Your Tuesday Blip 7/28/20

Your Tuesday Blip 7/28/20

The Federal Reserve meets today and gurus are expecting interest rates to stay low. On Capitol Hill members of Congress and negotiating the next stimulus bill. At the close the Dow fell 205 points to 26,379. The silver lining today was that trading volume was low. There is a slew of earnings reports out this week and investors will be looking at how businesses managed the lockdown plus what they see in current trends plus forward guidance.
Under the Defense Production Act the US is loaning Eastman Kodak $765 million to revitalize its plants in Rochester, NY and Minnesota for the production of base ingredients needed for the making of medical drugs. This is all part of a reshoring effort by the administration to reduce dependence on China for healthcare supplies. The Loan is incentive laden which will reduce lending costs to tax payers. The goal is that by the end of the buildout the project Kodak will be able to produce 25% of the US supply of active pharmaceutical ingredients used to make treatments. After being on a path to oblivion over the past 15 years the deal gives the company, founded in 1888, a new lease on life and sent Kodak’s stock up 3x just today alone.
McDonalds reported earnings today with sales dropping 30% while net income fell 68%. The weak results were due to a global drop in same store sales. The company did see positive US comp sales in July but weakness in Japan is causing the Big Mac maker to sell its stake in Japan plus they have plans to accelerate the closure of 200 stores in the US mostly located in Walmart stores which is not bad considering they operate 38,695 stores worldwide. A sales recovery in China has been slow due to a limited number of drive thru locations. Going forward the company is expecting a choppy recovery but is happy with their results in a tough situation.

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