Tuesday, June 2, 2015

Markets cautiously climb higher led by energy stocks

Dow slid back 28, advancers ahead of decliners 5-4 & NAZ was off 6.  The MLP index rose 2+ to the 433s & the REIT index was off 2+ to 319.  Junk bond funds gained & Treasuries continued weak.  Oil shot up to 61 & gold inched higher, staying close to 1200.

AMJ (Alerian MLP Index tracking fund)

CLN15.NYM....Crude Oil Jul 15....61.11Up ...0.91 (1.5%)

Live 24 hours gold chart [Kitco Inc.]

The European Commission, ECB & IMF agreed today on the terms of a cash-for-reform deal to be put to Greece in a bid to conclude 4 months of debt negotiations, a senior EU official said.  The proposal was drafted after the leaders of Germany & France met heads of the 3 institutions for emergency talks yesterday, pressing them to settle their own differences & reach a solution with Greece.  It was not clear whether the leftist gov of Prime Minister Alexis Tsipras, which put forward a rival plan & has vowed not to accept more austerity, would accept the creditors' plan.  Don't hold your breath!

Terms of Greece Debt Deal Agreed Upon

Wal-Mart’s, a Dow stock & Dividend Aristocrat, across-the-board pay raises for 2 large segments of its vast workforce may put a crimp in the retail giant’s short-term profits but the increases come as welcome news for American workers seeking higher wages.  Analysts say WMT wouldn't be raising wages for an estimated 600K US employees unless the economy had improved to such an extent that competition for workers forced their hand.  And if it's raising wages for its workers, other retailers will be sure to follow if those employers want to retain their workers. Today, WMT announced it is raising starting wages for more than 100K US department managers & workers in its deli & other specialized departments.  The company will increase the wages of managers of service-oriented departments such as electronics & auto care to $13-$24.70 per hour from $10.30-$20.09 currently.  Hourly wage of managers of departments such as clothing & consumer products will rise to $10.90-$20.71 from $9.90-$19.31.  At specialized areas such as the deli sections, workers will earn $9.90-$18.81 per hour compared with $9.20-$18.53 currently.  Those raises follow quickly on the heels of pay hikes announced in Feb for about 500K entry level workers.  The pay increases will raise the wages of tens of thousands of Americans, but at a cost.  Earlier this month WMT reported a 7% drop in Q1 as the strong dollar & efforts to improve its long-term business hurt its bottom line.  Higher worker wages & increased spending on its online operations contributed to the decline in earnings.  Greg Foran, head of the US operations, said that weaker profits are temporary & part of a long-term plan that will strengthen the company’s position in the future.  Raising its workers’ wages is an important part of that plan.  The stock lost chump change.  If you would like to learn more about WMT, click on this link:


Wal-Mart Pay Raises Bode Well for Economy

Wal-Mart (WMT)

Amazon is introducing free shipping on thousands of popular, smaller items: makeup, mobile phone accessories, earplugs - in its web store, without requiring a minimum order.  The new initiative applies to all customers, including those not enrolled in Amazon Prime (the annual membership program that includes 2-day shipping).  AMZN is using the free shipping program to target cost-conscious shoppers.  Amazon has focused on recent investments to increase the value of its $99-a-year Prime membership, adding same-day delivery in big cities, video streaming & music.  By offering free shipping, the online retailer will be able to target a wider pool of customers & market its services, including Prime membership.  Items covered by the new shipping offer weigh 8 ounces (230 grams) or less & usually cost no more than $10.  Delivery will take 4-8 business days from a new shipping hub in Florence, Kentucky specifically stocked for the new program, dubbed “Fulfillment by Amazon Small and Light.”  Most of the inventory will come from hundreds of 3rd-party merchants that give AMZN a cut of each sale for handling storage, packaging, delivery & customer service.  This is its latest move as an online marketplace & logistics company connecting buyers & sellers.  AMZN started the program on a trial basis 13 weeks ago.  The company quietly introduced it yesterday based on the trial’s success, after seeing that items targeted for free shipping without a minimum order threshold sold more quickly than they had previously.  Non-Prime members usually have to order $35 in items to qualify for free 2-day delivery.  "Customers love that even if it’s a $5 item, shipping is free for everybody, Prime member or not," Neil Ackerman, a senior manager at AMZN, said.  "Customers love it and sellers love it."  The stock went up pennies.  If you would like to learn more about AMZN, click on this link:

Amazon Debuts Free Shipping on Small Goods Without Minimum Order

Amazon.com (AMZN)

Stocks tried to advance on hopes word from Europe indicates a solution to the Greek debt mess is near.  As usual, nobody knows what's going on.  Oil had a good day, nearing its yearly high (believe it or not) & energy stocks benefited.  Tomorrow there will be more reports on May macro economic data & maybe some clarity about what the powers plan for Greece.

Dow Jones Industrials

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