“U.S. wholesale inventories rose in March, fueled by increased stocks of cars and machinery which have provided support for economic growth early in the year, but wholesale sales posted the biggest fall in four years.
The Commerce Department said on Thursday wholesale inventories rose 0.4 percent, just above the median forecast in a Reuters poll for a 0.3 percent gain….”
Comments »“If you imagine that age 81 means shuffleboard, golf carts, and sitting on the beach, David Mintz will make you reconsider. The founder and CEO of food brand Tofutti, Mintz works 15-hour shifts, sometimes driving 500 miles a day to visit his factories. He sleeps four or five hours a night and works out every morning. “I’m working harder now than 20 years ago,” he says.
Mintz and others like him are leading a shift toward working later into life. Just 11 percent of people older than age 65 were still working in 1993, according to the Bureau of Labor Statistics. Today, that figure has reached almost 18 percent – and it’s climbing.
Most of these workers are not just putting in a few hours: A 2008 study of people age 50 and older who retired and then went back to work found that 54 percent were employed full time and 19 percent worked more than 41 hours a week.
All of this could mean good news for the larger economy. As baby boomers move into their later years, the 65-and-over population will grow from about 13 percent in 2010 to a projected 20 percent by 2030. The rising population of seniors who work will bring stronger economic growth – if companies can retool to accommodate an older workforce, say economists and experts.
But if companies fail to plan ahead, they might also see costs mount: By one estimate, health insurance premiums for workers age 65 and older cost companies almost three times as much as those age 25.
People working in their later years could help with the country’s fiscal problems, says Gary Burtless, a Brookings Institution economist who is finalizing a study on the issue. Every additional year that a person stays on the job brings more revenue to the federal treasury in income taxes. If current trends continue, working seniors will have a positive, if small, impact on federal deficits under the most plausible budget projections….”
“Last Friday’s surprisingly strong April jobs report and today’s unexpected drop in initial unemployment claims were welcome developments in the beleaguered U.S. labor market.
However, the underlying details of the labor market continue to be troubling.
Last week, veteran economist David Rosenberg gave a lengthy 59-slide presentation on the Federal Reserve’s failed efforts to get the economy on track.
Much of the presentation focused on the dynamics of the U.S. workforce.
Rosenberg argued that despite the high unemployment rates, there’s actually a shortage of qualified labor, which is resulting in labor hoarding….”
Comments »“This extraordinary stock market is driven by characteristics that defy conventional valuation techniques. I receive emails from people who tell me that the market is overextended, overvalued, and trading way above its 50- or 200-day moving average. If you look at the metrics, the market is all of those things.
I receive other emails that talk about the valuation of the market. Is it reasonably “fair?” If you look at earnings expectations and the price of stocks this year and compare them to a metric, you would say the market is reasonably priced.
The math goes something like this. The S&P 500 Index will earn an estimated $105-$110 for 2013. That puts it at a multiple of about 15 times earnings. Those earnings are being reported by companies that have minimal distortions due to inflation or accounting mechanisms. Thus the earnings are of a higher quality in terms of reporting than they have been in the past. They do not reflect the bubble of the 2006 and 2007 financials. And they are more representative of the diversity of American companies. Our metric would say the market is reasonably priced. Not a great market, but certainly not excessive.
The next metric ties the relationship between stocks and interest rates. We use a number of vehicles to make this comparison. I like the calculation of the equity risk premium that says how much you get paid for owning stocks versus riskless debt instruments. If you compute an equity risk premium against an interest rate next to zero, the valuation of stocks could be infinite. Anything compared to near-zero has a huge bulge in its multiplier.
If you compare stock valuations against the 10-year riskless Treasury note, the equity risk premium is still very high by any historical measure. Why? Because the Treasury interest rate is so low.
If you try to compare the equity risk premium against what you believe to be the normalized 10-year Treasury interest rate, you still get a fairly reasonable equity risk premium.
The math is straight forward….”
Comments »“The U.S. dollar just hit the key ¥100 psychological level against the Japanese yen!
The currency pair hasn’t traded north of ¥100 since April 14, 2009.
The chart below shows the big downward move the yen has made…”
Comments »“NEW YORK (Reuters) – Goldman Sachs Group Inc has slashed its capital pledges to investment fundsby nearly half since the Volcker rule was signed into law in 2010, as it prepares its principal investment business for restrictions on investing its own money, according to regulatory filings.
The Wall Street bank has reduced future commitments to hedge funds and funds that invest inprivate equity, credit and real estate, by $5.8 billion since June 2010, the last period before the Volcker rule was included in the Dodd-Frank financial reform act. That represents a reduction of 48 percent, according to data in filings with the U.S. Securities and Exchange Commission.
The Volcker rule – which has not yet been finalized or implemented – will prevent banks from investing more than 3 percent of Tier 1 capital in hedge funds or private equity funds, or from contributing more than 3 percent of capital from those funds.
Goldman’s existing hedge fund and private-equity fund holdings represented 14 percent of its Tier 1 capital as of March 31, according to its most recent filing on Thursday. Including future private-equity fund commitments, that ratio goes up to 17 percent.
It is not clear how the Volcker rule will treat credit funds or real-estate funds, or how much time banks will get to come into compliance with the law. Regulators are expected to release a final rule by the end of this year, after reviewing hundreds of letters from industry groups and the public about a proposal they released in October 2011….”
Comments »“NEW YORK (AP) — A look at the 10 biggest percentage gainers on Nasdaq at 1 p.m.:
Tesla Motors Inc. rose 26.8 percent to $70.72.
Green Mountain Coffee Roasters Inc. rose 24.9 percent to $74.31.
Synta Pharm rose 12.8 percent to $7.74.
CSP Inc. rose 10.7 percent to $8.25.
Parametric Sound Corp. rose 10.6 percent to $20.68.
Syntroleum Corp. rose 9.3 percent to $6.02.
Providence Service Corp. rose 9.3 percent to $20.19.
Sangamo BioSciences Inc. rose 8.5 percent to $8.54.
Groupon Inc. rose 8.4 percent to $6.06.
Cirrus Logic Inc. rose 8.2 percent to $23.40.”
Comments »“Every earnings season, companies share the details of their financial performance. Additionally, many managers will reveal what they are seeing and what they are expecting for the economy.
The view out of Q1 2013?
Things have turned a corner, but it’s still slow going.
For instance, China is slowing down, but not so much that it will disrupt markets.
North America is looking great, especially in Mexico.
Among regions, it’s really just the European Union that’s really struggling — but even there, we may have bottomed out.
Consumer sentiment remains solid, even in the face of the sequester. And at least one company believes we’d be able to weather a pullback in dovish monetary policy.
Some companies are seeing scattered softness.
But overall, the snapshots indicate strength.
Comments »“……The S&P has been up 56 of the 88 trading sessions so far,” writes Cashin. “That rate of success is not only extremely rare, it is, borderline, unprecedented. Fifty years of experience suggests streaks ultimately end – just ask Joe DiMaggio. For now, enjoy the ride; be wary of rumors; stay very nimble and have a great weekend.”
Comments »“Facebook appears to be close to makinganother billion-dollar acquisition to once again ramp up its mobile efforts: according to three reports in the Israeli press at Calcalist and sister publication Ynet andThe Marker (all in Hebrew), Facebook has approached Waze, the social mapping and traffic app maker, and is now in advanced due dilligence on a deal that Calcalist puts at between $800 million and $1 billion. The negotiations between the social network and crowdsourced mapping app apparently began six months ago.
We have been digging too and have picked up confirmation from a source that both sides have privately confirmed that the deal is happening, and that the pricing reported first by the Calcalist is accurate. The main issue right now, the source said, is whether to keep Waze in Israel or take it to the U.S., as Facebook did with two previous Israel acqusitions. Those were of feature phone interface developer Snaptu (bought for up to $70 million in March 2011) and facial recognition specialistFace.com (bought in June 2012 for $50-60 million).
But! Facebook and Waze have already come back to us with flat non-responses. “We do not comment on rumors or speculation about the business,” a spokesperson at Waze told TechCrunch. The company tells me that it currently has over 47 million active users — more than double what it had in July last year when it reported 20 million.
“We won’t comment on speculation,” a Facebook spokesperson said.
However, if the rumors are true, adding Waze to Facebook makes a lot of sense in some respects: Facebook has been putting a lot of effort into its mobile business, which now has 751 million monthly active users as of March 31, 2013, an increase of 54% year-over-year. That puts mobile on a faster track at the moment than Facebook’s desktop business, which currently has 1.11 billion MAUs, an increase of 23% year-over-year….”
Comments »“Microsoft is offering to pay $1 billion to buy the digital assets of Nook Media LLC, the digital book and college book joint venture with Barnes & Noble and other investors, according to internal documents we’ve obtained. In this plan, Microsoft would redeem preferred units in Nook Media, which also includes a college book division, leaving it with the digital operation — e-books, as well as Nook e-readers and tablets.
The documents also reveal that Nook Media plans to discontinue its Android-based tablet business by the end of its 2014 fiscal year as it transitions to a model where Nook content is distributed through apps on “third-party partner” devices. Speculation about the plan to discontinue the Nook surfaced in February. The documents we have are not clear on whether the third-party tablets would be Microsoft’s own Windows 8 devices, tablets made by others (including competing platforms) or both. Third-party tablets, according to the document, are due to get introduced in 2014.
Nook e-readers, meanwhile, do not appear to fall into the discontinuation pile immediately. Rather, they’re projected to have their own gradual, natural decline — following the general trend of consumers moving to tablets as all-purpose devices.
Microsoft and B&N representatives declined to comment for this story.
A deal to buy the digital assets of Nook Media is the natural next step for Microsoft, which first announced a plan to work with Barnes & Noble on its Nook devices and content in April 2012, ponying up $300 million at the time to help. That plan included an additional $180 million advance to develop content for its Windows 8 devices — which Nook has been doing.
To date, there have been 10 million Nook devices sold, including both tablets and e-readers, with more than 7 million active subscribers. Microsoft has seen limited interested in its Windows 8 devices (although it says it has sold more than 100 million licenses for the OS to date). Currently the Nook app is available on every major platform, including Android, iOS and Windows…..”
Comments »Upgrades – AWK, BBVA, CBI, FLR, GRPN, KBR, MDR, OPTT, RAX, SINA, VSAT,
Downgrades – BLK, CLNE, GES, LPSN, RAX, TSLA, THI, TLP, TUMI,
Comments »“JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) had perfect trading records in the first quarter, making money every day of the period as Morgan Stanley posted losses in eight sessions and Goldman Sachs Group Inc. in two.
One daily gain at JPMorgan exceeded $200 million as the biggest U.S. bank by assets recovered from last year’s London Whale derivatives loss, the New York-based company said yesterday in a regulatory filing. Bank of America, the second-largest lender, generated more than $25 million of revenue on 97 percent of trading days, compared with 76 percent at Morgan Stanley, the firms said in separate filings. Goldman Sachs, which generated about half its revenue from trading last quarter, said its team made more than $100 million on 17 days…..”
Comments »“WASHINGTON (AP) — The number of Americans who applied for unemployment benefits fell by 4,000 last week to a seasonally adjusted 323,000, a fresh five-year low. The decline signals fewer layoffs and possibly more hiring.
The Labor Department said Thursday that the four-week average, a less volatile figure, dropped 6,250 to 336,750. That the fewest since November 2007, before the recession began.
Applications are a proxy for layoffs. Weekly applications have fallen about 9 percent since November and are now at a level consistent with a healthy economy.
The job market has also improved over the past six months. Net job gains have averaged of 208,000 a month from November through April. That’s up from only 138,000 a month in the previous six months.
Still, much of the job growth has come from fewer layoffs — not increased hiring. Layoffs fell in January to the lowest level on records dating back 12 years, though they have risen moderately since then. At the same time, overall hiring remains far below pre-recession levels and unemploymentremains high at 7.5 percent….”
Comments »“DETROIT (Reuters) – Consumer Reports magazine awarded a near-perfect score to Tesla MotorsCo’s Model S, citing the electric car’s power, “pinpoint” handling and quiet, well-crafted interior.
The score of 99 out of 100 puts the Model S far ahead of other electric and gas-powered rivals, including the Porsche Panamera sports car and the Fisker Karma plug-in hybrid.
“Slipping behind the wheel of the Tesla Model S is like crossing into a promising zero-emissions future,” the highly influential magazine said in its review on Thursday. “It’s what Marty McFly might have brought back in place of his DeLorean in ‘Back to the Future’.”
Consumer Reports last gave a near-perfect score six years ago to the Lexus LS 460L luxury sedan made by Toyota Motor Corp, according to the magazine, which has more than 8 million subscribers.
The positive review comes on the heels of Tesla reporting its first quarterly profit in its 10-year history. Chief Executive Elon Musk is attempting to reach a broader group of buyers with the Model S electric sedan.
Consumer Reports said a Model S equipped with an 85 kilowatt hour battery was able to get 200 miles between electric charges. Range varied between 180 miles on cold winter days to about 225 miles in more moderate temperatures….”
Comments »“WASHINGTON (Reuters) – Fannie Mae , the nation’s biggest mortgage finance company, said on Thursday it will pay $59.4 billion in dividends to the U.S. Treasury after a record profit in the first quarter that reflecting a multibillion dollar gain from reversing an earlier writedown of tax benefits.
The government-controlled company reported pretax income of $8.1 billion for the quarter and booked an additional gain of $50.6 billion on the tax assets, resulting in net income of $58.7 billion. That compared to a $2.7 billion profit in the same three months a year earlier.
Since its return to profitability, Fannie Mae has been considering when to start counting potential tax credits as part of its net worth….”
Comments »“Brent futures fell for a third session as crude inventories in the U.S. increased. Iraq resumed oil exports via Turkey today after a halt caused by sabotage to a pipeline.
Brent dropped as much as 0.8 percent. Total U.S. crude stockpiles rose by 230,000 barrels, according to the Energy Department. Iraq’s state-run North Oil Co. repaired the pipeline to Turkey following a bombing attack yesterday in the city of Mosul. The weekly U.S. jobless claims will be announced at 8:30 a.m. Washington time and are expected to show an increase to 335,000, according to a Bloomberg survey.
“The market looks to be taking stock, awaiting the next economic data,” said Michael Hewson, a market analyst at CMC Markets Plc in London who expects WTI to peak at $98 this year. “It’s a demand story at the moment as inventories keep rising. We need positive economic news to stop the fall and that could come with the weekly jobless claims.”
Brent for June settlement fell as much as 78 cents to $103.56 a barrel, and was at $103.73 as of 12:39 p.m. London time on the ICE Futures Europe exchange.
West Texas Intermediate for June delivery was down 71 cents at $95.91 a barrel in electronic trading on the New York Mercantile Exchange. The front-month European benchmark was at a premium of $7.82 to WTI. It closed at $7.72 yesterday, the narrowest gap since January 2011.
“U.K. industrial production rose more than economists forecast in March as cold weather boosted demand for electricity and gas.
Output increased 0.7 percent from February, when it gained 0.9 percent, the Office for National Statistics said today in London. The median forecast of 31 economists in a Bloomberg News survey was for a gain of 0.2 percent. Electricity and gas surged 2.4 percent, the most since October. The data also showed that production increased 0.2 percent in the first quarter, matching an estimate in last month’s gross domestic product report.
Britain’s economy grew 0.3 percent in the three months through March and surveys suggest that the recovery may have continued into this quarter. Bank of England policy makers meeting today will probably maintain their target for asset purchases at 375 billion pounds ($583 billion) as they weigh risks to the rebound from the contraction in the fourth quarter.
The data “suggest that the economic recovery gained some momentum towards the end of the first quarter,” said Samuel Tombs, an economist at Capital Economics Ltd. in London. Still, “we doubt that this strong growth will be maintained. With the euro zone still deep in recession, any recovery in the export-dependent industrial sector this year is likely to be limp at best.”
The pound advanced against the dollar and the euro. It rose 0.2 percent to $1.5559 as of 10:31 a.m. London time and was 0.3 percent stronger at 84.43 pence against the euro. The yield on the 10-year U.K. government bond was little changed at 1.77 percent.
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