Thursday, April 2, 2015

Higher markets ahead of jobs report

Dow climbed 65, advancers over decliners 2-1 & NAZ added 6.  The MLP index jumped 2+ to go over 430 (still not far above multi year lows) & the REIT index rose 2+ to 340.  Junk bond funds clawed their way higher & Treasuries saw selling.  Oil fell back to the 49s & gold is just over 1200.

AMJ (Alerian MLP Index tracking fund)

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CLK15.NYM....Crude Oil May 15....49.18 Down ...0.91  (1.8%)

Live 24 hours gold chart [Kitco Inc.]

Iran & world powers reached an outline accord that keeps them on track to end a decade-long nuclear dispute, allowing 3 more months to nail down differences & reach a final settlement.  The EU foreign policy chief Federica Mogherini hailed a “decisive step” in the 18-month process after he & Iranian Foreign Minister Mohammad Javad Zarif announced the accord.  Pres Obama said the result of their work was an “historic understanding” that will prevent Iran from getting nuclear weapons.  “If Iran cheats the world will know it,” though so far it has “met all its obligations,” Obama said & added that Congress will be fully briefed.  The accord will set a schedule for Iran’s enrichment of uranium, limit it to a single site & allow intl monitoring over the next quarter-century.  It will extend the “break-out” period that Iran would need to obtain nuclear weapons to more than a year.  The US & EU will lift the economic sanctions that have crippled Iran's economy once inspectors verify its compliance.  Secretary Kerry said that diplomats will get “back to work soon on a final deal,” the last step in the quest to bring Iran back into the intl fold, & cap the risk that tensions over its nuclear plans may escalate into war.  Mogherini said she’s confident it can be achieved by the end of Jun.  Mogherini & Zarif said the accord envisages ending uranium enrichment at the controversial underground Fordo complex, which will be converted into a center for advanced physics research with intl participation.  But Zarif said there are still “serious differences” to be resolved with the US, & there are no obligations until a final accord is reached.

Iran Negotiators Agree on Outline for a Nuclear Deal

US oil rigs fell by the smallest number in 15 weeks, a sign that America's oil-drilling crash may be nearing its end.  Drillers idled 11 oil rigs (excluding gas rigs), dropping the number to 802, according to Baker Hughes.  The rig count has dropped 50% since Oct, an unprecedented retreat, as the drop in oil prices has made production less profitable.  The forecast was for a decline of 19.  But production isn't slowing yet, & new efficiencies in US drilling & pumping may make raw numbers of rigs in the field misleading.  The US will pump 9.3M barrels a day this year, the most since 1972, despite the fewest rigs in the field in almost 4 years, according to the Energy Information Administration.  US oil in storage is at a record, & production is at its highest level since 1972.

Oil Rigs Decline By Smallest Number in Almost Four Months

The Fight for $15 campaign at McDonald's, a Dow stock & Dividend Aristocrat, wasn’t mollified by the announcement Wed that it would boost pay.  On Apr 15, protestors plan to gather outside restaurants to criticize the company for not going far enough.  The company said that it will raise pay at US company-owned stores, which account for about 10% of its more the 14K domestic locations, by at least $1 above the local minimum wage.  It will also begin offering vacation benefits as part of the plan, which takes effect on Jul.  By the end of 2016, the chain expects workers at company-owned locations to earn more than $10 an hour on average.  MCD said about 90K employees would get the raises.  The approximately 660K employees at the 90% of US restaurants run by franchisees will not.  In its pledge to improve pay & benefits, it joined a growing roster of major US employers.  For now, the pay hike is expected to take a toll on profit & the pay raise has the potential to cut EPS.  The pay increase marks a dramatic early move for new CEO Steve Easterbrook.  After his promotion to the top job last month, Easterbrook has been working to reignite growth.  Other efforts include a test of all-day breakfast at San Diego restaurants & an touch-screen system that lets customers customize burgers & sandwiches.  The company has been grappling with sluggish sales in its home market & a health scare in Asia.  US same-store sales fell 4% in Feb, a worse decline than predicted.  The stock lost 46¢.  If you would like to learn more about MCD, click on this link:

McDonald's Hourly Raise Fails to Satisfy Its Labor CriticsBloomberg

McDonald's (MCD)

Stocks were not encouraged by the nuclear deal with Iran.  Part of the reason is that nothing was decided beyond more talking & words can be cheap.  Forecasts for the tomorrow's jobs report expect a lot.  Nobody knows the numbers until tomorrow when the US markets will be closed.  There was small amount of selling into the close.  Have a good holiday!!

Dow Jones Industrials

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