The S&P 500 came within a hair of closing at another all-time high, and energy stocks got smoked after a hedge fund manager gave a scathing presentation about fracking.
First, the scoreboard:
- Dow: 18,071.00, +46.94, (0.26%)
- S&P 500: 2,114.45, +6.16, (0.29%)
- Nasdaq: 5,016.93, +11.54, (0.23%)
And now, the top stories on Monday:
- Bill Gross dropped his latest monthly investment outlook Monday morning, and it’s real ugly. “I have a sense of an ending. Death frightens me,” he wrote about how he’s thinking about his life after turning 70. And his main message was that investors should also be worried about the impending death of the 35-year “supercycle” in bonds and stocks. And some people are already speaking up. “They [prominent market commentators including Ray Dalio] don’t necessarily counsel heading for the hills, or liquidating assets for cash, but they do speak to low future returns and the increasingly fat tail possibilities of a “bang” at some future date.”
- Hedge fund manager David Einhorn took a massive swing at “motherfrackers” — the fracking industry — and Pioneer Natural Resources, plunging its shares by as much as 3.6%. Speaking at the Sohn Investment Conference in New York, he argued that frackers raised money before the oil crash that they now cannot pay back. “We think that in the current environment Pioneer has a negative return on capex,” he said.
- McDonald’s CEO Steve Easterbrook finally unveiled the company’s massive plan to bounce back from several quarters of declining revenues and customers. The company will be restructured into four market segments: the US, international lead markets including Australia and Canada, high-growth markets including China and Russia, and foundational markets (every other country.) expects to save $US300 million annually by 2017. Easterbrook said the company would cut layers of management, focus more on customer feedback, and act faster to adapt to changing tastes. And it launched delivery in New York.
- Berkshire Hathaway CEO Warren Buffett says stocks are definitely on the “high side of valuation,” and won’t look cheap when interest rates rise. Buffett was on CNBC’s “Squawk Box” Monday morning, following the company’s annual investors’ meeting last weekend. He said that even though rates may rise soon, they would not rise significantly — definitely not near 4%, as they were before the Fed started slashing rates in 2007.
- In economic data out Monday, factory orders saw the biggest gain in eight months in March. The Commerce Department said new orders for manufactured goods jumped 2.1%, the largest gain since July 2014, following a revised 0.1% drop in February. The print was a hair better than the 2.0% gain economists had expected. Excluding transportation orders, factory orders were unchanged in March at 0%, compared to a 0.8% gain the prior month.
- Lowe’s recalled a brand of its flooring after a blogger claimed it had excessive levels of formaldehyde, a known carcinogen. The home improvement chain recalled its Tecsun line of flooring Friday, which was only sold online. It plans to conduct an investigation, a spokesperson said. In June 2013, Xuhua Zhou claimed that Lumber Liquidators’ flooring sourced in China had toxic levels of formaldehyde, in a blog post on Seeking Alpha. On Friday, he made similar allegations about this Lowe’s product. Lowe’s stock was higher but little changed near the close of trading; Lumber Liquidators is down 46% since the March 1 episode of CBS’ “60 Minutes” that showed tested samples of its laminate flooring contained excessive formaldehyde.
- Dow Chemical announced it will cut between 1,500 and 1,750 positions, or 3% of its workforce. “Our productivity efforts continue to center on cost-out actions and doing more with the resources we have in place, all to enable higher earnings,” said Howard Ungerleider, CFO of the US chemical giant. Since the financial crisis, companies everywhere have been trimming their headcounts to cuts costs and boost productivity.