It was a big day in the markets as earnings drove stocks higher with the NASDAQ crossing the 6k mark for the first time and the Dow gaining 232 points on heavy trading volume to close at 20,996
One trend of note in the United States is the ever increasing export volumes of natural gas either in LNG form or via pipelines to Mexico. With huge stockpiles of natural gas now in the US, exports to Asia, Central America and parts of Europe grew 30% from 2015 to 2016. Cheniere Energy, which is the first US company to export LNG, started shipping gas in June of last year and has now reported massive quarterly revenue gains since then. Some gurus are saying that exports of gas from the US could grow to 13% of US Nat gas production within 5 years.
US Housing stocks today took a hit after the Trump administration announced a 20% tariff on Canadian lumber imports. Canada supplies about a third of US lumber and for years US mills have complained about cheap Canadian lumber and unfair subsidies from crown lands. The tariff battle has been brewing for several years. Canada made it clear last year that no deal was better than a bad deal and since both sides were not able to reach an agreement, the May 2017 time period has been on the calendar for the tariff to take effect. Because the tariff was on the low end of what was expected, Canadian lumber stocks were higher while the Canadian looney took a hit since export lumber is important to their economy. The tariff will add a few thousand dollars to the cost of each new home in the US. US mills support the tariff while US home builders oppose it. It will be interesting to see how this plays out in the larger context of renegotiating NAFTA.
Earnings reports of note came from McDonald’s, Cat, Alcoa and DuPont which all reported better than expected results and sent shares higher. Alcoa had a great report and is anticipating solid forward demand. Revenue was up 25% and net was higher by 200%.