Wednesday, May 8, 2019

Mixed markets mostly lower on trade tensions

Dow inched up 2, decliners modestly ahead of advancers & NAZ was off 20.  The MLP index slid lower in the 246s & the REIT index added 1+ to the 376s.  Junk bond funds were mixed & Treasuries retreated on profit taking.  Oil went over 62 (more below) & gold fell 3 to 1282 (after 3 straight up sessions).

AMJ (Alerian MLP Index tracking fund)

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China has promised to take "necessary countermeasures" against the US if it follows thru on its threat to increase tariffs Fri on Chinese goods.  China's Commerce Ministry said today that Beijing will retaliate if US tariffs on $200B of Chinese goods are hiked to 25% from 10% as threatened by Pres Trump on Sun.  "The escalation of trade friction is not in the interests of the people of the two countries and the people of the world," the ministry said.  "The Chinese side deeply regrets that if the US tariff measures are implemented, China will have to take necessary countermeasures."  The post came just hours after  Trump said that Beijing officials "informed" the White House that Chinese Vice Premier Liu He will lead the country's delegation "coming to the U.S. to make a deal."  White House press secretary Sarah Huckabee Sanders later reinforced Trump's tweet, saying the administration has received "indications" from the delegation that they would like to make a deal.  The precise "indications" conveyed by the Chinese were not immediately clear & Sanders did not offer further detail.  Trump's declaration that Beijing is looking to strike an agreement also followed an earlier tweet from the pres, in which he claimed to know why China backed away from the negotiating table.  Trump said China is hoping that, if a Dem is elected presi in the 2020 election, the new administration will abandon the aggressive trade rhetoric.

China says it will take ‘necessary’ countermeasures if US raises tariffs Friday

General Motors (GM) is seeking to sell one of its Ohio plants to an upstart truck manufacturer & investing $700M in 3 other facilities in the region, a move that could help appease critics who blasted the carmaker for choosing to close the Lordstown plant & shed up to 15K jobs.  Trump made the announcement today, noting that he had just spoken to CEO Mary Barra. GM said it is in talks to sell the Lordstown plant to Workhorse Group (WKHS)., a company seeking to build an electric pickup but one that has struggled financially, posting just $21K in revenue in the final months of 2018.  “We remain committed to growing manufacturing jobs in the U.S., including in Ohio, and we see this development as a potential win-win for everyone,” Barra said.  Workhorse previously revamped its leadership, replacing founder Steve Burns with COO Duane Hughes.  It also recently borrowed $35M from hedge fund Marathon Asset Management.  “This potential agreement creates a positive outcome for all parties involved and will help solidify the leadership of Workhorse’s role in the EV community,” Hughes said.  GM also said it was adding 450 jobs to manufacturing plants in Ohio, a decision the carmaker made because the "U.S. economy and our core business are strong."  “We also expect to bring more jobs to the U.S. over time in support of the expected provisions" of the new trade deal with Mexico & Canada, according to Barra.  Known as the USMCA, the agreement has yet to be ratified by Congress.  The Moraine facility will manufacture the Detroit-based company's new heavy-duty pickups.  Toledo Transmission will produce the firm's new 10-speed automatic transmission, & the Parma center will begin using lase cell welding technology.  WKHS stock jumped up 1.81 to 2.65 on the news.  GM stock fell 32¢.
If you would like to learn more about GM, click on this link:

GM in talks to sell Lordstown plant, will invest $700M in Ohio facilities

The Energy Information Administration (EIA) reported that US crude supplies declined by 4M barrels last week.  That was bigger than the fall of 2.2M barrels expected.  Data from the American Petroleum Institute yesterday had shown an increase of 2.8M barrels, according to sources.  The EIA data also showed that gasoline inventories were down 600K barrels, while distillate stockpiles edged lower by 200K barrels last week.  The S&P Global Platts survey had shown expectations for supply declines of 980K barrels for gasoline & 1.05M barrels for distillates.  Jun West Texas Intermediate crude was up 33¢ (0.5%) at $61.73 a barrel.  It was trading at $61.55 before the supply data was released.

EIA data show a bigger-than-expected weekly decline in U.S. crude supplies

McDonald’s (MCD), a Dow stock & Dividend Aristocrat, will bring intl menu favorites to US customers this summer as the fast-food chain attempts to lure customers back to stores.  The “Worldwide Favorites” menu includes the Stroopwafel McFlurry from The Netherlands, the Grand McExtreme Bacon Burger from Spain, the Tomato Mozzarella Chicken Sandwich from Canada & Cheesy Bacon Fries from Australia.  The items will be available starting Jun 5 for a limited time.  “We know our U.S. customers are curious about McDonald’s international menu items. Because we are always innovating our menu, we are thrilled to leverage our global scale and offer popular flavors from around the world next month,” said Linda VanGosen, VP of menu innovation.  “We are committed to creating everyday feel-good moments for customers no matter what McDonald’s restaurant they walk into anywhere in the world.”  MCD has tinkered with its menu in recent months in a bid to streamline operations & offset a decline in customer traffic.  The company posted strong sales in Q4, but noted that traffic fell 2% in fiscal 2018 compared to the previous year.  The company has raised menu prices to address the trend.  The company announced last month that it would phase out its premium “signature crafted” hamburgers to focus on simpler qtr-pounder options.  Execs have said the premium items slowed down drive-thru times.  The stock lost a penny.
If you would like to learn more about MCD, click on this link:

McDonald's 'worldwide favorites' brings international menu to US stores

Stocks began the day around breakeven, but buyers returned later to bid prices higher.  Then selling in the last ½ hour trimmed those gains & NAZ slid back into the red.  The market gain was touchy & the outlook is uncertain.  There is a lot riding on the outcome of the US-China trade talks & nobody knows what will be the result.

Dow Jones Industrials

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