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Business News Archives for 2014-05


US Personal Income Up to Second Month


So how is that idea of “sell in May and go away” working for you?  On the last day of trading for May the S&P 500 is up 2.2% for the month and 3.88% for the year.  Any up finish today will put us at a record close to end the month. (CNBC)

US personal income rose 0.3% in April and consumer spending fell 0.1%.  (Associated Press)

Precision Castparts, Titanium Metals Corp, will pay a record $13.75 million fine for unlawful manufacturing and disposal of hazardous materials.  This is the largest fine for a single facility in EPA history. (Portland Business Journal)

There may be a surge in winery sales as more owners are looking to cash in on skyrocketing vineyard prices according to a new bank study. Over 10% of Oregon’s 525 wineries say they will sell in the next five years. (Oregon Live)

Under the category of … … “why do medical costs keep rising” … … 2.1 billion people, one-third of the world population is obese or overweight.  That is a threefold increase since 1980. The US has 13% of all obese people, followed by China and India with 15% combined. (Bloomberg)

Join us Saturday at 10 on Financial Radio when we will put you on our wealth building counseling couch and talk about money and your emotions.
 

US Economy Shrinks


Markets broke a four day winning streak yesterday closing just below the flat line. Today we look to start a new streak – the direction we will have to wait and see.

The second reading of first quarter GDP shows the economy shrank 1%.  That is the first decline in three years. The hard winter is being blamed for the slowdown. (CNBC)

Costco reported quarterly profits of $473 million, up 3.1% with both higher sales of 5% in the US and 3% abroad. (CNNMoney)

Starbucks is getting into the burger business.  The company plans to open the La Boulange chain to cater to the dinner crowd. In addition to coffee the chain will also offer wine, beer and milkshakes.  (Associated Press)

McDonald’s plans to return $20 billion to shareholders by 2016 in the form of share buy backs and dividend increases. That is a 20% increase to what they did from 2011 through 2013.  (Bloomberg

Even as the world gets smaller almost 70% those born in the US still live in the State of their birth and only 1.5% move each year across State boarders.  That is a lower rate than our parents just a generation ago. In 1980 3% of the population moved States each year. The biggest reason for moving is a job and a warmer climate. (Bloomberg)

Another S&P 500 Record


The S&P 500 hit another record yesterday as markets continue to rally. Markets look to open higher again this morning. (CNBC)

Even though home mortgage rates continue to be near record lows there are fewer takers.  Total mortgage applications (refinancing and new home purchases) are down 48% since last year.  Refinancing is down 62% and new home mortgages are down 15% annually. (Mortgage Bankers Association)

The Case-Shiller home price index says home prices are still rising nationally but at a slower pace.  Prices are up 12.4% from a year ago.  A slim supply of homes for sale continues to put pressure on prices.

About 2.2% of Oregon homes with mortgages were in foreclosure in March. That is down from 2.88% in March of last year. (CoreLogic)

The S&P 500 is up 2 and NASDAQ is up 2.

Oil is down 13 cents at $104 barrel. The average price of gas is $3.87 a gallon in Oregon still 3% below the peak of last year.  That price is the 7th highest in the nation. (AAA Oregon/Idaho)

Gold is flat at $1265 a Troy ounce. Gold has broken out of a range it has traded in for about four months, reaching 15-week lows.  The bling is down 9.1% from the high of the year reached in March. (Bloomberg)
 

S & P at record highs


The S&P 500 closed at a record high and above 1900 for the first time on Friday. Pfizer has officially walked away from their offer to buy AstraZeneca.  The offer was for $118 billion in cash and would have been the largest drug deal in over a decade.  (Reuters)

April Durable Goods, those items lasting more than five years, was up 0.8% mostly on the back of autos and airplanes. Factor out transportation and durable goods were up 0.1%.  This months number was much better than expected and March was revised upwards. (CNBC)

Pilgrim’s Pride is offering to buy Hillshire Brands for $6.4 billion in cash. The offer comes just two weeks after Hillshire made an offer for Pinnacle Foods.  The offer is a 25% premium to Hillshire’s Friday closing price. (Wall Street Journal)

Here is a blast from the past.  Cabbage Patch Kids are getting a makeover  for the new century in 2014.  Jakks Pacific makers of the doll are partnering with Skechers sneakers to brighten up the refreshing. The new dolls will have flashing Sketcher shoes and may be sold in Sketcher Stores.  Jakks is looking for ways to sell the doll as the number of toy stores continues to decline. (Bloomberg)

Oregon Labor Participation Rate Falls


The road to recovery for Hewlett-Packard hit a bump last quarter when their earnings fell below what traders expected.  HP saw sales of $27.3 billion during the quarter. The company plans to cut up to 16,000 more jobs in a move to right size operations.  The company has cut 50,000 jobs over the last two years. (CNBC)

The index of leading economic indicators climbed 0.4% in April.  The index gives us a glimpse of what to expect six to 12 months in the future. This is the third consecutive monthly increase driven by improving housing and financial market conditions. (Associated Press)

Just three in five adult Oregonians are working or looking for a job, the lowest level since it was first tracked in 1976.  Over the last four years the labor participation rate has fell in all but two counties.  The decline in workers has been ongoing since the turn of the century and is driven by demographics and lack of economic opportunities in rural counties. (Oregon Live)

Another blow to the summer grilling season could be climbing pork prices.  Pork in US cold storage has dropped 17% from a year ago.  This comes when seasonally pork supplies are building.  Hog slaughters have fallen due to a pig virus that has cut herds. (Reuters)

Sears Tumbles Again


One has to ask themselves were the equity markets really 1% worse on Tuesday only to get 1% better on Wednesday?  We are getting lots of volatility in the market these days and this is the time to remind all retail investors to keep your eyes on the long-term not the neurotic day-to-day movements of the markets.  

The owner of a once iconic brand and an iconic blue light continues its path into the abyss.  Sears Holdings, the owners of Sears and K-Mart, says store sales fell almost 7% during the quarter resulting in a loss of $402 million. The company says they are closing another 80 stores by the end of the year. (Fortune)

International consumer staple company, Unilever, is selling the Ragu pasta sauce brand to Japans Mizkan Group for $2.15 billion as it completes the reorganization of its North American brands. Ragu had $600 million in sales annually.  Unilever move forward with its many brands such as Dove soap and Ben & Jerry’s ice cream. (CNBC)

Oregon railcar maker Greenbrier says it has received orders for 7000 railcars during April and May.  That is more than $700 million in revenue.  Oil tank cars made up 2300 of those new orders. (PR Newswire)

Portland based Keen Footwear has named Steve Mieneke their new President. Keen has been without a President for about a year after the last one lasted less than a month on the job. (Oregon Live)
 

Low Mortgage Rates -- Lots of Cash Buyers


Home improvement retailer Lowes saw profits climb 16% in Q1 on sales that climbed 2%.  The company cited the rough winter for the lower than expected sales increase and expects to be up 5% for the entire year. (Associated Press)

Dick’s Sporting Goods saw its fifth quarter of single digit earnings growth posting a 4% increase in the first quarter.  That comes as sales increased 8%.  The number was below expectations as the company saw big declines in their golf and hunting lines. (Investor Business Daily)

Mortgage applications for new home purchases fell 3% last week and are down 12% from a year ago.  This is despite conforming loan rates, homes below $417,000, being at their lowest levels since last Thanksgiving and jumbo rates being their lowest in a year.  (Mortgage Bankers Association)

All-cash home purchases accounted for 43% of all home sales in the first quarter of 2014. That is up 19% from a year ago. Only 5.6% of all sales were investors, the rest were purchasing homes to live in. (Market Watch)

A Gallup poll shows only 27% of Millennials (those born after 1980) own stocks – down from 33% in April 2008.  The group was scared by the Great Recession and as a group has missed the big rally that followed and the corresponding gains. (Bloomberg)

Nike is cutting jobs


The world’s largest home improvement chain, Home Depot, is under pressure this morning after they failed to meet expectations in their latest earnings release. The company saw same store sales grow 2.6%, but said the hard winter had an adverse impact on their numbers.  They are looking for 4%-5% growth for all of 2014. (Zachs)

Ten million home owners still owe more than their homes are worth. Affordable homes are three time more likely to be “underwater” than expensive homes.  Thirty percent of home under $100,000 are still under water, 10% of homes $100,000 to $300,000 are under water and 10.7% of those above $300,000 still owe more than they are worth. (Zillow)

Nike employed about 1 million contract factory workers in 2013.  That number was almost 10% lower than the year before and that number is down 17% from its high in 2009.  This steep decline in employment is the result of an aggressive automation push by the company and comes as sales increased 8% last year and 32% since 2009.  This is a good example of the changing job market both here and abroad. (Portland Business Journal)
 

Housing Starts and Student Loan Debt Jump


One mega deal is alive – another is dead.  Drug maker AstraZeneca has rejected Pfizer’s final $116 billion buyout offer. Pfizer says it will not go hostel.  AT&T is buying DirecTV for $48.5 billion or $95 a share.  Only one-third of DirecTV’s 70 million subscribers are already AT&T customers. (Barron’s)

Mickey Mouse is asking a lot more to visit the California Magic Kingdom.  A Disney Park Hopper pass is going up 9.5% to $150 and a one day/one park pass is going up 4.3% to $96 a day. (Buzz)

Tires prices are getting some downward price pressure as natural rubber supplies build on a four year surplus. Rubber prices have fallen 62% since the peak in 2011.  Big global suppliers of rubber include Thailand, Vietnam and Indonesia. (Bloomberg)

New housing starts surged 13% in April.  Leading the jump was a 43% increase in multi-family units.  Single family starts were up 1% for the month.  Home ownership stands at 64.8% and is below the 50-year average of 65.4%. (CNBC)

Along with their diploma the average college graduate in the class of 2014 will get a bill for $33,000 in student loans.  That makes this year’s class the most indebted ever. Over 70% of all graduates will have some student loan debt upon graduation, which is close to double what we saw just 20 years ago. (Wall Street Journal)

Higher Inflation is Not a Bad Thing


The world’s largest retailer, Wal-Mart, posted disappointing results for Q1 as profits fell 5% to $3.6 billion.  The company cited bad winter weather in the US and a tough international sales environment as their economies continue to struggle.  US same store sales grew 2% and international sales were down 1.7%. (Market Wire)

US wholesale prices climbed by 0.6% in April the most in three years.  US producer price inflation is now running at a 2.1% clip.  Rising food prices, what impacts the average consumer the most, saw some of the biggest gains. (Bloomberg)

Eugene-based retailer Bi-Mart is opening a chain of Cascade Farm and Outdoor stores throughout the Pacific Northwest.  The first store opened this year in Walla Walla, Washington.  The stores will be farm and feed based with goods Bi-Mart does not carry and will have more upscale brands like Carhartt, Columbia and DeWalt tools. The company employs 3500 persons and will open their 75th store this year.  (Oregon Live)

In a secondary sign that employment is improving 1.2 million persons have dropped out of the food stamp program from October 2013 to February 2014.  That is a 4% decline.  Over 46 million Americans are on the food stamp program which costs taxpayers about $6 billion a month. (Wall Street Journal)
 

One Last Blast of Earnings


Another record setting day on Tuesday for the S&P 500 as the index finished just above the flat line.  The S&P 500 crossed 1900 for the first time yesterday but was not able to hold it into the close. (Fox Business News)

John Deere posted a profit of $981 million last quarter down 9% from last year.  Sales were also down 9%. The world’s largest maker of farm equipment says sales will be down 7% for the entire year. (Reuters)

Retailer Macy’s is raising its dividend by 25% and increasing its stock buyback program to $2.5 billion as they put their cash to work.  During the first quarter the company saw sales fall 2% and profits increase by 9 %.(CNBC)

A once iconic and struggling brand, Sony, will post its second consecutive annual loss in 2014 and the company expects 2015 to be another losing year.  The company is selling its TV and PC business and will concentrate on imaging, gaming and mobile computing. (Financial Times)

The good news is mortgage applications rose last week by 3.6%, the bad news was it was entirely due to a 7% gain in refinancing.  Applications to purchase a new home are down 12% for the year.  The 30-year rate stands at 4.39%, its lowest level since November.  (Mortgage Bankers Association)

Record close


The US Stock market closed yesterday with its best gain in a month and sent the S&P 500 and Dow to fresh new record highs.  This morning markets have opened

Retail sales slowed sharply in April after Americans appear to have slowed spending down sharply after splurging in March.  Retail sales last month were unchanged from a year ago.  Wall St watches the retail sales numbers closely because consumer spending makes up so much of the economic activity in this country.(marketwatch.com)

The US government recorded a $107 Billion budget surplus in April contributing to a steady decline in the deficit in 2014.  The Congressional Budget Office estimates the deficit in 2014 will be $492 Billion which is the smallest the deficit has been since before Bush was President.(Yahoo Finance)

AT&T is in active talks to buy satellite TV provider DirecTV for close to $50 Billion.  An offer for DirecTV of $95/share would value the company at $48 Billion.  Shares of DirecTV rose 6% on that news to $90/share.(WSJ)

And Nike announced that they are going to go forward with a quarterly dividend of $.24 per share.  The move will return $214 million to shareholders and $32 million to founder Phil Knight.  The dividend increase is an effort by the company to return cash to shareholders.  Nike has a strong balance sheet with $5 Billion in cash and almost no debt.  Shares of Nike trade at $74/share.(Portland business journal)
 

Merger Monday


It is merger Monday and Hillshire Brands, makers of Ball Park Franks and Sara Lee, are buying Pinnacle Foods, makers of Birds Eye and Duncan Hines for $6.6 billion in cash and stock.  The purchase price is an 18% premium to Friday’s closing price. (Reuters)

 

Qualcomm is in talks to buy Israeli chipmaker Wilocity.  The deal is reported to be for about $300 million.  Wilocity, founded in 2007, makes chips that allow for faster internet speeds that are important to streaming video users and device makers. (Reuters)

 

Oregon’s Precision Castparts posted a $479 million profit in the first quarter up 15.4% from last year. Sales were up almost 4%.  The company has been in acquisition mode for the last three years, but has still been able to raise cash.  At the end of March Precision had $361 million in cash, up 29% from last year.  Time to go shopping.  (Zacks)

 

The Oregonian is reporting Vestas Wind Systems may be moving their Portland sales and service offices to Colorado.  The move would mean the loss of 200 jobs from Oregon.  Just four years ago the company had as many as 400 jobs in the State. Vestas has gotten over $11 million in tax payer subsidies since coming to Oregon in 2010. (Oregon Live)

Big Population Shift Coming



April retail sales showed a strong 6% year-over-year increase and showed their biggest one month gain since 2011.  Of those reporting individually, Costco led the pack with an annualized 5% increase in sales. (Market Watch)

Apple will unveil the iPhone 6 in August which will reportedly have a bigger screen.  It is projected Apple will sell 80 million of the new phones in 2014.  Also Apple is also reportedly in talks with Dr. Dre to buy the Beats headphone brand. (Reuters)

Only 13% of Americans say home ownership is a top long-term goal according to a new survey, down from 17% in 2011.  A majority of those surveyed, 50%, say saving for retirement is their main goal up from 43% three years ago.  (Market Watch)

The number of Americans older than 65 years will double by 2050 to 84 million.  At that time there will be more seniors than those 18 and younger.  These demographic changes will have huge impacts on our economy and potential immigration policy.  To see some of the potential pluses and minuses one only has to turn their eyes to Japan that is currently living through this population shift. (Market Watch)

Join us Saturday at 10 for Financial Focus when our guest will be Linda Baker, Editor, of Oregon Business Magazine
 

Strong Weekly Jobs Number


With the Bend Broad Band sale to Chicago based Telephone and Data Systems we have seen firsthand changes in the cable/data business.  That continues as it looks like a DirecTV/AT&T merger could be closer. DirecTV has hired Goldman Sachs as an advisor in looking at the deal. (Reuters)

New weekly unemployment claims fell 26,000 to 319,000 last week. Another good jobs number showing improvement. (Fox Business)

It is the spring home buying season and weekly mortgage applications are jumping.  Applications were up 5.3% last week.  Most of the gain was in new purchase applications, but refinancing also saw gains. For the first time since 2009 new purchase applications were greater than refinancing applications in total. (Mortgage Bankers Association)

Under the category – “Why is Japans Economy Such A Mess” – their population fell for a 3rd year and the percentage of the population above 65 set a global record.  Japan has the world’s lowest birth rate and 25% of the population is 65 years old and greater. (Bloomberg)

Oregon’s fourth generation company Pape’ Machinery is buying Central Point based Floyd A. Boyd Company adding to its John Deere equipment dealerships.   Pape’ has four locations in Oregon and one in northern California.
 

NW Companies Report


Northwest fitness equipment maker Nautilus seems to have turned a corner after languishing for years with disappointing earnings.  The company saw sales climb 21% in the first quarter reaping a profit of $5.4 million up 10% from last year. (Business Wire)

German based Adidas, with North American headquarters in Portland, saw flat sales and declining profits of 34% in the first quarter as currency rates and suffering sales at TaylorMade golf drug down profits. This summer’s soccer World Cup in Brazil was cited as an expected boom for this summer’s sales.  (Bloomberg)

US exports climbed $4 billion in March in a big part due to an increase in plane deliveries by Boeing. Industrial supplies and autos were also up.  Imports also climbed showing the US consumer is still looking to buy as the economy strengthens. (Reuters)

Papa Murphy’s Pizza went public last Friday trading under the symbol FRSH.  The company raised $70 million going public at $11 a share.  The company has 1425 locations in 38 states, Canada and the United Arab Emirates. (Yahoo Finance)

Non-farm labor productivity in the first quarter fell 1.7% and labor costs rose 4.2%. Those numbers are much different than expected and give a hint that inflation pressure, while not excessive, are building in the economy. (CNBC)

Business News


US Stocks closed higher yesterday as investors shrugged off worries over the slowing economy in China and a deteriorating situation in the Ukraine.  This morning US stocks have opened

Target fired their CEO yesterday.  Greg Steinhafel worked at Target for 35 years and was considered to be a lifer known for his great merchandising abilities.  Unfortunately for him the huge data breach over the holidays and a money loosing expansion in Canada were enough for the board to ask for his resignation.  Shares of Target lost 3.5% on the news.(yahoo finance)

Merck announced this morning that they are going to sell their consumer care business to Bayer for $14 million.  The deal will make Bayer the largest seller of over the counter drugs in the US.  Shares of Merck rose on the news while Bayers stock sold off.(marketwatch.com)

According to the US Census Bureau home ownership here in the US is at it's lowest level since 1995.  Only 13% of Americans consider home ownership as their number one financial goal.  There are 20 million US households that are currently able to purchase a home but are choosing to rent instead.  Most economists agree that this is a positive because people are saving for retirement instead of being house rich and cash poor.(marketwatch.com)

And shares of Twitter are down over 7% this morning because today is the day that insiders can sell 489 million shares that have been locked up.  Wall Street thinks there will be a lot of selling pressure in shares of Twitter as insiders cash out.(yahoo finance)
 

That's a Lot of Jobs!!


The big jobs report for April is out and shows the US economy added 288,000 jobs.  The private sector added 273,000 and government 15,000.  There were big upward adjustments for February and March.  The unemployment rate dropped to 6.3%. That is the lowest unemployment rate since September of 2008. The labor force participation rate did fall to 62.8%.    (Associated Press)

Umpqua Bank made almost $19 million in the first quarter down 20% from the same time last year mostly due to charges associated with its acquisition of Sterling Bank. The Sterling deal was the largest bank acquisition in Oregon history and makes Umpqua Oregon’s largest resident bank. (Business Wire)

Oregon based maker of computer chip production equipment, Electro Scientific Industries, says Q1 performance was bleak. The company has been struggling for a couple years and says they see no meaningful increase in sales anytime soon.  The company says losses could double from last year. (Business Wire)

Oregon insurance company StanCorp Financial Group posted profits 6.5% better than the same time in 2013.  The company saw lower claims on group and individual disability policies but lower premium and investment income.  (Zacks)

Happy May Day !!!


Happy May Day as markets get ready for a new month.   The S&P 500 was up 1.42% for the month of April and is up 1.93% for the year.  

The number of companies planning layoffs in April rose by 17% from the previous month.  US employers planned to cut 41,835 jobs during the month. (Challenger, Gray & Christmas)

Portland based Columbia Sportswear posted a profit of over $22 million last quarter up 120% from the year before.  Sales climbed 22% on cold winter weather.  Columbia is also buying prAna a mainly women based retailer of clothes for spring and summer.  (The Street)

Hillsboro based FEI, the world’s largest maker of powerful microscopes posted weak profits and sales last month.  Sales were up 2.3% to record levels but well below what the company had forecast.  Profits came in at a little over $25 million but were also below what was expected.  (Globe Newswire)

US home ownership is the lowest in 19 years standing at 64.8%.  This is the lowest since Q2 of 1995 when it was 64.7%. Tight lending standards, rising interest rates, slow personal income growth and delays in getting married are all driving the number down.  Some speculate the number could drop to 55% before recovering. (Bloomberg)

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