Dow rose 358, advancers over decliners 4-1 & NAZ went up 115. The MLP index gained 2+ to the 98s & the REIT index jumped 9 to the 317s. Junk bond funds were purchased again for their high yields & Treasuries slid a little lower. Oil advanced to the 24s on hopes for production cuts (more below) & gold added 2 to 1685.
AMJ (Alerian MLP Index tracking fund)
Oil prices are bouncing back as traders turn their attention to the upcoming virtual meeting between Saudi Arabia & Russia. West Texas Intermediate (WTI) crude oil, the US benchmark, climbed 3.6% to $24.47 a barrel. Brent crude, the intl benchmark, rose 0.7% to $32.08. Russia & Saudi Arabia are set to hold a virtual meeting to discuss production cuts that Pres Trump has suggested could total 10M barrels per day. WTI crude oil has plunged 63% from its Jan 6 peak as the price war between Russia & Saudi Arabia worsened a supply glut amid a period of severe demand destruction caused by the COVID-19 pandemic. Following the meeting between OPEC & its allies, energy ministers of G20 nations will meet Fri to discuss the economic damage & the sharp drop in oil prices. Weekly inventory data from the American Petroleum Institute released late yesterday showed crude stockpiles increased by 11.9M barrels last week, more than the 9.3M barrels that was expected. In the previous week, inventories swelled by 10.5M barrels. The inventory build followed the release of an updated 2020 outlook from the Energy Information Administration (EIA) that projected global demand will fall by 5.2M barrels a day as inventories swell by 3.9M barrels. The EIA sees Brent crude averaging $33 this year – $10 below last month’s forecast. EIA officials also forecast the US will become a net importer of crude oil in Q3.
McDonald’s (MCD), a Dow stock & Dividend Aristocrat, said that its global same-store sales fell 22% in Mar as the coronavirus pandemic led the fast-food chain to close its dining rooms. Fast-food restaurants have been faring better than their full-service competition. Transactions at fast-food restaurants fell 40% in the week ended Mar 29, while full-service restaurants saw their transactions decline 79% in the same period, according to the NPD Group. In the 2 months ended Feb 29, MCD US same-store sales grew by 8.1%. But thanks to domestic same-store sales plummeting 13% in Mar, the company expects Q1 same-store sales growth of 0.1% in the US. The company transitioned to delivery, takeout & drive-thru only in the US in corp-owned locations in mid Mar & asked franchisees to do the same. The intl markets were hit even harder by the pandemic. Its intl operated markets segment, which includes France, Italy, Spain & the UK, saw same-store sales plunge 34.7% in Mar. In its intl developmental licensed markets & corp restaurants segment, which includes China, Japan & Brazil, same-store sales fell 19.4% in Mar. The company said that its global same-store sales fell 3.4% in Q1. MCD also withdrew its 2020 outlook & long-term forecast issued in Feb, citing the uncertainty related to the pandemic & its impact on the economy. The chain previously expected EPS growth in the high-single digits & systemwide sales growth of 3-5%. MCD expects to spend about $1.4B on capital expenditures in 2020, cutting about $1B in spending due to fewer US restaurant renovations & a reduction in new global locations. CEO Chris Kempczinski said that he will be cutting his salary in ½, until at least Sep 30. 4 MCD top execs have volunteered to reduce their salaries by 25% thru the same time period. Kempczinski also said that the company will postpone its virtual global franchisee convention until later this year “once we’ve emerged from the peaks of this crisis.” The company will provide an update when it reports earnings April 30.
McDonald’s global same-store sales down 22% in March amid coronavirus pandemic
The news is getting better. Efforts to fight the coronavirus are showing signs of improvement & that is bringing investors back into the stock market. However it's much to early to celebrate. Fighting the epidemic will take more time & require much more work. The MCD story above will be repeated many from other companies. But the Dow has rebounded about 5K from its lows shown below (while gold is at multi year highs). Volatile trading will continue.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 24.61 | +0.98 | +4.2% |
| GC=F | Gold | 1,684.00 | +0.30 | +0.0% |
Oil prices are bouncing back as traders turn their attention to the upcoming virtual meeting between Saudi Arabia & Russia. West Texas Intermediate (WTI) crude oil, the US benchmark, climbed 3.6% to $24.47 a barrel. Brent crude, the intl benchmark, rose 0.7% to $32.08. Russia & Saudi Arabia are set to hold a virtual meeting to discuss production cuts that Pres Trump has suggested could total 10M barrels per day. WTI crude oil has plunged 63% from its Jan 6 peak as the price war between Russia & Saudi Arabia worsened a supply glut amid a period of severe demand destruction caused by the COVID-19 pandemic. Following the meeting between OPEC & its allies, energy ministers of G20 nations will meet Fri to discuss the economic damage & the sharp drop in oil prices. Weekly inventory data from the American Petroleum Institute released late yesterday showed crude stockpiles increased by 11.9M barrels last week, more than the 9.3M barrels that was expected. In the previous week, inventories swelled by 10.5M barrels. The inventory build followed the release of an updated 2020 outlook from the Energy Information Administration (EIA) that projected global demand will fall by 5.2M barrels a day as inventories swell by 3.9M barrels. The EIA sees Brent crude averaging $33 this year – $10 below last month’s forecast. EIA officials also forecast the US will become a net importer of crude oil in Q3.
Oil rallies before Russia, Saudi Arabia meet
Coronavirus deaths will continue to climb in the
US this week even as new cases near their peak and the rate of
hospitalizations slow down, White House health advisor Dr Anthony Fauci
said. “It’s going to be a bad week for deaths,” Fauci,
the director of the National Institute of Allergy and Infectious
Diseases, said. Fauci added that deaths generally lag behind other aspects of the outbreak such as new cases & hospitalization. After this week, the US should see the “beginning of a turnaround,” Fauci said. “So,
we need to keep pushing on the mitigation strategies because there is
no doubt that that is having a positive impact on the dynamics of the
outbreak,” he continued. “Now is not the time to pull back at all. It’s the
time to intensify.” The White House has previously projected that
100K-240K in the US will die from the coronavirus. As
people continue to practice social distancing, Fauci said that
projection is likely to fall. The virus, which emerged in China a
little over 3 months ago, has infected about 400K people in the
US & has killed almost 13K,
according to data compiled by Johns Hopkins University. New York is the epicenter of the outbreak in the US. Yesterday, Gov Andrew Cuomo said Mon the state saw its biggest single-day jump in COVID-19 fatalities since the outbreak began a few months ago. Fatalities
jumped even as the number of intensive care admissions started to
decline, giving the state some needed breathing room to ramp up supplies & staff to handle an expected wave of cases over the next few weeks,
he said. Yesterday, Fauci said the COVID-19 outbreak is “shining a bright light” on
how “unacceptable” the health disparities between blacks & whites are. “Yet again, when you have a situation like the coronavirus, they are suffering disproportionately,” Fauci said of minorities. “It’s
not that they are getting infected more often. It’s that when they do
get infected, their underlying medical conditions ... wind them up in
the ICU,” he said at a White House press conference Tuesday.
Coronavirus outbreak should begin to turn around after ‘bad week for deaths,’ Fauci says
McDonald’s (MCD), a Dow stock & Dividend Aristocrat, said that its global same-store sales fell 22% in Mar as the coronavirus pandemic led the fast-food chain to close its dining rooms. Fast-food restaurants have been faring better than their full-service competition. Transactions at fast-food restaurants fell 40% in the week ended Mar 29, while full-service restaurants saw their transactions decline 79% in the same period, according to the NPD Group. In the 2 months ended Feb 29, MCD US same-store sales grew by 8.1%. But thanks to domestic same-store sales plummeting 13% in Mar, the company expects Q1 same-store sales growth of 0.1% in the US. The company transitioned to delivery, takeout & drive-thru only in the US in corp-owned locations in mid Mar & asked franchisees to do the same. The intl markets were hit even harder by the pandemic. Its intl operated markets segment, which includes France, Italy, Spain & the UK, saw same-store sales plunge 34.7% in Mar. In its intl developmental licensed markets & corp restaurants segment, which includes China, Japan & Brazil, same-store sales fell 19.4% in Mar. The company said that its global same-store sales fell 3.4% in Q1. MCD also withdrew its 2020 outlook & long-term forecast issued in Feb, citing the uncertainty related to the pandemic & its impact on the economy. The chain previously expected EPS growth in the high-single digits & systemwide sales growth of 3-5%. MCD expects to spend about $1.4B on capital expenditures in 2020, cutting about $1B in spending due to fewer US restaurant renovations & a reduction in new global locations. CEO Chris Kempczinski said that he will be cutting his salary in ½, until at least Sep 30. 4 MCD top execs have volunteered to reduce their salaries by 25% thru the same time period. Kempczinski also said that the company will postpone its virtual global franchisee convention until later this year “once we’ve emerged from the peaks of this crisis.” The company will provide an update when it reports earnings April 30.
McDonald’s global same-store sales down 22% in March amid coronavirus pandemic
The news is getting better. Efforts to fight the coronavirus are showing signs of improvement & that is bringing investors back into the stock market. However it's much to early to celebrate. Fighting the epidemic will take more time & require much more work. The MCD story above will be repeated many from other companies. But the Dow has rebounded about 5K from its lows shown below (while gold is at multi year highs). Volatile trading will continue.
Dow Jones Industrials
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