Comments »Icahn Raises Stake in Herbalife from 13.6% to 15.5% $HLF
— Benzinga.com (@Benzinga) March 7, 2013
Monthly Archives: March 2013
Wealthy Households Keeping Consumer Sector Afloat
“The consumer sector has held up in recent months, with consumer spending rising 0.2 in January from December.
But it’s a tale of two countries: the wealthy, infused with stock market wealth and improving home values, are keeping the sector afloat, while the non-wealthy, struggling with a payroll tax increase on top of a bleak job market and higher gas prices, are dragging it down.
“People in the top half of the income distribution are doing just fine. They’re spending enough to keep the economy moving,” Mark Zandi, chief economist at Moody’s Analytics, tells The Wall Street Journal.
“But the lower half is having a difficult time keeping their heads above water.”
The impact of the wealthy is stronger than the impact of the non-wealthy. That’s because the top 20 percent of the country in terms of income do about 38 percent of the spending, which equals nearly as much as the entire bottom 60 percent of the income spectrum, according to Labor Department data cited by The Journal.
But it’s unclear if the wealthy can keep things going on their own, The Journal explains. Already economic growth has slowed to just 0.1 percent in the fourth quarter. And the sequester could tip the economy in the opposite direction.
Ryan Sweet, another economist at Moody’s, has a mixed view for consumer spending going forward. “It’s going to be touch and go for the consumer for the next few months,” he tells Bloomberg.
“The consumer is going to be able to support the recovery, but they’re not going to be able to take it” higher, he says.
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Challenger, Gray, & Christmas Say Planned Job Cuts Rise 37%, Second Month of Upticks
“FOR RELEASE AT 7:30 A.M.ET,MARCH 7, 2013
Job Cuts Up Second Month in a Row
FEBRUARY CUTS RISE 37% TO 55,356
CHICAGO, March 7, 2013 –Planned job cuts increased for the
second consecutive month in February as U.S.-based employers announced
workforce reductions totaling 55,356, up 37 percent from 40,430 in January,
according to the report released Thursday by global outplacement
consultancy Challenger, Gray & Christmas, Inc.
The February total was 7.0 percent higher than the 51,728 job cuts
announced the same month a year ago. It was the highest monthly tally
since last November, when announced layoffs reached 57,081.
Employers have now announced 95,786 job cuts so far in 2013. That
is 9.0 percent fewer than the 105,214 job cuts through the first two months
of 2012.”
Jim Chanos Has No Position in $HLF, He Backs Ackman’s Analysis
“Famed short-seller Jim Chanos, the founder of Kynikos Associates, said on CNBC’s “Squawk Box” this morning that he shorted Herbalife last year.
“We were short last year,” Chanos said, adding, “We were short at a price.”
He currently has no position in Herbalife, which is a multi-level marketing firm that sells nutrition products.
He explained that he’s “not crazy” for this multi-level marketing model. He’s said that before.
He also added that he thinks Bill Ackman is “correct in his analysis in that when your business is based, in effect, on selling an overpriced commodity to your customers or you distributors you ultimately have a flawed business down the road.” ….”
Comments »Gapping Up and Down This Morning
Upgrades and Downgrades This Morning
In Play and On the Wires
Corporate Buybacks Hits $1 Trillion
“Corporate buybacks have surpassed the $1 trillion mark for the first time since 2009, a sign the credit boom is reaching new heights, according to Brian Reynolds, chief market strategist at Rosenblatt Securities.
“Buyback announcements for the S&P have now topped the trillion dollar mark for this credit boom. And even though this boom is about to begin its fifth year, this past month has seen the fastest growth for buyback announcements, as if CEOs are making up for lost time,” Reynolds said in a note on Wednesday.
(Read More: Is Corporate Behavior Too Bubblicious in Bond Market?)
He said buybacks, where a company repurchases its own outstanding shares to reduce the number of shares in the market, have helped boost share prices.
“Buybacks have been the main driver of higher equity prices during the current credit boom, which began in 2009, as all other major stock market participants combined have been net sellers.”
Since March 2009, the S&P 500 has risen from its low of 676 to Wednesday’s close of 1541, an increase of almost 104 percent….”
Comments »The BoE Keeps Rates Unchanged, Pound Sterling Rises
“The Bank of England kept its benchmark interest rate unchanged at 0.5 percent and maintained the size of its asset purchase program at 375 billion pounds on Thursday.
The pound rose to 1.5061 against the dollar after the news.
While most analysts had expected the BoE to keep policy unchanged, some analysts were braced for a surprise after minutes from the bank’s last meeting showed three of the nine committee members had voted in favor of expanding bond buying by a further 25 billion pounds ($38 billion).
Amid fears of a triple-dip recession, the bank’s deputy governor Paul Tucker last month went so far as to suggest negative interest rates on money parked at the central bank in order to encourage the financial system to step up lending.
“The decision this month was obviously to hold, it doesn’t mean that next month they won’t go and buy another 25 billion [pounds],” Marcus Ashworth, head of fixed income at Espirito Santo Investment bank said.
The pound has weakened in recent months after weak economic data and expectations of further quantitative easing. HSBC warned earlier this week, the currency could get “smoked” from new monetary stimulus. But Jan Randolph, head of sovereign risk at IHS global insight said the pound weakness might have actually helped the BoE stand pat….”
Comments »FLASH: ECB Lowers GDP Expectations
Carl Ichan Proposes Alternative for $DELL
“Billionaire investor Carl Icahn is proposing an alternative to the $24.4 billion plan to sell slumping PC maker Dell to a group led by founder Michael Dell, saying it substantially undervalues thecompany.
Icahn says he favors paying a one-time dividend totaling $9 per share in a move that would allow shareholders to keep their stake in the company.
He says that would be more valuable to shareholders than selling it as negotiated by a special committee of independent Dell directors to sell the company to an investment group for $13.65 per share.
Icahn says that if the board turns down his plan….”
Comments »Initial Claims, Productivity, and Trade Balance
Initial Claims: Prior 344k, Market expects 350k, actual 340k ….continuing claims edge up to 3.094m
Productivity: Prior -2%, market expects -1.6%, actaul -1.9%
Trade Balance: Prior -$38.5b, market expects -$43b, actual $44.4
Comments »Initial Claims, Trade Balance, Productivity
$TWC To Spin Off Magazine Business
“Time Warner Inc. will spin off its magazine business later this year, turning the nine-decade-old publisher of Time, People and Sports Illustrated into a separate publicly held company.
The board authorized management to proceed with the plan after a review of options, the New York-based media company said yesterday in a statement. As part of the move, Time Inc. Chief Executive Officer Laura Lang will step down from the role…”
Comments »Keystone Fails Texas Common-Carrier Test, Landowners Say
“TransCanada Corp. (TRP) faces court arguments from Texas landowners that its plans for the Keystone XL pipeline to transport Canadian tar-sands oil to coastal refineries don’t give it the right to condemn their property.
One farmer, in an appellate hearing set for today in Beaumont, Texas, will try to build on a state Supreme Court decision and what may be a groundswell of support for property rights and environmental protection in a state whose laws and courts have historically accommodated the oil and gas industry. David Holland, whose cattle and rice farm lies next to a cluster of refineries, argues TransCanada doesn’t qualify as a common carrier under state law and doesn’t have a right to take an easement for the pipeline.
Lawsuits by four landowners constitute the last hurdle blocking the pipeline’s southern leg from Cushing, Oklahoma, to the Gulf Coast. For the northern leg across the Canadian border, the Calgary-based pipeline and power company needs approval from the Obama administration, which has delayed a decision amid environmentalists’ opposition.
“There’s a lot of contemporary salience” for the landowners’ fight, Lynn Blais, who teaches environmental and property law at the University of Texas in Austin, said in a phone interview. “This is a property-rights state. But while the courts will be sympathetic, I don’t know whether the landowners will win. These are two of the most important interests to appear in court in Texas — property owners and the oil industry.”
Reversal Sought…”
Comments »German Factory Orders Fall Unexpectedly
“German factory orders unexpectedly fell in January as the sovereign debt crisis curbed demand in the euro area.
Orders, adjusted for seasonal swings and inflation, declined 1.9 from December, when they rose a revised 1.1 percent, the Economy Ministry in Berlin said today. Economists forecast a 0.6 percent gain, according to the median of 41 estimates in a Bloomberg News survey. In the year, workday- adjusted orders dropped 2.5 percent.
The Bundesbank expects the German economy to rebound in the current quarter after contracting 0.6 percent in the final three months of 2012. Confidence among entrepreneurs and investors jumped in February and retail sales rose the most in more than six years in January. At the same time, the euro area, Germany’s largest export market, is in a recession and theEuropean Central Bank predicts only a gradual recovery later this year.
“After a long series of encouraging sentiment indicators, today’s new orders are a disappointment” and “a painful reminder that the crisis is not over yet,” said Carsten Brzeski, senior economist at ING Group in Brussels. “While the solid labor market and a sharp increase in retail sales in January already confirmed the growth-supportive role of consumption, the strengthening of industrial activity remains a very gradual and choppy one.”
Market Reaction….”
Comments »Unemployment in France Hits a 13 Year High as Growth Slows
“French unemployment climbed to a 13- year high in the fourth quarter as companies eliminated tens of thousands of jobs to cope with a stalled economy.
The jobless rate based on International Labor Organization standards rose to 10.6 percent from a revised 10.2 percent in the previous three months, national statistics office Insee in Paris said today. Excluding France’s overseas territories, the rate was 10.2 percent, compared with a median forecast of 10.1 percent in a Bloomberg News survey.
Faced with an economy that fell back into recession early last year and risks doing so again, companies such as PSA Peugeot Citroen (UG), Renault SA and Alcatel-Lucent are slashing payrolls. That’s adding pressure on President Francois Hollande who is trying to retain support of unions while attempting to revamp Europe’s second-largest economy in the wake of the region’s sovereign debt crisis.
“Unemployment will likely rise further in coming months, with the peak only coming at the end of the year or early next year,” said Joost Beaumont, an economist at ABN Amro in Amsterdam. “The economy may gain some traction in the second half but it’s unlikely to be enough to induce companies to start hiring in a serious way.”
Hollande, elected last May, has said he aims to revive growth and reduce joblessness by the end of his five year mandate by improving French competitiveness.
His Socialist government yesterday endorsed a plan to overhaul French labor law to add flexibility in legislation that lawmakers will vote on later this month.
‘Preserve Jobs’…”
Comments »The ECB Keeps Rates on Hold
“The European Central Bank left interest rates on hold as it gauges how big a threat Italy poses to the economic recovery.
Policy makers meeting in Frankfurt today kept the benchmark rate at a record low of 0.75 percent, as forecast by 56 of 61 economists in a Bloomberg News survey. President Mario Draghi holds a press conference at 2:30 p.m. to explain the decision.
Budget cuts and economic reforms were rejected by more than half of voters in an Italian election last month, undermining optimism that the euro area will shake off the sovereign debt crisis and gradually climb out of recession this year. With economists predicting the ECB will lower its growth and inflation forecasts today, investors are looking for signs from Draghi that the ECB will do more to foster a recovery.
“It’s up to governments to implement structural reforms and Draghi will make clear what the ECB can do compared to what governments can do,” said Marco Valli, chief Eurozone economist at UniCredit Global Research in Milan. “But if the Italian situation impacts monetary policy or poses a downside risk to inflation, they’ll have to act.”
Policy options available to the ECB include rate cuts, more long-term loans to banks, and measures to encourage bank lending to small and medium-sized companies that are struggling to gain access to credit, economists said.
Italy Concern….”
Comments »2012 Was a Record Year for Capping the Swiss Franc
“The Swiss central bank spent 10 times as much in 2012 as it did the year before to defend the currency cap it implemented to shield the economy.
The Swiss National Bank (SNBN) bought 188 billion francs ($199 billion) in foreign currencies from a wide range of counterparties in Switzerland and abroad, the Zurich-based central bank said in its Accountability Report today. It has amassed record foreign currency reserves in its fight to protect the ceiling, and a large portion of those reserves are held in highly rated government bonds. In 2011, it spent 17.8 billion on foreign currencies.
“The SNB took care to avoid its investments having any impact on the markets and currency developments of other countries,” the central bank said in the report.
The SNB’s decision to impose a cap on the franc of 1.20 versus the euro in September 2011 has helped shield Switzerland from a downturn. The euro area, its biggest trading partner, is trying to emerge from recession.
The SNB’s foreign currency reserves fell in February to 427.5 billion francs, data published by the central bank today showed. That sum is equal to almost three quarters of Switzerland’s annual gross domestic product.
In response to a question about how much the SNB might have to spend this year to make the cap stick, SNB President Thomas Jordan, speaking to reporters in Zurich, said today that “concerning the future I can’t tell you anything.”
Debt Crisis….”
Comments »China Moves One Step Closer to Allowing the Yuan to Trade Freely
“Chinese regulators expanded a program allowing institutions to raise yuan offshore for investment in the mainland, a step that moves the nation closer to a freely traded currency and may bolster confidence in the stock market.
Financial institutions registered in Hong Kong and the Hong Kong units of Chinese banks and insurers will be allowed to join units of Chinese brokerages and fund-management firms in theRenminbi Qualified Foreign Institutional Investors program, according to a statement posted on the China Securities Regulatory Commission’s website yesterday. The regulator also expanded the range of products participants can invest in beyond exchange-traded stock funds and bonds.
Standard Chartered Plc (STAN) said today it would be “very interested” in participating in the program. The expansion comes as legislators meet this week at the annual National People’s Congress in Beijing, during which a new generation of Communist Party leaders headed by Xi Jinping assumes oversight of the world’s second-largest economy. The party pledged in November to make the exchange rate more market-based and promote freer movement of capital in and out of the country for investment purposes.
“This announcement will be welcomed with open arms by the many major foreign financials with any kind of significant presence in Hong Kong,” Z-Ben Advisors, a Shanghai-based fund researcher, said in a report today. “We anticipate at least 20 will be lining up to apply for an RQFII license in the coming months.” …”
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