As we approach what may be the first federal government shutdown in 17 years, markets continue to be in turmoil. Long-term investors need to remember that we believe this will be a short-term news event, not a long-term market event. It was just 10 months ago we went down this path. Like Yogi Berra said “it is deja vu all over again”. The bad part of this current debate is that it appears the fix may only be for a couple months so the turmoil may continue. (Bloomberg/Associated Press)
Today marks the end of the third quarter. Even at the pace of the current sell off it looks like both the month and quarter will be positive for the S&P 500. (Fox Business News)
China’s factory activity expanded at a slower than expected rate in September according to the HSBC Purchasing Managers Index. The measure showed expansion at 50.2 slightly higher than August, but still below what was expected.
Politics are also driving markets overseas. It appears that the coalition government in Italy is falling apart. That has sent Italian bond interest rates spiking. European markets are down about 1% across the board. (NBC News)
Under the category “is he a dinosaur or a visionary”. Time Warner CEO Jeff Bewkes says he does not think that the soon to be released Intel TV and others like Net Flix will disrupt the traditional TV distribution model. He says there is just too many technical difficulties to overcome. And they said man would never fly. (Variety)
The S&P 500 broke its longest losing streak in almost a year yesterday as it shrugged off the worry of political stalemate in Washington, DC. But today it looks like risk off as investors’ position themselves in front of a long weekend of headlines. (Associated Press)
August personal income was up 0.4% in August and consumer spending was up 0.3%. Those are both good numbers that shows continued economic growth. (US Department of Commerce)
Nike saw sales rise 8% last quarter and profits surged 37% (on a per share basis) to $780 million. The company reported slowing growth in China as they have excessive inventory and have misjudged Chinese consumer tastes. (Reuters)
The banking industry continues to consolidate as we put the financial crisis in the rearview mirror. Home Federal Bank is being bought by Banner Corp of Walla Walla Washington. The move will put Banner assets at $5.2 billon making it the fourth largest bank in the Pacific Northwest. Home Fed purchased Community First Bank of Prineville and Liberty Bank of Eugene when they failed as part of the financial crisis. (Banner Corp news release)
Join us Saturday at 10 for Financial Focus when we will have two guests. Washington, DC lobbyist Steve Silver to talk about what he thinks is the end game on the coming fiscal cliff and Chris Mergenthaller CEO of Velatrack about US exports and international trade.
The S&P 500 posted its fourth consecutive down day Tuesday as markets fret about politics and headlines associated with the federal budget debate. Don’t expect anything to change for the next few days as we are likely to see even more brinksmanship. (CNBC)
August Durable Goods were up 0.1% which was better than expected. August was much better than the minus 8.1% in July. (US Department of Commerce)
As the Federal Reserve put tapering of their bond buying program on hold interest rates have temporarily fallen and that boosted mortgage applications for a second week. Refinancing applications were up 4.9% and new home applications were up 5.5%. The 30-year fixed rate stands at 4.62%. (Mortgage Bankers Association)
Home prices continue to rise, but not at the heated levels we have seen over the last year. In July home prices were up 12.4% from a year earlier. (Case-Shiller)
Consumer confidence dipped slightly in September, just off the 5 ½ year highs set in June. Consumers continue to show worry about the slow pace of the recovering economy. (Associated Press)
A Portland hedge fund manager who stole $6.4 million from investors in a Ponzi scheme will spend 6 ½ years in prison. Yusaf Jawed promised big returns but never invested the money and instead used it to pay back personal loans and travel. (Oregonian)
It is now fall and this morning we start the last week of trading for the third quarter. Next week starts the last quarter of the year and there are 93 days left to do your Christmas shopping.
While we slept the Chinese Purchasing Mangers’ Index, a measure of factory orders for September, climbed to six month highs and beat expectations. This shows the economy is showing signs of recovery. (Bloomberg)
The new iPhone is seeing big early demand and an Oregon company is benefiting. Hillsboro based Triquint Semiconductor has a chip in the new phone. Apple is approximately one third of the sales for the Oregon Company. (iFuxut’s/Oregonian)
It is a game of catch up. Today Microsoft will unveil its new generation tablet to the world in New York City. It is anticipated the company will announce new features and accessories. (CNBC/Reuters)
Retailer Kohl’s has kicked off the holiday hiring season. The company says they will be hiring 53,000 seasonal holiday employees. Kohl’s has 12 Oregon stores and two in SW Washington. (Oregonian)
The market got some good economic data points but shrugged them off. The US’ current account deficit was smaller than expected, The Philly Fed manufacturing index spiked higher showing its best reading in 2 years, and the leading economic indicator index also rose more than expected. All of this points to a continued grind higher in the US economy.
The largest bank in the US JPMorgan Chase agreed to pay a $920 million fine to settle its liabilities from the $6.2 Billion London whale derivatives loss last year. That news sent shares of JPM 1.5% lower.
Rite Aid saw their stock surge 23% higher after the drug store chain raised their profit forecast and reported a fourth straight quarterly profit.
And Priceline.com’s shares closed up .6% yesterday to $1000.62/share, making it the first stock in the S&P 500 to close above $1000/share.
And today after the close of trading Alcoa, Hewlett-Packard, and Bank of America will be dropped from the Dow Jones Industrial average Index to be replaced by Nike, Visa, and Goldman Sachs. The changes were prompted by the low stock prices of the 3 companies being removed since the Dow is a price weighted index.
Stocks are trading at all-time highs this morning after the Federal Reserve announced they will keep the punch bowl spiked a little longer.
By a 9-to-1 vote the Fed chose to continue its massive $85 Billion per month Bond buying program which stunned the financial markets sending stocks higher and bond yields lower. The central bank cited softer US growth, rising interest rates, and reduced federal spending that would all act as headwinds as their reason for not tapering.
Tech bell weather Oracle reported earnings yesterday after the bell. The company saw an increase in quarterly profit of 8% but the software giant’s sales fell below expectations for the third quarter in a row. The company also gave disappointing guidance for the rest of the year. That news sent the stock lower.
And the number of people filing for unemployment claims was 309,000 last week which is the lowest number in 6 years which is a positive sign because it is a forward looking economic indicator.
All eyes are on the Federal Reserve and their decision about tapering. The S&P 500 rose above 1700 yesterday for the first time in 6 weeks and is within a few points of an all time high.
Markets around the world will be in a holding period until 2pm eastern time today when the Federal Reserve wraps up their 2 day meeting with a press conference where Ben Bernanke is expected to announce the long retreat from the ultra-easy monetary policy of the last 5 years. The Fed is expected to announce a $10-$15 Billion reduction in monthly Bond purchases while stressing that interest rates will remain near zero for a long time. The 5 year expansion of the Fed’s balance sheet has left the central bank with a $3.6 trillion balance sheet.
And a company that is a good proxy for the future health of the US economy, FedEx, reported fiscal 1st quarter earnings increased 6.5% on an increase in ground shipping and improving margins. The company also backed their full year profit projections sending the stock 2.5% higher.
The U.S. Department of Commerce said that construction on new homes rose 0.9% in August to a seasonally adjusted annual rate of 891,000 pointing to a continued rebound in the housing market, though there is a concern that rising mortgage rates are slowing the recovery.
And Forbes is out with their annual list of the 400 richest people on the planet. Five years after the financial crisis the wealthiest 400 collectively gained back $2.2 Trillion which equals the GDP of Russia. The average net worth on the list is $5 Billion and Bill Gates has taken the top spot back from Mexico’s Carlos Slim with a net worth of $72 Billion.
The Federal Reserve starts a two day meeting today that will end in the Chairman’s press conference tomorrow. It is widely anticipated that Ben Bernanke will announce a slowdown in their bond purchasing program. That could introduce significant volatility into markets. (CNBC)
Inflation at the consumer level was up 0.1% in August. The number is cool and shows inflation remains in check. (Department of Commerce)
Vancouver based pizza maker Papa Murphy is looking to make some big changes. The company is rolling out new designs for their stores. The foot print will not change, but the décor will. They are also preparing for an initial public offering. The company reported $800 million in revenue last year. (Reuters)
As they are building a new store in Bend and a few months ago fired their founder from the board, Men Wearhouse is struggling. The company said profits fell 28% last quarter, sales were down 2.3%. (Associated Press)
Regulators say Citigroup must pay a couple $3.1 million for real estate investments one of their former brokers sold in a politician’s development. The broker was not supposed to be selling the product and Citigroup did not catch him doing it. That broker is now employed by Wells Fargo Advisors.
The winning streak came to an end yesterday and so we start anew. Stocks are in position for their second best week of the year. (Seeking Alpha)
Producer prices were up 0.3% last month showing inflation remains in check. Retail sales were up 0.2% in August, not as robust as anticipated. (Department of Commerce)
The percentage of Americans not paying any federal income tax stands at 43% for the 2012 tax year. That is off the 47% who did not pay any federal income taxes in 2011. Most of the decline is led by the expiration of tax cuts enacted during the Great Recession. (Tax Policy Center)
Hot weather may cause a smaller harvest of potatoes in Oregon this fall. Oregon has 40,000 acres planted in potatoes for the 2013 growing season. About 75% of Oregon potatoes are processed in the State and 15% exported to countries like Japan. An average of 58,500 pounds of potatoes comes from one Oregon acre. (Oregon Potato Commission)
Oregon’s Killer Burger is opening a sixth location at the old Rose Garden (now the Moda Center) just in time for the new NBA season. Killer Burger is known for its peanut-butter topped burgers and bottomless French fries. (Oregonian)
For you Financial Focus Radio listeners the show will be aired starting 830 on Saturday. The early start time you will enable to get your fill of financial news before you listen to Duck football.
The S&P 500 has been up for seven straight days as at least investors feel good about what is going on around the globe and the potential for growth here at home. We have essentially recovered the losses of August during the first eleven days of September. (CNBC News)
It is official Umpqua Bank is buying Sterling bank for $2 billion. Once the deal is complete all Sterling branches will be rebranded to the Umpqua name. The deal will double the size of Umpqua and give them $16 billion in deposits and $15 billion in loans. (Portland Business Journal)
Big job cuts are coming to the banking industry as they downsize their mortgage units. But this should not be a surprise to anyone ……. The refinancing boom is over as rates rise and anyone that could did refi, maybe multiple times. Mortgages for new and existing home sales continue to recover and remain strong, but could never be at levels that would support the refi infrastructure built by the banks. (CNBC)
The State of Oregon’s terrible investment in green energy company SoloPower is dragging on. The State is allowing the company to delay loan payments and suspend job requirements as SoloPower tries to lineup $50 million in new financing and restructure debt. The company is in default on a $10 million loan given by tax payers and $20 million in tax credits that were linked to producing jobs that have not materialized. (Oregonian)
he Dow Jones Industrial Average climbed 136 points, or 0.89%, to 15326, the S&P 500 gained 5.1 points, or 0.31%, to 1689 and the Nasdaq Composite dipped 4 points, or 0.11%, to 3725.
Wall Street has been fixated with developments on the Syria front in recent days. A diplomatic solution that could stave off U.S. military involvement solution emerged early in the week, which sent stocks zipping higher.
President Barack Obama reaffirmed those plans late Tuesday in an address to the nation in which he asked Congress to hold off on a vote authorizing military action.
Traders had a bullish reaction, saying they expected Wall Street to continue its move higher.
"The big market takeaway is that the risk of an imminent attack on Syria continues to recede," Dan Greenhaus, chief global strategist at BTIG told FOX Business on the heels of President Obama's address. He added that "all else equal, that's a positive for markets."
The Dow Jones Industrial Average is losing long-time blue-chip companies Alcoa (AA), Hewlett-Packard (HPQ) and Bank of America (BAC) in what marks the index's largest shakeup since 2004.
The companies are being replaced by Visa (V), Goldman Sachs (GS) and Nike (NKE).
Alcoa will be dropped from the Dow Industrials after serving as a Dow component for the last 54 years. It is being replaced by Nike, which the DJIA's index committee says helps to diversify the index's consumer discretionary sector. The Oregon-based athletic-apparel maker, currently ranked 59th on the S&P 500 in market cap, saw its shares climb 2% to $66.72 in recent trade.
Meanwhile, payments giant Visa will replace computer maker H-P, while Goldman is swooping in for BofA.
In a statement, S&P Dow Jones Indices said the changes were prompted by the low stock price of the three exiting companies and the Index Committee's desire to diversify the sector and industry group representation of the index.
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