Dow dropped 61, decliners over advancers more than 2-1 & NAZ fell 16. The MLP index was about even in the 536s & the REIT index lost 1+ to the 512s. Junk bond funds were mixed to lower & Treasuries declined. Oil
rebounded from a 7-month low before a gov report that
may show US supplies fell for a 4th week & gold inched higher.
AMJ (Alerian MLP Index tracking fund)
Photo: Bloomberg
Mario Draghi asked European govs to help him help them. But the answer so far is “no.” France & Germany, with the 2 largest economies, will say they’re not interested in providing state guarantees for the an ECB asset-purchase program announced last week, according to a draft document. Draghi asked govs to guarantee some elements of asset-backed securities, bundled loans that the ECB plans to purchase to unlock funding in the region’s stalling economy. After rolling out interest-rate cuts & long-term loans to banks, the ECB is now turning up the pressure on political leaders to put their own money on the table. “Some actors have called for a public intervention, to facilitate the development of the securitization market, notably to improve the economics of securitization,” the French & German govs wrote in a paper that may be presented this week. “An intervention in the form of a public guarantee would be problematic.” While the plan to revive the region’s €1.2T ($1.5T) ABS market is within Draghi’s monetary-policy remit, officials have signaled that expanding the program to include riskier slices of debt (mezzanine tranches) would need gov support. “For me it’s a very decisive point, that there’s a guarantee, for example from a state on a mezzanine tranche,” ECB Executive Board member Sabine Lautenschlaeger said. That would allow “a company that is, for a bank, too great a credit risk to be given a push.” The ECB is calling for a partnership with govs in reviving the ABS market reflects some misgivings about the risks in such instruments. ABS are backed by underlying assets such as mortgages or credit-card debt, & are packaged into products containing slices with different risk profiles. Similar products were blamed for helping cause the financial crisis. Bundesbank pres Jens Weidmann last week opposed the rate cut & ABS plan, & has spoken out against the greater threat such purchases would pose to the central bank’s balance sheet.
Draghi Plea for ABS Support Rebuffed by France, Germany
McDonald's, a Dow stock & Dividend Aristocrat, posted the worst same-store sales decline in more than a decade, hurt by sluggish demand in the US & a health scare involving a Chinese supplier. Sales at stores open at least 13 months fell 3.7% in Aug, worse than the 3.1% estimate. MCD also said that supplier problems in China will reduce Q3 EPS by 15-20¢. Domestically, it’s been relying on discounts, limited-time offers & remodeled stores in a failed attempt to reignite growth. In China, the company’s meat supplier OSI Group was investigated for changing the expiration dates on food, triggering shortages & a sales slump. US same-store sales dropped for the 4th straight month in Aug, falling 2.8%. Analysts projected a 2% decrease. Weak sales may pressure US margin in Q3, the company said. In the US, the chain has been trying to lure diners with $2 jalapeno burgers & 20-piece Chicken McNuggets for $5. There’s also been steeper competition from rivals. In Aug, the company said Mike Andres will take over as pres of US operations when Jeff Stratton retires next month. Same-store sales in the Asia Pacific, Middle East & Africa division dropped 14.5% last month. Analysts projected a 10.1% drop. Japan same-store sales tumbled 25% following the food safety scare. Earlier this month, the company said it appointed a China food safety chief & is stepping up audits of suppliers there after it had to pull products. On this gloomy report, the stock dropped 79¢ to its lowest level since early 2013. If you would like to learn more about MCD, click on this clink:
club.ino.com/trend/analysis/stock/MCD?a_aid=CD3289&a_bid=6ae5b6f7
McDonald’s Monthly Sales Slump the Most Since 2003 Amid China Supply Scare
China's money-supply growth unexpectedly eased to the slowest pace in 5 months, comments by Premier Li Keqiang indicated, a sign of credit constraints as a property slump weighs on the economy. M2, the broadest measure, rose 12.8% in Aug from a year earlier, Li said ahead of the official release by the People’s Bank of China. That compares with a 13.5% pace in Jul, which was also the estimate for Aug. The slowdown in money-supply expansion follows a plunge in new credit in Jul to the lowest level since 2008. Li said the rate of M2 growth is within a controllable range & that the nation is capable of meeting economic targets for the year. He reiterated that growth can be slightly above or below the goal of about 7.5%. “There’s already a lot of money in the pool, and we can’t rely on monetary stimulus to spur economic growth,” Li said. China will continue to implement a “prudent” monetary policy. Li said China created almost 10M jobs in the first 8 months of 2014, close to the full-year goal. China “can accept and is willing to keep” growth rates that create enough jobs & ensure income gains, Li said. The gov is trying to balance reining in debt risks with ensuring that there’s enough lending to support the official economic-growth target.
China Money-Supply Growth Eases to Slowest in Five Months
Stocks are back to meandering, looking for direction. Nothing dramatic is going on but the underlying feeling is not positive. The chart below shows the Dow has flattish for over 2 months, aside form the dip in early Aug. The big picture message has not changed much in recent months. US consumer spending is sluggish with inconsistent data & overseas markets are nothing to write home about. Europe may become a bigger headache if Mario can not throw more money at the economy, which needs help. But the Dow is still within striking distance of setting a new record.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLV14.NYM | ...Crude Oil Oct 14 | ...93.11 |  ...0.45 | (0.5%) |
| GCQ15.CMX | ...Gold Aug 15 | ...1,260.40 | ...2.60 | (0.2%) |
Mario Draghi asked European govs to help him help them. But the answer so far is “no.” France & Germany, with the 2 largest economies, will say they’re not interested in providing state guarantees for the an ECB asset-purchase program announced last week, according to a draft document. Draghi asked govs to guarantee some elements of asset-backed securities, bundled loans that the ECB plans to purchase to unlock funding in the region’s stalling economy. After rolling out interest-rate cuts & long-term loans to banks, the ECB is now turning up the pressure on political leaders to put their own money on the table. “Some actors have called for a public intervention, to facilitate the development of the securitization market, notably to improve the economics of securitization,” the French & German govs wrote in a paper that may be presented this week. “An intervention in the form of a public guarantee would be problematic.” While the plan to revive the region’s €1.2T ($1.5T) ABS market is within Draghi’s monetary-policy remit, officials have signaled that expanding the program to include riskier slices of debt (mezzanine tranches) would need gov support. “For me it’s a very decisive point, that there’s a guarantee, for example from a state on a mezzanine tranche,” ECB Executive Board member Sabine Lautenschlaeger said. That would allow “a company that is, for a bank, too great a credit risk to be given a push.” The ECB is calling for a partnership with govs in reviving the ABS market reflects some misgivings about the risks in such instruments. ABS are backed by underlying assets such as mortgages or credit-card debt, & are packaged into products containing slices with different risk profiles. Similar products were blamed for helping cause the financial crisis. Bundesbank pres Jens Weidmann last week opposed the rate cut & ABS plan, & has spoken out against the greater threat such purchases would pose to the central bank’s balance sheet.
Draghi Plea for ABS Support Rebuffed by France, Germany
McDonald's, a Dow stock & Dividend Aristocrat, posted the worst same-store sales decline in more than a decade, hurt by sluggish demand in the US & a health scare involving a Chinese supplier. Sales at stores open at least 13 months fell 3.7% in Aug, worse than the 3.1% estimate. MCD also said that supplier problems in China will reduce Q3 EPS by 15-20¢. Domestically, it’s been relying on discounts, limited-time offers & remodeled stores in a failed attempt to reignite growth. In China, the company’s meat supplier OSI Group was investigated for changing the expiration dates on food, triggering shortages & a sales slump. US same-store sales dropped for the 4th straight month in Aug, falling 2.8%. Analysts projected a 2% decrease. Weak sales may pressure US margin in Q3, the company said. In the US, the chain has been trying to lure diners with $2 jalapeno burgers & 20-piece Chicken McNuggets for $5. There’s also been steeper competition from rivals. In Aug, the company said Mike Andres will take over as pres of US operations when Jeff Stratton retires next month. Same-store sales in the Asia Pacific, Middle East & Africa division dropped 14.5% last month. Analysts projected a 10.1% drop. Japan same-store sales tumbled 25% following the food safety scare. Earlier this month, the company said it appointed a China food safety chief & is stepping up audits of suppliers there after it had to pull products. On this gloomy report, the stock dropped 79¢ to its lowest level since early 2013. If you would like to learn more about MCD, click on this clink:
club.ino.com/trend/analysis/stock/MCD?a_aid=CD3289&a_bid=6ae5b6f7
McDonald’s Monthly Sales Slump the Most Since 2003 Amid China Supply Scare
McDonald's (MCD)
China's money-supply growth unexpectedly eased to the slowest pace in 5 months, comments by Premier Li Keqiang indicated, a sign of credit constraints as a property slump weighs on the economy. M2, the broadest measure, rose 12.8% in Aug from a year earlier, Li said ahead of the official release by the People’s Bank of China. That compares with a 13.5% pace in Jul, which was also the estimate for Aug. The slowdown in money-supply expansion follows a plunge in new credit in Jul to the lowest level since 2008. Li said the rate of M2 growth is within a controllable range & that the nation is capable of meeting economic targets for the year. He reiterated that growth can be slightly above or below the goal of about 7.5%. “There’s already a lot of money in the pool, and we can’t rely on monetary stimulus to spur economic growth,” Li said. China will continue to implement a “prudent” monetary policy. Li said China created almost 10M jobs in the first 8 months of 2014, close to the full-year goal. China “can accept and is willing to keep” growth rates that create enough jobs & ensure income gains, Li said. The gov is trying to balance reining in debt risks with ensuring that there’s enough lending to support the official economic-growth target.
China Money-Supply Growth Eases to Slowest in Five Months
Stocks are back to meandering, looking for direction. Nothing dramatic is going on but the underlying feeling is not positive. The chart below shows the Dow has flattish for over 2 months, aside form the dip in early Aug. The big picture message has not changed much in recent months. US consumer spending is sluggish with inconsistent data & overseas markets are nothing to write home about. Europe may become a bigger headache if Mario can not throw more money at the economy, which needs help. But the Dow is still within striking distance of setting a new record.
Dow Jones Industrials
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