Your Weekly Market Blip 10/25/19

Your Weekly Market Blip 10/25/19

Stocks were higher today on earnings reports and US China trade progress. At the close the Dow was up 152 on mixed volume at 26,958. For the week the Dow gained about 187 points or roughly 0.7%. Shares of Boeing were lower after the Indonesian Transportation Safety Committee issued its report about the Lion Air crash. They said the main culprit was a design flaw with the MCAS but along with this a faulty sensor, inadequate maintenance, poor pilot training and a failure to heed previous problems with the same aircraft all contributed to the crash. Boeing said it is working to correct all errors.

Alaska Air (“Alakba Air” as they say in Moscow) reported good earnings sending shares to a 52-week high. The company posted an increase in revenue of 8% and a gain in profits of 38%. Both top and bottom line numbers beat guru estimates. Margins were higher as the load factor rose to 85.8% and revenue passenger miles were up 4.4%. The company is on the verge of paying off the $2 billion it borrowed to buy Virgin Atlantic as debt levels continue to drop. Alaska increased its dividend 9%, bought back stock and is now hinting at buying new jets.

Amazon posted its quarterly numbers and the results revealed that strong revenue growth was offset by higher expenses as the company rolls out its same day delivery service. Revenue was up 24% and for the first time hit $70 billion for the quarter. Net income however was down 26% missing estimates. The stock plunged 9% in overnight trading but then rallied back and ended the day down only 1% as gurus remain bullish.

In the steel industry, US iron ore pellet producer Cleveland Cliffs reported lower numbers but managed to beat estimates with a revenue of $555 million down 25% and net income off 48%. The reason I am talking about this is that comments made by the CEO shed light on the global status of the steel industry. CEO Lorenzo “Steelinho” Conclaves (he is from Brazil) said that domestic US steel industry has become more efficient and that increased production has pushed prices down even though US demand is steady. Globally however China has maintained its steel export levels in the face of US tariffs by abandoning environmental standards and dumping steel into the EU economic zone hurting European steel producers. He noted that European steel companies are cutting orders for ore as they grapple with this flood of Chinese steel. Steelinho said that tariffs are protecting US producers from the storm, but he is upset that China continues to produce and find buyers for tons of cheap steel made without any environmental standards to speak of.

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