Dow gained 62, advancers ahead of decliners 3-2 but NAZ was up a meager 2. The MLP index lost pocket change in the 454s (record territory) & the REIT index rose 1+ to the 289s. Junk bond funds were mixed but Treasuries were higher (bets against stimulus measures). Oil fell back & gold crawled higher.
AMJ (Alerian MLP Index tracking)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Yahoo
After a strong start to the year, the US economy is set to slow as some of the effects of gov spending cuts take hold, likely leaving the central bank's extraordinary stimulus in place into at least 2014. Still, the labor market is expected to continue healing this year, even after last month's disappointingly weak job gains, & the housing recovery should gain momentum. Both may help keep the economy from cooling too much. Economists in a Reuters poll taken after the latest job report ratcheted up their forecasts for Q1 growth to an annualized 3% from the 2% forecast last month. But that pace is not expected to last, slowing to 1.6% in Q2 before picking up to 2% for the rest of the year. While the consensus for Q1 is the highest since polling began for that period in Oct 2011, the Q2 expectation in the poll is the lowest. A solid start followed by a weaker spring has been the norm for the economy in recent year. Consumer spending could also cool after holding up surprisingly well early in this year. Payroll taxes increased at the beginning of the year & that could prompt Americans to curb purchases. Consumer activity makes up about 2/3 of the US economy. Tighter fiscal policy & an economic recovery that is still vulnerable to setbacks suggest that the Federal Reserve will leave its stimulus efforts in place for at least another year.
McDonald's circa 1955
Photo: Yahoo
McDonald's, a Dow stock & Dividend Aristocrat, is battling back from recent earnings disappointments by putting unusual emphasis on a longtime challenge: getting its far-flung workforce to provide service with a smile. The restaurant giant saw sales in the US began to slip last year & is pushing franchisees to improve staffing & service amid mounting complaints about rude employees. The company told franchise owners last month that 1 in 5 customer complaints are related to friendliness issues "and it's increasing." MCD identified the top complaint as "rude or unprofessional employees." There are customer complaints about speed along with customers finding service "chaotic." "Service is broken," said Steve Levigne, VP of business research for McDonald's USA. A franchisee said MCD has renewed emphasis on customer service since CEO Don Thompson installed Jeff Stratton, the chain's global chief restaurant officer, as president of McDonald's USA in Nov, after 2 consecutive qtrs in which the company missed earnings expectations. "The new leadership has decided to focus on customer satisfaction as a real driver for us to build the brand and build sales," this franchisee said, adding that the company had been gaining market share for years. "So for us to maximize the potential that's out there, we've got to be the leader in guest satisfaction," the franchisee said. The stock was up 50¢ after a good rise following the change in command for the US business.
Italian borrowing costs dropped at an auction of €7.17B ($9.38B) of bonds as investors shrug off risks tied to the country’s political crisis. Italy sold €4B of a new 2.25% 2016 bond at 2.29%, down from the 2.48% on similar maturing debt Mar 13. Investors bid 1.4X the amount of the new 3- year bond offered, up from 1.28X last month. The treasury also sold longer-term debt, placing €1.67B of 4.75% 2028 bonds & €1.5B of floating-rate 2017 bonds to yield respectively 4.68% & 2.74%. Italy raised nearly its €7.5B target. The Feb election failed to produce a parliamentary majority, leaving Prime Minister Monti as a caretaker until a new administration can be formed. Monti said yesterday Italy's debt will reach a post-war record of 130% this year as the euro’s 3rd-biggest economy borrows to help contribute to bailouts & pay arrears to gov suppliers. Monti said undoing his economic policy would be a mistake & the country’s improved credibility “can be undermined quickly.” The gov managed to keep its budget deficit within the EU’s limit of 3% of GDP, easing some of the concern over the debt level.
It seems like nothing can get in the way of the bulls buying more stock. The budget mess in DC is going nowhere FAST. Federal reduction in spending is getting more attention, but not by the bulls. Dow is up an amazing 2.3K (20%) in the last 5 months while the US economy is lumbering along, Europe is in a recession with record unemployment levels & China is trying to restart its growth engine. Dow might as well go over 15K & get that out of the way while economic concerns are placed on a back-burner.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking)
Treasury yields:
U.S. 3-month |
0.063% | |
U.S. 2-year |
0.232% | |
U.S. 10-year |
1.788% |
| CLK13.NYM | Crude Oil May 13 | 93.25 |  1.39 (1.5%) |
Photo: Yahoo
After a strong start to the year, the US economy is set to slow as some of the effects of gov spending cuts take hold, likely leaving the central bank's extraordinary stimulus in place into at least 2014. Still, the labor market is expected to continue healing this year, even after last month's disappointingly weak job gains, & the housing recovery should gain momentum. Both may help keep the economy from cooling too much. Economists in a Reuters poll taken after the latest job report ratcheted up their forecasts for Q1 growth to an annualized 3% from the 2% forecast last month. But that pace is not expected to last, slowing to 1.6% in Q2 before picking up to 2% for the rest of the year. While the consensus for Q1 is the highest since polling began for that period in Oct 2011, the Q2 expectation in the poll is the lowest. A solid start followed by a weaker spring has been the norm for the economy in recent year. Consumer spending could also cool after holding up surprisingly well early in this year. Payroll taxes increased at the beginning of the year & that could prompt Americans to curb purchases. Consumer activity makes up about 2/3 of the US economy. Tighter fiscal policy & an economic recovery that is still vulnerable to setbacks suggest that the Federal Reserve will leave its stimulus efforts in place for at least another year.
McDonald's circa 1955
Photo: Yahoo
McDonald's, a Dow stock & Dividend Aristocrat, is battling back from recent earnings disappointments by putting unusual emphasis on a longtime challenge: getting its far-flung workforce to provide service with a smile. The restaurant giant saw sales in the US began to slip last year & is pushing franchisees to improve staffing & service amid mounting complaints about rude employees. The company told franchise owners last month that 1 in 5 customer complaints are related to friendliness issues "and it's increasing." MCD identified the top complaint as "rude or unprofessional employees." There are customer complaints about speed along with customers finding service "chaotic." "Service is broken," said Steve Levigne, VP of business research for McDonald's USA. A franchisee said MCD has renewed emphasis on customer service since CEO Don Thompson installed Jeff Stratton, the chain's global chief restaurant officer, as president of McDonald's USA in Nov, after 2 consecutive qtrs in which the company missed earnings expectations. "The new leadership has decided to focus on customer satisfaction as a real driver for us to build the brand and build sales," this franchisee said, adding that the company had been gaining market share for years. "So for us to maximize the potential that's out there, we've got to be the leader in guest satisfaction," the franchisee said. The stock was up 50¢ after a good rise following the change in command for the US business.
- McDonald's Tackles Repair of 'Broken' Service The Wall Street Journal
McDonald's (MCD)
Italian borrowing costs dropped at an auction of €7.17B ($9.38B) of bonds as investors shrug off risks tied to the country’s political crisis. Italy sold €4B of a new 2.25% 2016 bond at 2.29%, down from the 2.48% on similar maturing debt Mar 13. Investors bid 1.4X the amount of the new 3- year bond offered, up from 1.28X last month. The treasury also sold longer-term debt, placing €1.67B of 4.75% 2028 bonds & €1.5B of floating-rate 2017 bonds to yield respectively 4.68% & 2.74%. Italy raised nearly its €7.5B target. The Feb election failed to produce a parliamentary majority, leaving Prime Minister Monti as a caretaker until a new administration can be formed. Monti said yesterday Italy's debt will reach a post-war record of 130% this year as the euro’s 3rd-biggest economy borrows to help contribute to bailouts & pay arrears to gov suppliers. Monti said undoing his economic policy would be a mistake & the country’s improved credibility “can be undermined quickly.” The gov managed to keep its budget deficit within the EU’s limit of 3% of GDP, easing some of the concern over the debt level.
It seems like nothing can get in the way of the bulls buying more stock. The budget mess in DC is going nowhere FAST. Federal reduction in spending is getting more attention, but not by the bulls. Dow is up an amazing 2.3K (20%) in the last 5 months while the US economy is lumbering along, Europe is in a recession with record unemployment levels & China is trying to restart its growth engine. Dow might as well go over 15K & get that out of the way while economic concerns are placed on a back-burner.
Dow Jones Industrials
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