Dow lost all of 1, decliners slightly ahead of advancers & NAZ added 43. The MLP index slid back pocket change in the 273s & the REIT index went up 2+ to 347. Junk bond funds hardly budged & Treasuries was little changed. Oil was up pennies in the 66s (more below) & gold lost 4 to 1299.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.6056911933253399)
McDonald's (MCD), a Dow stock & Dividend Aristocrat, should reveal the details of its restructuring plan shortly, which will include increasing the support the company gives to its franchisees. MCD has a town hall meeting planned after the announcment & the company sent a memo ahead of the meeting, confirming that some positions will be eliminated, but pledging more support for US employees & franchisees. In the memo, Christopher J. Kempczinski, USA Pres at MCD, said that employees who will be laid off will be notified by Jun 28 but didn't report how many would lose their jobs. When it comes to the other changes, Kempczinski said the company would create a single point of contact to help franchisees get the resources they need. The company will also create a new exec position called chief transformation officer to oversee the changes. “We are putting into place a new U.S. field structure that will better support our franchisees and will ensure McDonald’s continues on a path to being more dynamic, nimble and competitive. These planned actions are consistent with our previously announced $500M G&A targeted savings, which we expect to achieve by the end of 2019,” a MCD spokesperson said. The company posted a document on its website on yesterday detailing that it expects to record a pretax charge of $80-90M in Q2 from employee severance costs & other costs associated with closing field offices. The company should complete the transition to the new field structure in Q3. The stock rose 25¢.
If you would like to learn more about MCD, click on this link:
club.ino.com/trend/analysis/stock/MCD?a_aid=CD3829&a_bid=6ae5b6f7
Saudi Arabia opened the taps in May, increasing its oil output ahead of a critical meeting of crude-producing nations that will determine whether it's time to unwind a deal to limit production. The Saudis reported the supply spike following reports that the Trump administration sought assurances that Riyadh would raise output to offset the impact of DC restoring sanctions on Iran, Saudi Arabia's chief regional rival & OPEC's 3d biggest producer. OPEC's top producer said it hiked output by 161K barrels a day in May, bringing the monthly production to just over 10M barrels a day & pushing it towards the ceiling it agreed to in Nov 2017. The oil cartel's overall output was relatively steady, rising by about 34K barrels a day to nearly 31.9K barrels a day, according to independent sources cited in OPEC's monthly report. That total reflects a Saudi output figure slightly lower than the kingdom reported itself & a monthly jump that was roughly ½ as large. To be sure, the increase is not proof that Saudi Arabia is getting ahead of OPEC policy before the wider group meets on Jun 22 in Vienna. The Saudis have also pumped well below their quota throughout the production-cutting agreement, which has been in place since Jan 2017. They also warned fellow OPEC members that their output exceeded 10M barrels a day in May.
Saudi oil output spikes ahead of OPEC decision on production caps
Pres Trump committed to ending joint military exercises the US conducts with South Korea that he labeled “provocative” in the first head-to-head meeting with North Korean leader Kim Jong Un. The 9-paragraph agreement Trump & Kim signed in Singapore is short on specifics but calls for denuclearization of the Korean Peninsula as well as the return of the remains of prisoners of war & soldiers missing in action. It notably did not call for verification of the denuclearification process, as past agreements with North Korea have, but Trump said at the press conference that the issue was discussed, & that a combination of Americans & outside observers will see to it. Kim told the pres that North Korea is also destroying a major missile engine-testing site, according to Trump. In a press conference, Trump said the annual exercises with South Korea will end. “We will stop the war games which will save us a tremendous amount of money,” Trump added. “Plus, it is very provocative.” Trump also said, at some point, he would like to withdraw the roughly 30K US troops stationed in South Korea. Later, he complained about the cost of flying planes from Guam to participate in the exercises. “I said where do the bombers come from? Guam. Nearby. I said great. Where is nearby? Six and a half hours. That’s a long time for these big massive planes to be flying to South Korea to practice and drop bombs all over the place and go back to Guam.” Trump said the issue of human rights, Human Rights Watch describes North Korea as one of the most repressive authoritarian states in the world, was discussed, but only briefly. “It’s rough in a lot of places, by the way,” Trump added. Trump said North Korea “exploding the cannons in the ocean” moved him to discuss real-estate potential with Kim. “I said, ‘look at that view. That would make a great condo.’ ”
The big meeting in in Singapore was taken with a sense of equanimity. No drastic changes & a desire to keep calm was welcomed by the stock market. While there are plenty of unknowns, it looks like the outcome of this meeting was positive. On the other hand, a lack of exciting news kept stocks buyers on the sidelines. The FOMC meeting tomorrow could provide excitement, although current expectations are for another rate hike. Meanwhile, trade negotiations are lumbering along & that is a depressant for stocks going forward. The Dow continues above 25K.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
US consumer prices rose marginally in May amid a
slowdown in the pace of increases in the cost of gasoline, pointing to
moderate inflation pressures. The Labor
Dept said its Consumer Price Index increased 0.2% & food prices were unchanged. That followed a similar gain
in the CPI in Apr. In the 12 months thru May, the CPI increased
2.8%, the biggest advance since Feb 2012, after rising 2.5% in Apr. Excluding the volatile food & energy components, the CPI rose 0.2%, supported by a rebound
in new motor vehicle prices & a pickup in the cost of healthcare,
after edging up 0.1% in Apr. That lifted the year-on-year
increase in the core CPI to 2.2%, the largest rise
since Feb 2017, from 2.1% in Apr. Annual
inflation measures are rising as last year's weak readings fall from
the calculation. The forecasts called for both the CPI & core CPI
rising 0.2% in May. The
central bank tracks a different inflation measure, which is just
below its 2% target. The Fed is expected
to raise interest rates for a 2nd time this year tomorrow.
Economists are divided on whether policymakers will signal one or 2
more rate hikes in their statement accompanying the rate decision. The
Fed's preferred inflation measure, the personal consumption
expenditures price index excluding food & energy rose 1.8% on a
year-on-year basis in Apr, matching the Mar increase. Economists
expect the core PCE price index will breach its 2% target this
year. Fed officials have indicated they would not be too concerned with
inflation overshooting the target. Last month,
gasoline prices increased 1.7% after surging 3.0% in
Apr. Food prices were unchanged in May after rising 0.3% in the
prior month & food consumed at home fell 0.2%. Owners'
equivalent rent of primary residence, which is what a homeowner would
pay to rent or receive from renting a home, rose 0.3% last month
after increasing 0.3% in Apr. Tenants' rent increased 0.3% after shooting up 0.4% in Apr. Healthcare
costs gained 0.2% after nudging up 0.1% in Apr. Prices
for new motor vehicles rose 0.3% after sliding 0.5% in
Apr.
US consumer prices increase as expected in May
McDonald's (MCD), a Dow stock & Dividend Aristocrat, should reveal the details of its restructuring plan shortly, which will include increasing the support the company gives to its franchisees. MCD has a town hall meeting planned after the announcment & the company sent a memo ahead of the meeting, confirming that some positions will be eliminated, but pledging more support for US employees & franchisees. In the memo, Christopher J. Kempczinski, USA Pres at MCD, said that employees who will be laid off will be notified by Jun 28 but didn't report how many would lose their jobs. When it comes to the other changes, Kempczinski said the company would create a single point of contact to help franchisees get the resources they need. The company will also create a new exec position called chief transformation officer to oversee the changes. “We are putting into place a new U.S. field structure that will better support our franchisees and will ensure McDonald’s continues on a path to being more dynamic, nimble and competitive. These planned actions are consistent with our previously announced $500M G&A targeted savings, which we expect to achieve by the end of 2019,” a MCD spokesperson said. The company posted a document on its website on yesterday detailing that it expects to record a pretax charge of $80-90M in Q2 from employee severance costs & other costs associated with closing field offices. The company should complete the transition to the new field structure in Q3. The stock rose 25¢.
club.ino.com/trend/analysis/stock/MCD?a_aid=CD3829&a_bid=6ae5b6f7
McDonald's expected to announce layoffs
Saudi Arabia opened the taps in May, increasing its oil output ahead of a critical meeting of crude-producing nations that will determine whether it's time to unwind a deal to limit production. The Saudis reported the supply spike following reports that the Trump administration sought assurances that Riyadh would raise output to offset the impact of DC restoring sanctions on Iran, Saudi Arabia's chief regional rival & OPEC's 3d biggest producer. OPEC's top producer said it hiked output by 161K barrels a day in May, bringing the monthly production to just over 10M barrels a day & pushing it towards the ceiling it agreed to in Nov 2017. The oil cartel's overall output was relatively steady, rising by about 34K barrels a day to nearly 31.9K barrels a day, according to independent sources cited in OPEC's monthly report. That total reflects a Saudi output figure slightly lower than the kingdom reported itself & a monthly jump that was roughly ½ as large. To be sure, the increase is not proof that Saudi Arabia is getting ahead of OPEC policy before the wider group meets on Jun 22 in Vienna. The Saudis have also pumped well below their quota throughout the production-cutting agreement, which has been in place since Jan 2017. They also warned fellow OPEC members that their output exceeded 10M barrels a day in May.
Saudi oil output spikes ahead of OPEC decision on production caps
Pres Trump committed to ending joint military exercises the US conducts with South Korea that he labeled “provocative” in the first head-to-head meeting with North Korean leader Kim Jong Un. The 9-paragraph agreement Trump & Kim signed in Singapore is short on specifics but calls for denuclearization of the Korean Peninsula as well as the return of the remains of prisoners of war & soldiers missing in action. It notably did not call for verification of the denuclearification process, as past agreements with North Korea have, but Trump said at the press conference that the issue was discussed, & that a combination of Americans & outside observers will see to it. Kim told the pres that North Korea is also destroying a major missile engine-testing site, according to Trump. In a press conference, Trump said the annual exercises with South Korea will end. “We will stop the war games which will save us a tremendous amount of money,” Trump added. “Plus, it is very provocative.” Trump also said, at some point, he would like to withdraw the roughly 30K US troops stationed in South Korea. Later, he complained about the cost of flying planes from Guam to participate in the exercises. “I said where do the bombers come from? Guam. Nearby. I said great. Where is nearby? Six and a half hours. That’s a long time for these big massive planes to be flying to South Korea to practice and drop bombs all over the place and go back to Guam.” Trump said the issue of human rights, Human Rights Watch describes North Korea as one of the most repressive authoritarian states in the world, was discussed, but only briefly. “It’s rough in a lot of places, by the way,” Trump added. Trump said North Korea “exploding the cannons in the ocean” moved him to discuss real-estate potential with Kim. “I said, ‘look at that view. That would make a great condo.’ ”
President commits to ending South Korean military exercises after meeting Kim Jong Un
The big meeting in in Singapore was taken with a sense of equanimity. No drastic changes & a desire to keep calm was welcomed by the stock market. While there are plenty of unknowns, it looks like the outcome of this meeting was positive. On the other hand, a lack of exciting news kept stocks buyers on the sidelines. The FOMC meeting tomorrow could provide excitement, although current expectations are for another rate hike. Meanwhile, trade negotiations are lumbering along & that is a depressant for stocks going forward. The Dow continues above 25K.
Dow Jones Industrials
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