctuary cities. Also, a major investigation into voter fraud. Also torture “absolutely” works. Also, a ban on refugees. Smog blankets Europe. Earnings reports from BA, UTX, FCX, AA, T, QCOM

Financial Review by Sinclair Noe for 01-25-2017

 

DOW + 155 = 20,068
SPX + 18 = 2298
NAS + 55 = 5656
RUT + 13 = 1382
10 Y + .05 = 2.52%
OIL – .36 = 52.82
GOLD – 7.90 = 1201.60

 

 

The Dow Industrials topped 20,000 for the first time ever. The S&P 500 and the Nasdaq Composite closed at record highs yesterday. European markets traded higher, with many indexes up by about 1%. Most Asian markets ended the day with gains. The Dow Industrials first hit 10,000 back in 1999 and for the next 10 years, the Dow went up and down multiple times before finally breaking out in 2009. The Dow topped 15,000 in 2013. It only took 43 days to go from 19,000 to 20k. Can it go higher? Sure, a trend in place is more likely to continue than it is to reverse – until it reverses. The Dow Industrial Average first started in 1896 – only one company on that original list is still on the list: General Electric. And the 120-year old Dow hit 1,000 for the first time in 1972; then it crashed 40% and didn’t make it back to 1,000 until 1980. Go figure.

 

President Trump signed an executive action today directing federal resources toward building a border wall with Mexico. Trump said construction of the wall would begin within months, with planning starting immediately. Initially the US will pay for the wall, but Trump insists that Mexico will reimburse the costs at a later date. Mexico’s President Enrique Peña Nieto is scheduled to visit Trump in Washington on Jan. 31. The border wall is included in an executive action titled Border Security and Immigration Enforcement Improvements, which calls for hiring more Border Patrol agents, stricter enforcement, and expanding detention capacity, possibly with more private prisons. A second executive action, titled Enhancing Public Safety in the Interior of the United States calls for withholding federal funds from sanctuary cities. Today’s executive actions also seek to force other nations to take back criminal aliens by using leverage such as withholding U.S. visas. And it will allow Immigration and Customs Enforcement to more aggressively arrest, detain and remove people from the US.

 

President Trump said today he would seek a major investigation of alleged voter fraud in the November election. Trump said on Twitter: “I will be asking for a major investigation into VOTER FRAUD, including those registered to vote in two states, those who are illegal and….even, those registered to vote who are dead (and many for a long time). Depending on results, we will strengthen up voting procedures!” And it didn’t take long to find someone registered to vote in 2 states – Steve Mnuchin, Trump’s nominee for Treasury Secretary is registered in New York and California – which is legal – although he can only vote once. And Steve Bannon, Trump’s senior counselor was registered in New York and Florida – not that there’s anything wrong with that.

 

Trump also said he wants to “fight fire with fire” when it comes to stopping terrorism, suggesting that he could be open to bringing back torture because he “absolutely” believes it works. The Trump administration is also considering a 120-day suspension of refugee admissions and cutting the total number allowed into the U.S. in the current fiscal year from 110,000 to 50,000, actions that could be announced as soon as Thursday.

 

When will the gavel drop? According to WSJ, President Trump has culled the candidates to fill a vacancy on the Supreme Court to a handful of federal appellate judges. The list includes Neil Gorsuch, Thomas Hardiman, Raymond Kethledge and William Pryor. Trump said he would make his nomination next week, replacing the late Justice Antonin Scalia.

 

Trump on Tuesday signed executive actions to advance the approval of two controversial oil pipelines — Dakota Access and Keystone XL. Trump’s administration has instructed the Environmental Protection Agency to remove the climate change page from its website.

 

The Trump administration has also instituted a temporary gag order against government scientists at the Environmental Protection Agency and Department of Agriculture, barring the agencies from publishing any news releases, blog or social-media posts or otherwise communicating with the public about taxpayer-funded research. The Twitter account of Badlands National Park posted a series of climate-change factoids on Tuesday, apparently, an act of defiance against President Trump, who has said he believes climate change is a hoax. The tweets were removed hours later.

 

Heavy pollution enveloping much of Europe has prompted emergency measures across the continent, as extreme cold, no wind and heavy burning of coal and wood for heating left many regions shrouded in smog. In several countries, including Britain, France and Belgium, officials have cautioned against physical exertion for children and the elderly. Hundreds of flights have also been canceled and heavy polluting vehicles have been ordered off the road.

 

Puerto Rico’s new governor wants to replace a law that allows the U.S. territory to redirect revenues earmarked for bondholders to pay for essential services. The government planned to introduce legislation on the so-called debt moratorium law today.

 

It’s another busy day for earnings reports. Before the opening bell, Boeing beat analysts’ profit estimates despite another charge for its military tanker aircraft and said it expects to deliver more planes and higher earnings in 2017, though revenue likely will fall. Boeing profit rose as the 787 Dreamliner emerged from a decade of losses.

 

United Technologies posted a fourth-quarter profit, compared with a year-ago loss, and reiterated its 2017 profit and sales forecasts. The company reported Wednesday income from continuing operations of $1.024 billion and net income, which includes results from discontinued operations, of $1.013 billion. Under the diluted earnings (loss) per share of common stock heading, the line item for continuing operations showed $1.26, but the line for discontinued operations just showed a loss of 1 cent. For investors to get net earnings per share, they are required to subtract a penny from $1.26, to get $1.25. It’s simple math but not necessarily easy. The SEC is supposed to keep an eye on this kind of garbage accounting.

 

Freeport-McMoRan reported a lower-than-expected profit before the opening bell but said it would double gold sales to 2.2 million ounces this year, while selling less copper. Freeport is being helped by higher prices for both metals but its copper business has been dented recently by a ban on exports of copper concentrates in Indonesia. Since November 8, Phoenix-based Freeport has experienced an increase of just over 50%.

 

Alcoa Corporation logged a net loss of $125 million or 68 cents per share for the fourth quarter of 2016. Barring one-time items, adjusted earnings came in at 14 cents per share for the reported quarter, missing. Revenue topped estimates. This is the company’s first quarterly report as a standalone, publicly traded company.

 

Qualcomm slid after the chip maker issued a weak second-quarter outlook amid ongoing legal and regulatory challenges. Apple earlier this month filed a suit against Qualcomm for allegedly leveraging its monopoly position to demand onerous royalty rates. The Federal Trade Commission last week also filed a complaint against the company for anticompetitive practices.

 

AT&T reported fourth-quarter earnings in line with expectations and sales slightly below forecasts.

 

Cisco Systems has agreed to buy software maker AppDynamics for $3.7 billion. AppDynamics had been planning to price its IPO tonight.

 

Following activist investor pressure for a split, Bob Evans Farms has agreed to sell its restaurant business to PE firm Golden Gate Capital for $565 million. Bob Evans will now focus on packaged foods.

 

Amazon.com now has a market cap of $390 billion, and according to research from Credit Suisse, the retail giant is now worth more than the top eight traditional brick-and-mortar retailers combined. For the record, that roster includes Best Buy, Macy’s, Target, JCPenney, Nordstrom, Walmart, Kohl’s and Sears.

 

Bottled water – not soda – is taking center stage in PepsiCo’s war against Coca-Cola. Pepsi has bought a 30-second Super Bowl ad to debut the company’s new premium bottled water brand, “LIFEWTR,” that is positioned to compete with its archrival’s “smartwater.” The product will be priced at around $2.70 for a 1-liter bottle.

 

 

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