Thursday, January 4, 2018

Markets rise, as the Dow reaches 25,000 for the first time

Dow shot up 152 (close to the highs), advancers over decliners 3-2 & NAZ gained 12.  The MLP index added 1+ to the 289s.  Junk bond funds fluctuated & Treasuries were slightly weaker.  Oil rose in the 61s & gold rose another 5 to 1324.

AMJ (Alerian MLP index tracking fund)

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The Trump administration proposed opening nearly all US offshore waters to oil & gas drilling, reversing protections in the Arctic, Atlantic & Pacific.  The bid to expand American energy production faces objections from environmentalists, state officials & some business groups worried about spills & the potential impact on coastal tourism.  Interior Secretary Ryan Zinke said the draft National Outer Continental Shelf Oil & Gas Leasing Program for 2019-2024 would make over 90% of the outer continental shelf's total acreage available for leasing, including areas put off-limits by the Obama administration.  "We want to grow our nation’s offshore energy industry, instead of slowly surrendering it to foreign shores," Zinke said, saying the plan is part of the Trump administration's "American Energy Dominance" agenda.  The Interior Dept identified 47 potential lease sales compared with 11 under former Pres Barack Obama's strategy, making it "the largest number of lease sales in U.S. history" offered in a federal 5-year plan.  Weeks before leaving office, Obama had banned new oil & gas drilling in federal waters in the Atlantic & Arctic oceans, protecting 115M acres of waters off Alaska & 3.8M acres (1.5) in the Atlantic from New England to the Chesapeake Bay.  Pres Trump last Apr ordered the Interior Dept to overhaul the existing offshore drilling plan, which the agency said placed 94% of the outer continental shelf off-limits to drillers.  The proposal comes as low oil prices & soaring onshore production have curtailed industry demand for offshore leases, raising questions about the benefits of the move.  Ahead of today's announcement, lawmakers from both parties, environmental groups & local business leaders along the Atlantic Coast said they were opposed to any effort to open up their coastlines to drilling rigs, citing environmental risks & threats to their lucrative tourism industries.

Trump administration aims to open nearly all US offshore waters to drilling

The number of Americans filing for unemployment benefits rose for a 3rd straight week last week, but that likely does not suggest a material shift in labor market conditions as data for several states, including California, were estimated.  Initial claims for state unemployment benefits increased 3K to a seasonally adjusted 250K for the latest week, the Labor Dept said. The forecast called for claims falling to 240K.  Claims tend to be volatile around holidays.

US jobless claims rise, data for several states estimated

Macy's (M) will close 11 stores in early 2018 & adjust staffing across its stores in order to cut costs.  With these closures, the company will have completed 81 of the approximately 100 planned store closures announced in Aug 2016.  Shuttering these stores is part of a multi-year effort by the company to ensure the optimal mix of brick-&-mortar stores & digital footprint.  The 7 newly-announced closures are located in California, Florida, Indiana, Michigan, Ohio & Vermont.  Macy's said these cost-cutting measures will result in about $300M in savings beginning in fiscal 2018, which it intends on reinvesting in the business.  Cost savings will see an even greater boost due to tax reform legislation passed in Dec.  Due to the new law, & the timing of Macy’s fiscal year, federal tax reform will result in an effective annual tax rate that is one point lower than previously expected, 36% rather than 37%.  As a result, the company raised its full-year 2017 earnings guidance to $3.59-$3.69 in 2017, excluding certain items.  Prior guidance was for $3.38 to $3.63.  The tax reform bill included a corp tax rate cut from 35% to 21%, & according to Macy's, federal tax reform will require the company to re-measure deferred tax balances in fiscal 2017.  The company currently estimates the deferred tax impact of the federal tax corp rate reduction will result in a non-cash tax benefit of approximately $550-650M.  The stock lost 86¢.
If you would like to learn more about Macy's, click on this link:

Macy’s expects big tax-cut gain

McDonald's (MCD), a Dow stock & Dividend Aristocrat, is launching a new incarnation of its famed “dollar menu” as competition between fast-food chains to appeal to value-minded consumers intensifies.  The introduction of the “$1 $2 $3 Dollar Menu” marks the first time MCD has used the pricing structure since it discontinued the original $ menu in 2013.  Sausage burritos, McChicken sandwiches, cheeseburgers & any soft drink will be available for $1.  Sausage McGriddles, buttermilk crispy tenders, small McCafe beverages & Bacon McDoubles will be sold for $2.  Triple cheeseburgers, sausage McMuffins, the new classic chicken sandwich & Happy Meals will be sold for $3.  “We built this new menu with variety and value firmly in mind,” said its USA pres Chris Kempczinski.  The company estimates that it has lost roughly $500M in sales in the 5 years since the $ menu's cancellation.  The stock went up 1.25.
If you would like to learn more about MCD, click on this link:

McDonald's relaunches 'Dollar Menu' amid fast food wars

The stock market remains red hot.  The Dow broke out of sideways trading in the last 2 weeks of 2017 (what has been a time for a Christmas rally in the past) as better than expected manufacturing & private payrolls data in the US fueled bets a growth pick-up & tax breaks will buttress earnings.  The Dow & the S&P 500 posted their best performance in years, fueled by a synchronous expansion in the global economy & a go-slow approach toward withdrawing monetary-stimulus in major markets.  In  the meantime, gold keeps rising & next week the House returns in DC.  Those guys will be very busy.  Now a 30K Dow is in sight for the venturesome!!

Dow Jones Industrials

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