Awful Thursday
My golden oldies IBM and AT&T (T) will jointly provide corporate users with cloud hosting. If the New Jersey techies who missed their deadline for our bluehost website's restoration do not come up with a solution soon I may just turn to these two companies which offer Cloud Satellite and Red Hat Open Shift to improve security and customer experience. Dear Ian Luca, dear Calvin, dear Allen please reply to my request to learn when the website will be operational. Or I will tell my readers about your lack of respect for customers who pay you for setting up their sites. I need to know because I have trips planned and a daughter having an operation.
Big econometric data today should have boosted stock prices, but for one big negative: bad results from several major global shares, so the sell-off continued, but at a moderate level compared to Wednesday. Because we are now in a real Terrible Thursday, I will try to be brief about the macro numbers.
In Q3 the US gross national product went into a real recovery period, with growth at 7.4%. Using the Department of Commerce annual figures, this comes to 33.1%, vs the estimate of 32%. Remember that GNP fell 31.8% in Q2 so this is mostly catch-up. But it was a record all the same.
Upbeat too was the level of new unemployment claims, at 757,000 whereas the consensus forecast had been 778,000.
While the big 4 techs which have been sustaining the market report today, we don't own any of them. So here is the news from our companies:
*Nokia quarterly earnings at 6¢/sh was a penny below the consensus estimate of 7¢. It was up 20% from the nickel the Finnish telephone equipment maker earned a year earlier. But then NOK reported quarterly sales with missed by $100, mn at $6.19 bn. Sales were also down by $100 mn from the level of the last Q3. All that would have not sunk the share had NOK not warned about gaps ahead in margins expected to fall to 9% from 9.5% in 2020 and to 0.07% to 10% next year, below the prior forecasts by NOK. This took the share down a massive 20.12% here. (It only fell 13% in European trading.)
Its new CEO Pekka Lundmark announced that NOK will split into 4 business groups to beat archrival Ericsson and new contender Samsung of Korea in 5G even though Huawei is now a reduced threat. They will begin next year and the groups are: mobile networks; IP and fixed networks; cloud and network services; and Nokia Technology (the patent holders.) Barron's speculates that Mr. Lundmark is clearing the decks to produce bang-up results going forward, which I hope is right. NOK stock is rated buy to hold by most analysts.
*Japanese robotics firm Fanuc (FANUY) rose 5.8% today despite its H1 profits off 39% to Y28.11 bn. That counts as good news because in Q1 its net fell 61%. The equivalent in dollars was $270 mn. Net profit was Y19 bn in the quarter beating consensus forecasts of Y12.94. Revenues were off 12% in H1 to Y230.4i bn, but Q2 again beat, at Y121.2 bn, vs the consensus estimate of Y114.15 bn. Better yet, FANUY now expects to have full-year profits of Y502.5 bn and a net profit of Y71.8 bn. Its FY ends on March 20, 2021.
*Tower Semiconductor, Israeli-US run, gained 1.5%. TSEM chips are an alternative to Chinese.
*Royal Dutch Shell (RDS-B), whose B shares we own, reported earnings which beat handily at plus 6¢ vs forecasts of minus 29¢. Because the ADRs equal 2 shares, you need to double those levels. Its adjusted earnings totaled $955 mn topping forecasts. Revenues missed at $44 bn and also were down 49.2% from prior Q3. Its dividend saved the day, raised by 4% in euros and marginally more than that in bucks at the present exchange rate. It will be paid Dec. 16, so the exchange rate is a mystery depending on among other things who wins the US election and how many hurricanes there are till then. At present stock prices, the yield is an appealing 5.77% despite a freeze on dividends by the EU. Now up 5.4%.
The boost in earnings came from higher prices and demand for refined fuel and other products, as gas prices remained under pressure and refineries were under-used and under price pressure. A tax break helped according to Dow Jones, which gave no details. Shell shares went ballistic here, up 6.8% although down 80% in 2020. We bought it later. Shell's rise boosted BP plc (BP), which gained 1.4%.
*Chinese electric vehicle maker Nio rose 12.5% today, back over $30 on the troubles of rival electric carmakers (including Tesla) which did recall over battery fire risks and suspension. Polestar (Volvo) today recalled its vehicles for an inverter issue. It is the one with the vegan interior and googles built-in. NIO reported that it hit 5000 vehicle production in Hefei, its new HQ, a new month high, in Sept.
*Algonquin Power & Utilities rose 1.5% to $15.29 today on hopes for its quarterly results coming Nov 13. AQN here, APUC up north, both in US$s.
*Our India solar power stock is up 4.67%, Azure of Mauritius. No news.
*Dr Reddy's of India which reported yesterday was said to be able to boost its generics drug margins going forward by ICICI Securities, as reported by Dow Jones. Its TP was raised 3% by the Indian brokerage. In the conference call yesterday, its growth figures were massaged by adding licensing income, without which there would have been a drop in overall earnings despite a 46% level in India. RDY is up 2.3% here. Its CEO is name is Erez Israeli.
*A real Israeli drug firm, Compugen (CGEN), gained 2.76% today It reports on Q3 Nov. 5. Teva (TEVA) lost 2.15%.
*Chinese Beigene (BGNE) which did a complex capital increase I wrote up earlier this week, is up fractionally, but back over $300.
*Despite announcing phase 2 trials for Motafixafortide with Libayo (anti PD-1 complimab) and chemo to treat metastatic pancreatic cancer, BiolineRX of Israel is down here today. The killer cancer treatment works in mice.
*Irish CRH is selling its Brazil cement business to Companhia Nacional de Cimento for $218 mn, which boosted CRH's share price by 2.75%. It is also a Biden play.
Funds
*SPDR Gold (GLD), fell 0.5%. But gold miner Kirkland Lake (KL) whose costs are in loonies is up 2.1%. The price of gold rose to $1909.90.
*Fibra Uno, the Mexican REI (FBASF), rose 5.25% today.
*Aberdeen Asia Pacific Income Fund (FAX) rose 1.52%. Aberdeen Global Income Fund (FCO) which often trades at a premium, rose only 1.04%.
*New Ireland Fund rose on no news except that for CRH, up 2.5%.
*Goldman Sachs Japan ETF (GSJF) rose 0.55% while Japan Small Cap Fund, closed-end JOG, rose 0.84%. Korea Fund is up 0.42%.
*Investor A/B of Sweden gained 0.16%. IVSBF counts as a Scandinavia fund and owns achunk of NASDAQ.
*But the Swiss Helvetia Fund lost 0.4%. Foreign funds are a way to cut election upheaval risks.