Thursday, June 18, 2015

Popular stock averages at or near records on dovish staement from the Fed

Dow soared 180 (off the high), advancers over decliners 2-1 & NAZ gained 68.  The MLP index was up pennies in the 421s & the REIT index, recovering from recent lows, added 4+ to the 319s.  Junk bond funds continued weak & Treasuries dropped as stocks were purchased.  Oil is above 60 & with a big push gold topped above 1200.

AMJ (Alerian MLP Index tracking fund)

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CLN15.NYM....Crude Oil Jul 15....60.55 Up ...0.63 (1.1%)

Live 24 hours gold chart [Kitco Inc.]

The House passed Obama’s fast-track trade bill, one of his top 2nd-term priorities, with mostly Rep votes a week after a Dem rebellion almost killed the proposal.  The 218-208 vote returns the measure to the Senate, which also voted for it last month.  Obama wants the expedited trade negotiating authority to help his administration complete a 12-nation Trans-Pacific Partnership.  A Senate vote to bring up fast-track authority could come as soon as this PM, if Democrats block action on the defense appropriations bill.  “This is a vote for a stronger economy and higher wages. This is a vote for our system of free enterprise. This is a vote for American leadership,” said House Ways & Means Committee Chairman Paul Ryan, a Wisc Rep.  The measure, known as trade promotion authority, would let Obama submit trade agreements to Congress for an expedited, up-or-down vote without amendments.  It would give the authority to Obama & the next pres for 6 years as part of a package that revamps US trade policy into the next decade.  With fast track thru the House, attention now turns to how its backers will make good on a pledge to ensure that the worker-aid program also is enacted.  Passing both measures is a long-standing political agreement between backers of fast track, even though most Reps oppose it.  House Dems, who have been supporters of worker assistance, voted against it last week because the vote was legislatively linked to fast track, something that is no longer the case.  House Speaker John Boehner, Ohio Rep, predicted that the Senate would pass both, with worker assistance attached to a bill promoting commerce with poorer countries, possibly next week.  “I’m also confident that the Senate can consider both TPA again and trade adjustment assistance as part of the preferences package that hopefully will be back here as soon as next week, so we can move both of these to the president,” he said.

Obama Trade Bill Passes House as Senate Now Controls Fate

The burger chain that put "supersize" into the American vernacular is slimming down:  For the first time in more than 40 years, & perhaps ever, McDonald's, a Dow stock & Dividend Aristocrat, says the number of US restaurants it has will shrink.  It plans to close more restaurants in the US than it opens this year.  That hasn't happened since at least 1970.  MCD said the reduction would be "minimal" compared with its total of over 14K US locations.  Still, the contraction is symbolic of troubles & how it's trying to regroup.  The company enjoyed rapid expansion for much of its history by offering consistent food at affordable prices.  It even thrived during the recession, when its Dollar Menu drew in people trying to save money & new products like McCafe coffee drove up sales.  Since then chains with new menus, serving better food & ingredients, have chipped away at its dominance & there is also a new breed of "better burger" chains.  MCD execs have conceded that an overly complicated menu led to inaccurate orders & longer wait times, & that they failed to keep pace with changing tastes.  In Apr, the company said it would close about 700 underperforming locations around the world this year, including in the US.  CEO Steve Easterbrook also later laid out plans to restructure the company to remove layers of bureaucracy & move more nimbly.  In any given year, some underperforming restaurants will be closed.  But previously, the number of closings has been outweighed by new restaurants that open.  Even though it's closing locations, MCD easily remains the country's biggest hamburger chain.  And MCD is still growing globally as it plans to add about 300 restaurants to its worldwide total of more than 36K.  The stock rose 95¢.  If you would like to learn more about MCD, click on this link:

McDonald's to Shrink in U.S., 1st Time in Decades

McDonald's (MCD)

After a harsh winter & a slump in growth in Q1, there are signs that the American consumer might be making a comeback.  But Macy’s CEO Terry Lundgren says it’s “not adding up.”  “You saw GDP being revised downward, and that’s not surprising to us because the first quarter for us, as it was for many retailers, was softer than we all had anticipated,” Lundgren said.  Lundgren said the negative impact of a strong dollar & challenges with a port slowdown “are past us,” & he believes the consumer will ramp-up retail spending in the fall season.  “Certainly for now, they are buying houses, and we are benefitting from the furniture business and the big ticket pieces of that. They are buying technology, and health care prices are going up…They are spending their money. But overall, it’s pretty flat at this point ... It doesn’t add up to real growth in the overall economy,” he added.  According to Lundgren, an increase in savings will get consumers to start spending again & drive the economy.  “The consumer should be feeling pretty confident [they have] more savings today than they had this time a year ago and the year before that … there should be an opportunity for the consumers to spend and when they do, that’s what will create momentum that this country needs in terms of GDP growth,” he said.  He said the company is taking an “offensive” approach to luring the consumer back into stores.  They recently opened an off-price business called Backstage & purchased beauty company Bluemercury.  During Q1, the company saw strength & growth in its internet business, which according to Lundgren is the 7th largest internet company & believes that it has created a new shopping trend.  "The fastest segment of growth is, you buy it online and then you pick it up in the store. So you get the immediate satisfaction of having the product. You’ve actually sat in the chair or tried on the blouse, or you’ve had the makeup applied. So you get that extra experience inside the store…It’s really an Omni channel experience and I love that transaction because the more the customer touches us online, in-store, the more loyal they become,” he added.  The stock went up 59¢.  If you would like to learn more about Macy's, click on this link:

Macy’s CEO: Consumers Need to Spend

Macy's (M)

NAZ reached a new record after going over 5.1K 3 months ago & the S&P 500 is inches from a new record, after going over 2.1K 3 months ago.  Not all that impressive.  Dow needs an advance of 1% to set another record.  Meanwhile some securities are not doing well.  High yielding stocks & bonds have seen selling all year in anticipation of higher interest rates.  Janet's words are the biggest reason for moving stocks.  Now Greece is running out of time to refinance its bailout & that dark cloud over the market needs be kept in mind.

Dow Jones Industrials

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