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Business News

Rally Mode

Markets have new been in rally mode the last two days driven by strong corporate earnings.  Apple blew out earnings making a profit of $8.5 billion in the latest quarter on sales of $42.1 billion.   Sales of the new iPhone boosted sales. (The Wrap)

US housing starts and permits rose in September, a signal the market's modest recovery is supporting what appears to be growing strength in the broader economy.  Groundbreaking rose 6.3% to an annual 1.02 million-unit pace.   New housing starts for single-family homes, the largest part of the market, rose 1.1% in September, while the more volatile multi-family homes segment jumped 16.7%.(Reuters)

The number of supertankers sailing toward China’s ports surged to a nine-month high amid speculation an oil-price slump is encouraging the world’s second-biggest crude importer to accelerate purchases.  On Friday there were 80 very large crude carriers, the industry’s biggest ships, sailing toward the Asian country’s ports, according to Bloomberg. That’s the highest since Jan. 3. Average shipments are 2 million barrels.

U.S. consumer sentiment rose in October to the highest in more than seven years, boosted by views on personal finances and the national economy. The Thomson Reuters/University of Michigan preliminary October reading on the overall index on consumer sentiment came in at 86.4, the highest since July 2007.

Business News

Goldman Sachs turned in significantly better third-quarter results than expected, thanks to a long-awaited improvement in trading conditions for Wall Street banks.

Goldman’s profits rose to $2.24 billion, up 47% from the third quarter of 2013. The bank’s total sales rose 25%, to $8.39 billion. (Reuters)

Mattel Inc's revenue fell for the fourth straight quarter as demand for its billion-dollar brands, Barbie and Fisher-Price, slipped further, increasing pressure on the toymaker as it heads into the holiday shopping season. Barbie made her debut in 1959, but the doll has fallen out of favor with fickle-minded young girls, who are reaching for electronic toys such as tablets. In 2009, Barbie held more than a quarter of the market share in the dolls & accessories category in the United States, but that fell to 19.6% in 2013.  (Fox Business News)

There is a downside to lower oil prices we will pay for later.  The global crash in crude prices is reverberating through the oil and gas industry, pressuring producers to curtail investment to protect profits and avoid cuts to dividend payments.  Projects in the Canadian oil sands, offshore fields in Norway and drilling-intensive U.S. shale deposits are among the most vulnerable as oil prices come perilously close to production costs. The world’s largest oil companies have rarely spent so much for so little reward. (Bloomberg)

Just how bad a job have we been doing saving for retirement? A majority of U.S. seniors would be poor if Social Security were excluded from their incomes, according to a report on poverty released by the Census Bureau on Thursday.  If the Census were to exclude Social Security benefits from income, the poverty rate for American seniors would jump from 14.6% to a whopping 52.6%—roughly 23.4 million people. The nation’s overall poverty rate would rise to 24.1% from 15.5%. (Wall Street Journal)

There is Good News

The number of Americans filing new claims for jobless benefits fell to a 14-year low, a positive signal that could counter doubts over whether the economy is shifting into a higher gear.  Initial claims for state unemployment benefits dropped 23,000 to a seasonally adjusted 264,000, its lowest level since 2000, the Labor Department said on Thursday. This suggests the labor market is gaining steam. (Reuters)

Industrial production in the U.S. rose in September by the most since November 2012, driven by a surge in utilities and a rebound in manufacturing.

The 1% advance in output at factories, mines and utilities exceeded the highest forecast. Utility production was the strongest since May 2012, while factories made strides even as motor vehicle output fell for a second month. The fact that we can get a 1% increase in production when you have a decline in the auto sector is striking. (Bloomberg)

Goldman Sachs turned in significantly better third-quarter results than expected, thanks to a long-awaited improvement in trading conditions for Wall Street banks. Goldman’s profits rose to $2.24 billion, up 47% from the third quarter of 2013. The bank’s total sales rose 25%, to $8.39 billion. (Reuters)

Philip Morris International's third-quarter profits dropped 8% as cigarette sales fell in the overseas markets that it serves and it was hurt by foreign exchange rates for the U.S. dollar. The seller of Marlboro outside the United States earned $2.15 billion, down from $2.34 billion, a year ago. Cigarette shipments fell less than 1% to 222.3 billion cigarettes.  Shipments fell 2% in Latin America and Canada and 1.3% in Asia. Shipments were up less than 1% in the company's region that encompasses Eastern Europe, the Middle East and Africa, as well as in the European Union. (Associated Press)

Not That Bad

The market continues its correction. But even with this correction the S&P 500 is essentially flat for the year. Not that bad. (Fox Business News)

The Commerce Department says business inventories increased 0.2%, the smallest rise since June 2013. Business sales fell 0.4% during the month, and at August's sales pace it would take 1.29 months for businesses to clear shelves, this is unchanged from July.

U.S. retail sales declined in September even when factoring out weakness at auto dealers and gasoline stations, providing a surprisingly cautionary sign for the strength of consumer demand. Total retail sales dropped 0.3% during the month, according to the Commerce Department. Drops in receipts at gasoline stations and auto dealers dragged on the reading.

Prices received by U.S. producers fell in September for the first time in over a year, a potentially worrisome sign for the economy in that inflation appears to be failing to gain traction.  U.S. producer prices slipped 0.1% last month, according to the Labor Department.

The US dollar has been getting stronger relative to other currencies recently. The dollar has risen steadily for over 11 weeks and that's the longest winning streak for the dollar since our currency became free floating in 1973. Rising dollar can affect your wallet. The strong dollar affects the price of crude oil driving prices of imports lower. If you're going to travel abroad or export goods your cost will be going up. (Market watch)

Black Gold, Texas Tea

Oil continues to fall as oil gushes out of the ground in both the United States and Canada, and much of it is coming from places they don't have a pipeline infrastructure. So it's being shipped by rail. In 2008, around 9,500 carloads of crude oil were transported by rail in the US. By 2013, that number topped 400,000 according to the Association of American Railroads.

Death rates are declining worldwide. In almost every country, mortality rates fell during the last four decades. The biggest falls were among young children, twice the rate of decline was experienced by those age 5 to 49. The biggest absolute declines occurred in poor and low to middle income countries. (Economist)

More investors are taking out loans against their 401(k)s, and that could hurt their retirement income by hundreds of dollars a month. The number of investors borrowing from their 401(k)s has been steadily increasing for more than a decade with more than one in five people, borrowing against their retirement savings, up from 18.7% in 2000. More than 2 million investors have outstanding loans, and nearly 1,000,000 took out loans in the past year.  (USA TODAY)

Nearly one in for millennial's, those born from 1980 to 2000, say they trust no one for money advice. About a third said they trust their parents most for information on money, but many reported a real lack of communication with their parents about their finances. Almost half reported never receiving financial advice from their parents. (CNBC)

Business News

Okay let's talk about what's on everybody's mind. This correction. For at least the last 36 months I have been telling you to get ready for this correction and it is here so it should not be a surprise to anyone.

What about the big intraday and intraday moves in the market indices? The market fell about 1.7% yesterday on the heels of a 2.1% drop on Thursday, which was the worst performance for the S&P 500 for the year. But Thursdays move also marked only the fourth time this year that the S&P 500 has closed down by more than 2% on any given day. But that is well below the number of 2% corrections to the downside there we should expect on any typical year. Since 1928 the S&P 500 has averaged 19 separate 2% losing days in any given year. There were 35 such moves in 2011, 56 and 2009 and 72 in 2008 the worst for the financial crisis. A Record of 140 Took Place in 1932.  (CNBC)

What we are going through right now is your basic run-of-the-mill correction in the market. This is not being caused, in our opinion by any market forces other then there are more buyers than sellers and a weak sisters are being washed out of the market. For the long-term prudent investor this correction should be welcome and embraced, not feared. The speculator there was betting on highflyers and overvalue companies, this is indeed an unwelcome event.

Volatility in the market is commonplace and to be expected. The amount of volatility there we are currently seen is normal for lack of volatility that we have seen since 2011, in fact was the abnormal situation.

So in our opinion this correction is not to be feared, but embrace. For the long-term investor just stay the course and you're very reported over the long-term.

Business News

Stocks are way overdue for a correction and this may be it. But don't dismay. Last week was volatile, the Dow lost 466 points and the S&P 500 dropped 3.1%. But even with that, the broad index S&P 500 is up 3.1% year to date. So it's not a disaster. Corrections come and go. (CNBC)

Americans' confidence in the housing market is on the rebound. More than two-thirds polled said they think it's a good time to buy a home, while only one in four said they would rent. Historically low mortgage rates  make buying attractive. But while borrowing costs are low, relatively few are taking the plunge. In August total existing home sales remain more than 5% below the 5.33 million-unit level from the same period last year. (CNBC)

A new survey lists the top college majors that make someone the most employable. Business majors (27%) are the best bet followed by engineering (20%), accounting (14%), nursing (6%) and computer and information sciences (5%). Those on the bottom included math and statistics (1), science technologies (1%), communications technologies and finance (both at 0%). (CNBC)

Oil is dropping. West Texas Intermediate has gone from $105 to $85 in three months.
Gold settled lower on Friday as a rise in the dollar capped four days of gains, though the metal remained supported around the $1,220 level by the prospect of a widespread economic slowdown that could keep interest rates low. Strength in the U.S. currency drove commodities lower across the board.  

Volatility Continues

US stocks look to open sharply lower after Thursday’s 334 point Dow drop, the worst since February and the third straight day of moves of 200 points or more. Stocks were poised for their biggest weekly losses in more than two months. (CNBC)

September import/export prices are out and tell us there is no inflation on the horizon. Import prices were down 0.5% and export prices were down 0.2%. (Fox Business News

Ford sold 95,875 vehicles in China in September, edging down 0.2% from last year. That follows a 9% year-over-year rise in August and a 25% increase in July. Ford's sales in the first nine months of the year totaled 813,412 vehicles in China, up 26% from the same time last year. (Reuters)

Join us tomorrow at 10am for Financial Focus Radio when we share with you our thoughts on why you should not fear the correction.

Crude Continues To Sink

The ying and the yang of market volatility is back as yesterday we had a monster gain that wiped out the monster loss of the day before.  Are the bulls or the bears in charge?  Only time will tell; but in the long-run we know the bulls will prevail.  (Fox Business News)

PepsiCo beat analysts' expectations in the third quarter. The company's third-quarter profits grew 10%  year-over-year. Revenue increased to $17.22 billion, up about 2%. (Reuters)

Sales of personal computers fell 0.5% in the third quarter as shipments declined in emerging markets. Growth continued in mature markets, with shipments in the US rising 4%. The third quarter is typically driven by back-to-school sales and business purchases. (Wall Street Journal)

Many employers do a poor job making sure they are good fiduciaries for their company retire plans.  That may be why the US Supreme Court will consider giving 401(k) participants more power to sue their plans over investments that impose excessive fees. The appeal, filed by Edison International workers, contends that participants should be able to sue plans for retaining imprudent investments. (Bloomberg)

The level of government overspending fell by nearly a third during the 2014 fiscal year to $486 billion, as revenues grew 9% and spending grew only a fraction.  Higher spending was fueled largely by the cost of expanding health-care coverage and Social Security. (CNBC)

Business News

US Stocks had their largest one day sell-off in two months yesterday.  US Stocks are now 4% below their all-time-highs reached just 3 weeks ago.  This morning stocks are trading

The International Monetary Fund trimmed their forecast for global economic growth yesterday.  The IMF said there is a widening divide between the accelerating growth here in the US and a slowdown in the Eurozone and Asia.  The IMF expects global growth to be 3.8% the year versus their previous estimate of 4%.

The owner of Taco Bell, KFC, and Pizza Hut, Yum Brands, reported earnings that came in below expectations.  The company missed on both the top and bottom line.  Sales in their Chinese stores fell 14% year over year which was a major contributor to the earnings miss.  Shares of Yum are lower on that news.

Warehouse club operator Costco profits topped analysts' estimates for the first time in five quarters, helped by strong back-to-school sales and higher membership fees.  Shares of Costco are 2.5% higher on that news.

Home price growth has dropped to a two year low.  Year over year home price growth fell 6.4% in August.  Housing appreciation is expected to slow down even further, with growth of 4% forecasted in 2015.  Continued moderation in home price appreciation is a good sign of a more balanced real estate market.

Business News

Stocks had their biggest one day gain in 2 months on Friday thanks to a stronger-than-expected jobs report that delivered a dose of investor confidence.  Friday's big gain put a dent in the weekly loss but the major indexes ended the week lower marking the 2nd straight of declines for stocks.

Hewlett-Packard announced yesterday that they plan to break into two companies, separating their personal computer and printer business from their corporate hardware and services operations.  The distribution of the separate company's shares will be tax-free and happen early next year.  The move by HP is one that has long been anticipated by investors.  Shares of HP are trading sharply higher on the news.

Medical technology company Becton Dickinson has reached a deal to buy CareFusion for $12.2 Billion in cash and stock.  Subject to shareholder and regulatory approval the deal is expected to close early next year.  Shares of both companies are higher, shares of CareFusion are up over 25%.

In another sign of an improving economy here in Central Oregon the Gross Domestic Product for Deschutes country increased 6.1% in 2013 which is the largest increase among Oregon's 8 metropolitan statistical areas.

And the former chairman of the Federal Reserve, Ben Bernanke, is having trouble refinancing his mortgage.  In an effort to save $300/month on his D.C. home, Bernanke tried to refi at a lower interest rate, but the underwriters say his income over the last 12 months was too low to qualify for a new loan even though he is now making $250k per speaking engagement and has a $1mm+ book deal.

Another Good Jobs Report

The US economy added 248,000 jobs in September.  The lower than expected August number was revised up by 40,000 making it almost 200,000 for the month.  The unemployment rate dropped to 5.9%. (Fox Business News)

New orders for manufactured goods dropped 10.1% in September, the largest drop since 1992. Stripping out transportation orders, new orders were down a more modest 0.1%.The U.S. manufacturing sector continues to expand, although growth may be moderating. (Reuters)

Mortgage applications to purchase a home are 11% lower than they were one year ago and are running about 30% lower than historical norms. With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.  (CNBC)

Get ready to see peanut butter in a lot more places. This years harvest will jump 19% to 4.97 billion pounds creating an oversupply and driving down prices. Prices for the creamy spread dropped for five straight months through July, when they reached the lowest level since 2011. Creamy peanut butter was about $2.42 a pound in August, 11% cheaper than a year earlier. (Bloomberg)

More Good Jobs News

The National Football League announced a new long-term deal with DirecTV for it to carry Sunday Ticket, which was set to expire soon.  The new deal will expand DirecTV's rights to stream Sunday Ticket programming live on mobile devices and through broadband.  Renewal of the agreement was thought to be key in the AT&T – DirecTV merger deal. (CNBC)

Still think the job market is not really getting better? The number of planned layoffs by US employers fell to a 14-year low in September. Employers planned to cut 30,477 jobs in the month. Heading into the fourth quarter, 2014 is now on track to have the lowest number of planned job cuts since 1997. (Challenger, Gray & Christmas/CNBC)

U.S. student debt has climbed to an all-time high, despite a decrease in consumer debt for all other major lending categories such as automotive debt, credit card and home equity loans. Behind mortgages, student loans are the second largest debt class. Now at $1.2 trillion, student debt has increased 84% since the 2008 Great Recession. Mississippi, Oklahoma and Louisiana had the highest amount of late payments. Massachusetts, Vermont and Minnesota had the least amount of late payments. (CNBC)

In another example of why costs go up.  A shopper at a Costco Wholesale store in Northeast Portland is suing the store for $670,000.  The male shopper says that he was pushing his shopping cart out of the store when he was detained because he wouldn't stop and show his receipt. The shopper tried to remove one of the employees who was holding on to his cart by grabbing the employee's shirt collar. A second employee then used a martial-arts-style kick to strike  breaking his leg in several places. (Oregon Live)

The Streak Continues

A new month and new hopes for the equity markets. The S&P 500 and NASDAQ have posted 7 consecutive quarters of positive growth as of the end of the third quarter.  That is almost two years. (Fox Business News)

U.S. single-family home prices rose in July year-over-year up 6.7%.  Home prices continue to rise but thankfully at a more sustainable rate. (S&P/Case Shiller composite index)

ADP says the private sector added 213,000 jobs in August. Growth was seen across every sector and every size of business. (CNBC)

Iron ore has slumped below $80 a metric ton for the first time in five years on speculation that China’s slowing economic growth will curb demand by the world’s biggest user, exacerbating a global surplus. Global output of iron ore will exceed demand by 52 million tons this year and 163 million tons in 2015, adding to the surplus. (Bloomberg)

First it was the surge in beef prices now you can add lemons to the growing list. A case of 165 lemons costs about $50, up from $30 to $35 last year. A prolonged drought in California, which grew 91% of US lemons this year, contributed to a surge in costs. Wholesale prices almost doubled from a year earlier, and retail lemons are up 36% in August, the highest since 1980. (Bloomberg)

Oil and Gold Fall

Today is the last trading day of the third quarter. Ahead of the open, the Dow was up 1.4% for the third quarter. The S&P 500 was up about 1%. The Nasdaq is up more than 2%, while the small-cap Russell 2000 has lost more than 6%. (CNBC)

US drugstore chain operator, Walgreen, reported a 6.2% rise in quarterly sales, helped by higher prescription sales. Prescription sales, which made up nearly two thirds of the company's total sales, rose 9.3%. The company reported a loss of $239 million due to the amendment and exercise of its Alliance Boots call option.  (Reuters)

FedEx (FDX) has approved the repurchase of up to 15 million shares or about 5.2% of its outstanding shares. The cost would be more than $2.4 billion based on the package delivery company’s current stock price. (Associated Press)

Fewer Americans signed contracts to buy homes in August, suggesting that real estate sales will remain sluggish over the next few months. The pending home sales index fell 1% over the past month. Higher prices and weak wage growth has limited buying, as the index is 2.2% below its level from a year ago. (Associated Press)

Personal Income and Spending Climb

We are in the home stretch of the third quarter with just two trading days left.  As we wrap things up we have seen big intraday swings in the stock markets and that looks to continue today.  (Fox Business News)

Personal income rose 0.3% in August and spending rose 0.5%.  Both of the number are about what was expected and show a growing economy with low inflation. (Bloomberg)

U.S. consumer sentiment finished September at its strongest in more than a year on growing optimism about the economy and more favorable outlook on future income. The Thomson Reuters/University of Michigan's final September reading on the overall index on consumer sentiment finished at 84.6 up from 82.5 at the end of August. (Reuters)

Harley-Davidson, trading under the ticker HOG, is recalling more than 105,000 motorcycles from the 2014 model year because their clutches may fail, causing stopped bikes to creep forward and potentially crash. The company is also recalling nearly 1,400 bikes made earlier this year to test for possible fuel tank leaks. (Associated Press)

Banks are getting more of their profits from fees. The average fee for using an out-of-network ATM climbed 5% over the past year to a new high of $4.35 per transaction.  Overdraft fees also surged, rising on average over the past 12 months to $32.74. (Associated Press)

Where Are the Jobs?

There is a decades-long trend of prime working-age males, ages 25 to 54 falling away from the U.S. labor force. Their participation rate slid to 88.4% in August in a steady decline from 97.9% in 1954. Over the last 10 years, the slump was the steepest for those ages 25 to 34. About 7 million male Americans waste their best years of wealth formation not employed or even trying to find work. The portion of married-couple families with only the wife employed rose to 7.8% in 2013 from 5.7% in 1994. (Bloomberg)

But some things in the labor market never seem to change. The median American worker has been on the job for 4.6 years.  Job tenure stretches out considerably as people age. Nearly 50% of people between 20 to 24 have been in their current job for less than a year. For workers age 35 to 44, median tenure on the job is 5.2 years. For ages 45 to 54 the median is 7.9 years. And for workers older than 55, most workers have been on the job for more than 10 years, with more than a quarter having tenure longer than 20 years. (Wall Street Journal)

American companies have seldom spent more money than they are now buying back stock. The same can't be said for their executives. The ratio of buys to sells is near the lowest since 2000. A total of 7,181 insiders bought their own stock this year through Sept. 12 and 23,323 sold shares. At the same time, corporate repurchases reached $275 billion in the first half of the year, the second busiest since S&P Dow Jones Indices began tracking the data in 1998. (Bloomberg)

Time to Go Skiing

US stocks are higher in early trading, following the Dow’s first back-to-back triple-digit losses in three months. The blue-chip average is up 3% on the year. (CNBC)

A staggering 43% of companies have experienced a data breach in the past year, up 10% from the year before. The absolute size of the breaches is increasing. In January, 40% of South Koreans—a total of 20 million people—had their personal data stolen and credit cards compromised. (USA Today)

US regulators are investigating whether the way bond giant PIMCO values its bond holdings may artificially boost returns of its Total Return Fund. This comes as the bond fund had net outflows of $830 million in July, marking its 15th straight month of outflows. (Wall Street Journal)

Total mortgage applications for the week fell 4.1%. Applications to refinance a loan fell 7% and are down 31% from a year ago. Applications to purchase a home were down 0.3% for the week and down 16% from a year ago. (Mortgage Bankers Association)

Ski season is just around the corner and publically traded Vail Resorts is out with earnings.  The company says season pass sales are up 18% from last year.  Last year skier visits at their resorts were up 10.2%. (PR Newswire)


Equity markets are coming off their biggest drop in nearly two months.  This morning stocks are lower in early trading. (CNBC)

After four consecutive months of gains, existing-home sales slipped in August as investors paying in cash retreated from the market. Total existing-home sales decreased 1.8% to an annual rate of 5.05 million. Total housing inventory declined 1.7% to 2.31 million existing homes for sale, which represents a 5.5-month supply.  Unsold inventory was 4.5% a year ago. (Market Wired)

Railroads traffic is booming.  Oregon railcar maker Greenbrier, has received orders for almost 39,000 railcars, valued at $3.72 billion, since September of 2013. (Oregon Business Mag.)

A statistic that could have tremendous economic implications -- More U.S. millennial women, those born after 1980, are holding off on motherhood.  Fewer teens than ever had babies last year -- 26.6 per 1,000 women, down 57 percent since 1991. For women 20 to 24 years old, the birth rate also reached a record low, while a decline continued for those 25 to 29 years old. (Bloomberg)

This is something Oregon would love. Starbucks is testing a latte that it says has the "savory toasty malt" flavor of a foamy mug of stout. The "Dark Barrel Latte" is being tested in a handful of stores in Ohio and Florida. (Associated Press)

Sears One Foot in the Grave?

Sears bid to sell their Canadian operations for $750 million has failed and that is bad news for the declining icon.  The funds for the sale was hoped to be a near-term cash infusion for the company.  The corporate parent of Sears and Kmart was forced last week to take out a $400 million loan as it prepares for the crucial holiday shopping season. (New York Post)

More than 20% of Americans laid off in the past five years are still unemployed, and one in four who found work is in a temporary job. Despite the sharp drop in long-term unemployment recently, many people out of work at least six months are struggling to recoup their former wages and lifestyles. Those idled for years face an even tougher road back to employment. (USA Today)

United Airlines says it will offer flight attendants up to $100,000 in severance if they leave the company.

The lump-sum payments will be offered in order of seniority to some of United's 23,000 flight attendants. United says the early-outs will help it match staffing to its flight schedule and produce a labor contract with the union. (Associated Press)

Anheuser-Busch InBev, the world's largest beer maker by volume, is reported to be preparing to buy SABMiller.  A merger between the two would create one company that controls nearly a third of the world's beer supply. Bud Light is the largest seller of beer in the world producing some 5.28 billion liters.  (Washington Post)


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