Final day of the month, with all the major indices at multiyear highs: Dow up 3.6 percent, Transports up 4 percent. This is the 5th month in a row of positive returns for the Dow Industrials.
I get two types of emails on this: 1) why doesn't the public care about the big move up in stocks? Or 2) why don't stocks care about the lousy job market and the sluggish economy?
One thing's for sure: the public could care less about the outstanding state of the balance sheet of corporate America, or about the low interest rates that make it easy to borrow money. "We don't feel any of that," my sister remarked to me last weekend. She simply could not understand why the markets were up, even though she was a beneficiary.
1) While it has been a quiet night overseas (Tokyo and London were closed), the dollar continues to decline against all the major currencies.
2) Caterpillar up 3 percent pre-open, reported a blowout quarter: $1.84, well above consensus of $1.31, and five times the profit they made in the same period last year. Revenues of $12.95 billion were also nearly 10 percent above consensus — that is very rare. 2011 guidance of $6.25-$6.75 was above prior guidance of $6.00.
They didn't just sell more, they also had higher prices, though manufacturing costs also increased.
3) Goodyear Tire jumps 7 percent after shocking the Street with an enormous beat ($0.42 vs. $0.12 consensus). Surging raw materials costs were nearly completely offset by higher prices. Sales jumped 27 percent, thanks not only to higher pricing (up 15 percent), but also higher tire volumes (up 7 percent).
The tire maker expected continued growth this year and has boosted its volume outlook to the high end of its previously-announced range of up 3 percent to 5 percent. Meanwhile, cost inflation will not ease — it predicts commodity costs will soar 25 percent to 30 percent this year!
4) Cemex is down fractionally after posting a first quarter loss. However, sales rose 11 percent, more than expected, as volumes improved particularly in Mexico, Latin America, and Europe. But the building materials firm still signaled construction weakness in the U.S. as sales dropped 8 percent in the quarter.
5) More good news out of the auto sector — American Axle also jumps 7 percent after profits more than doubled, handily beating Street estimates ($0.50 vs. $0.38 consensus). Revenues soared a much better-than-expected 24 percent in the quarter to their highest level in over 3 years as non-GM sales surged 44 percent. Demand also improved as volumes for GM & Chrysler truck and SUV programs rose 11 percent.
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