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Business News


Farmers Fear Drought Losses, Food Prices To Skyrocket


(Sacramento, CA)  --  Many of California's farmers fear the ongoing drought will likely force them to let hundreds of thousands of acres sit idle.  And less supply, they warn, will send food prices skyrocketing.  The hardest hit crop will be lettuce, which takes three-and-a-half gallons of water just to grow one head of the leafy green.  Lettuce prices could jump by 28-percent, followed closely by avocados.
 

Markets Closed Today


(New York, NY)  --  There will be no Opening Bell this morning.  The markets are closed for Good Friday.  Stocks closed out Thursday in mixed fashion to end a short week on Wall Street.  The Dow Jones Industrial Average fell 16 points to 16-408.   The Nasdaq gained nine points to 40-95 and the S&P 500 was up two points to end the session at 18-65.  Shares in both IBM and Google were down over three percent after reporting weaker than expected earnings.  Morgan Stanley rose three percent after the financial services company reported a rise in first-quarter earnings.

Xbox One Sales Top 5 Million


(San Francisco, CA)  --  There's no denying the Xbox One video game console is a smashing success.  Microsoft announced Thursday it has sold more than 5 million units since Xbox One launched back in November.  If you're keeping score, Sony's Playstation Four still dominates the video game console business, with over 7 million units sold.

It Is An Earnings Feast


Today is the last day of trading for the week as investors get ready to celebrate Easter.  The history of the Good Friday shutdown, the only non-federal holiday the markets are closed, is posted on the Northwest Quadrant Wealth Management Facebook page. https://www.facebook.com/northwestquadrantwealth Today we get a boat load of earnings news.

General Electric saw profits fall 16% in Q1 as they saw a slump in their transportation business that sells locomotives.  GE is currently in the process of selling their credit card business that many believe is a burden to its core business growth. (Reuters)

IBM revenue was down 4% and profits fell 21% during the first quarter as its hardware sector continues to struggle.  The company is currently selling its low end server business to Lenovo. Their software business posted gains. (Associated Press)

Investment bank Goldman Sachs saw profits and revenue fall last quarter but not as much as the street expected. A decline in trading revenue was the biggest drag on the companies still robust $2.26 billion profit. (Wall Street Journal)

PepsiCo sales popped 4% last quarter and profits jumped 13% as their snack business did well.  Snack business growth in Latin America was up 5%.  But, like their competitor Coke North American soda sales fell. (Associated Press)
 

Wild Ride in the Markets


Tax day was a wild one for equity markets as prices went from high too low and back too high again.  Volatility is back after what seemed like a long absence. (CNBC)  

While we slept China posted better than expected GDP growth of 7.4% during the first quarter of the year.  That number is slightly lower than the 7.7% to end 2014 but shows their economy is not falling apart. (Fox Business News)

Bank of America lost $514 million last quarter as litigation by the Fed’s over mortgage issues took a big bite out of the bottom-line.  Last year the nation’s second largest bank posted a $1.1 billion profit. (Reuters)

PC sales totaled 73.4 million during the first three months of 2014, down 4.4% from last year. That could have a big impact on Oregon’s largest employer, Intel, whose chips dominate the PC market.  Intel is projecting its third straight year of flat sales in 2014. (Oregon Live)

Now that that your taxes are in the mail we can assess the damage.  The top 1% of wage earners will pay an average tax bill of $525,231 up $36,000 from last year.  The top 1% will pay over 53% of all federal taxes in 2014. (CNBC)
 

Oregon Tax Freedom Day April 21st


It is tax day!  If you don’t have your taxes done get to work.  In the State of Oregon you still have 6 days until Tax Freedom Day, the day you have worked enough to pay all your taxes, three days later than last year.  Oregon is the 16th highest tax state in the nation and the 17th biggest spender.  (Oregon Catalyst)

Coca-Cola saw profits fall almost 8% last quarter and revenue was down 4%. The numbers met street expectations as Coke is struggling with declining soda sales and heavy soda taxes in Latin America. (Reuters)

Consumer goods and drug maker Johnson & Johnson saw profits climb 8% in Q1 as sales climbed 4% on better drug sales. The company raised its outlook for 2014 as they see an improving economy. (Market Watch)

In good economic news March retail sales recorded their largest gains in 18 months climbing 1.1%.  Nearly all sectors of the economy saw growth. US consumer inflation for March was tame at 0.2% and has us running at a 1.5% rate of price growth. (Reuters)

US employers posted more job openings in February as the labor market continues to improve. Employers posted 4.2 million jobs up 7.7% from the previous month.  (Associated Press)
 

More Good Jobs News


Markets rallied yesterday as the Federal Reserve continues to reassure investors that while interest rates will go up one day it will not be soon.  While we slept China reported their exports declined 6.6% and imports declined 11.3%. (CNBC)

New claims for unemployment fell 32,000 to 300,000 a new cycle low and good news on the job front. (Fox Business News)

Part of the new American energy renaissance could be becoming a major energy supplier to China.  China is a major consumer of LPG (Liquefied Petroleum Gas) which we have ample supplies.  Currently the US bans the exports of crude oil but there are no limits on LPG. Exports of LPG could triple by 2020. (Reuters)

US foreclosures are at their lowest levels since mid-2007 and have been falling for 42 straight months. Currently banks are holding about half a million homes they have already foreclosed upon.  Of these bank owned properties 10% are listed for sale and half are occupied by the former homeowners or a renter. (Reuters)

A whopping 48% of Americans don’t have enough savings to last even a month without a paycheck.  The silver lining is of those who have savings more than half of them say they could make it more than 8-months without a paycheck. (RetailMeNot.com)
 

Auto Here and Abroad


Stocks rose yesterday for the first time in four days as the S&P 500 is, barely, back into positive territory for the year. Alcoa officially kicked off earnings season last night posting a bigger than expected profit as global aluminum demand grew by 7% last year. (Associated Press)

In a sign the American manufacturing renaissance continues, BWM will soon make a decision where to put their second North American factory to build their 3-series sedan and the US is still in the running.  This comes as they are investing $1 billion to expand their current South Carolina factory. (Bloomberg)

Ford, the only domestic auto manufacturer not to be bailed out with your tax dollars, says sales in China grew 28% over the last year.  Ford sold 271,321 cars during the first quarter in the country up 45% from last year.  The Ford Focus is the best-selling car in China. (Reuters)

Under the category hard work pays off.  Affluent Americans expect to delay retirement to age 68 according to a new report. The average age when people stop working overall is 60 years.  (Investor Retirement Income Trends)
 

Business News


US Stocks sold off sharply yesterday led lower by the tech heavy NASDAQ which saw it's largest 3 day drop since November of 2011.  This morning markets are trading

Cash rich NIKE is ramping up purchases of its stock as they continue their strategy of returning cash to shareholders through buybacks and dividends.  The company is 1/3 of the way through an $8 Billion buyback of their stock.  The current buyback follows a previous $5 Billion buyback program.  Both programs have benefited shareholders with Nike's stock soaring over the last year.  Shares of NIKE are trading at $72/share.

The National Federation of Independent Small Business optimism index is out this morning showing a 2 point rise in March.  The index is still off the post recession high saw in January.  Small business owners report the 3 biggest problems in their businesses are taxes, government regulations and red tape, and poor sales.

And the United States is warning China about the recent depreciation in their currency the Yuan.  The US Treasury is pressing China to let the Yuan float in the market so that natural market exchange rates can determine its value.  A weak Yuan makes Chinese exports cheaper for US consumers at the expense of US producers.  Many at the Treasury believe the Chinese manipulate the Yuan to weaken it so they can export more globally.

Earnings Season Gets Going


We ended last week with a big sell-off as good news gave investors a reason to take profits.  This week we begin earnings season which over the last couple years has been the real market mover. (Seeking Alpha)

Medford based Lithia Motors continues its acquisition binge, hitting the century mark for dealerships.  The company is buying a Ford dealership in Texas and opening a Chrysler dealership in Alaska. Lithia is now the eighth largest car seller in the US selling 28 brands in 12 states. (Market Wired)

Strong Asian demand has pushed Oregon log prices to 20-year highs.  About 2 billion board feet of logs are exported from private lands in Oregon, Washington and Northern California last year. Most the logs go to China.  In 2013 Oregon log exports were double those seen in 2009 we Chinese demand started to ramp up. (Oregon Live)

Even when you are dead you can make money.  Former lead man of Nirvana, Kurt Cobain, killed himself 20-years ago this weekend.  Last year he sold 350,000 albums and 900,000 singles for revenue of almost $4.5 million.  His estate is valued at $450 million. (CNBC)
 

Jobs Growth Strengthens


Markets finished essentially flat yesterday after three days in rally mode.  Today it is jobs report Friday and we learn the economy added 192,000 jobs in March, both January and February were revised upward.  Governments shed 9,000 jobs and the private sector added 201,000 jobs.  As of March the private sector has regained the 8.8 million jobs lost during the Great Recession. (Reuters)

Americans complain about working too much yet they only take half their vacation time each year. The average US worker gets 10 days of vacation and 9 paid holidays.  That is on par with Canada and Japan, but much smaller than the 30 days of vacation in France and 28 days in the UK.  (Harris Interactive)

Family owned Seneca Jones Timber of Eugene is showing corporate courage in bidding on a tract of timber in the Elliott State Forrest.  Money from the sales goes to the common school fund.  Environmental extremists have threatened bidders for the land with endless lawsuits to stop management of the ground and to reduce the money that would be generated for schools. (Oregon Live)

Northwest Pipe Company has sold its “oil country tubular goods” division to a Texas company for $42.7 million.  The company says the move will allow them to concentrate on their water pipe division and its growth.  The stock was down 23 cents in yesterday’s trading. (Market Wired)
 

Business News


US Stock indexes traded higher yesterday the last day of the 1st quarter.  The S&P 500 gained .7% in the 1st quarter that marks the 5th straight quarter of gains for that index.  This morning markets have opened higher.

General Motors added another 1.3mm vehicles to their growing recall list.  The problem this time is the power steering on seven models made between 2004 and 2010.  GM said the seven models could experience a sudden loss of power steering.  Shares of GM are trading lower on that news at $34/share.

Chrysler sold 194k vehicles in March, up 13% from a year ago. That's the best March result since 2007 and the 48th straight month of year-over-year sales gains, the car company said.  Chryslers Jeep brand saw a 47% year over year increase.  The company sold more jeeps than they ever have in 1 month.

Federal Reserve Chair Janet Yellen gave a speech yesterday that was very well received by the markets.  Yellen said the Fed's extraordinary commitment in the form of bond buying and a zero interest rate policy are still very much needed and will be for some time to come.  That quote sent global stock markets shooting higher.

Microsoft's Office apps for the Apple iPad appear to be off to a great start.  The Microsoft Office 365 suite is the most downloaded app on Apple hardware.  That is great news for Microsoft as they have been trying to get their apps on Apple tablets for years.  Microsoft's shares have rallied sharply as of late and are up over 9% in 2014 alone trading at $41/share.
 

Happy opening day for major league baseball!


The 1st Quarter wasn't a great one for stock investors as investors played it safe in defensive sectors.  This weeks economic news highlighted by the jobs report on Friday should provide investors more fireworks.  This morning the US Stock market has opened

Shares of Facebook lost 11% last week after the company announced they would pay $2 Billion to buy Oculus a maker of virtual reality goggles.  Wall Street analysts are disappointed that Facebook appears to have wildly overpaid for yet another technology company.  Shares of Facebook have turned positive at $60/share in early trading. (yahoofinance)

China's Premier sought to reassure some nervous global investors over the weekend.  He assured investors that Beijing was ready to support their cooling economy saying the Chinese government would push ahead with infrastructure investments that would spur growth.  Asian equity markets rallied sharply on that news.(marketwatch)

Portland State University is out with their list of the fastest growing cities in the state of Oregon from 2010 to 2013.  Madras was the 4th fastest growing city in the state over the last 3 years edged out by Wilsonville, The Dalles, and Happy Valley in the #1 spot.(Portland Business Journal)

And 60 Minutes had a piece last night with author Michael Lewis where Lewis proclaimed the US Stock market is rigged.  Mr. Lewis was promoting his book Flash Boys where he claims the markets have been taken over by high frequency traders giving them the edge over little guys like you an me.  It would be great if the SEC took some action on the outrage this should cause.(marketwatch)

Business News


>>Payroll Report Due Out This Week

(New York, NY)  --  The most watched economic report is due out this Friday when the monthly payroll report is released.   A hiring increase is expected and it should be enough to help push the markets higher.  Manufacturing and service sector numbers are also due out with experts predicting solid numbers to show the economy is still on the upswing.  Car sales figures will roll out and so will private sector-payrolls and the February international trade deficit report.  Today’s trading marks the final session of the month and first quarter.

>>Credit Card Security Company Denies Role In Target Breach

(Chicago, IL)  --  A credit card security firm is denying it had any role in a massive data breach at Target.  Trustwave Holdings' CEO Robert McCullen says his company had no part in the oversight or monitoring of Target's credit card processing, which was compromised by hackers late last year.  McCullen posted an open letter on his company's website to counter claims made in a lawsuit seeking at least five-million dollars in damages from both Target and Trustwave.  Two banks have sued both companies, saying they failed to properly secure the credit card data of around 40-million customers.

>>Oculus VR Reports Death Threats After Purchase By Facebook

(Undated)  --  Employees at Oculus VR are apparently feeling the downside of being part of a two-billion dollar purchase by Facebook.  The virtual reality firm's founder Palmer Luckey posted on Reddit that employees and their family members were receiving "death threats and harassing phone calls" following the announcement last week.  Luckey said the negative reaction was unwarranted, adding that it was "impacting people who have nothing to do with Oculus."  Some of the negative reaction stems from critics who are upset that Oculus began using two-point-four-million dollars in funding raised through Kickstarter.  The company confirmed last week that none of those who invested through the crowdfunding site will receive any part of the two-billion dollar sale price.

Inflation at the Dinner Table


Markets started the day up again yesterday, for the fourth day this week, only to turn negative as the day wore on. The S&P 500 is currently on track to be flat for the first quarter that ends on Monday. (Seeking Alpha)

In February personal income was up 0.3% and consumer spending rose 0.3%.  Both numbers are what were expected and show a growing but not overheating economy. (CNBC)

Oregon is poised to participate in the great American energy renaissance as the US Department of Energy approved exports of liquefied natural gas from the port of Coos Bay.  The Jordan Cove Project will require the construction of a shipping terminal, a natural gas fired power plant and a 230-mile pipeline. The project will provide $7.5 billion in capital, 150 permanent full-time jobs and original construction jobs. (Wall Street Journal)

Inflation is pretty tame in the overall economy, but that is not true when it comes to your entrée at dinner. Meat is rising at a faster pace than any other food group.  Beef prices, cattle numbers are at their lowest levels since 1951, are up 20% from last year and pork prices are up 56%. (Bloomberg)

There is lots of change and consolidation currently happening in the media delivery arena.  Adding to the fray are reports that Dish Network and DirecTV are in merger talks.  Combined the two companies have 34 million customers.  Talks come as Comcast and Time Warner Cable are merging in a $45 billion deal. (Bloomberg)
 

Economic Data Shows Strength


Markets started higher yesterday then sold off as we had a very strong US Treasury auction that drove rates on the 10-year note to 2.7%. As we start today the S&P 500 is essentially flat for 2014. (CNBC)

New unemployment claims for last week were down 10,000 to 311,000. That is a good number and shows a strengthening job market over the next six months. (Reuters)

The final reading on fourth quarter gross domestic product was revised up to 2.6%. The private sector grew much quicker and government showed contraction. (Reuters)

Beer is big business in Oregon with 188 “brewing establishments” of which 50 are in Portland and 18 in Bend. (Oregon Live)  Other Oregon brew facts include:

5127 persons employed by the industry.
$28,190 is the average worker pay.
Oregon holds 5.7% market share of the national craft brew industry.

For decades a lot of companies claimed severance packages for terminated employees was not subject to Social Security and Medicare taxes, claiming they were supplemental unemployment benefits.  On an 8-0 vote the Supreme Court put an end to that practice. Over $1 billion in tax revenues and potential refunds were at stake in the case. (Bloomberg)

Good Economic Data Drives Markets


We start the day with consumer confidence being at its highest level since late 2007, just before we slipped into the Great Recession. The index stands at 82.3 driven higher by better outlooks for increased hiring and improved business conditions. (Business Insider)

Durable goods orders, ex aircraft, in February rose 0.2% versus being up 0.9% in January.  (Department of Commerce)

Home prices in America’s 20-largest cities climbed 13.3% during the last 12-months according to January data.  Since the bottom of the index in 2013 home prices have rebounded 23%.  Portland, which is included in the survey, was right at the national average. (S&P/Case-Shiller)

Oregon’s personal income grew 3.5% last year adding $5.4 billion to the economy. Oregon’s per capita income is $40,233 which is only 90% of the national average, a gap that has been growing since 1990 when the spotted owl crippled the forest products industry. We are number 32 in national per capita income. (Oregon Live)

Another example of the death of DVD comes from Oregon media measurement company Rentrak.  They are selling their “Pay-Per-Transaction” business that measures DVD rentals.  They say as viewers move to other medium their revenue from the business has fallen from $100 million in 2006 to $7 million in 2013. (Oregon Live)

The Ups and Downs of Liquor Sales


Markets swung from up to down on Friday as we had big intraday volatility, some of which was caused by triple options expiration.  

While we slept China factory output contracted for a third straight month in March.  That has many concerned that the world’s second largest economy could really be slowing and could drag on the rest of the world. (CNBC)

In 2013 patrons to bars and restaurants cut back on alcohol consumption by 1.3% and that trend is slipping into 2014.  The $683 billion restaurant industry has been challenged and the loss of a high margin item is concerning.  The spirits industry continues to grow however as consumers are buying higher end liquors for home. (USA Today)

Starbucks says they are done testing and will expand the rollout of alcohol to thousands of stores over the next several years.  The alcohol sales come with an expanded light fare appetizer menu.  But a double jolt of caffeine and alcohol to get your morning going will not be happening ….. Alcohol sales will only occur after 4pm. (Bloomberg)

Oregon private timberland investment firm the Campbell Group is changing their name to Campbell Global.  The company started business in 1981 and now manages more than 3.1 million acres in the US and Australia, employing over 300 people.  (Portland Business Journal)
 

Oregon's Two Fortune 500 In the News


Equity markets shot up yesterday celebrating the first day of spring and rebounding from the Fed sell-off from the day before.  

Nike global sales rose 12.7% last quarter to $6.97 billion.  Profits were essentially flat on a per share basis.  Future orders were way up. However Nike stock is down 3% in pre-market trading as the company says a stronger dollar and weaker currencies will be a big and continuing hit to the bottom-line this year. (Reuters)

The sale of previously owned homes in the US fell to 20-month lows in February.  Rising prices and increasing borrowing costs were cited as drags. (Bloomberg)

Oregon’s other Fortune 500 company; Precision Castparts is acquiring Aerospace Dynamics International for $625 million in cash.  The acquisition is the company’s 14th in the last two years and brings 625 new employees to the company. (The Street)

The price of limes for your Margarita may be going up.  Growers in Mexico are limiting their harvesting of the tart fruit to maintain higher prices.  Lime prices were up 68% in February alone in Mexico. (Bloomberg)

Join us Saturday at 10 for Financial Focus when Tyler and I will talk about a new report showing how you may be leaving money on the investing table.
 

Lots of Yellen About Nothing


In her first post meeting press conference yesterday Federal Reserve Chairman Janet Yellen told us what we already knew and that sent Mr. Market into a tail spin as markets sold off a little more than half a percent.  It is expected the Fed will start to raise interest rates in late 2015 as long as the economy continues to improve.  Lots of action on little news.  (Market Wire)

Just four months removed from Black Friday and 280 days till Christmas, Wal-Mart is firing the first shot in fighting for your spring shopping dollar.  Tomorrow the company is putting pressure on Lowe’s and Home Depot as they slash prices on lawn mowers, patio furniture and outdoor living supplies.  The Easter selling season makes up a huge part of retailer revenues and Wal-Mart is angling to regain momentum after a year of same store sales losses. (CNBC)

Umpqua Bank is suing Target over that big holiday security breach.  The bank says they will be left hanging with fraudulent charges as a result of the breach.  They say Target was negligent and not current in providing card security.  The Consumer Bankers Association puts the cost of card replacements alone at $200 million. (Portland Business Journal)

BMW says their profits will grow in the high single digits in 2014.  BMW, Audi and Mercedes are in a fight to see who claims leadership of the luxury car market. (Bloomberg)

FedEx Hurt By Winter Weather


Today at 11am we hear from the Federal Reserve and the results of their two day meeting.  We will also hear from Chairman Yellen at her first post meeting press conference.

 

The number two package delivery company, FedEx, posted disappointing earnings for last quarter citing “brutal winter weather”.  Sales were up 3% to $11.3 billion as ground delivery picked up, but special delivery was flat.  The company posted a quarterly profit of $378 million.  (Reuters)

 

You will soon be able to pay for that Whopper with your smartphone at Burger King with their new ap.  The move is targeted toward attracting younger customers. The company says the next step is to allow preordering for pick-up when you arrive at the store location.  (Bloomberg)

 

It has been a tough year for ski resorts, but one Oregon resort will not even open this year.  Mt. Ashland in the Siskiyou’s will not open for the first time in 50-years due to lack of snow. Economic impacts mean the loss of 130 jobs, $10,000 per month not spent on diesel for snow cats and the loss of $2500 of propane a month and $9000 per month in power bills. (Oregon Live)

 

A measly $1000 is all 36% of workers have saved for retirement, but that is up from 28% last year. A whopping 90% of households have some type of retirement account.  (Employee Benefit Research Institute)

Inflation in Check -- Housing Not Bad


Today the Federal Reserve starts a two day policy meeting in Washington, DC.  At stake are continued reductions in their bond buying program and hints as to when they will start raising interest rates.

Consumer producer prices were up 0.1% in February. This number shows essentially no inflation pressures in the economy.  (Associated Press)

Housing starts during February dropped by 0.2% on cold winter weather and new building permits were up 7.7%.  (Reuters)

Copper is trading at 44 month lows as worries about growth in China and the government lets the Yuan trade in a wider band push prices lower.  China consumes almost 40% of the world’s copper. (Bloomberg)

US factory production rose the most in six months during February even with all the bad winter weather.  The 0.8% gain follows at 0.9% slump in January essentially leaving us where we were in December.  Automakers were the big winners with production rising 4.8%. (Market Watch)

The number of millionaire households in the US spiked by 640,000 or 7% to 9.63 million in 2013.  That is an all-time high since records started being kept in 1997 and the first record since we 2007 when we entered the recession.  Households worth $5 million rose by 100,000 to 1.24 million and those worth $25 million were up 15,000 to 132,000 households. (Spectrem Group)
 

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