Diamonds and Dogs

8/19/15

The golden arches are golden again. McDonald's (MCD) is the diamond of the day and the only Dow component to sit at all-time highs. No real news on McDonalds today, but the retail sector in general is acting well. Home Depot, Lowes, TJX, and Target are other retail stocks trading higher recently thanks to better than expected earnings. At least the US economy remains strong. Can't say that about the rest of the globe.

The energy sector has gone from bad to worse as the price of oil dropped to new lows not seen since March 2009. The lower oil price is wreaking havoc on oil and fracking companies including the dog of the day, Marathon Oil (MRO). Marathon Oil is down 7% to a new 52 week low today and down 60% in the last year after a downgrade from Oppenheimer yesterday. If the price of oil remains low, Oppenheimer sees Marathon Oil generating a $2.2billion cash flow deficit this year and $1.3 billion deficit next year which means their 5% dividend is pretty much toast.