Dow slid 47, decliners over advancers almost 4-1 & NAZ was off 92. The MLP index declined 1+ to the the 223s & the REIT index was off 1+ to the 366s. Junk bond funds were weak & Treasuries saw heavy buying, sharply reducing yields. Oil dropped 1+ to the high 76s & gold fell 3 to 1996.
AMJ (Alerian MLP Index tracking fund)
McDonald's (MCD), a Dow stock & Dividend Aristocrat, reported quarterly earnings & revenue that topped expectations as US consumers keep buying Big Macs & Shamrock Shakes. But execs offered a conservative view of the economy, reiterating last qtr's
warning that recessions could hit the US & Europe later this year.
Customers in some of McDonald's markets have pushed back more than
expected against price increases & diners have slightly decreased how
many menu items they include in an order. Still, execs stressed they are confident that the fast-food giant can handle any challenges. “At
McDonald’s, we perform well in good times and in bad, so that gives us
optimism as we go through the rest of the year,” CEO Chris Kempczinski
said. The fast-food giant reported Q1 EPS of $2.45, up from $1.48 a
year earlier. Excluding restructuring charges & other items, EPS was $2.63. The
company reported a $180M charge, which CFO Ian Borden said was
related to terminating leases & employee severance as part of a
corp reorganization. Earlier this month, MCD laid off hundreds of office workers as it moves to become more efficient & eliminate silos across the company. Net sales rose 4% to $5.9B. All 3 of its divisions reported same-store sales growth of 12.6%. In its home market, higher menu prices & increased traffic fueled
same-store sales growth, which topped estimates of 7.9%. Its intl developmental licensed markets segment, which includes
China & Japan, topped same-store sales expectations of 10.5%. Execs said sales are improving in China, which ended its zero-Covid policy in Dec. The stock fell 2.53.
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McDonald’s earnings beat estimates as U.S. traffic grows despite price hikes
PepsiCo (PEP), a Dividend Aristocrat, boosted its outlook for the year as it posted earnings & revenue that beat expectations. EPS was $1.40,
compared with $3.06 in the year-earlier
period. Excluding one-time items, the company posted $1.50 in EPS. Net sales rose 10.2% to $17.85B & organic
revenue, which doesn't include the impact of acquisitions &
divestitures, rose 14.3%. Volumes rose 1% in the beverage
business, while they declined 3% in its food segment. Overall, volumes
were down 2% across all categories, while prices were up 16% overall. Frito-Lay
North America reported an organic revenue increase of 16%, fueled by
market share gains & double-digit net revenue growth across key brands
like Lay's, Doritos & Cheetos, as well as brands such as Sun Chips & PopCorners. “Our intention is not to build a large portfolio of products or a
complex portfolio, but it is to focus on a few good brands, develop with
strategic partners, and then leverage our distribution capabilities,”
CFO Hugh Johnston said. The
company said it expects its full-year 2023 organic revenue to increase
8%, up from 6%, & core constant currency EPS to increase 9% up from
8%. The stock rose 4.22.
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PepsiCo raises outlook as quarterly results beat expectations
According to new data, a year of surging prices for everyday expenses squeezed Americans' budgets to the point of kneecapping an alarming number of US households' retirement savings in 2022, The TIAA Institute & George Washington University's Global Financial Literacy Excellence Center's latest Personal Finance Index released last week found historically high inflation forced a qtr of Americans to slash their retirement savings & a full 12% to quit saving entirely over the last year, concerning researchers. "This steep of a drop – on top of a crisis where 40% of Americans already don’t have enough saved for retirement – means many families will have to work even harder to achieve a secure retirement," said Surya Kolluri, head of the TIAA Institute. Kolluri says the reduction in savings could have lasting effects that will make it more difficult for people to reach the point of being able to survive in their golden years. "When somebody reduces how much they save for retirement, it may not be just a one-time cut," he said. "Many employers match what their employees save for retirement, so a reduction in an individual's savings will also turn into a reduced matching contribution. It also means missing out of the compounded growth of these amounts." The study found retirement savings were not the only place Americans said they were falling behind financially. 30% of those surveyed said they found it difficult to make ends meet in 2022, up from 24% in 2021. Some 26% of respondents said they were debt constrained, a 6-point rise from the year before & 39% said they lacked sufficient savings to cover one month of living expenses – a 7-point rise. The researchers that led the study say individuals with a very low level of financial literacy are far more likely to report having money woes than those who have a handle on managing personal finances. People with low financial literacy are twice as likely to cut their retirement savings & more than 4 times likely to stop saving. They are also more than 4 times as likely to say they have difficulty making ends meet, 3 times as likely to report debt stress, & 4 times as likely to have inadequate non-retirement emergency savings.
Millions of Americans suffer major losses in nationwide saving crisis
Investors are worried about the new earnings reports. Meanwhile economic data has been underwhelming. Treasury securities are in heavy demand while gold is drifting sideways.
Dow Jones Industrials
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