The Dow popped 150 points higher on heavy trading volume to close at 26,496 as……you guessed it……. trade talks between the US and China seemed to unfold in a positive way. Apparently, President Trump and the Chinese Vice Chair meet tomorrow at the White House. It’s steady as she goes in the markets with both IBD and BTS indicators remaining neutral to positive for the time being.
San Francisco based utility Pacific Gas & Electric is having a bad day. While upwards of a million of its customers sit in the dark due to planned “fire prevention” power outages, a judge in California ruled the company could not have exclusive say over its reorganization from chapter 11 bankruptcy and must allow institutional bond holders, some of them ad hoc, a hand in the process. The result of this decision is to increase the risk that shareholders will be wiped out while the bondholders get more grease. This upset the company because some hedge funds and institutional bond managers swooped in and bought PG&E bonds on the cheap and the company contends this court decision only enriches these so called speculators. Bond prices jumped on the news while shares of PG&E fell 30%.
Strong demand for air travel helped Delta Airlines report better than expected numbers as passenger revenue was up 6% while fuel costs were down 11.6%. This resulted in a 29% jump in net income off a 5% increase in total revenue. The two flies in the ointment however were a 17% drop in freight and weak forward guidance by management. These two issues overcame the good numbers and investors pushed shares lower.