Tuesday, November 10, 2015

Markets rise cautiously after yesterday's selloff

Dow added 27, advancers over decliners 4-3 & NAZ lost 12.  The MLP index was fractionally lower in the 319s & the REIT index rose 2+ the 315s.  Junk bond funds were mixed & Treasuries edged higher.  Oil saw buying after recent selling & gold was flattish, stuck below 1100.

AMJ (Alerian MLP Index tracking fund)

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CLZ15.NYM....Crude Oil Dec 15....44.18 Up ...0.31 (0.7%)

Live 24 hours gold chart [Kitco Inc.]

McDonald's, a Dow stock & Dividend Aristocrat, will not spin off its properties into a real estate investment trust (REIT), CEO Steve Easterbrook said.  The company also raised its quarterly div to 89¢ from 85¢.  After significant deliberation, the company determined that such a move was not the best interest of shareholders.  The potential upside was not compelling & the risks were too great, Easterbrook said.  Analysts said that the recent sales improvement should ease pressure on the company to put its US properties into a REIT.  Real estate historically has been an important part of its business.  The company collects rents from franchisees & those payments have increased 26% from 2009 to 2014.  Last year, when company sales & profits dropped, rents accounted for more than 22% of total revenue.  The "rent and royalty income we receive from franchisees provides a stable revenue stream that has relatively low costs and enables us to return significant cash to shareholders," MCD said in its 2014 annual report.  The stock went up 29¢.  If you would like to learn more about MCD, click on this link:

McDonald’s Won’t Put Property into REIT

McDonald's (MCD)

DR Horton, the largest US homebuilder, reported a near 44% jump in profit for its Q4 as the company sold more homes & it said orders rose 19%.  Orders, an indicator of future revenue for homebuilders, rose to 8477 homes, increasing in all regions except the Midwest, where they fell by one unit.  The housing recovery in the US has been gaining traction, supported by a strengthening labor market.  Gov efforts to ease lending conditions for first-time buyers, who currently account for about 1/3 of US home sales, & interest rates at historic lows have also added to the positive sentiment by builders.  The company, whose homes are priced from $100K-$1M+, said that home sales rose 23% to 10,576 units.  EPS was 64¢, including a non-cash tax benefit of $17.5M & a pretax goodwill impairment charge of $9.8M.  Excluding items, EPS was 61¢, missing the estimate of 62¢.  Revenue rose 26.9% to $3.05B, beating expectations.  The stock gained 2.38.  If you would like to learn more about MCD, click on this link:

D.R. Horton's Profit Jumps Nearly 44%

D.R. Horton (DHI)

Chipotle Mexican Grill said it would reopen all 43 restaurants in Seattle & Portland after health officials found no evidence of E. coli bacteria at those outlets.  The company closed the restaurants Oct 31 after a reported outbreak of E. coli, which caused food poisoning among some people who had eaten at 8 of its restaurants.  Health officials have concluded that there is no ongoing risk from the incident, Chipotle said.  The company will replace all ingredients at the closed restaurants & reopen the outlets in the "coming days".  CMG will test fresh produce, raw meat & dairy items before restocking restaurants.  The company said none of its employees at these restaurants had E.coli.  It's also working with health officials to improve food handling & implement other safety procedures to ensure quality.  The high priced stock soared 19+ on the news.  If you would like to learn more about CMG, click on this link:

Chipotle to Reopen All 43 Outlets in Seattle, Portland

Chipotle Mexican Grill (CMG)

Dow is up about 100 in Nov after struggling following the stellar advance in Oct.  But it is back in the red YTD, in what was supposed to be another year of higher stock prices.  The increasing likelihood of the first rate hike in a decade by the Fed is haunting the market.  And this time it looks like the Fed will bite the bullet.  This year is shaping up as a drab year for economic growth.  GDP should grow around 2½%, a continuation of meager numbers that have been common while the Fed has pursued its policy of low interest rates.

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