The first trading month of the year is going to end like it started… … on a down note. Despite yesterday’s bounce to the upside markets continue to be rattled by foreign currency struggles in the emerging markets and the specter of deflation in Europe. But as we have said in the past this correction is not the end of the world and if you are properly diversified there is nothing to fear. If early trading is any indication the S&P 500 will end the month down over 4%. This will be the first January loss as measured by the S&P 500 since 2009. (CNBC)
Personal income in December was unchanged and consumer spending was up 0.4%. In this country inflation remains in check running at a 1.2% annual rate. Inflation was a little hotter than expected stalling worries about deflation in the US. (Federal Reserve)
Wal-Mart will not be helping things today with their announcement that profits will be below analyst expectations for 2013. Most of the impacts on the bottom-line are associated with expenses related to stores in the emerging markets, mostly Brazil and China. (Business Wire)
The US House of Representatives passed a long delayed farm bill yesterday. Depending on your view it could be good or bad for Oregon Christmas Tree growers. The bill will allow the implementation of a 15 cent per tree tax to fund research and promote the industry.
The price of gasoline is fairly steady heading into the weekend. Triple-A reports the average for regular in the Portland area is just above three-28, less than a penny below the average of a week ago. Regular gas sold in Portland for an average of about three-38 a gallon at this time last year.
Join us Saturday at 10 for Financial Focus Radio when we will talk about this correction and why smart investors should not be worried.
Markets threw a taper tantrum yesterday as the Federal Reserve continued doing what they said they would do and slow the pace of liquidity being added to our economic system. In addition foreign currency worries – that were not even on the radar screen a couple weeks ago – have traders wringing their hands. (Fox Business News)
The first look at fourth quarter GDP says the economy grew 3.2%, in line with expectations. Declining Federal spending of 4.9% was a drag. (Department of Commerce)
The big brown truck – UPS – posted profits about 6% lower than last year in the fourth quarter on sales that were almost 3% higher. During the quarter the company delivered an average of 20 million packages per day. At the peak on December 23rd they delivered 31 million packages. (theflyonthewall.com)
The world’s largest publically traded company – Exxon Mobil – said profits dropped 16% during the last quarter to $8.35 billion. Their total oil and natural gas production fell 1.8%. (Reuters)
In 2010 the federal government allowed American to make tax free charitable contributions up to $5 million. With that Americans opened their wallets making record gifts of $122 billion in 2012 more than 4 times the amount the year before. Most of the gifts, $84 billion came in gifts exceeding $1 million and were made by fewer than 30,000 people. (Bloomberg)
Yesterday the week long correction took a pause as markets moved to the upside. Today just before lunch the Federal Reserve will end their two day meeting and tell us what they decided. This could move markets.
Boeing posted a 26% increase in profits last quarter on sales that were up 6.6%. The company expects to deliver between 715 and 725 planes this year. But those results were less than traders expected and the stock is down about 3%. (Reuters)
US mortgage applications were essentially flat last week according to the Mortgage Bankers Association. As interest rates start to tick up and the refinancing boom tapers the mortgage index hit its lowest level since December 2000 as we ended 2013. The 30-year fixed rate stands at 4.52%.
December consumer confidence hit its highest level since August as the job market and business conditions improve. For 2013 the confidence index averaged its highest level since 2007. (Associated Press)
With the lack of snow in the west many in the ski industry expect consolidation as smaller resorts struggle. One of the big winners could be Vail Resorts, ticker signal MTN. They have been on an acquisition binge the last couple of years. (Bloomberg)
Emerging market currencies are in turmoil as worries continue about Fed easing and what that means to foreign debt. That has unsettled equity markets over the last two trading days as we have slipped about 3.2%. (Seeking Alpha)
Caterpillar posted strong profits as they cut costs to offset continued sluggish sales of its earth moving equipment. Profits climbed 43% to $1 billion for the quarter on sales that were 10% lower. The company has been hit hard by slowing in the mining industry. (Reuters)
Wal-Mart owned Sam’s Club stores will lay off 2% of its workforce or 2300 workers in the coming weeks. Most of the cuts will be in the management ranks and hourly persons at underperforming stores. (Wall Street Journal)
Oregon based Reser’s Find Foods will return to NASCAR racing in 2014 for a second year. The deal will have the Reser’s car on the track for 7 races with Joe Gibbs Racings, Matt Kenseth will be behind the wheel. The company says the sponsorship expanded the recognition of their salads and other products. (Portland Business Journal)
Union membership was flat in 2013 at 11.3% of the workforce. Since 1983 union jobs have dropped from 17.7 million to 14.5 million workers. The union membership rate is 6.7% in the private sector and 35.3% in the public sector. (Bureau of Labor Statistics)
Umpqua Bank posted fourth quarter earnings that were in line with expectations. For the entire year profits were up 1% and for Q4 were down 5%. Loan growth was up 10%, but mortgages were down 47% as refinancing slows. (Business Wire)
McDonald’s posted fourth quarter profits 1.5% higher than last year. Sales were up 2%. The company saw same store sales declines in December almost across the board. Company leadership acknowledged 2013 was a challenging year. (Reuters)
The Portland Airport served a record 15 million travelers in 2013, breaking the last high water mark set in 2007. December was also a record month up 10% from 2012. (OregonLive)
For investors when the heard starts running all in the same direction it is usually time to start worrying. While not frothy a survey of Bloomberg subscribers last week said 59% say the economic outlook is improving. That is up from 33% in November. (Bloomberg)
In a positive economic sign US job openings and the number of people quitting their jobs reached five year highs in November. Job openings were up 1.8% and those quitting was up 1.9%. Job opening levels reached 4 million for the first time since March of 2008. (Associated Press)
The holiday is over and it is back to work. Diversified healthcare company, Johnson and Johnson posted a profit 35% higher than last year. The $3.52 billion profit came despite an $800 million charge for recall of defective “metal-on-metal” hip replacement devices. (Reuters)
Verizon sales rose 3.4% as it added more wireless subscribers. Profits were up 19%. Both good numbers. Traders look to next month to see if they have lost customers to T-Mobiles aggressive pricing. (Reuters)
Oregon’s largest employer, Intel, says they will cut their workforce 5% or about 5400 jobs this year. What that means for Intel’s 17,000 Oregon jobs is not yet know. The company is struggling with the transition from PC’s to mobile computing as currently two thirds of their production is for the declining PC market. (Associated Press)
Oregon media measurement company Rentrak stock is jumping after signing CBS to a ratings agreement. The CBS deal helps them break into the national market and the strangle hold once held by the Nielsen rating company. Rentrak stock almost doubled in 2013 and is up another 33% in 2014. (Bloomberg)
US oil production grew in 2013 by 15%. That is the fastest annua growth of any country in the last two decades. (CNBC)
Oregon’s largest employer, Intel, saw sales rise 3% in the fourth quarter, its best growth in six quarters. This came despite a continued decline in PC shipments. The company is projecting no sales growth in 2014. (Market Watch)
GE profits rose 8% and sales were up 3%. CEO Jeff Immelt says the company saw good conditions in emerging markets, strength in the US and a mixed environment in Europe. (Reuters)
If you like technology you might have been one of the first to own a Nest Thermostat. Google is buying the company for $3.2 billion in cash as they branch into even more technologies. Nest just introduced a smoke alarm product that you can also control from your phone. (Yahoo Finance)
The Fed’s posted the largest budget surplus for any December on record in 2013 thanks to $25 billion in dividend payments from Fannie Mae and Freddie Mac. That puts the US budget deficit at $123 billion for the first half of the fiscal year. (Fox Business News)
US housing starts were just shy of a million in 2013 at 999,000. New starts were down almost 10% in December after a huge November boom. (CNBC)
Join us Saturday at 10 for Financial Focus when Tyler and I will take your questions and talk Obama Care with health insurance expert Don Klippenes of Health Insurance Strategies.
Two big rally days have the S&P 500 back at all-time highs as we start trading today. Good profit numbers from banks as we start earnings season have been fuel on the fire.
Inflation remains in check at the consumer level up 0.3% in December. (Fox Business News)
The rest of the big banks are in. Citigroup posted profits almost 19% higher than last year but revenue was down 5%. Goldman Sachs posted lackluster earnings down 20% from last year. Revenues fell 15% as Goldman’s bond underwriting fell 14% and client trading fell 15%. (Reuters)
Best Buy shares are down over 28% in premarket trading as the company reports holiday sales fell 0.9%. They say sales were down due to deep discounting, competition and supply constraints. (Reuters)
Home foreclosures hit a 6-year low in 2013. Over 747,000 homes entered the foreclosure process last year down 33% from 2012. Over 462,000 homes were actually taken back by banks last year. At the peak in 2010 1.05 million homes were foreclosed on by banks. (Associated Press)
Sales growth of wine is expected to increase in 2014 after being on a three year skid. Wine sales are expected to rise 6% to 10%. Last year the US consumed over 825 million gallons of wine.
Equity markets sold off yesterday as concerns raged about the end of loose money and good economic data. It could be good news for markets that Congress appears to have cut a budget deal through September that will provide a little certainty. (Reuters)
US small business sentiment improved in December, as firms were optimistic about future business conditions and earnings. The NFIB small business optimism index was up 1.4 points and has been on an upward trend for a year, but is still well below pre-recession levels.(National Federation of Independent Businesses)
It is bank day on Wall Street as earnings season heats up. JP Morgan Chase had a fourth quarter profit 7% lower than last year as it paid some huge legal costs. Top line revenue was down 1%. Wells Fargo saw profits grow 11% as they right size staffing in their mortgage departments. Revenue was essentially flat. (Reuters)
December retail sales up 0.2%, if you take out autos they were up 0.7%. Both good numbers. Inflation remains in check with import prices being flat and export prices rising 0.4%. (Associated Press)
You are dating yourself if you remember who Stan Smith was or if you remember his shoe, but a whole new generation will find out as Adidas is set to rerelease the iconic shoe tomorrow. The German company, with North American offices in Portland originally released the shoe in the 70’s and it is one of their best selling shoes of all time. Retro shoes are hot in the market right now.
(Portland Business Journal)
It is merger and acquisition Monday and Japanese Suntory Holdings is buying BEAM, makers of Jim Beam and Makers Mark Whiskeys, for $16 billion in cash and debt. The $83.50 per share deal is a 25% premium to Friday’s closing price. (Market Watch)
China became the world’s largest trading nation in 2013, overtaking the US. The world’s second largest economy saw $4 trillion in trade. Chinese exports were up 7.9% and imports were up 7.3%. (The Guardian)
While we did not get all that cold weather here in Oregon, the Midwest and east saw last week, it may touch your pocket book. The cold winter weather may have damaged up to 15% of the winter wheat crop, cattle prices are the highest on record as the cold halts slaughtering and transportation and up to 15% of the citrus crop has been damaged. All this may lead to higher prices. (Bloomberg)
This falls under the category – “why do my shoes cost so much?” – A Portland pimp has filed a $100 million lawsuit against Nike. He says the company should have had a label warning him his Air Jordan’s could be used as a dangerous weapon. This comes after he was sentenced to 100-years in prison for a brutal beating he gave with a pair of Nike shoes. (OregonLive)
The December government jobs report says the US economy added 74,000 jobs in December. The private sector added 87,000 and the government shed 13,000. The unemployment rate dropped to 6.7%. The labor participation rate was 68.3% which is the lowest in 30 years. (Department of Labor)
It may not be the death throes, but the PC market is awful sick. PC sales were down 10% in 2013, the worst ever decline on record. The industry shipped 316 million units which dropped it to 2009 levels. (Bloomberg)
Where is technology going? Is bigger better? It seems that way when it comes to TV’s. Samsung unveiled a curved 105 inch ultra high def TV at the International Consumer Electronics Show. They did not say the price but the 55-inch version retails for $9000. (Washington Post)
Corn stock piles in the US are growing at their fastest pace in 19 years as a record crop overwhelms increased demand by stock yards and fuel makers. Corn futures were down 40% in 2013 and helped send global food costs down 14% from the 2011 highs. (Bloomberg)
Join us Saturday at 10 for Financial Focus when our guest will be Linda Baker, editor of Oregon Business Magazine.
It appears that the economy is starting to gain some speed. On top of yesterday’s big ADP private sector jobs number we found out layoffs in December were down 32% from the year before at 30,623. That is the lowest number of layoffs since 1999. Total layoffs in 2013 were the lowest since 1997. (Challenger Report)
Same stores sales rocked the house for both Costco and Macy’s. December same store sales for Costco were up 3%. Foreign exchange rates were a 2% drag on that number. Costco saw a big pickup in online sales. (Rueters)
For Macy’s sales climbed 3.6% in November and December from the year before. They will also be laying off 2500 person as they find efficiencies in their operations (Reuters)
Overall retail sales in November and December were up 2.7% from the prior year, according to ShopperTrack. That is better than expected. What was surprising was store visits were down almost 15% as shoppers appear to be doing online research and doing less in-store browsing. Online sales increased 10% during the period. (Associated Press)
Who was the big winner of this week’s college national championship game? The Florida State coach. Jimbo Fisher got a $550,000 bonus when his team won the game. That is on top of his $2.75 million salary. College football is big time business. (Bloomberg)
A big rally yesterday snapped a three day losing streak to start the year. Today ADP said the private sector added 238,000 new jobs to the economy in December. That is a big number. The manufacturing and construction sectors were the big leaders in job gains. (Fox Business News)
Oregon thermal and nightvison manufacturer FLIR announced new products yesterday that will bring thermal imaging to your smart phone. The new device attachments for your iPhone 5 and 5S will cost $349 from retail outlets including Amazon. Shares of FLIR closed up 10% yesterday on the news. (Market Wired)
The US trade gap fell to a four-year low as oil imports fell to their lowest levels in three years. The trade gap fell by almost 13% in November. US exports rose 0.9% during the month to a record $195 billion. (Bloomberg)
US housing prices were basically flat in November. Even with the flat number sales prices are still up 11.8% on the year. The sales of existing homes reached 5.1 million in 2013 up 10% from the year before and the highest since 2006. (CoreLogic)
First Obama Care, then the fiscal cliff, what could be worse? A Velveeta shortage! Kraft foods says some customers may not be able to find the cheesy confection over the next few weeks. High demand for nachos while watching football bowl and playoff games was cited as a reason for increased seasonal demand. (Associated Press)
We are riding a three day losing streak to start the year as we take a healthy breather from the big Santa Claus Rally. Driving the rest of the week will be the beginning of earnings season on Thursday and the big jobs report on Friday morning. (Seeking Alpha)
We now know for certain the next Chairman of the Federal Reserve will be Janet Yellen. She will take the helm on February 1st. Ben Bernanke will then hit the speaking circuit and monetize his decades of government service. (NBC)
The rental scene in Oregon is a mirror of what is happening nationally. US apartment vacancies stand at 4.1% their lowest level in more than a decade. The lowest level ever recorded by the survey happened in 2001 at 3.9%. Rental prices were up 0.8% in 2013. (Reis Inc.)
The battle of fine dressed men continues as Men’s Warehouse has launched a hostile takeover bid of Jos. A Bank for $1.61 billion. The two companies have been sparing for about six months on who will buy who in a merger. (Reuters)
The US Service sector slowed for the second straight month in December. While the number was lower than expected it still showed expansion for the 48th month in a row. (Reuters)
US factory orders climbed in November by 1.8%. Orders received by manufacturers totaled $497.8 billion, the highest level on record. (Associated Press)
It is a new trading year and 2013 will be hard to beat.
The S&P 500 was up 29.60%.
The NASDAQ was up 38.32%.(Fox Business News)
US consumer confidence rose in December. The 78.1 reading is near the levels last seen in October just before the government shutdown. (The Conference Board)
Manufacturing activity slowed in the mid-west for a second month to 59.1. The index is up considerably from the beginning of 2013 when it sat just below 50. (Institute for Supply Management)
New claims for unemployment came in at 339,000. Down 2000 from last week.
The S&P 500 is down 3 and the NASDAQ is down 10.
Oil is down 75 cents at $97.50 a barrel. GasBuddy analysts are predicting gas prices in the US will fall by about 10 cents a gallon in 2014 from the $3.50/gallon average in 2013. If this happens it would be the lowest average annual gas prices since 2010 when it was $2.78 a gallon.
Gold is up $16 at $1218 a Troy ounce. Gold was down 28% in 2013 the most in 32 years. That broke a streak of 12 straight years of price gains for the bling. (Bloomberg)
With Northwest Quadrant Wealth Management a Registered Investment Advisor I am Troy Reinhart.