The CEO of McDonald’s (NYSE: MCD), Jim Skinner, will retire at mid-year. No matter what critics have to say about the danger of fast food and marketing it to children, Skinner has presided over one of the most impressive growth stories of any American company in the past decade. The stock of the world’s largest fast-food company has risen by 120% over the past five years, while the S&P 500 has been flat. McDonald’s has bought back billions of shares and has a dividend yield of 2.9%. Despite global competition from rivals that include Yum! Brands (NYSE: YUM) and Subway, sales at McDonald’s rose from $22.7 billion in 2009 to $27 billion last year. Net income is up from $4.6 billion to $5.5 billion.
Gas at $3.88
Gasoline prices rose again yesterday, according to the AAA Fuel Gauge report. The price for a gallon of regular reached $3.881, up from $3.864 the day before and $3.570 one month ago. In some of the largest states by population, the price is much higher — $4.345 in California and $4.038 in New York. News about a possible release of oil from the Strategic Petroleum Reserve has not brought down the price of either crude or gasoline. Neither has news that Saudi Arabia will release additional supply. Concerns about a loss of refinery capacity on the East Coast and trouble that might close the Strait of Hormuz continue to pressure prices higher.
European PMI Falls
Europe continues its fall into a new recession. Research firm Markit has reported about March. This morning it announced:
The Markit Eurozone PMI Composite Output Index fell from 49.3 in February to a three-month low of 48.7 in March, according to the preliminary “flash” reading, which is based on around 85% of usual monthly replies. The latest reading signals a contraction in business activity for the second successive month, and the sixth decline in the past seven months.
The news was not much better for the region’s two largest economies:
At 51.4 in March, down from 53.2 in February, the seasonally adjusted Markit Flash Germany Composite Output Index indicated only a marginal expansion of private sector business activity. Output growth has now been recorded for four months in a row, but the latest rise was the weakest since December 2011 and slower than the long-run survey average.
And:
Latest Flash PMI data signalled a decline in French private sector output for the first time in four months during March. The Markit Flash France Composite Output Index, based on around 85% of normal monthly survey replies, recorded 49.0, down from 50.2 in February.
The area recession that so many economists feared has arrived.
iPad Sales Continue
News about overheating and battery problems with the new Apple (NASDAQ: AAPL) iPad have not dampened demand for its stock. Since the revelations, shares have moved from a low of $590 on Monday to a high of nearly $610 yesterday — just shy of the all-time peak. Analysts expect that Apple will sell has many as 12 million of the new iPads in the current quarter. iPhone 4S sales show no sign of slackening. And Apple is expected to release the new iPhone 5 with 4G LTE capacity later this year. That should cause another surge in revenue.
Airline Industry Teeters
The International Air Transport Association released numbers yesterday that showed it expects profits among its member airlines and air cargo carriers to drop sharply this year compared to its previous forecasts. That is, in part, the association says, due to high oil prices. Along with that, problems with the EU economy could dampen passenger and cargo demand. Management at Emirates, one of the world’s largest carriers, painted an even more bleak picture. In an interview with Bloomberg, Tim Clark, the CEO of the Dubai-based airline, said, “We can reel off a whole load of airlines that are teetering on the brink or are really gone. Roll this forward to Christmas, another eight or nine months, and we’re going to see this industry in serious trouble.”
Douglas A. McIntyre
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