Tue, Feb. 9, 6:43 PM
- The U.S. Supreme Court blocks Pres. Obama's planned new federal regulation that would cut emissions from power plants, halting at least for now the administration's sweeping effort to combat climate change.
- The justices heeded calls from utilities, coal miners and more than two dozen states to halt the EPA rule while court challenges go forward.
- The delay will last at least until a D.C. appeals court rules on the plan, probably later this year after it hears arguments in June; meanwhile, the EPA will not be able to enforce a Sept. 6 deadline for states to either submit their emission reduction plans or request a two-year extension.
- ETFs: XLE, XLU, VDE, ERX, OIH, UTG, IDU, VPU, ERY, DIG, DUG, BGR, IYE, GUT, BUI, FENY, PXJ, FIF, RYE, FUTY, RYU, UPW, FXN, FXU, DDG, PUI, SDP
Thu, Jan. 21, 7:27 PM
- An attempt to delay enforcement of Pres. Obama's Clean Power Plan to reduce greenhouse gas emissions until legal challenges are resolved is denied by the U.S. Court of Appeals for the D.C. Circuit.
- The court order is an early victory for the EPA in what is likely to be a multiyear legal battle over a cornerstone of Pres. Obama's climate plan, which more than two dozen states and various utility companies, coal producers and business groups opposed, arguing they faced immediate burdens from complying with the regulation, which the administration issued in August.
- The regulation requires a 32% cut in power-plant carbon emissions by 2030 based on emissions levels of 2005.
- ETFs: XLE, XLU, VDE, ERX, OIH, UTG, IDU, VPU, ERY, DIG, DUG, BGR, IYE, GUT, BUI, FENY, FIF, PXJ, RYE, FUTY, RYU, UPW, FXN, FXU, DDG, SDP, FUGAX
Fri, Jan. 15, 4:16 PM
Wed, Jan. 13, 2:56 PM
- The day's declines have picked up a good bit of steam, with all of the major averages sitting at session lows a bit more than an hour before the close.
- The Nasdaq (NASDAQ:QQQ) and Small-caps (NYSEARCA:IWM) are leading the way with declines of more than 3%, while the Dow (NYSEARCA:DIA) and S&P 500 (NYSEARCA:SPY) are off just over 2%.
- Leading sectors on the downside: Energy (XLE -2.5%) and Financials (XLF -2.4%). What's working? Utilities (XLU), barely.
- In the green for most of the session, oil is now modestly lower and threatening to head below $30 per barrel.
- Money is pouring into fixed income, with the 10-year Treasury yield off another five basis points today to 2.05%. It hasn't been below 2% since early October. TLT +1%, TBT -2%
Tue, Jan. 12, 3:17 PM
- The 10-year Treasury yield is off eight basis points on the session at 2.10%, and now lower by about 20 basis points since the Fed Funds rate got hiked 25 basis points less than a month ago - probably not the best scenario for mREIT earnings going forward.
- Other income favorites like equity REITs, BDCs, and utilities (XLU -0.8%) are also being aggressively sold today.
- Annaly Capital (NLY -1.8%), American Capital Agency (AGNC -1.7%), Armour Residential (ARR -2.4%), Two Harbors (TWO -2%), CYS Investments (CYS -1.9%), Invesco (IVR -2.3%), New York Mortgage (NYMT -2.3%), Hatteras (HTS -3.2%), Capstead (CMO -3.6%), Western Asset (WMC -2.9%), Apollo Residential (AMTG -3.6%), Dynex (DX -3.1%), Ellington Residential (EARN -3.5%), AG Mortgage (MITT -3.2%), PennyMac (PMT -4.9%), FIve Oaks (OAKS -5.7%)
- ETFs: MORL, REM, MORT, LMBS
Wed, Jan. 6, 2:49 PM
- Add together geopolitical concerns, falling stock prices, crumbling oil, and the idea the Fed may have gotten it wrong when it tightened monetary policy last month, and gold gets off to a big start to the year.
- In fact, since the Fed hiked in mid-December, the three best-performing asset classes are the VIX (NYSEARCA:VXX), the gold miners (NYSEARCA:GDX), and gold (NYSEARCA:GLD). After that are utilities (NYSEARCA:XLU) and long-dated Treasurys. Go figure.
- Today's 1.35% gain in gold has the metal up about 3% in 2016, and at $1,093 per ounce, its highest price since early November.
- Previously: Oil tumbles to new bear market low (Jan. 6)
- Previously: FOMC Minutes: Rate hike a "close call" for some (Jan. 6)
Dec. 18, 2015, 5:26 PM
Dec. 9, 2015, 3:13 PM
- The bank's team is fairly aggressive in their expectation of rate hikes, seeing a 25 basis point move next week and another 100 basis points by the end of 2016.
- The cycle, they say, most closely resembles that of 2004, and regulated utilities outperformed the broader market by 6% and 18% in the three and 12 months following the first hike that year.
- As for this particular moment, Barclays says a flattening yield curve, increasing high-yield default rates, and a strong greenback impacting S&P earnings relative to utilities all bode well for the sector.
- The team's favored picks: NextEra Energy (NYSE:NEE), American Electric Power (NYSE:AEP), Entergy (NYSE:ETR), Xcel Energy (NYSE:XEL), and PG&E (NYSE:PCG).
- Utility ETFs: XLU, UTG, IDU, VPU, GUT, BUI, FUTY, RYU, UPW, FXU, SDP, FUGAX
Dec. 4, 2015, 5:57 PM
- Shares in NRG Energy (NYSE:NRG) and Dynegy (NYSE:DYN) - two of the largest U.S. independent power producers - each fell 18% today, even as most utility stocks (NYSEARCA:XLU) rose and the broader market surged.
- Barron's Amey Stone says one factor was yesterday's resignation of NRG CEO David Crane, who led the company’s push into renewable energy and was considered a visionary leader.
- Stone also notes that today's slide continued a drop that started December 1, the date of a settlement between utilities and regulators in Ohio over “income guarantees" that DYN opposes; since Dec. 1, DYN has dropped 30% and NRG has slide 27%.
- UBS analyst Julien Dumoulin-Smith points to the renewed slide in energy prices, the Ohio settlement, and discussions of possible extensions of tax credits for renewable energy.
Nov. 18, 2015, 5:59 PM
- Declining utility stocks are a harbinger of rate increases, as the sector tends to underperform the broader market when rates are rising, and the S&P utilities index is trading near levels seen Sept. 16, when many investors and economists also expected the Fed to raise rates.
- The average utility dividend yield has risen to 4.07% from 3.96% on Sept. 16, another sign that investors expect a rate increase; it had dropped to 3.68% on Oct. 22 after the Fed left its target rate at 0%-0.25%.
- There’s no short-term risk to utility profit or cash flow from a modest rate increase in December, says Bloomberg credit analyst Jaimin Patel.
- ETFs: XLU, UTG, IDU, VPU, GUT, BUI, FUTY, RYU, UPW, FXU, PUI, SDP, PSCU
Nov. 13, 2015, 4:20 PM
Nov. 6, 2015, 12:54 PM
- With higher rates now all but reality after this morning's blowout jobs number, the Utilities Select Sector SPDR ETF (XLU -3.5%) is on pace for its worst one-day decline in five years, writes Chris Dieterich.
- The 10-year Treasury yield is now higher by 10 basis points to 2.33% and the two-year yield up seven bps to 0.89% - its highest level in more than five years.
- The action in utilities mirrors that of another income-favorite sector, the REITs, and stands opposite of that of income-starved sectors, the banks, insurers, and brokers.
- ETFs: XLU, UTG, IDU, VPU, GUT, BUI, FUTY, RYU, UPW, FXU, PUI, SDP, PSCU, FUGAX
Oct. 23, 2015, 6:45 PM
- Two dozen states file a lawsuit against Pres. Obama’s carbon emission regulations, the administration's signature climate change rule for power plants, challenging the EPA’s authority to enforce the rules issued in August.
- The challengers are expected to focus on whether the EPA exceeded its powers by pushing utilities to shift to cleaner forms of energy instead of just focusing on pollution controls at fossil fuel-fired power plants.
- Senior EPA officials say they are confident the agency's Clean Power Plan is legally sound, but the EPA is relying upon a seldom-used section of the Clean Air Act as its authority for the rules, which leaves an opening for legal scrutiny.
- Most of the states involved in the legal challenge are reliant on fossil fuels, and all but two of the 24 are led by Republican governors.
- The EPA rule seeks a 32% cut in the power sector’s carbon emissions by 2030 vs. 2005 levels.
- ETFs: XLE, XLU, VDE, ERX, OIH, UTG, IDU, VPU, ERY, DIG, DUG, BGR, IYE, GUT, BUI, FENY, PXJ, FIF, RYE, FUTY, RYU, UPW, FXN, FXU, DDG, PUI, SDP, PSCU, TONS, FUGAX
Oct. 16, 2015, 4:14 PM
Oct. 12, 2015, 10:56 AM
- Electricity producers are largely planning to comply with, not contest, the Obama administration’s new rule limiting carbon emissions from power plants, believing the new regulations at least add certainty to their plans to move away from coal to generate electricity toward cheap natural gas and renewable energy, WSJ reports.
- "Everybody is moving in this direction anyway,” Dominion (NYSE:D) CEO Tom Farrell says.
- "Our coal assets are still running but they’re not making any money," says CEO Bob Flexon of Dynegy (NYSE:DYN), whose generating capacity is ~45% coal and 55% gas. “All the earnings are coming from our gas portfolio."
- Certainly not every utility has agreed to go along with the EPA’s 15-year plan to cut carbon dioxide emissions from the power industry by 32% from 2005; among those who say they are still studying the rule and deciding on next steps are DUK, AEP and SO.
- ETFs: XLU, KOL, UTG, IDU, VPU, GUT, BUI, FUTY, RYU, UPW, FXU, SDP
Oct. 8, 2015, 12:43 PM
- Ahead of revisions to the Global Industry Classification Standard structure set to take effect next August in which real estate-related stocks will be broken out of the financial sector, State Street's (NYSE:STT) Real Estate Select Sector SPDR (NYSEARCA:XLRE) opens for trade alongside the FInancial Services Select Sector SPDR (NYSEARCA:XLFS). The Financial Select Sector SPDR (NYSEARCA:XLF) remains the same for those looking for exposure to the whole sector in just one ETF.
- Concurrent with the launches, SSgA cuts the expense ratio for the entire Select Sector SPDR ETF suite to 0.14% from 0.15%.
- Other Sector SPDRs: XLY, XLP, XLE, XLV, XLI, XLB, XLK, XLU
The Utilities Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Utilities Select Sector Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
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