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Fri, Dec. 19, 6:23 PM
- The EPA released new rules for the disposal of coal ash in the first U.S. guidelines for dealing with the waste generated by burning coal, but the rules are not as stringent as environmentalists had wanted.
- The rules require power companies to close ponds containing ash slurry if they are structurally unsound or have contaminated groundwater and are not lined with materials that prevent leaks; some of the 150-plus coal ash disposal sites that have contaminated nearby groundwater may be forced to shut down.
- However, the rules do not classify coal ash as a hazardous waste, which would have added tougher handling requirements and higher costs; the EPA will leave it up to state regulators to ensure that companies meet the new requirements.
- ETFs: XLU, IDU, VPU, RYU, FUTY, UPW, PUI, FXU, SDP, PSCU
Mon, Nov. 24, 2:34 PM
- "While the thirst for yield is understandable, it may be leading investors to overpay and take on hidden risks," says BlackRock CIO Russ Koesterich, noting defensive sectors like utilities (NYSEARCA:XLU) and consumer staples (NYSEARCA:XLP) are priced aggressively, but carry high interest rate sensitivity. Should rates rise even modestly in 2015, these sectors (REITs too) are likely to perform poorly.
- Yield can be found elsewhere, though, he says, pointing out cyclical sectors and high yield as areas to benefit from the improving economy.
- ETFs: XLU, XLP, IDU, VPU, VDC, FXG, RYU, UPW, FUTY, RHS, FSTA, PUI, FXU, PSL, SDP, PSCC, PSCU
Thu, Nov. 13, 2:55 PM
- Chief execs of the top U.S. coal-burning utilities predict blackouts and rising power bills if they are not given more time to achieve greenhouse gas emission cuts described in the new climate agreement with China.
- A proposed timeline for cutting pollution from power plants threatens to shutter coal-fired plants before enough new generation can be built to replace lost supplies, say CEOs of Southern Co. (NYSE:SO) and American Electric Power (NYSE:AEP).
- The challenges go beyond the cost and time it would take to build new plants to replace coal units forced into retirement, Southern's Thomas Fanning and AEP's Nick Akins say; there’s not enough pipeline capacity to carry the natural gas that would be needed by all the newly built gas-fired power plants spawned by the EPA's proposals.
- Southern would have to retire more than 9K mw of coal-fueled generators and add ~5,400 mw of natural gas plants by 2020 under plans envisioned by EPA, Fanning says.
- ETFs: XLU, IDU, VPU, RYU, UPW, FUTY, PUI, FXU
Wed, Nov. 12, 2:14 PM
- Utility stocks, among the year’s top performing sectors in the market, are sharply lower today - a bad sign, says Weeden & Co. head researcher Michael Purves, who believes now is the time to reduce or hedge utility holdings such as the Utilities Select Sector SPDR Fund (XLU -1.9%).
- Ultra-low bond yields have made utility stock payouts look good by comparison., but valuations have been moving up; Purves says the rally has put XLU’s P/E ratio for the next 12 months at 17.4x, near a 10-year high.
- Investors ought to “start to take profits, given the run was getting long in the teeth,” Purves writes.
- The top 10 XLU holdings are all lower today: DUK -2.5%, NEE -1.7%, D -1.9%, SO -1.4%, EXC -2.8%, AEP -2%, SRE -1.7%, PPL -1.8%, PCG -1%, PEG -2.8%.
- Other ETFs: IDU, VPU, UPW, RYU, FUTY, FXU, PUI, SDP
Thu, Sep. 18, 12:53 PM
- Banks, insurers, brokerages and anything else starved for yield continue to gain following yesterday's FOMC news. Among the gainers are Bank of America (BAC +1.9%) - which breaks above $17 for the first time since April - Citigroup (C +2.7%), Wells Fargo (WFC +1.1%), PNC (PNC +1.1%), Fifth Third (FITB +1.7%), SunTrust (STI +1.2%), Schwab (SCHW +2.3%), Prudential (PRU +2.5%), and Lincoln National (LNC +2.4%).
- The XLF +1.2%, KBE +1.5%, and KRE +2%.
- Financial sector ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, KBWB, FNCL, RKH, QABA, FINU, KRU, KBWR, RWW, RYF, KRS, FINZ
- Lit up bright red is the utility sector (XLU -1%), led by Southern Company (SO -1.1%), Dominion Resources (D -1.2%), Duke Energy (DUK -1.4%), and Pinnacle West (PNW -1.9%).
- Utility ETFs: XLU, IDU, VPU, UPW, RYU, FUTY, PUI, FXU, SDP, PSCU
Fri, Jul. 11, 11:10 AM
- Morningstar’s Robert Goldsborough thinks utilities are unlikely repeat their mid-2013 swoon, asserting that investors now are pricing in 4% U.S. Treasury yields, which would suggest no substantial downward moves in utilities if rates hit that level; utilitiy companies also could continue their recent outperformance if Treasury rates stabilized close to 3%.
- On the other hand, Brendan Conway of Barron's sees this as reason for caution in the long run; if the climate of falling rates since 2000 is one of the drivers of utilities’ tremendous decade-plus performance, then the end of that climate would seem to bode ill for ETFs such as VPU and XLU.
- Also: IDU, UPW, FUTY, RYU, PUI, FXU, SDP, PSCU
Tue, Jul. 8, 12:26 PM
- Leading this week's decline are a lot of the same names which led March's "momo" selloff, among them the biotechs (XBI -4.5%) and social media (SOCL -4.4%). Also familiar, small caps (IWM -1.5%) are off more than the other major indexes.
- Doing their jobs are the low volatility ETFs like SPLV (SPLV) and USMV (USMV -0.2%), as well as defensive sectors like the utilities (XLU +0.6%).
- Raymond James' typically bullish Jeffrey Saut is out with a note calling for the first decent pullback of the year - a 10-12% decline - to commence later this month or early August, and he suggests investors begin raising cash.
- Biotech ETFs: XBI, BBH, FBT, PBE
- Low-vol ETFs: SPLV, LGLV, CFA, CFO
- Utility ETFs: XLU, IDU, VPU, UPW, FUTY, RYU, FXU, PUI, SDP, PSCU
Wed, Jun. 18, 6:41 PM
- Investors plowed $1.2B into U.S. utilities sector ETFs during the past five days, signaling skepticism that an economic recovery is strong enough to eventually lift interest rates.
- Military conquests in Iraq by Islamic insurgents over the past week probably fueled the trend, and the Fed said today that interest rates will stay low for a considerable period even amid economic growth after it stops buying back bonds; utility stocks responded, with the S&P 500 Utilities Index jumping 2.2% in its biggest one-day gain since last September.
- The FXG and FXU ETFs enjoyed record cash inflows June 16, according to data compiled by Bloomberg; State Street’s Utilities Select Sector SPDR (XLU) was the best-performing sector ETF in the past week, attracting $468M.
- ETFs: IDU, VPU, UPW, RYU, FUTY, PUI, FXU, SDP
Sun, Jun. 1, 9:04 AM
- Utility company equities took a "what me worry" attitude this week to Barclays' downgrade of the debt of the entire electric sector thanks to long-term challenges from solar and storage. "In the 100+ year history of the electric utility industry, there has never before been a truly cost-competitive substitute available for grid power," says Barclays, but that's changing before our eyes.
- The cost of solar + storage for residential customers is already competitive with the price of grid power in Hawaii, says Barclays, and could soon follow in California, New York, and Arizona, with many other states soon after.
- Utility investors (at least on the credit side), says Barclays, are depending on a continuation of the "regulatory compact" - in which utilities keep the lights on in exchange for low-risk returns - to protect them from the disruptive forces at hand. It's worked in the past, but "technological change creates precisely the environment where slower-moving incumbents and their regulators can fall behind the curve, risking credit volatility."
- Seeing "a rare opportunity," Barclays recommends credit investors underweight the electric sector against the broader U.S. Corporate index (AGG), and rotate out of paper issued by utilities in areas where solar is closer to being competitive.
- ETFs: XLU, IDU, VPU, UPW, RYU, FUTY, PUI, FXU, SDP, PSCU
Tue, May. 27, 2:30 PM
- The utility sector is among the day's best performers after the annual capacity auction at PJM Interconnection, which runs the largest U.S. power grid, forecasts payments to electricity producers will jump to $120/MW-day vs. $59.37 in the previous 12-month period and expectations of $75-$100.
- The higher capacity price is a boon to power producers, which rely on the payments as baseline revenues; the auction results are viewed as another endorsement of natural gas.
- The outlook is particularly favorable for Exelon (EXC +3.9%) and FirstEnergy (FE +6%), according to S&P's Aneesh Prabhu; PPL Corp. (PPL +2.9%) also benefits, especially considering that the price in its region was expected to fall.
- The price for Public Service Electric & Gas' (PEG -0.2%) utility territory in northern New Jersey was set at $215/MW-day, down from $219 a year earlier.
- ETFs: XLU, IDU, VPU, DBE, RJN, UPW, FUTY, RYU, PUI, FXU, JJE, SDP, ONG, RGRE, UBN
Tue, May. 27, 11:59 AM
- The Obama administration is planning to introduce next week a new climate-change initiative that would allow states to use cap-and-trade systems, renewable energy and other measures to reduce carbon emissions by existing power plants.
- The proposal, which would affect hundreds of power plants nationwide, is designed to allow states some flexibility in meeting benchmarks instead of placing emissions limits on individual plants.
- The EPA is scheduled to complete the rule by June 2015 with states submitting their plans the following yea. but likely lawsuits and political opposition could easily upend that timeline.
- ETFs: XLE, XLU, TAN, ERX, KOL, IDU, VDE, OIH, ERY, VPU, DIG, DUG, IYE, PXJ, RYE, FENY, UPW, FUTY, RYU, FXN, PUI, FXU, DDG, SDP, PSCU
Tue, May. 20, 7:15 PM
- Environmentalists are angry at the Obama administration's scaled-back regulation meant to keep fish from being sucked into the water intakes of factories and power plants.
- The EPA regulation issued yesterday specified a range of at least seven options facility operators can use to reduce the 2B fish, crab or shrimp that die each year in water intakes, but critics say the agency left too many decisions with state regulators and are threatening to sue to force tougher action.
- Power companies operating large coal or nuclear plants such as Entergy (ETR), Exelon (EXC), Duke Energy (DUK) and Dominion (D) had urged the EPA to grant flexibility and time to meet the water-intake standards, and generally were satisfied with the outcome.
- ETFs: XLU, IDU, VPU, UPW, RYU, FUTY, PUI, FXU, SDP, PSCU, UTLT
Fri, May. 16, 5:03 AM
- The White House is considering forcing power plants to cut carbon emissions by 25% over a 15-year period, Bloomberg reports.
- The problem is that owners can only cut so much of a facility's emissions by increasing efficiency, so a lot of the reduction could have to come by "going outside the fence," such as by deepening the use of renewable energy, improving grid efficiency and encouraging customers to use less electricity.
- Trying to compel operators to rely on such external measures could run afoul of what the government is allowed to do under the Clean Air Act.
- ETFs: KOL, XLU, IDU, VPU, RYU, PUI, UPW, FXU, SDP, PSCU, FUTY, UTLT
- Coal Tickers: PCXCQ, BTU, WLT, CNX, ACI, ANR, JRCC, YZC, ARLP, AHGP, NRP, PVR, PVG, PVA, OXF, CLD, WLB, RNO
- Utilities: ED, POM, PEG, FE, NST, UTL, ETR, EXC, D, NU, PCG, DUK
Wed, May. 14, 5:55 PM
- Utility stocks have been the top performer in the S&P 500, up 11% YTD, but they’ve started to wane - down 2.7% so far in May - and that may not bode well for the broad market, WSJ's Steve Russolillo writes.
- Strength in utilities suggests investors have taken a more defensive mindset in 2014 compared to last year’s big rally, and if demand for the group continues to fade and struggling momentum names fail to step up, the entire rally would seem to be in trouble.
- Whether utilities remain on top could foreshadow how the broad market performs in the months ahead, Russolillo concludes.
- ETFs: XLU, IDU, VPU, UPW, RYU, FUTY, PUI, FXU, SDP, PSCU, UTLT
Tue, Apr. 29, 11:48 AM
- The U.S. Supreme Court hands the Obama administration an important environmental victory by upholding a rule that requires aging power plants to sharply reduce emissions that contribute to unhealthy air in neighboring states.
- The 6-2 ruling breathes new life into the EPA's Cross-State Air Pollution Rule, which requires 28 states to reduce power-plant emissions that hurt air quality in states located downwind.
- The regulation could affect ~1,000 power plants in the eastern half of the U.S that may have to adopt new pollution controls or reduce operations.
- ETFs: XLU, IDU, VPU, UPW, RYU, PUI, FUTY, FXU, SDP, PSCU, UTLT
Fri, Apr. 25, 1:31 PM
- Today's selloff is following the pattern of most in the past few weeks, with the small caps (IWM -1.9%) and tech (QQQ -1.5%) leading the way. Pacing declines in the Nasdaq are a 8.8% dive in Amazon post-earnings and a 4.6% fall in Facebook. Setting tongues wagging in FB - but hardly a huge deal - is the sale of another 283K shares by Sheryl Sandberg, bringing her holdings down to 8.7M shares.
- The liquidation in biotech has previously been a convenient excuse for small cap selloffs, but the IBB is off just 1.4% today, outperforming the Russell 2000.
- What's working? Utilities again. The XLU +0.8% today and +13% this year, outperforming the Russell 2000 by about 1.6K basis points.
- Small cap ETFs: IWM, TZA, TNA, UWM, VB, IJR, SLY, RWJ, URTY, SCHA, TWM, RWM, SRTY, SAA, DWAS, VTWO, SDD, VIOO, JKJ, RSCO, SBB, FYX, XSLV, EWRS, TWOK, SMLV, PXSC
- Utility ETFs: XLU, IDU, VPU, NLR, GRID, JXI, NUCL, DBU, IPU, UPW, RYU, PUI, FUTY, FXU, SDP, PSCU, UTLT
- Biotech ETFs: IBB, XBI, BIB, BBH, FBT, PBE, BIS
PUI vs. ETF Alternatives
The PowerShares DWA Utilities Momentum Portfolio (Fund) is based on the DWA Utilities Technical Leaders Index (Index). The Fund will normally invest at least 90% of its total assets in common stocks that comprise the Index. The Index is designed to identify companies that are showing relative strength (momentum), and is composed of at least 30 common stocks from a universe of approximately 3,000 common stocks traded on US exchanges. The Fund and the Index are rebalanced and reconstituted quarterly.
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