X Gon’ Give it to Ya!
Just like how DMX gifted his music to the world (RIP Earl Simmons), U.S. Steel (X) gifted their shareholders a kick-a** Q3 earnings report. The company not only crushed earnings estimates, but also raised their dividend. Shares of X closed Friday’s trading session up 13%. The company reported the following:
- $5.36/share on $6B in sales vs. the Street’s estimates of $4.87/share on $5.8B in sales.
- 4.1M tons of steel were shipped in Q3, up from the 3M tons shipped a year ago.
- The company also announced that it would buy-back $300M in stock and raise the quarterly dividend from $.01/share to $.05/share.
Friday’s move in U.S. Steel puts it up close to 60% year-to-date. This move in X tracks with the future’s price of Hot-Rolled Coil (HRC), a key benchmark in the steel industry. HRC is up 79% YTD, with U.S. Steel trading between $20 and $31 since late March. Friday’s announcement has pushed the stock back through the midpoint of that range.
Turn that Zune up to 11
^Microsoft’s C-Suite celebrating at Chili’s happy hour
The old king reigns once more. On Friday Microsoft (MSFT) surged ahead of Apple (AAPL) to become the world’s most valuable company by market cap, at $2.49T. Apple reported a disappointing quarter on Thursday of last week, dropping its value to a paltry $2.46T. How embarrassing.
- MSFT reported a strong quarter last week, with EPS of $2.27 vs. estimates of $2.07, and revenue of $45.32B compared to the expected $43.97B.
- Results were up across business segments, with Cloud Services, Productivity & Business Processes (LinkedIn and Office), and More Personal Computing (Windows, gaming, devices) all up double digits YoY.
- Despite the company seemingly firing on all cylinders, nobody wants to set Bing as their default search engine.
Shares of MSFT were up 2.24% on Friday and are up 48% YTD. Quarters like this where all segments are contributing could mean that the company is poised to continue its momentum and upward trajectory. CEO Satya Nadella continues to prove that Steve Ballmer is best suited for underperforming as an NBA owner.
Are we sure it’s just transitory?
^ a live look at inflation rising
Normally when something hits a 30 year high it’s good news, but not when that metric happens to be inflation. Headline inflation, which includes food and energy costs, rose at a 4.4% clip during September, the fastest pace since 1991. Maybe this all has something to do with crowds at football stadiums chanting for some guy named Brandon?
- Core inflation, which is apparently an inflation measure without food or energy and does not pertain to abs, was up 3.6% annualized, also a 30 year high. Who needs to eat or drive or heat their homes anyway?
- Prices may be on the rise, so surely income is keeping pace, right? Well no, as personal income decreased by 1% during September. Maybe next month’s reporting will be better since October should have some good news driven by staffing up of Spirit Halloween stores.
- Another potential drag on the economy is potential weakening of consumer spending, which was up only 0.6% in September.
Inflation keeps rising, meanwhile, personal income has mostly stayed the same. To try to make up the difference and fight inflation, investors may be driven into riskier assets, so it’s possible that stocks and cryptocurrencies benefit. The best combatant may be high end bourbon though, since prices continue to hit comical levels. Best of luck to any of you trying to source some Pappy Van Winkle during the annual Buffalo Trace Antique Collection release.