Drill baby, drill pledge sends oil prices down today
Oil slid as U..S President Donald Trump promised to boost U.S. crude production. Brent crude retreated almost 1% to near $80 a barrel.
ALV
Jobs surprise–economy delivers stronger than expected performance in December
In December U.S. economy in December added the most jobs since March and the unemployment rate unexpectedly fell. Nonfarm payrolls increased 256,000, exceeding all but one forecast in a Bloomberg survey of economists. The unemployment rate fell to 4.1%, while average hourly earnings rose 0.3% from November, a Bureau of Labor Statistics report showed Friday. For 2024 as a whole, the economy added 2.2 million jobs—-below the 3 million increase in 2023 but above the 2 million created in 2019. The data almost certainly assured that the Federal Reserve would not cut interest rates at its January 29 meeting. As of 11 a.m. New York time, the yield on the 10-year Treasury had climbed another 5 basis points to 4.74%.
China’s deflation problem got worse in December
China’s consumer price index rose 0.1% in December from a year earlier, in line with the median forecast of economists surveyed by Bloomberg. Factory deflation extended into a 27th month, though the producer price index recorded a slower drop of 2.3%, the National Bureau of Statistics said Thursday. For the full year, consumer prices only inched up 0.2% from 2023, well short of the 1.1% gain economists had predicted at the beginning of 2024.
Fed’s December minutes another nail in the coffin for early interest rate cuts
In minutes from the Federal Reserve’s December 17-18 meeting released on Wednesday, January 8, Federal Reserve officials clearly decided to move more slowly on cutting interest rates in the quarters ahead. “Participants indicated that the committee was at or near the point at which it would be appropriate to slow the pace of policy easing,” minutes from the Federal Open Market Committee showed. “Many participants suggested that a variety of factors underlined the need for a careful approach to monetary policy decisions over coming quarters.” Please note the reference to “quarters” and not “months.”
More bad news for stocks from the bond market today
The 20-year Treasury bond, a laggard on the government debt curve since its re-introduction in 2020, topped 5% Wednesday for the first time since 2023. The move looks to be fueled by concern that President-elect Donald Trump’s policies on tariffs and tax cuts will lead to wider deficits and rekindle inflation.
Stocks fall as they begin to price in no rate cut until July
The Institute for Supply Management’s index of services advanced 2 points to 54.1 last month. That show of strength in the economy–readings above 50 indicate expansion–was enough to push stocks lower as the markets began to price in a delay in the next interest rate cut from the Federal Reserve until July The measure of prices paid for materials and services rose more than 6 points to 64.4, suggesting that the drop in the inflation rate in the service sector–about 70% of the U.S. economy–might be over.
Please Watch My New YouTube Video: Quick Pick Autoliv
Today’s Quick Pick is Autoliv Inc (ALV). Autoliv makes auto safety equipment from seatbelts to newer products such as driver assistance and lane keep. They have a 45% global share of the global auto safety market with growing penetration in China. (China is now about 22% of sales). With a 40% market share in China, the company has room to grow, especially as China exports more and more vehicles. As Chinese car exports grow, so too will Autoliv’s sales of safety products. Chinse cars for the domestic market include 2-3 Autoliv products. Cars for the export market include 4-5. Autoliv just announced earnings on April 25 which beat estimates by about 18% with about a 70-80% increase in earnings year over year. Morningstar calls the stock fairly valued, I think that’s an underestimate. The price to sales on the stock is currently at 0.97 and the trailing 12-month PE is 19.17, and the forward EPS is at 13. The shares also offer a 2.1% dividend yield with a buyback yield of 4.7%. Free cash flow is rising (up $170 million last year) even while the company is investing more in China, India, and Vietnam. Autoliv has also shown a solid increase in operating margin in the most recent quarter from 5.17% to 7.4% and management is hoping to drive that up to 10%. I’m adding the shares to my Jubak’s Picks Portfolio.
Autoliv beats on prospects for global auto recovery–but I think you’ve got better stocks to play this trend
Autoliv (ALV) reported third quarter earnings per share of either $1.48 (non-GAAP) or $1.12 (GAAP). (GAAP is generally accepted accounting principles.) That consensus was $1.09 a share on Wall Street. Revenue of $2.04 billion was in line with expectations and up 0.5%...Good news and bad news on risk today after Trump-Xi “success”
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Autoliv shares move up as future outweighs past
Before the market open today, Autoliv (ALV) delivered disappointing earnings for the third quarter. But the stock still climbed on news that China is considering cutting the tax on car purchases to 5% from 10% in an effort to stimulate the country's auto market at a...
White House announces trade deal with Mexico to replace NAFTA
If you're looking for a reason for U.S. stocks to keep climbing from current highs, this morning's event at the White House is a big deal. President Donald Trump announced that the U.S. and Mexico have reached a bilateral trade agreement that would replace the 1993...
Autoliv earnings beat and spinoff plans buck today’s market plunge
To subscribe to JAM you need to fill in some details below including, ahem, some info on how you'll pay us. A subscription is $199 (although if you're subscribing with one of our special offers it will be lower) for a year for ongoing and continuing access to the...Jim’s Stock Alerts
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