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Business News Archives for 2018-06


More trade tensions are in the making on reports that Justin Trudeau will mark Canada's 151st birthday on Sunday by imposing tariffs on about C$19.4B worth of U.S. imports and providing aid to trade hit industries. The proposed tariffs will target metals, whiskies, mustard, toilet paper, washing machines, motorboats and maple syrup, in response to the American levies on Canadian steel and aluminum that went into effect a month ago.  (SA)

The debut of Walgreens into the Dow Jones Industrial Average this week marks the worst performance of any new entrant in the past decade. Shares are down more than 11% in the past three days - trimming more than 44 points off the index - after the company replaced GE. Walgreens also tumbled along with other drug retailers yesterday as Amazon made its entry into the industry by acquiring online pharmacy PillPack. (FT)

It's official! Twenty-First Century Fox shareholders will vote on Walt Disney's (NYSE:DIS) revised $71B bid for Fox's entertainment assets on July 27. The date effectively sets a deadline for Comcast to come back with a higher bid. Disney has already won DOJ approval for the deal on condition it sells 22 of Fox's regional sports networks. (WSJ)

S&P 500 futures are up 10 and NASDAQ futures are up 26. The MSCI international index is up 2/5 of a %.
Oil is up $.02 at $73.47 a barrel.
Gold is up $1 at $1252 a Troy ounce.
With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

 



The debt load for U.S. corporations has reached a record $6.3T, this according to S&P Global, as Wall Street investors brace for a stricter rate environment even as cash hoarding reaches a peak. The good news is that U.S. companies have a record $2.1T in cash to service that debt, however most of that cash is in the hands of a few giant corporations. (S&P)

 

Amazon is building out its own last-mile delivery service, pushing further onto the turf of shipping partners UPS and FedEx. The new program, called Delivery Service Partners, will let entrepreneurs run their own local delivery networks of up to 40 delivery vans emblazoned with Prime logos. (SA)

 

Today beings part 2 of the Fed’s annual bank stress tests, when lenders will learn whether they can boost buybacks and dividends to shareholders. Goldman Sachs and Morgan Stanley barely squeaked by on the first part last week, and some analysts remain concerned about Wells Fargo and Deutsche Bank.  The results come as the S&P 500 Financials Index fell for a 13th straight day on Wednesday - the longest losing streak on record - amid trade war worries and rising interest rates. (WSJ)

 

S&P 500 futures are down 2, and NASDAQ futures are down 9.  The MSCI international index is down about 1/5 of a %.

Oil is down $.23 at $72.53 a barrel. 

Gold is down $3 at $1253 an ounce.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor, I'm Josh Fenili.



LEI continues to support a strong economy. The Leading Economic Index jumped 0.2% in May, after being up 0.4% each of the past two months. This index comprises 10 components (e.g., jobless claims, factory orders, and confidence) to show a picture of future economic health. This is key indicator we use as a warning sign for a pending economic slowdown, and fortunately we see little reason to expect a recession over the next 12 months. Year over year, this index is up +6.1%, well above the negative year-over-year signal that has preceded every recession going back to the early 1970s. (LPL)

 

Banks pass stress tests. Round one of the Federal Reserve's required testing for banks deemed "systemically important" to determine how they'd fare under severe economic conditions showed all 35 institutions received a passing grade for required capital minimums; though a few firms cleared the hurdle by a relatively small margin. (LPL)

 

UPS and the Teamsters have reached a tentative agreement on a new five-year labor contract. The prior agreement expires on July 31. (CNBC)

 

General Electric near a sale of its industrial engine unit to private equity firm Advent International. (CNBC)

S&P 500 is down 11 and the NASDAQ is down 60. The MSCI international index is lower.

Oil is up 31cents at $68.90 a barrel.

Gold is up $1 at $1271 a Troy ounce.

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



Mid Oregon Credit Union has acquired Bend-based High Desert Bank. High Desert Bank opened 2007. Its five employees have been offered jobs at Mid Oregon. Mid Oregon has seven branches in Central Oregon. (Bulletin)

OPEC may ramp up production. OPEC and Russia meet today in Vienna amid speculation that Saudi Arabia will get its 600K barrel/day output increase. Though likely, disagreement among several key members and the inability of secondary players to reach production targets introduce uncertainty. We see countervailing forces keeping oil prices largely range-bound near current levels, but strong global demand, geopolitics, and U.S. infrastructure bottlenecks offer the potential for a reversal of recent weakness. (LPL)

Foreign stocks getting cheaper. Recent underperformance by international stocks has helped those stocks get cheaper. On a forward price-to-earnings basis, the price-to-earnings multiple on the MSCI EAFE (developed international benchmark) has dropped from 15 to 13.7 this year. However, stronger earnings in the U.S. have led to a bigger drop in U.S. stock valuations, from 18.2 to 16.5. (LPL)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



Americans applying for government disability benefits is plunging, evidence that a stronger economy is pulling people back into the job market (NY Times)

The 334.3 million mobile phones shipped during the first quarter of 2018 was a 2.9 percent decline year over year and was led by China, which declined to a level not seen since 2013. (IDC)

The National Association of Realtors say existing home sales slipped 0.4 percent last month. It was the second straight monthly decline in sales. Existing home sales, which make up about 90 percent of U.S. home sales, dropped 3.0 percent on a year-on-year basis in May. They have declined for three straight months.

Darden Restaurants', owners of the Olive Garden, saw quarterly results top Wall Street expectations. Darden earned $174.5 million, or $1.39 per share, up almost 41%. Revenue increased to $2.13 billion. Sales at Olive Garden restaurants open at least a year rose 2.4% in the quarter.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



The Commerce Department said U.S. homebuilding surged to near an 11-year high in May up 5% from last month. Building permits fell 4.6%, the lowest level since September 2017.

Barron’s reported fewer than half of US consumers look past the first five options, or the first page of results, at least half the time when searching for products on ecommerce sites.

Research published by Cowen & Co. found the amount of retail overlap between traditional retailers and online commerce continues to trend upwards. Cowen found that 87 percent of Target shoppers also visited Amazon, while 83 percent of Walmart consumers also shopped on the online platform.

The combined wealth of the world's millionaires rose for a sixth straight year, topping $70 trillion for the first time ever in 2017 thanks to an improving global economy and strong stock market performance. (USA Today)

General Electric is being dropped from the Dow after being included in the 30-stock index for 111 years. It will be replaced by drugstore chain operator Walgreens Boots Alliance. (CNBC)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.
 



Capex has been rebounding and has the means, motive, and opportunity for a sustained run. We are seeing on-going signs of a rebound in business spending and investment and believe the trend is likely to continue. Lower tax rates and the brining home of foreign profits are giving businesses the means to invest; business confidence and a tight labor market are providing the motive; and provisions in the tax law incentivizing capex and a still solid global growth backdrop are providing the opportunity. This could produce a sustainable pick-up in economic growth and the possible extension of our 2.75-3.0% 2018 growth estimate later into the cycle. (LPL)

At the close yesterday, the Dow was up about 1.5% for the month and S&P 500 up about 2.5% for the month, with the Nasdaq up more than 4% for the month. The Nasdaq is up about 12% in 2018, with the S&P is up nearly 4% and the Dow is up 1.5% year-to-date. (CNBC)

Foreign governments reduced their purchases of U.S. debt by about $5 billion each for March and April. Most notable was Russia, which sliced its holdings of U.S. debt nearly in half from March to April, from $96.1 billion to $48.7 billion. Foreigners held $6.17 trillion of the total $14.84 trillion of Treasury debt outstanding through April. The national debt is more than $21 trillion. (CNBC)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.
 



U.S. rolls out tariffs on Chinese goods. President Trump approved a list of more than 1,100 items expected to generate ~$50 billion in taxes on Chinese imports, with an additional $16 billion in goods still under review. Collection is slated to begin in three weeks. The value of the tariffs suggests this is another negotiating tactic. (LPL)

The East Coast-based clothing chain Brooks Brothers has closed its downtown Portland store. It opened in 2008. The Portland store was Brooks Brothers' only Oregon location. (OBN)

Kellogg is recalling 1.3 million cases of Honey Smacks cereal due to potential salmonella contamination. (Reuters)

Apple has signed a multiyear deal with Oprah Winfrey as part of the tech giant's push into original content. Winfrey will create original programs. Apple has reportedly committed $1 billion to original content. (CNBC)

If you were looking for another reason to fly first class, Alaska Airlines is now serving ice cream from the Portland-based Salt and Straw. (Oregon Live)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



According to Fannie Mae’s Home Purchase Sentiment Index for May, the rapid rise in home prices is resulting in a divergence in consumer attitudes toward buying and selling a home. Those who said that “now is a good time to sell a home” rose to 46% up 14 points over the year before, while those “who said now is a good time to buy a home decreased to 28%. (Mortgage Orb)

Strong retail sales for May point to accelerating second quarter growth. Consumer demand picked up steam in May as retail sales rose 0.8% versus April and up 6.4% year over year. The increase was broad based with 10 of 13 categories showing growth, including building materials with a 2.4% increase. The data are a clear sign that consumer spending has picked up nicely after a soft first quarter. (LPL)

New applications for unemployment benefits fell unexpectedly last week, coming in at 218,000. The labor market is considered to be close to full employment and the data further affirms our view of a strong and gradually tightening labor market. (LPL)

Microsoft is developing technology to eliminate cashiers and checkout lines from stores. Challenging Amazon's automated grocery stores. (Reuters)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



Surging fuel costs spur wholesale inflation. Producer prices rose more than expected last month, up 0.5% from April and 3.1% year over year, to more than 6-year highs. Growth in the headline reading was driven primarily by rising fuel costs, as wholesale gasoline prices spiked 10% from the prior month. When stripped out, core inflation rose a more modest 2.3% from a year ago. (LPL)

Consumer inflation ticks higher. The year-over-year rate of growth in the consumer price index (CPI), was 2.8%, bested consensus expectations for a 2.7% as energy costs continued to rise. Meanwhile, the core reading, which strips out the more volatile food and energy components, held steady month over month at +2.1% as medical care services and auto prices rose, while growth in transportation costs moderated. (LPL)

Small Business Optimism Index Continues Historic Highs. NFIB’s Small Business Optimism Index for May was the second-highest in the 45-year-history of the survey. The index saw a three-point gain, rising to 107.8. Positive earnings trends reached a survey high, and positive sales trends are at their highest level since 1995.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



Today the Federal Reserve is expected to raise interest rates by 0.25%. That news comes at 11 am.

The expansion turns 9. The economic expansion officially turns 9 years old this month, making it the second longest behind the 10-year expansion during the 1990s. (LPL)

Daimler Trucks North America will invest millions on an automated truck research and development center in Portland. The facility will be located at the company's Swan Island headquarters. (PBJ)

IHOP has announced its new name – IHOb. To promote the debut of the brand’s new Ultimate Steakburgers, the company is flipping the “P” in its name – which stands for pancakes – to “b” for burgers. However, the name change is only for the “time being,” with no set date for the return of its classic branding. (FBN)

H&R Block earned $5.43 per share for its first quarter. The tax preparation firm also saw sales beat forecasts. They raised their quarterly dividend by 4 percent to 25 cents per share. (CNBC)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.
 



U.S. stock-market indexes traded moderately higher yesterday ahead of a highly anticipated summit between President Donald Trump and North Korean leader Kim Jong Un in Singapore and a litany of potentially market-moving central-bank meetings.

Home Depot plans to spend $1.2 billion over the next five years to speed up delivery of goods to homes and job sites as the rise of online shopping resets consumer expectations.  The home improvement retailer will add 170 distribution facilities across the U.S. so that it can reach 90% of the U.S. population in one day or less.
U.S. factory orders fell by 0.8% in April, somewhat higher than expected. Economists had forecast a 0.5% drop. The decline was concentrated in commercial aircraft. Orders for nondurable goods also rose slightly.

The International House of Pancakes AKA IHOP is probably getting exactly what it wanted when it decided to change the name of the pancake chain to IHOb to celebrate its launch of a new line of burgers.  The company changed the P to B for burgers and has been getting plenty of press.  It seems gimmicks are the new form of marketing…
 



Global PMI data reflects broad global strength with U.S. taking the lead. Measures of U.S. manufacturing activity have broken away from the global pack to the upside while the European manufacturing sector has slowed over the past couple of months. Still, recent Markit Purchasing Managers' Index (PMI) data indicates a solid 80% of countries are in expansion. (LPL)

The trade deficit narrowed by $1.0 billion in April, its second straight decline, to $46.2 billion, marking the smallest deficit since September 2017. The reduction in April was driven by a smaller goods trade deficit, while the services surplus was little changed. However, on a 12-month total basis, the trade deficit widened marginally to $573.1 billion, the biggest gap in nine years, with deficits with China and Europe hitting records.
(LPL)

Kraft-Hines, the fifth-largest food and beverage company in the world with a market cap of $71 billion has created a “Legal-Ade” unit to help kids fight any legal issues or fines associated with lemonade stands. Any child fined for running a lemonade stand without a permit can have his or her parent apply for reimbursement. Each submission will then be reviewed by Country Time Lemonade’s team. (FBN)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



U.S. stocks struggled for direction yesterday, with major indexes paring an early advance with the Nasdaq down firmly as major technology stocks sold off.  That was offset an uptrend in banking stocks.

The CEO of Berkshire Hathaway, Warren Buffet, and JP Morgan’s CEO Jaime Dimon wrote an OP ED piece in the WSJ calling for America’s public companies to stop making quarterly profit forecasts.  Buffet and Dimon said the quarterly earnings guidance leads to an unhealthy focus on short-term profits and the expense of a good long-term strategy.

Shares of Costco traded higher yesterday, after the company reported May sales showing same-store sales were up 14% to $11.02 billion from $9.66 billion in the same month a year ago. E-commerce sales were up 34.4%, the company said. In the U.S. the strongest regions were the Midwest, Texas and the Southeast, while internationally, Mexico, Japan and Taiwan were standouts.

Jobless claims were 222k last week and the rate of layoffs in the economy are at 50 year lows as the labor market continues to be on fire.



April figures show that the number of job openings, at 6.7 million, topping the number of unemployed people (6.3 million) for the first time in the report's 18-year history. Openings in manufacturing and services increased, though the number of hires was little changed. Labor turnover remained fairly static overall. Net employment rose 2.4 million for the month, indicating the labor market continues to tighten as the economic cycle continues to progress. (LPL)

Both ISM non-manufacturing and Markit services came in better than expected, with backlogs in non-manufacturing orders hitting a record high and growth in services activity accelerating at rates not seen in three years. Inflation pressures increased as input costs rose, but robust demand and the order backlog, in conjunction with a tight labor market, point to continued upside for the U.S. economy. (LPL)

Applications to refinance a home loan are 17 percent lower than a year ago. Mortgage applications to purchase a home are 9 percent higher than a year ago. The adjustable-rate mortgage share of activity increased to 7.1 percent of total applications. (Mortgage Bankers Association)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



This week has saw continued strength under the surface. In fact, the Russell 2000, Russell Microcap, technology sector, and Nasdaq all closed at new all-time highs. Not to be outdone, various advance/decline lines made new highs as well including: the S&P MidCap, Nasdaq 100, NYSE, NYSE common stock only, S&P 100, S&P small cap, and S&P 500. (LPL)

Treasury futures remain at historic net short levels. The positioning indicates market participants believe yields will move higher. However, this has been an important counter-cyclical indicator, as profits (or losses) on these positions can lead to buying Treasury futures to close them out, leading to a decline in interest rates over the short term. (LPL)

The Oregon Treasury has decided not to give public employees a choice in how a portion of their retirement savings is invested. The agency decided the move could leave investment managers open to lawsuits if things don't go well. (Oregon Live)

Hobby Lobby opened its first store in Portland last weekend. Hobby Lobby's first Oregon store opened in 2014 and has four other Oregon locations, in Bend, Springfield, Albany and Salem. (Oregon Live)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



Oregon is known for loving recycling, but China's decision to ban the importation of many types of recyclable materials has had a major impact across the state. With China out of the picture the price for many recyclables has plummeted, which ultimately will mean that more recyclables are placed in the landfill or consumers will foot more of the bill to recycle. (Eager Law)

Americans spent $230 million on doughnuts last year.  According to Square, Inc., nearly 100 million were sold in the U.S. in 2017. Americans spent 37% more on doughnuts last year over the previous year.

US companies are set to pour $2.5 trillion into buybacks, dividends and M&A this year according to UBS.
The moves should help boost a stock market that has been stuck in neutral for much of the year. May set a record for share repurchases. UBS expects dividend issuance to top $500 billion, buybacks to range from $700 billion to $800 billion, and M&A to constitute about $1.3 trillion.

McDonald's will upgrade 1,000 stores with kiosk and mobile order technology every quarter for the next eight to nine quarters. They are exploring delivery in the U.S. (CNBC)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.
 



wage rates will increase 25 to 50 cents an hour. It will cost the company about $110 million to $120 million a year before taxes. 90 percent of Costco's employees are paid hourly, and earn $22.50 an hour, on average, with access to health insurance benefits for which the company pays 90 percent of annual costs. (AP)
Costco reported quarterly results posting $32.36 billion in sales and membership revenue in the period a 12.1 percent increase.  Profits jumped 7 percent to $750 million. (Yahoo)

De Beers will open a $94 million lab-grown diamond plant in Gresham. Lightbox Jewelry, will sell the Oregon-grown diamonds for between $200 and $800. The full $94 million investment will be made over the next four years. (PBJ)

Apple has hired about 12 people in a hardware engineering lab in Washington County. (Oregon Live)

Bayer, the German drugmaker will retire Monsanto's name as it finishes the $63 billion takeover of the U.S. seeds maker. (CNBC)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.
 



It's jobs report Friday: the next snapshot of the U.S. economy is likely to show another 189,000 jobs added in May, with the unemployment rate holding steady at 3.9% and average earnings expected to have risen 2.7% on an annualized basis. The nonfarm payrolls report will also cement expectations that the Fed will raise interest rates again in June, but chances for a fourth rate hike this year have dimmed to 27%, according to CME Group, down from around 50% last week. (SA)

Besides retaliatory tariffs from the European Union, the U.S. is facing "counter-balancing measures" from its northern and southern neighbors after imposing duties on steel and aluminum. Canada's levies will cover C$16.6B in imports, including whiskey, orange juice and other food products, alongside metal tariffs. Mexico's reciprocal measures will also target steel, as well as pork legs, apples, grapes and cheeses. (SA)

A round trip over in Italy - marking a dramatic recovery from a rout on Tuesday ignited by the specter of fresh elections and months of uncertainty.  The ugly drop has now almost entirely reversed.  The week's economic turmoil was driven by fractious politics, which appeared to be drawing to a close on Friday morning after a new Italian coalition government was agreed, although the new government still faces a confidence vote in parliament. (FT)


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