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Business News Archives for 2019-05


Target continued to gain the upper hand in the battle for US retail dollars, with its digital investment and aggressive push to offer same-day delivery powering sales for its latest quarter.  The company, whose cheap-chic offerings and stylish celebrity partnerships have garnered a loyal following among middle-class shoppers, saw its shares jumped more than 8 per cent in pre-market trading on Wednesday after it delivered sales and earnings growth that sailed past analysts’ lofty expectations.  Like-for-like sales, a closely followed industry metric, rose 4.8 per cent in the three months to May 4 as shoppers flocked to its stores. The rise marks the eighth straight quarter of same-store sales growth for Target and topped expectations for a 4.1 per cent rise. (FT)

 

Saudi Aramco has announced a deal with Sempra Energy for a 25 per cent stake in the first phase of its Port Arthur liquified natural gas export project in Texas, as the state energy giant seeks to grow its business beyond oil.  The transaction with the San Diego company would also include a 20 year supply agreement from the project, which is still under development, for 5m tonnes per year of the supercooled fuel.  Saudi Aramco is already planning billions of dollars worth of investments in its Port Arthur refinery, the largest in the US. (Alphaville)

 

The calls for 737 MAX compensation are growing as China's three biggest airlines - Air China, China Southern, and China Eastern - requested payments from Boeing for losses incurred by the grounding and delayed deliveries of 737 MAX. China was the first country to ground the jets globally after a crash in Ethiopia killed 157 people in March, in the second such incident for Boeing's newest aircraft. The compensation requests come as the FAA hosts global regulators in Dallas tomorrow to determine when the grounded 737 Max aircraft will return to the air. (SA)

 

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



Home Depot reported a rise in earnings that beat analysts’ expectations in the first quarter -- The Atlanta-based company said net earnings rose to $2.5bn in the first quarter of fiscal 2019, beating expectations and up from $2.4bn the previous year.  The company reported revenue of $26.4bn, a 5.7 per cent increase from the first quarter of 2018.  (WSJ)
 
The sell-off in chipmakers is going from bad to worse.  Semiconductor stocks are facing their biggest monthly drop since the financial crisis as the Trump administration’s crackdown on Chinese technology group Huawei and the continued trade spat between Washington and Beijing heap pressure on the sector.  All 30 members of the Philadelphia semiconductor index, which tracks companies that design, distribute and manufacture semiconductors, were in the red on Monday, dragging the index 3.1 per cent lower this morning and leaving it down by 13 per cent so far this month. That puts the gauge, which trades under the ticker Sox, on track for its worst month since November 2008, when it shed 17.2 per cent.  (FT)
 
Chinese officials continue to warn that the country will retaliate to the U.S. blacklisting of Huawei Technologies Co., while also refusing to be drawn on what form that response might take.  The rhetoric has ramped up, with Chinese state TV playing a steady procession of anti-American movies from the Korean War era, and Tencent was prevented from broadcasting the season finale of Game of Thrones.  (WSJ) 
  
With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.
 



It's a rough start to the week for chipmakers as key semiconductor manufacturers cut off supplies to Huawei after the Trump administration added the Chinese company to a trade blacklist last week. Qualcomm, Intel, and Micron are all lower on the news. Google started the trade suspensions over the weekend, leaving Huawei with access only to the open-source version of Android. Nokia and Erikson shares are both higher on the news.  (SA)

 

Japan’s economy unexpectedly grew in the first quarter of the year.  The 2.1% growth rate defied analyst forecasts for a small contraction in gross domestic product The surprise rise in GDP piles pressure on prime minister Shinzo Abe to introduce a delayed change to the country’s consumption tax rate from the current rate of 8 per cent to 10 per cent. (FT)

 

Following talks with the FCC, T-Mobile and Sprint are planning to announce commitments to the U.S. government within days that include asset sales and rural-service guarantees to help secure regulatory approval for their $26.5B merger, Bloomberg reports. Among them: The sale of one of their prepaid brands, a three-year buildout of their 5G network and a reiterated pledge not to raise prices while the network is being constructed. The deal has stoked concerns of reduced competition in the wireless industry because the number of major players would fall from four to three. (Bloomberg)

 

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



Stocks rose yesterday, and are a 3 day win streak as sentiment was boosted by strong earnings from Walmart and Cisco Systems while banks climbed on higher rates.
 
The number of people who applied for unemployment benefits last week fell to the lowest level in a month, dragging new jobless claims back near a post-recession low and suggesting all is well in the U.S. labor market.
 
Construction on new houses rose almost 6% in April, but builders still lagged behind last year’s pace despite a big drop in mortgage rates with the busy spring buying season in full throttle.Housing starts increased to an annual rate of 1.24 million last month.  Economists expected starts to rise at a 1.21 million pace.

 

Shares of Pinterest dropped more than 15%, after the company reported larger losses than expected in its first quarterly earnings report since its initial public offering.  Pinterest reported a net loss of $41 million, or 33 cents a share, on revenue of $201.9 million, up from $131 million a year ago.

 

Boeing said it has completed the development phase of its 737 Max software update, having flown the aircraft with the updated feature for more than 360 hours on 207 flights.  The company said they are hoping for speedy approval of the fix by the FAA.


With Northwest Quadrant Wealth Management, I'm Tyler Simones



U.S. stocks staged a comeback yesterday afternoon after starting the day sharply lower, amid developments in U.S. international trade relations that were being viewed as optimistic by investors who have become increasingly sensitive to tariff headlines.  The market‘s gains were broad, with shares of internet-related and information technology companies climbing the most.

 

Sales at U.S. retailers fell in April for the second time in three months, a sign that Americans are exercising caution over how much they spend with the economy facing increased headwinds.  Retail sales dropped 0.2% last month.   Sales declined in most major segments including automobiles, home centers and internet stores. 

 

The National Association of Home Builders’ monthly confidence index jumped three points to 66 in May. That was the highest reading since October.  The May increase beat consensus estimates for a one-point rise.  Any reading over 50 signals improvement in home building.  Builder confidence slid throughout 2018 as conditions in the housing market darkened, but it's perked up over the past few months.

 

Oregon taxpayers could receive a record-shattering $1.4 billion “kicker” tax rebate next year, state economists told lawmakers during a revenue forecast in Salem yesterday morning.  But Democratic leaders immediately suggested that at least some of the windfall be used to help hedge against a future economic downturn and expand government programs rather than be directed back to taxpayers. 
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones.



Stocks traded higher yesterday, regaining some of the sharp losses from Monday’s trading session, as investors weighed the impact of the escalating trade war between the United States and China.  The market’s signal to the US and China on the trade war is that the countries leaders have wandered into a minefield.

 

Disney is taking full control of Hulu from Comcast, as both companies prepare to launch their own streaming services in response to declining audiences for traditional TV.  The companies said that Comcast, which owns a third of Hulu, can sell its stake to Disney starting in 2024, for a minimum of $5.8 billion. Until then, Comcast will be a silent investor.

 

The small-business optimism index by the National Federation of Independent Business rose to a four-month high in April. The index rose 1.7 points to 103.5, with 8 out of 10 index components increasing.

 

Oregon’s total nonfarm payroll employment rose in April, continuing a recent surge.  According to the Oregon Employment Department the state’s total nonfarm payroll employment rose 3,300 in April, following a gain of 6,500 jobs in March. Monthly gains were strongest in health care and leisure and hospitality, which each added 1,000 jobs. Oregon’s unemployment rate was essentially unchanged at 4.3 percent in April.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones.



US Stocks fell sharply yesterday, with the S&P 500 and Nasdaq having their worst day of the year, after China decided to raise tariffs on some U.S. goods as the ongoing trade war between the world’s largest economies intensifies.

 

Amazon wants its employees to start their own businesses — delivering packages for Amazon.  The company announced a program that will offer employees who quit their jobs $10,000 plus three months’ gross salary to start companies delivering Amazon packages.  The announcement comes just two weeks after Amazon announced it will offer one-day shipping for members of its $119-a-year Amazon Prime program. Amazon said it expected to spend $800 million in the second quarter on implementing that new, faster delivery option.

President Donald Trump’s latest appointee to the Supreme Court joined with liberal justices yesterday to green light a consumer class action accusing Apple of monopolizing the market for iPhone apps.  Justice Brett Kavanaugh, wrote the majority opinion holding that iPhone owners qualified as “direct purchasers” with the right to sue Apple for allegedly monopolizing the market for apps through its App Store.  Apple’s stock fell 6% on the news.

 

Shares of Boeing fell to their lowest since Jan. 7 on jitters the company’s 737 Max family could be grounded longer than Wall Street had anticipated.  The Wall Street Journal reported that the 737 Max planes would not be expected to return to the skies before the end of the summer travel rush.



Broad stock indexes had their worst week of 2019 last week, as it became apparent that President Trump was set to pull the trigger on his threat to raise tariffs on $200 billion in annual imports from China to 25% from 10%.

 

Uber’s public offering last week was a big belly-flop.  Uber fell below its offering price in the initial minutes of its hyped stock-market debut. The car-share company priced its shares at $45 but quickly fell to $41/share.  At that price, the entire company would be worth more than $75 billion, making it the largest to go public since Facebook in May 2012.

 

Goldman Sachs said the cost of tariffs imposed by President Donald Trump last year against Chinese goods has fallen “entirely” on American businesses and households, with a greater impact on consumer prices than previously expected.  The bank said in a note that consumer prices are higher partly because Chinese exporters have not lowered their prices to better compete in the US market.

 

Rising rents and the higher cost of gas in April spawned a sizable increase in inflation for the second month in a row, but price pressures more broadly appeared to pose little threat to the U.S. economy.  The consumer price index rose 0.3% in April, the government said Friday



Investors have held their nerve so far Friday as a sharp escalation in tariffs took effect as negotiations in Washington failed to produce a breakthrough.  Beijing’s commerce ministry said it “deeply regretted” increased US tariffs on $200bn worth of Chinese imports, but expressed optimism that a negotiated settlement could still be reached.  Meanwhile, on Twitter, the President said there’s “no rush” to reach a deal and that the imposition of tariffs will make the US “much stronger”.  (CNBC)

 

Uber has priced its shares at $45 a piece, near the bottom of its indicated $44 to $50 range, after paring expectations following the fraught debut of its rival Lyft and a broader US market sell-off.  The ride-hailing company sold 180m shares to raise $8.1bn in new capital and deliver a total valuation of $82.2bn on a fully diluted basis. This makes it the biggest IPO for a US-based technology company since Facebook in 2012, and the tenth biggest overall US listing in terms of proceeds.  (FT)

 

The latest inflation figures are out -- U.S. consumer prices rose in April but, underlying inflation remained muted.  The Labor Department said its Consumer Price Index increased 0.3% last month, lifted by rising gasoline, rents, and health-care costs.  The persistently low inflation print should help rationalize further stability in interest rates.  (WSJ)

 

The Bend housing market zoomed to another sales price record in April, and so did Redmond, which experienced an even larger jump from a year ago.  The median home sale price in Bend hit $463,000 last month, up $18,000 from March and an increase of more than 11.5 percent from April of last year, according to Beacon Appraisal Group of Redmond.  Redmond’s median home sale price rose to a record $326,000 in April.  April's median sales price in other Central Oregon markets ranged from $510,000 in Sunriver and $428,000 in Sisters to $225,000 in La Pine, $229,000 in Jefferson County/Crooked River Ranch and $250,000 in Crook County.  (KTVZ)


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



Walt Disney eclipsed Wall Street expectations for sales and profits in the first set of quarterly results since closing its blockbuster acquisition of the Fox entertainment empire.  The world’s largest traditional media company reported adjusted earnings of $1.61 a share on sales of $14.9bn. Profits declined from the same period a year ago,but were better than analyst predictions.  Growth in theme parks helped outweigh a downbeat quarter for Disney’s film studio, which still dominated the box office with huge hits like Avengers: Endgame and Black Panther. (FT)

 

The number of Americans filing applications for unemployment benefits fell less than expected last week, a sign the labor market continues to tighten.  Initial claims for state unemployment benefits decreased 2,000 to a seasonally adjusted 228,000 for the week ended May 4, the Labor Department said this morning. Data for the prior week was unrevised. (CNBC)

 

The President amped up rhetoric about a Friday deadline to raise tariffs on Chinese goods with comments at a political rally Wednesday night, sending Asian markets lower. "They broke the deal," he said, but "don't worry about it," suggesting there's "nothing wrong with taking in $100B a year" in tariffs. Doubters already wondered whether a U.S. visit from China's Vice Premier Liu He could avert the new tariffs. (SA)

 

The most-anticipated initial public offering of the year will price after the bell today, with ride-sharing giant Uber Technologies Inc. expected to look at something close to the middle of the marketing range, despite the offer being three-times oversubscribed. Coming just a day after a drivers’ strike, and amid what can only be described as challenging market conditions, the debut of the highly valued U.S. startup will be watched with unusual intensity. (Bloomberg)

 

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



Wall Street is looking to stabilize following yesterday’s sell-off, as Chinese trade negotiators travel to Washington for high-level talks on Thursday and Friday. That leaves at least one more day for markets to contemplate how the talks will turn out and whether the cracks showing in the stock rally are real. It's also possible the rout sparked by the President’s tariff threats won't be bad enough to force a rethink, giving him a green light to impose the new levies. (SA)

 

An increase in the number of people looking for love — or something a little less long term — online via the dating app Tinder underpinned forecast-topping revenue growth for Match Group in its first quarter.  Match said the number of average subscribers across its suite of services, which include Tinder, Hinge and OKCupid, rose 16 per cent in the three months ended March 31 from a year ago, to 8.6m.  Total revenue increased 14 per cent from a year ago to $464m.  (FT)

 

Lyft has told investors 2019 will be its “peak loss year” as the ride-hailing company posted a $1bn-plus quarterly loss and warned revenue growth would slow this year, in its first results as a public company.  The group on Tuesday said its net loss jumped to $1.14bn, or $48.53 a share.  Revenue for the first quarter rose 95 per cent from a year ago to $776m, slightly higher than analyst expectations.  (WSJ)

 

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



Stocks closed marginally lower yesterday after being down more than 2% early in the trading session. The market staged a comeback after the Chinese said they will in fact still travel to the U.S. to continue negotiations this week.
 
U.S. Trade Representative Robert Lighthizer said the U.S. will raise tariffs on China to 25% from 10% on $200 billion worth of goods on Friday morning. Lighthizer reportedly told reporters at a briefing that China was "reneging" on previous commitments in talks and talked of "erosion in commitments," though he didn't say in which areas China backtracked. Lighthizer said he did expect talks to continue with Chinese officials on Thursday and Friday.
 
The U.S. initial public offering market is entering its biggest week since 2015, with at least 15 deals expected to be priced, including that of Uber, the biggest IPO since Alibaba in 2014 and the biggest U.S. company going public since Facebook in 2012.  Uber is expected to price its much anticipated offering on Thursday, just weeks after its ride-sharing rival Lyft, which has had a rocky start as a public company. Lyft’s shares have fallen 15% from their IPO price, given widespread concerns about the company’s ability to become profitable.


Anadarko Petroleum announced that its board had unanimously decided that an acquisition bid from Occidental Petroleum was a better deal than an earlier bid from Chevron.  Chevron has until the end of the week to alter its bid or make another proposal, and stands to receive a $1 billion termination fee. Anadarko shares dipped slightly in late trading after the announcement, but are up more than 60% in the past month as the acquisition talks have been public.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones.



US Stocks traded higher last Friday after a stellar jobs report but were flat on the week.
 
Stocks are set to open sharply lower this morning after President Donald Trump threatened Beijing with increased tariffs.  Trump said in a Sunday afternoon Twitter post that the current 10% tariffs on $200 billion worth of Chinese goods will rise to 25% on Friday. He also threatened to impose 25% levies on an additional $325 billion of Chinese goods “shortly.”  In response the premier of China said they may back out of trade talks scheduled for this week with U.S. officials.
 
In just two weeks, “Avengers: Endgame”  has garnered more than $2.2 billion worldwide.  This is the fastest a film has ever surpassed the $2 billion mark at the box office.  As of Sunday, “Endgame” is the second-highest grossing film of all time, just behind “Avatar.”

 

We are now 2/3 of the way through 1st quarter earnings season and of the companies that have reported so far 77% have beaten expectations.  The stand outs so far have been the heath care and consumer staple companies with energy being the laggard.

 

This one goes in the genius file.  MIT research scientist Fei Yan was arrested on federal charges of insider trading.  Prosecutors caught Yan because he Googled “how sec detect unusual trade” before he bought numerous stocks and options that netted him around $120,000 in illicit profits.  Federal prosecutors allege that Yan’s profits came from confidential information he obtained from his wife.

 

With Northwest Quadrant Wealth Management, I'm Tyler Simones.



Stocks closed lower yesterday after Fed Chairman Jerome Powell said in a news conference that recently low inflationary pressures may only be “transitory,” dashing speculation the central bank was at least entertaining the idea of an interest rate cut.

 

The Federal Reserve left interest rates unchanged yesterday.  The Fed funds rate influences the cost of borrowing for mortgages and all sorts of consumer and business loans, noting a recent decline in inflation even as the economy continues to grow “at a solid rate.”


More proof that the US labor market is on fire.  The payroll company ADP said that private-sector employers hired 275,000 people in April, which topped economists’ consensus estimate for 180,000 jobs added.

 

Cura Partners the biggest cannabis company to rise in Oregon since the state legalized recreational pot in 2014, has agreed to be acquired in a blockbuster, nearly $1 billion all-stock deal with Curaleaf Holdings, a Massachusetts-based company.

 

We’re halfway through 1st quarter earnings season and of the companies that have reported so far 77% have beaten Wall St estimates.

 

With Northwest Quadrant Wealth Management, I'm Tyler Simones



U.S. stocks traded mixed yesterday, as investors reacted to disappointing sales figures from Google-parent Alphabet, which weighed on technology shares.


Shares of Apple are higher after they reported earnings for the 1st quarter that fell in line with expectations, although revenue was down from the same period last year. However, Apple’s guidance for next quarter was higher than analysts expected, and it said it planned to spend $75 billion buying back its own shares.


The S&P Case-Shiller 20-city home price index rose a seasonally adjusted 0.2% in February compared to January and was 3.0% higher compared to a year ago. That was the slowest pace of annual growth since September 2012 and shows national home price growth coming back to earth.


Consumer confidence bounced back in April, suggesting the economy is likely to keep growing solidly through the summer.  The consumer confidence index rose to 129.2 from 124.2, showing American consumers feel pretty good about how the economy is doing right now, and they see good times continuing over the next six months.


Rebuilding the country’s aging infrastructure is one of the few bipartisan issues they can seem to agree on in Washington.  Yesterday President Donald Trump and leading Democratic lawmakers agreed a plan to overhaul U.S. infrastructure to the tune of $2 trillion.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones
 


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