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Business News


Stocks Rise -- Oil, Gold Fall


Equity markets continue to melt up.  The S&P 500 moved up for a third straight session yesterday. The S&P 500 flirted with a record Wednesday, but closed just short of the mark. (Fox Business News)

New applications for unemployment claims fell 14,000 to 298,000.  New applications for unemployment are at their lowest levels as a percentage of the labor force since 1967. (Associated Press)

A once iconic brand continues its slide into the abyss. Sears, also the owners of Kmart, reported its ninth straight quarterly loss.  The second quarter loss widened to $573 million and sales continued their decade-long fall down by 9.7%. (Reuters)

Nobel Prize winner Lars Peter Hansen says uncertainty surrounding regulation is hindering U.S. economic growth. He says, "I think the uncertainty that institutions on what kind of regulatory environment there is going to be in the next few years is contributing to caution … … in a way that is going to be counterproductive. I think clarity in policy is really critical … ,". (CNBC)

As the world continues awash in oil it is moving down 67 cents to $92.78 barrel. The U.S. is pumping the most oil in 27 years, adding more than 3 million barrels of daily supply since 2008. The U.S. imported 7.2 million barrels a day of crude in May, a 26% drop from the same month in 2008 when oil prices spiked. (Bloomberg)

Business News


Markets continued their upward March on Thursday as it seems to put international worries in the rearview mirror.  Not even poor economic data from Europe seems to put a damper on things. (Seeking Alpha)

Nordstrom reported profits 2% higher during the latest quarter, compared to a year earlier. Sales were $3.3 billion an increase of 6.2% over last year. On July 31st Nordstrom announced it will acquire Trunk Club, a personalized clothing service for men. The Company will acquire Trunk Club for $350 million in Nordstrom stock. (Business Wire)

Oil tumbled 2% on Thursday, as European economic contraction highlights weak demand, meanwhile supplies are ample despite international conflict. U.S. crude inventories rose by 1.4 million barrels last week. Crude output is expected to rise, with 2014 U.S. output at 8.5 million barrels per day and 9.3 million barrels per day for 2015, which would be the highest annual average production level since 1972. (Reuters)

U.S. auto loans jumped to the highest level in eight years last quarter, fueled by big increases in lending to risky borrowers. Banks and other lenders issued $101 billion in new auto loans in the second quarter. Total outstanding auto loans rose to $905 billion during the quarter. Auto loans are the third-largest source of Americans' debt, after mortgages and student loans. Mortgage debt actually declined in the second quarter to $8.1 trillion while student debt rose to $1.12 trillion. Americans have $669 billion on their credit cards.  (Associated Press)
 

Business News


The number of job openings Rose to 4.7 million in June, up 100,000 from the prior month. This is the biggest number of Job opening since February 2001. Job openings have increased 17.6% over the last 12 months. (associated Press)

The national Federation of Independent businesses small business optimism index rose to 95.7 last month. While improving this index is still five points below the 35 year average. Small business owners are most concerned about government overregulation and taxes. (cNBC)

Australia plans to export more iron ore this year than any nation ever and that is driving up shipping costs by 80%.  Increase sales from Brazil before year end means freight rates could go even higher. Miners will ship an extra 97.8 million metric tons from Australia, equal to more than 600 cargo ships hauling the ore. (Bloomberg)

A new wealth gap is opening among US corporations, where cash holdings are growing more concentrated. eighteen American businesses hold 36% of corporate wealth in 2013, up from 27% in 2009. The top 1% of multinationals, includes Microsoft, Google, Coca-Cola, Apple and forward, that reap a big share of profits from non-US sales.  (Bloomberg)
 

Business News


On Friday the S&P 500 had its best day in almost 5 months to post a gain for the week. The S&P 500 is down 1.64% for the last month and up 4.5% for the year. (Yahoo Finance)

Households are bouncing back after the recession, With 60% saying they are "doing okay" or "living comfortably". 39% of families have a rainy day fund to cover three months of expenses. But just 48% could cover a $400 emergency expense without borrowing or selling something. (USA TODAY)

McDonald's says it's global sales forecast for 2014 is at risk after a food scare forced it to temporarily withdrawn menu items such as Big Macs and Spicy Mcwings in China. McDonald's said same restaurant sales in Asia-Pacific, Middle East and Africa fell 7.3% in July. Worldwide comparable sales at restaurants open at least 13 months fell 2.5% and US same restaurant sales fell 3.2%. US sales have been down or flat since November 2013. (Reuters)

Boeing and United technologies have been stockpiling titanium from a Russian producer in case international tensions disrupt supplies of the metal critical to building jet airliners. The companies by a substantial share of their titanium the from the Russian producer, the world's largest titanium producer. Internationally four companies provide 90% of the titanium used in the aerospace industry this year, with Russia accounting for 30% of that. (Wall Street Journal)

More Good Economic News


U.S. stocks continued their sell off yesterday and have been a yo-yo so far today.  President Obama’s authorization of airstrikes in Iraq, the Ukraine situation and poor economic information from Europe have investors on edge. (CNBC)

The flight from risky bonds could be gaining momentum. In one of the biggest signs yet of growing concern over risky assets, investors pulled a record $7.1 billion from high yield, otherwise known as junk, bond funds last week and bailed out of equity exchange-traded funds at the most frantic pace in 6 months. (Reuters)

Worker productivity in the second quarter rose 2.5%. Unit labor costs were up 0.6%. (Bloomberg)

That old tired coffee pot at work is becoming a thing of the past. Keurig Green Mountain, maker of the popular Keurig one-cup coffee brewers, reported a 33% rise in quarterly profit as more people opted for its single-serve coffee pods. Sales rose 5.7%. (Reuters)

Mortgage closing costs are rising in Oregon.  An Oregon homebuyer seeking a $200,000 mortgage with a 20% down payment and excellent credit, would pay $2559 in origination and third-party fees, up 7% from a year ago. Oregon's closing costs are the 20th highest in the nation. (Oregon Live)

Join us Saturday at 10 for Financial Focus, Your Smart Money Radio, when we will have our health insurance expert, Don Klippenes of Health Insurance Strategies as our guest.

Labor Market Continues to Improve


The S&P 500 was flat yesterday and today looks to stage an early morning comeback.  Earnings season for companies continues to be strong as profits for the S&P 500 are on track to climb almost 10% from last year.  (CNBC)

Second quarter economic growth in the US is expected to be revised up from 4% after the US trade gap fell 7% as oil imports slow.  The trade deficit is the lowest since January and oil imports are their lowest since 2010. (Bloomberg)

New unemployment claims for the week were down 14,000 to 289,000.  That is another cycle low showing the labor market continues to improve.  (Fox Business News)

Northwest fitness equipment maker Nautilus reported a profit of $600,000 in Q2.  Sales increased 34% with higher sales in both the direct and retail segments. The stock is trading at 52-week highs. (Business Wire)

Northwest Natural Gas saw earnings decline on lower revenues and higher expenses in its gas storage business, while its utility operations generated higher margins. The company posted a $1.1 million quarterly profit down about half from the same time last year. (Market Wired)

Computer chip sales hit a record of $27.6 billion in June.  For the 2nd quarter, global semiconductor sales were up 10.8%. Sales in the first half of the year were up 11.1%.  (Semiconductor Industry Association.)
 

Strong US Economic News - Weak in Europe


US stock markets continued to be in correction mode yesterday as good news was bad, and bad news was even worse. That trend looks to continue today as Russia masses troops on the Ukraine boarder and economic numbers in Europe show they continue to struggle. (Associated Press)

Bend’s newest corporate citizens, Walgreens, says it won’t pursue an inversion plan to re-incorporate in Europe to cut its tax bill. It is buying the remainder of Europe’s Alliance Boots that it doesn’t already own in a $10.1 billion deal. (CNBC)

With mortgage rates still wavering within a tight and historically low range, total mortgage applications rose 1.6% week to week. But no good news for new home building as it was all on the back of refinancing. (Mortgage Bankers Association).

Mondelez International, makers of Oreos and Tang, reported 2nd quarter results reflecting strong growth and margin expansion. Sales were $8.4 billion, down 1.8%, and profits were $957 million, up 10.6%. (Yahoo Finance)

Service industries such as builders and retailers grew in July at the fastest pace since December 2005, signaling the U.S. economy was hitting its stride entering the second half of 2014. The Institute for Supply Management’s non-manufacturing index increased to 58.7, exceeding the highest estimates. (Bloomberg)

Business News


Stocks had their biggest one-day sell off in 6 months yesterday as a combination of bad earnings, bad economic reports, and a default by Argentina on their bonds triggered the sell-off.

The Bureau of Labor Statistics is out this morning showing the US economy added 209,000 jobs in July and the unemployment rate ticked up from 6.1% to 6.2% as more people entered the labor force in search of work.  Economists had predicted the economy to add 235,000 jobs so this report is worse than expected.(marketwatch)

An index that measures the price of labor rose in the 2nd quarter at the fastest pace in over 6 years showing there is some wage inflation starting to present itself, which is sure to get the attention of the Federal Reserve.(CNBC)

GoPro reported their first quarterly earnings report as a public company reporting a $20 million loss sending the stock lower.  Tesla also reported a year over year decline in earnings sending their stock lower.  LinkedIn reported better-than-expected earnings sending their stock 7.5% higher.  And Proctor and Gamble reported a 38% increase in profit as the world's largest consumer product maker continued to cut cost and grow organic sales.(marketwatch)

Business News


US Stocks ended yesterday's choppy trading session mostly higher as investors weighed soft housing data against a flurry pf deal news including the takeover of Family Dollar by Dollar Tree.

Pending home sales fell 1.1% in June to mark the first decline in 4 months showing sales of US homes continue to face headwinds like higher interest rates, tight credit, and stagnant wage growth of prospective buyers.  The Case-Shiller home price index is also out this morning showing that house prices nationally declined .3% year over year.(marketwatch)

UPS reported 2nd quarter earnings this morning that missed expectations.  The company reported $1.21/share when wall st had been expecting the company to earn $1.25/share.  The company also lowered its full year earnings forecast because they plan on increasing expenses.  Shares of UPS sold off on that news.(CNBC)

Drug companies Pfizer and Merck both beat 2nd quarter earnings expectations sending those stocks higher.  Both are Dow components which will help lift that index today.(marketwatch)

And good news if you are retired.  In their annual report issued by the Medicare and Social Security Trustees showed that both programs will run out of money later than expected.  Medicare isn't scheduled to be exhausted until 2030 and Social Security will last until 2033.  Lower than expected spending extended the life of both programs which will certainly take the heat off lawmakers to address entitlements ahead of Congressional elections.(yahoo finance)
 

Business News


The major stock indexes finished last week mostly unchanged.  Stocks have started this trading week slightly lower ahead of the busiest weeks for economic reports of the summer.

Asian stock markets traded at a 3 year high after profits earned by the Chinese industrial sector rose 18% in June reinforcing expectations that the Chinese economy is powering through a recent soft patch.

So far half of the companies that make up the S&P 500 Index have reported 2nd quarter earnings and 77% of those companies have beaten expectations which is a big reason that index is at an all-time high.

One of those companies that missed expectations was Amazon.  The online retailer missed earnings expectations for the 2nd straight quarter reporting a loss that was double what was expected.  Amazon remains one of the most valuable companies in the US while struggling to turn a profit.

Engine maker Cummins reported a 7% rise in quarterly earnings and raised their full year revenue forecasts, citing improving demand from makers of pickup trucks and motor homes in North America.  Even though the company beat expectations shares are trading 2% lower in early trading.

 

New Jobless Claims Hit 9-year Low


Big boy toy maker, Caterpillar, posted profits almost 17% higher than last year on sales that were down about 4%. Caterpillar cited an uncertain global growth picture that weighed on sales expectations. CAT has seen a revival in its business based largely on strong sales in China, even as activity in the U.S. remains relatively stagnant. (Reuters)

Telecom company AT&T reported second-quarter 2014 profits that were down 7.5%. Significant pricing competition, new device financing plans and other promotional strategies weighed on earnings. (Zacks)

Umpqua Bank reported profits of $17.1 million for the second quarter of 2014, down 29% from last year. The Company's performance included strong organic loan and deposit growth and a higher net interest margin. (Business Wire)

The 10-year Treasury traded at its lowest yield since May as investors bet an uneven economic recovery won’t push the Federal Reserve to accelerate interest-rate increases. The 30-year bonds stayed close to its lowest yield since February 2009. The 10-year stands at 2.47 and the 30-year at 3.26%. (Bloomberg)

The National Retail Federation lowered its retail sales forecast for 2014, citing slow growth during the first half of the year. They now expect retail sales to grow 3.6 percent this year, down from its 4.1 percent forecast in January. (Associated Press)

New unemployment claims for last week were down 19,000 to 284,000. They now set at their lowest level since 2005. (Reuters)
 

A Cornucopia of Earnings


Microsoft stock stands at 15 year highs as they reported a second quarter profit that was down 7% and sales were up 17%.  Hitting the bottom-line was Microsoft’s integration of the Nokia phone operations into the company. (Reuters)

Pepsi saw profits drop 2% in the latest quarter as sales were essentially flat. The company raised full year profit guidance upwards in the report to 8% growth.  Like most multi-national companies Pepsi is seeing profit decreases due to currency exchange rates. (Wall Street Journal)

Boeings second quarter profits increased 52% as sales increased 1%.  The delivery of planes was up 7%.  Boeing gave strong future guidance on the increasing demand from low cost airlines and booming airline travel in Asia and China. (Associated Press)

Apple saw 12% profit growth in Q2 as iPhone sales increased almost 13%.  But for the second quarter in a row iPad sales fell, this quarter by 9.2% after falling 16% in Q1.  The company has $164.5 billion in cash. (Wall Street Journal)

 
Regulators are expected to vote today to end a long-time staple of the investment industry—the fixed $1 share price for money-market funds. The SEC may also vote to let money funds block withdrawals during periods of financial stress or impose new fees for withdrawals. This could remove a perceived safe haven for investors.  (CNBC)

Stocks Under Pressure


Lots of earnings after the bell today.  Stocks are under pressure as international violence continues to be a wet blanket on investors.

A new report shows US companies increased worker wages in the second quarter at a rate more than double of a year earlier. Wage growth has been almost non-existent during this recovery and some see this as a welcome sign.  It was the first report since third quarter of 2012 that no respondents reported declining wages. (National Association for Business Economics)

Some tax reform may be coming our way. The US House of Representatives passed the America Gives More Act last week. The bill makes three tax breaks permanent: the charitable deduction for contributions of food inventory by businesses, the deduction for contributions of conservation easements, and a provision that allows senior citizens to tap their IRAs for charitable donations without incurring a tax penalty. (Portland Business Journal)

US mortgage rates continue to be at near historic lows.  The 30-year fixed rate stands at 4.15%.  Mortgage rates are now below the lows of last year when the Federal Reserve said they would end their bond purchase program. (Associated Press)

Surging consumption of chocolate in Asia is pushing cocoa-bean prices to the highest level in three years.  While demand in the region ranked as the world’s lowest per capita in 2013, the market will grow at almost twice the global rate over the next four years putting pressure on supply. (Bloomberg)

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