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First Trust Utilities AlphaDEX ETF (FXU)

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  • Fri, Aug. 14, 2:48 AM
    • Fifteen U.S. states, led by coal-producing West Virginia, have launched an effort to halt President Obama's landmark climate policy while they prepare a legal challenge to have it overturned.
    • The states are first seeking a stay order, or injunction, because they say Obama administration deadlines mean the demand to cut emissions is effective immediately.
    • The Clean Power Plan calls for the U.S. power sector to slash carbon emissions 32% (from 2005 levels) in 2030.
    • ETFs: XLE, XLU, VDE, ERX, OIH, KOL, UTG, IDU, VPU, ERY, DIG, DUG, BGR, IYE, GUT, BUI, FENY, PXJ, FIF, RYE, FUTY, RYU, UPW, FXN, FXU, DDG, PUI, SDP, PSCU, FUGAX
    | 27 Comments
  • Mon, Aug. 10, 7:15 PM
    • Macquarie analyst Andrew Weisel makes a bullish case for utilities such as Edison International (NYSE:EIX), American Water Works (NYSE:AWK) and Aqua America (NYSE:WTR), noting that regulated utilities have boosted dividends by a median of 6.4% over the past year despite ambitious capex plans, and valuations look attractive.
    • Weisel prefers growth over yield, emphasizing that utilities with a top-quartile long-term growth outlook consistently outperform those with top-quartile dividend yields; he forecasts the fastest growth for EIX, AWK and WTR, and the slowest for Duke Energy (NYSE:DUK), PPL Corp. (NYSE:PPL) and Teco Energy (NYSE:TE).
    • ETFs: XLU, UTG, IDU, VPU, GUT, BUI, FUTY, RYU, UPW, FXU, SDP
    | 7 Comments
  • Thu, Aug. 6, 9:58 AM
    • The campaign to stop the Obama administration’s new emissions limits on power plants began taking shape yesterday, as 16 states asked the government to put the rules on hold while a Senate panel moved to block them.
    • West Virginia's attorney general led 15 other state AGs in a letter to the EPA requesting the agency temporarily suspend the rules while they challenge their legality in court; the administration believes its plan is legal and will not put it on hold, but by submitting the formal request, the states are laying the groundwork to ask the courts to suspend the emissions limits.
    • Although the most serious threat to the new power plant rules is in the courts, lawmakers in Congress are also pursuing legislative means to stop them, where a bill blocking the rules passed in the Senate Environment and Public Works Committee.
    • 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
    | 9 Comments
  • Tue, Aug. 4, 8:05 PM
    • The utilities (NYSEARCA:XLU) sector was Wall Street's biggest decliner today as natural gas was the surprise loser from Pres. Obama’s climate plan, with the White House apparently abandoning its previous enthusiasm for gas as a cleaner alternative to coal.
    • Gas producers were "confused and disappointed" that the administration eliminated an earlier projection that natural gas would contribute much more electricity, instead increasing the role of renewables; also perplexed were utility companies, who have led a power transformation and spent hundreds of millions of dollars to switch generating plants from coal to shale gas.
    • American Electric Power (NYSE:AEP) CEO Nicholas Akins says the U.S. does not have the luxury of being able to ditch nat gas, saying the only way to power big industrial processes is through large-scale, 24-hour generation close to consumers - “solar doesn’t provide that and wind doesn’t provide that."
    • The final plan is considered a boon for companies such as SolarCity (NASDAQ:SCTY) and NextEra Energy (NYSE:NEE) that have invested billions in renewable generation, but Sanford Bernstein calls NRG Energy (NYSE:NRG) the biggest potential loser from the plan, saying profits in some scenarios could tumble by half because most of its electricity comes from coal plants that are in EPA’s cross-hairs.
    • ETFs: XLE, XLU, VDE, ERX, OIH, KOL, UTG, IDU, VPU, ERY, FCG, DIG, GASL, DUG, BGR, IYE, GUT, BUI, FENY, FIF, PXJ, RYE, FUTY, RYU, UPW, FXN, FXU, DDG, SDP
    | 97 Comments
  • Mon, Aug. 3, 6:35 PM
    • Coal miners and related companies tumbled following today's announcement of the Obama administration's final Clean Power Plan, which aims to shift the U.S. energy mix towards renewable energy such as wind and solar while significantly limiting power plant carbon dioxide emissions.
    • Pres. Obama called the plan the “single most important step America has taken in the fight against global climate change," even though U.S. power plant emissions account for just 5% of global carbon emissions.
    • The final EPA rule requires a 32% cut in power plant carbon dioxide emissions by 2030 from 2005 levels, an increase from the 30% target proposed last year.
    • Industry officials are concerned about the plan’s cost, and Republicans and states hardest hit by the plan say they will fight it; more than a dozen states and the coal industry plan to sue the EPA, and several states say they will refuse to comply.
    • ETFs: XLE, XLU, VDE, ERX, OIH, KOL, UTG, IDU, VPU, ERY, DIG, DUG, BGR, IYE, GUT, BUI, FENY, PXJ, FIF, RYE, FUTY, RYU, UPW, FXN, FXU, DDG, PUI, SDP, PSCU, FUGAX
    | 58 Comments
  • Tue, Jul. 7, 11:46 AM
    • It's not just Greece, where that country's government officials arrived in Brussels today with no new proposal to save its EMU membership (one is now promised for tomorrow), but China's stock market bubble is in the midst of a spectacular collapse. This even as Beijing's efforts to prop up share prices make the Federal Reserve look like the Ayn Rand Institute.
    • The 10-year U.S. Treasury yield is lower by nine basis points to 2.20%, the U.K. 10-year yield is down 16 bps to 1.86%, and the German 10-year yield is down 12 bps to 0.65%. Copper is leading across the board declines in commodity prices.
    • European stocks closed down another 2.1%, and the S&P 500 is down 1%. The Utilities SPDR (NYSEARCA:XLU), however, is up 1.6%, and the iShares Real Estate ETF (NYSEARCA:IYR) is up 0.7%. A mortgage REIT ETF (NYSEARCA:REM) is up 0.7%.
    • Realty Income (O +0.6%), Omega Healthcare (OHI +1.3%), HCP (HCP +1.7%), Equity Residential (EQR +1.4%), Simon Property (SPG +1.2%), Kimco (KIM +1.3%), Public Storage (PSA +1.5%), Boston Properties (BXP +1.6%), Strategic Hotels (BEE +1.2%), First Industrial Realty (FR +1.1%).
    • ETFs: IYR, VNQ, DRN, URE, RQI, SCHH, ICF, SRS, RWR, RNP, JRS, KBWY, RFI, NRO, DRV, RIT, REK, RIF, FRI, FTY, PSR, DRA, FREL, WREI, IARAX
    • ETFs: XLU, UTG, IDU, VPU, GUT, BUI, FUTY, RYU, UPW, FXU, PUI, SDP, PSCU, FUGAX
    | 16 Comments
  • Mon, Jun. 29, 7:37 PM
    • For some big U.S. power companies, the Supreme Court's rejection of EPA rules reducing air pollutants from coal-fired plants has arrived too late for them to turn away from a natural gas-fueled future.
    • FirstEnergy (NYSE:FE) already has deactivated 5,429 MW of coal-fired generation and says it has no intention of placing any of it back on line, saying "deactivating power plants is an expensive process, and once they are deactivated it is difficult to restart them."
    • Dynegy (NYSE:DYN) says it already spent $2B to comply with MATS and other air regulations, and NRG Energy (NYSE:NRG) says it already added the necessary equipment to comply with state and federal laws.
    • Officials at other big power companies including American Electric Power (NYSE:AEP) and Duke Energy (NYSE:DUK) also say they will not change their ongoing MATS compliance activities.
    • ETFs: XLU, UTG, IDU, VPU, GUT, BUI, FUTY, RYU, UPW, FXU, SDP
    | 36 Comments
  • Thu, Jun. 25, 6:15 PM
    • Utilities stocks as a group have deteriorated nearly 12% YTD and 6% this month alone, but the carnage may not be over, WSJ's Spencer Jakab warns.
    • Jakab notes that utilities stocks’ P/E ratio relative to the S&P 500 has dropped to ~91% today from 107% at the start of the year, but the figure remains well above the 73% average seen during the 2000-06 period.
    • As interest rates have risen this year - and an eye toward what the Fed may do later this year - utilities stocks have been crushed, and the sector’s P/E has dropped back into the 15s; at one point last year, the P/E for utilities was higher than that of the S&P 500 as well as the technology sector.
    • ETFs: XLU, UTG, IDU, VPU, GUT, BUI, FUTY, RYU, UPW, FXU, PUI, SDP, PSCU
    | 2 Comments
  • Tue, Apr. 21, 12:27 PM
    • Capital spending by utility companies has soared across the U.S. - and so have customers' bills - despite the lower cost of natural gas, the main fuel used to generate electricity, WSJ reports.
    • Annual capex by investor-owned utility companies has climbed to $103B in 2014 from $41B in 2004, while U.S. residential electricity prices have jumped 39% over the same period; the average price of a kilowatt-hour of electricity rose 3.1% last year to $0.125/kwh, far above the rate of inflation.
    • Experts say there are several reasons for the surge in spending - including environmental mandates and the need to protect the grid against storms - but there's another major reason: It actually boosts their bottom lines as a result of a regulatory system that turns corporate accounting on its head.
    • It is now common for utilities’ allowable profit to be capped at ~10% of the shareholders’ equity that they have tied up in transmission lines, power plants and other assets - so the more they spend, the more profits they earn, which critics say can prompt spending on projects that may not be necessary or to choose high-cost alternatives over lower-cost ones.
    • ETFs: XLU, IDU, VPU, FUTY, RYU, UPW, FXU, PUI, SDP, PSCU
    | 3 Comments
  • Thu, Apr. 16, 12:25 PM
    • A federal appeals court begins hearing arguments today in two cases challenging the EPA’s far-reaching proposal to cut pollution from U.S. coal-fired power plants.
    • The lawsuits - one from a coalition of 15 states and another brought by privately held coal miner Murray Energy - are part of a growing pushback from opponents who say the move is illegal and will kill jobs, hurt demand for coal and drive up electricity prices.
    • The EPA rule proposed last year requires states to cut carbon emissions by 30% by 2030, giving customized targets to each state and leaving it up to them to draw up plans to meet the targets.
    • Coal industry arguments will be helped by an unlikely ally: iconic liberal law professor Laurence Tribe, who is representing Peabody Energy (NYSE:BTU) and likens Pres. Obama's climate change policies to "burning the Constitution."
    • ETFs: XLE, XLU, VDE, ERX, OIH, KOL, IDU, VPU, ERY, DIG, DUG, IYE, FENY, PXJ, RYE, FUTY, RYU, UPW, FXN, FXU, DDG, SDP
    | 38 Comments
  • Tue, Mar. 31, 2:18 PM
    • The Obama administration offers details on how the U.S. proposes cutting greenhouse gases over the next decade, part of a formal submission to the UN ahead of a global effort this year to curb emissions of carbon dioxide.
    • The proposed U.S. cuts rely mostly on previously announced rules for power plant emissions and vehicle efficiency, including a 26%-28% reduction in emissions by 2025 which was unveiled last fall in Beijing.
    • Environmental groups generally praise the plan, particularly the fact that the pollution cuts can be achieved without action from Congress.
    • ETFs: XLU, KOL, IDU, VPU, RYU, FUTY, UPW, PUI, FXU, SDP, PSCU
    | 7 Comments
  • Wed, Mar. 25, 7:11 PM
    • The U.S. Supreme Court appeared deeply divided after hearing oral arguments today on whether the EPA should have considered the costs to coal- and oil-fired power plants before deciding whether to subject them to regulation.
    • The case concerns a 2011 EPA regulation that curtails mercury emissions; the rule, which takes effect next month for most plants, has forced companies to close aging facilities or install expensive scrubbing equipment.
    • "It’s classic arbitrary and capricious agency action,” Justice Scalia said, and could lead to onerous costs for power companies.
    • Chief Justice Roberts questioned Obama administration estimates that the actual benefits of the regulations would be at least $37B, which would easily exceed the anticipated $9.6B in costs.
    • The court’s liberal justices generally voiced support for the EPA, with Justice Ginsburg saying Congress gave the EPA the discretion to make the best decision based on its expertise.
    • The case could come down to Justice Kennedy, who suggested Congress gave EPA latitude but also asked tough questions of the EPA.
    • ETFs: XLU, IDU, VPU, RYU, FUTY, UPW, FXU, SDP
    | 1 Comment
  • Tue, Mar. 24, 11:49 AM
    • Power companies have taken a pounding at the Supreme Court over the last decade, but will be looking to break that trend this week when the high court hears arguments on hazardous pollution caps that apply to 460 coal-fired power plants, including facilities owned by Southern Co. (NYSE:SO), American Electric Power (NYSE:AEP) and Peabody Energy (NYSE:BTU).
    • The industry says the EPA did not adequately take into account what the EPA estimates will be $10B in costs imposed by the rules; the agency says the new standards are worthwhile because they will prevent 11K premature deaths per year and produce as much as $90B in annual benefits.
    • Not all power companies are fighting the EPA rules: Exelon (NYSE:EXC), the largest U.S. owner of nuclear plants - which do not emit greenhouse gases - joined with other businesses to file a brief supporting the EPA’s actions.
    • ETFs: XLU, IDU, VPU, RYU, FUTY, UPW, FXU, SDP
    | 41 Comments
  • Tue, Mar. 17, 6:37 PM
    • Despite the prospect of a Fed rate hike, patient investors should stick with utility stocks for their attractive yields, regular earnings and dividend growth, two analysts tell CNBC.
    • While higher rates may look foreboding, Hilliard Lyons analyst David Burks says recent history shows the sector could still outperform, noting that electric utilities beat the S&P 500 "by a fairly wide margin" during the 2004-06 period of higher rates when the Fed raised rates 16 times.
    • Morningstar's Travis Miller thinks the sector's short-term performance will continue to reflect interest rate movements, but that investors willing to hold utilities two years or more can get strong absolute returns.
    • Burks' favorite income pick is PPL, his top growth pick is NEE, and he likes AEP for total return; Miller's picks include SO, which he says has come down substantially and is now trading a discount, plus DUK and ITC.
    • ETFs: XLU, IDU, VPU, RYU, FUTY, UPW, PUI, FXU, SDP
    | 5 Comments
  • Thu, Feb. 12, 7:21 PM
    • Stocks "take the stairs up and the elevator down," and the recent performance of the utilities sector is a prime example.
    • In just two weeks, the sector's fortunes have reversed and has given up nearly all of its outperformance vs. the S&P 500; the Utilities Sector ETF set an all-time intraday high on Jan. 28, coinciding with the trough in Treasury yields; rising yields since the end of January have killed the allure of a 3% dividend yield on the Utility Sector ETF.
    • Even today, as the market moved broadly higher, utilities fell; AGL Resources (NYSE:GAS) and Northeast Utilities (NYSE:NU) were two of the major laggards.
    • ETFs: XLU, IDU, VPU, RYU, FUTY, UPW, PUI, FXU, SDP, PSCU
    | 18 Comments
  • Tue, Jan. 6, 12:59 PM
    • While not truly bearish on the sector, Baird analysts make the case that utility stocks are fully valued after equaling or surpassing the firm's price expectations after enjoying substantial strength in 2014, and Q1 shapes up as a difficult period for utility stocks to outperform.
    • Baird rates only four utility stocks as Outperform: Allete (NYSE:ALE), whose above-average EPS growth the firm believes merits a premium to the industry; CMS Energy (NYSE:CMS), with an extensive pipeline of infrastructure investments supported by a constructive regulatory environment; UIL Holdings (NYSE:UIL), a smaller utility that could have solid upside for income accounts looking for conservative stocks; and Vectren (NYSE:VVC), which sports above average growth opportunities via its very stable utility subsidiaries.
    • ETFs: XLU, IDU, VPU, RYU, FUTY, UPW, FXU, SDP
    | 3 Comments
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FXU Description
The First Trust Utilities AlphaDEX® Fund is an exchange-traded fund. The investment objective of the Fund is to seek investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the StrataQuant® Utilities Index.
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Sector: Utilities
Country: United States
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