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Business News Archives for 2014-04


Target Will Issue More Secure Debit Cards


Target is switching its debit and credit cards over to a more secure technology by early next year.  The new cards are called chip and PIN.  A chip replaces the old magnetic strip, making the cards harder for thieves to duplicate.  A personal identification number is an added protection.  It's a system that's already widely used in Europe.  Target is hoping the change will restore customer confidence after last year's major data breach by cybercriminals.

Homeownership Hits 18-Year Low In 1st Quarter


(Washington, DC)  --  U.S. homeownership is at its lowest level in more than 18 years. Figures released by the Commerce Department yesterday show the share of Americans who own their own homes fell below 65 percent in the first quarter.  That's the lowest rate since 1995.  Analysts say rising property prices, higher mortgage rates and slow job growth are putting the brakes on the housing market.

Report: Federal Government Lost $11.2B On GM


(Washington, DC)  --  A new report from the federal government shows Washington lost eleven-point-two billion dollars bailing out General Motors, up from an original estimate of ten-point-three billion.  The increase comes after the Treasury Department found where an 826-million-dollar administrative claim had been written off in March tied to the bailout.  The government sold its last shares in the automaker in December.  Presidents Bush and Obama bailed out GM to the tune of over 50-billion dollars in aid in 2008 and 2009.

Samsung Quarterly Profit Falls Again


Samsung's first quarter profit is down.  This marks the second straight quarterly loss for the South Korean electronics giant.  Samsung's profit of eight-point-two billion dollars for the first three months of this year is three and a third percent below its first quarter profit in 2013.  The company expects better results for the current quarter.  The Galaxy S5 smartphone launched last month is predicted to outsell Samsung's previous top-end device.

Netflix Reaches Streaming Deal With Verizon


Netflix now has a deal with Verizon aimed at streaming movies and TV shows more quickly to Netflix subscribers.  Netflix announced a similar deal with Comcast two months ago.  The arrangement with Verizon will give Netflix a more direct connection between its servers and Verizon's Internet network to improve the delivery of Netflix streaming content.
 

Univision Chief Opposes Comcast-Time Warner Cable Merger


The head of Spanish language cable TV network Univision says Comcast's plan to buy Time Warner Cable could be "bad for Hispanic audiences."  Univision President Randy Falco said Monday that merging the two biggest cable TV providers could hurt competitors, including Univision, who serve minority communities.  The U.S. Justice Department and the Federal Communications Commission are reviewing the proposed 45-billion dollar deal.

Report: Magic Interested In Buying Clippers


(Los Angeles, CA)  --  Donald Sterling's tenure as owner of the Los Angeles Clippers could have an unexpected and unique ending.  Sources tell Yahoo! Sports that Hall of Famer Magic Johnson is very interested in purchasing the franchise from Sterling.  The NBA could help forge a deal for Sterling to sell the team to Johnson and Mark Walter of the Guggenheim Partners, who also own the Los Angeles Dodgers.  The same group also purchased the cash-strapped Los Angeles Sparks of the WNBA in February.  Sterling has come under fire after TMZ acquired an alleged recording of him making racially-charged remarks to his girlfriend.  Sterling specifically told his girlfriend that he didn't want her associating with Magic Johnson or bringing him to games.  The NBA will likely hand down sanctions to Sterling in the coming days.

Former Firefighter Invents Foam Cannon In Response To Oil Train Derailments


(Medina, ND)  --  A North Dakota man who spent decades working as a firefighter is the inventor of a new kind of equipment to fight oil fires.  Darrell Graf has applied for a patent for foam cannons he built in response to two major oil train derailments.  A derailment in a tiny Quebec town last July killed 47 people while last December's derailment near Casselton, North Dakota caused a huge fireball and forced a city-wide evacuation.  Graf's Foam Cannon 2000 uses a chemical foam that cuts off fuel vapors and can shoot up to 300 feet.  Graf hopes his invention will reduce the fear people living along oil train routes have about such derailments.  He also wants to better equip fire departments to deal with such disasters.

Pfizer Pursuing AstraZeneca In Huge Pharma Deal


(Undated)  --  U.S. drugmaker Pfizer is angling to pull off one of the biggest pharmaceutical deals ever.  The American pharma giant is trying to buy British drugmaker AstraZeneca.  Pfizer made a bid for AstraZeneca earlier this year but the British firm turned down the cash and shares deal.  Pfizer contacted AstraZeneca again over the weekend but said the British company's officials don't want to talk about a merger.  Pfizer says it's now "considering its options."

Business News


US Stocks were higher yesterday as positive earnings reports and stronger-than-expected economic data outweighed worries over military escalation near the Ukrainian border.

An 8.2% gain in Apple yesterday after their earnings report accounted for most of the gain in the NASDAQ and S&P 500 as it is the heaviest weighting in both indexes accounting for 4 points yesterday in the S&P. (marketwatch.com)

Microsoft reported fiscal 3rd quarter profits declined 6.5% dragged down by slumping personal computer sales.  The earnings report was the first under the new CEO Satya Nadella who took over 3 months ago.  Nadella participating in the Microsoft earnings call which is something the old CEO Steve Ballmer never did.  Wall St. seemed to like what the new CEO had to say breaking from the old leadership sending the stock higher.(Yahoo Finance)

Shares of Amazon traded higher after the company reported a fiscal 1st quarter profit of $108 million or 23 cents/share, which was better than the street had expected.(marketwatch.com)

Starbucks reported their profits were 10% higher last quarter over the same period last year.  Starbucks ended the 1st quarter with 335 new stores.  Shares traded 1.5% higher on that news.(marketwatch.com)

And the Ford motor company saw their 1st quarter profits fall to 24 cents/share from 40 cents/share a year ago.  That news sent shares of Ford 3% lower in early trading.(marketwatch.com)

Earnings Season In Full Swing


Lots of earnings this morning so let’s get too it.

The big brown truck, United Parcel Service, saw a fall in profits of 6% and a rise in sales of 3% in Q1. UPS also announced a price increase of 4.4%. (Market Wire)

Caterpillar gave the market a positive upside surprise in Q1 as they beat estimates and raised expectations for the entire year.  The company posted a profit of $922 million up 5% from last year.  Cat CEO Doug Oberhelman took a 33% pay cut last year due to underperformance. (CNBC)

The 3M Company saw profits climb 7% during the quarter.  3M says higher sales and profits were led by growth in its health care business.   The company says growth in China will be super-sized over the next five years. (Associated Press)

The price of your beer could be going up due to government regulation.  Brewers who distribute used grain from manufacturing to be used as animal feed would now be classified as animal feed manufacturers. This would force them to spend millions of dollars to dry and bag their byproduct before being used.  No problems have been reported using the current system that is great recycling and dual use of grains for both man and beast. (Oregon Live)
 

One Million Dollars Not Enough To Retire


(Undated)  --  It may not be enough to retire with one-million dollars in your savings.  Financial experts are saying that the new standard will be two-million dollars.  "USA Today" is reporting that low interest rates and the rise in the number of millionaires will force people to save more to retire.

Investors Hope Stock Rally Continues


(New York, NY)  --  Investors will hope yesterday's stock market rally will continue this morning.  Strong earnings reports fueled a strong day on Wall Street.  The Dow Jones Industrial Average gained 65 points to close at 16-514.  The Nasdaq rose 40 points to 41-61 and the S&P 500 was up eight points to end the session at 18-79.  Shares in Netflix rose close to seven percent following news of strong subscriber growth.  Healthcare stocks were the best performers of the ten major S&P sectors.  Allergen Inc jumped over 15 percent with a possible merger with Valeant Pharmaceutical on the horizon.

Poll: Gold Is Top Investment Choice For Low-Income Americans


(Undated)  --  Lower-income folks prefer investing in gold more than anything else.  A recent Gallup poll reveals nearly a third of all American households with less than 30-thousand dollars in annual income make gold their top long-term investment choice.  Only 18-percent of high-income earners prefer gold as primary investment strategy.  Overall, real estate wins out as the top choice as a long-term investment.
 

Earnings and Economic News


Markets are open after the long Easter weekend and we get ready for a busy week of earnings.  

Kimberly-Clark, the makers of Huggies, Kleenex and other consumer products saw sales decline 1% overall but grow 12% overseas in Q1.  Profits were up almost 4%.  The company paid a combined $750 million in dividends and stock buy backs during the first quarter. (Market Wire)

Toy maker Hasbro returned to profitability in Q1 making $32.1 million after losing $6.7 million last year.  Sales for girl’s toys, like My Little Pony, were up 21% while those for boys, like Nerf products, were up 4%. Hasbro beat their competition, Mattel that posted a loss for the quarter last week.  (Associated Press)

Payrolls climbed in 34 states in March showing the job market is improving.  The rough winter weather in the north has helped the tourism industry in the south as more people are trying to beat the snow and enjoy a little sunshine. (Bloomberg)

US manufacturing output rose by 0.7% for a second month in March.  Mining and utilities were leaders in the gains.  US factory capacity utilization stands at 79.2%, the highest since June 2008 and shows companies maybe approaching an end to their ability to get production gains without investing money in more plants and equipment. (Reuters)

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.
 

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