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Business News Archives for 2019-08


Consumer debt is growing. According to figures released by the Federal Reserve Bank of New York, household debt balances rose nearly 1.5% in the second quarter to nearly $13.9 trillion.

 

Food delivery has plenty of room to grow as it accounts for only 3% of all American restaurant orders. Pizza Hut plans to close 500 restaurants in the United States to "accelerate the transition" to locations better suited for delivery and takeout, outgoing CEO Greg Creed. (CNN)

 

Oregon legend Alpenrose Dairy plans to sell to Smith Brothers Farms of Kent, after a century of operation. The deal could close in 30 days. Smith Brothers would continue to operate the dairy in Portland,but 150 Alpenrose workers must reapply to keep their positions. (Oregonian)

 

Anheuser-Busch InBev has declined an option to buy Portland-based Craft Brew Alliance. AB InBev must pay $20 million to CBA. AB InBev, the largest brewery in the U.S. and owns more than 31% of the Portland company. (PBJ)

 



The annual Jackson Hole symposium is in the spotlight again today. While the gathering in the Grand Tetons typically gravitates toward academic discussions on policy, this year's meeting has heightened political, trade and rate considerations swirling around it. Federal Reserve Chairman Jerome Powell will make his first public remarks since the Fed cut interest rates for the first time in over a decade. The stakes are high for Powell with disagreement within the Fed over the strength of the U.S. economy and the pace of rate cuts. (SA)

 

Boeing told suppliers it will resume production of its best-selling 737 jets at a rate of 52 per month by February 2020 and step up to a record 57 per month in June. Suppliers were told that the new schedule depends upon regulators approving the 737 MAX to fly again commercially in Q4. Rate changes by major manufacturers are usually incremental and communicated months or even years in advance, but the unprecedented challenge to the 737 program is said to have forced Boeing to scramble. (CNBC)

 

Beijing announced it would apply additional tariffs of between 5 and 10 per cent on $75bn of US imports from September, marking the latest escalation in an increasingly bitter trade war.  China will add the tariffs on imports of a list of products including frozen pork and nuts from September 1, on a separate list of other products including some kinds of fabrics and food flavorings from December 15, the finance ministry said on its website.  The Trump administration said it would impose tariffs on $300bn of Chinese imports in September, before adding that it would delay imposing the duties on about half of those products until December. (FT)

 

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



Futures wavered between slight gains and losses overnight with investors largely attuned to the Fed's symposium in Jackson Hole, Wyoming, over the next two days. Philly Fed President Patrick Harker and Dallas Fed President Robert Kaplan will kick off the festivities today, commenting on the world's largest economy, before Fed Chair Jerome Powell takes the stage tomorrow. The ECB is also scheduled to release minutes of its July policy meeting, at which it raised the possibility of further rate cuts, money printing, and a reprieve from its penalty charge on bank deposits. (SA)

 

Nordstrom, cheered investors with a stronger than expected quarterly profit, despite a 5 per cent decline in sales, adding to fresh optimism over the health of the retail industry.  The upbeat results came on the heels of blockbuster earnings from industry heavyweights Target and Lowe’s yesterday, whose robust sales growth in the second quarter allayed broader fears of a slowdown in the economy and drove shares across the sector sharply higher. Nordstrom stock jumped as much as 16 per cent more after the publication of its results yesterday. (FT)

 

The federal government will rack up $12.2T in deficits through 2029, according to a new projection from the Congressional Budget Office, an $809B increase from its last projection in May. That will boost debt held by the public to 95% of gross domestic product, its highest since just after World War II. Fueling the increase from May’s projection is the bipartisan deal to raise spending caps, which would add $1.7T to the deficit over the course of the next decade. (SA)

 

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



This week's Central Bank Jackson Hole rodeo is ready for kickoff, starting with minutes from the Fed's July 30-31 policy meeting, when officials voted to lower interest rates for the first time since 2008. Traders will look for signs of disagreement on the FOMC, and clues to what the central bank might do next. The event will be followed by tomorrow's ECB minutes and the Jackson Hole symposium on Friday, where the focus will turn to Fed Chair Jerome Powell's tone and signals of further easing. (SA)

 

The US and Japan are racing to clear the final hurdles of a partial trade deal that could be finalized as early as next month, according to people familiar with the matter. The deal could involve Japan opening up to American agricultural goods in exchange for cuts to US industrial tariffs and immunity from levies against its carmakers. (FT).

 

Blowout quarters from US retailers Target and Lowe’s sent their share prices up sharply in pre-market trading as Americans continue to spend despite the gloom hanging over the global economy.  Shares in big-box retailer Target were up 15 per cent ahead of the Wall Street open, while home improvement chain Lowe’s added 12 per cent as both posted stronger-than-expected sales growth during the second quarter.  Lowe’s, which has been pursuing a turn-around program amid pressure from rising costs, reported same-store sales rose 2.3 per cent, ahead of estimates of 1.7 per cent. Target, meanwhile, said sales at established stores were up 3.4 per cent, topping forecasts for a 3 per cent advance in this closely watched same store sales measure. (CNBC)

 

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



Apple has committed to spending more than $6bn on original shows and movies for its new video streaming service that it hopes will challenge the likes of Netflix, Disney and AT&T-owned HBO.  The company’s new TV+ service will go live within the next two months, according to people briefed on its plans, in an attempt to pre-empt the launch of Disney Plus, which is scheduled to debut in the US in November. Apple has not yet revealed pricing or other key details for its TV+ subscription service, but said new content would be added every month after the service launches in more than 100 countries. (FT)

 

The U.S. government's decision to add more Huawei affiliates to a blacklist is "unjust" and "politically motivated" and will not help the country advance its technological leadership, the Chinese telecom equipment supplier said in a statement. Yesterday, the U.S. Commerce Secretary extended by another 90 days a temporary reprieve for Huawei to continue doing business with American companies, but the Bureau of Industry and Security added another 46 Huawei affiliates to the blacklist, bringing the total up to over 100. (SA)

 

Home Depot reported a rise in earnings that beat analysts’ expectations in the first quarter, but a closely watched sales metric missed estimates as the US housing market stuttered.  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 world’s biggest home improvement group on Wednesday said same store sales grew 2.5 per cent, sharply missing expectations for a 4.2 per cent rise. (WSJ)

 

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



Central bankers will gather at their annual Jackson Hole meeting in Wyoming on Thursday as warning signals from financial markets add to rising pressure to come up with ways to support the global economy.  Investors are anticipating a fresh wave of stimulus measures to tackle flagging growth as the White House considers a new round of tax cuts to boost the economy.  After all, there’s an election year just around the corner, which historically has been the best year in the cycle for stocks.  (FT)

 

Airbnb is readying a public listing for the first half of 2020, according to the WSJ, which also disclosed several of the home-sharing group's financials. Strong first quarter performance got a boost from the 91M nights reserved on the platform, which amounted to $9.4B in total bookings, up 31% from the same period the year before. It also had about $3.5B in cash on its balance sheet as of March 31 and reported a 40% revenue growth rate in 2018 compared with the previous year. Airbnb hasn't yet decided if it will pursue a traditional IPO or if it will follow the unconventional path of Spotify and Slack to a direct listing. (WSJ)

 

The president has cast doubt on any reprieve for US companies selling to Huawei, saying he does “not want to do business at all” with the Chinese telecoms company. The US Department of Commerce was expected to extend a temporary general license for companies to do business with Huawei for 90 days, with an announcement due on Monday. Any decision to allow more time for transactions between Huawei and US groups would be interpreted as an olive branch from Washington to Beijing in the ongoing trade talks.

 

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



Recession fears took hold yesterday as short-term Treasuries paid more than long-term notes, a warning sign that investors are rapidly shifting their money into bonds to shield against potential losses they could incur by holding stocks. A brief inversion could be just an anomaly (others have not preceded recessions), but it may depend on how long the condition lasts. Others argue the inversion occurred because of the Fed, which has kept its base short-term rate "too high," while some maintain the yield curve has been distorted by more than $15T worth of foreign bonds that pay negative interest rates. (SA)

 

The retail sector was hammered yesterday by weak guidance from Macy's as department stores continued to lose shoppers to newer forms of retailing. Shares tumbled 13% after the company lowered its full-year earnings outlook and missed profit expectations. Worries were also seen after Cisco's Q2 results, which showed struggles in China amid a continuing trade war. (CNBC)

 

Walmart reassured Wall Street over US consumer spending this morning as the retailer lifted its outlook for domestic full-year sales, but pointed to weakness in its stores abroad. The company, long considered a bellwether for middle-class spending, shrugged off turmoil elsewhere in the retail sector to post a 2.8 per cent rise in like-for-like domestic sales (FT).

 

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



Stocks climbed yesterday after the U.S. decided to delay tariffs on certain Chinese goods. The United States Trade Representative said certain products including clothing and cellphones are being removed from the tariff list based on “health, safety, national security and other factors” The S&P 500 rose 1.48% and the Nasdaq was 1.95% higher. Apple which surged more than 4%. (FT)

 

Yesterday the yield on the 10-year Treasury broke below the 2-year rate, an odd bond market phenomenon that has historically been a reliable indicator for economic recessions. (CNBC)

 

CBS and Viacom have agreed to merge, ending years of talks. The new company will be called ViacomCBS. (WSJ)

Airbnb has settled a lawsuit alleging the site allowed vacation rental owners who use the site to discriminate against customers based on race. (OregonLive)

 

Semiconductor equipment company Edwards Vacuum in Hillsboro is expanding its workforce by 100 employees, to 250. (OregonLive)

 

Troy Reinhart
Northwest Quadrant Wealth Management



Investors are jumping into bonds like they're a hot IPO, with the U.S. yield curve at its flattest level since 2007. The 30-year Treasury rate tumbled as much as 14 basis points on Monday to close in on its record-low of 2.0882% from July 2016, while the 10-year note fell 10 bps to 1.65%, and at one point was just 5 bps more than two-year notes. The pace of the move means 1.318% - the 10-year's all-time low set three years ago - is at risk of being broken, unless the Fed maintains a hawkish stance or if Beijing unveils a stimulus package to counter trade war fallout. (SA)

 

The U.S. budget gap widened further in July as federal spending outpaced revenue collection, bringing the deficit to $867B in the first ten months of the fiscal year, a 27% increase from the same period a year earlier. For the month, the biggest expenditure - Social Security - was $88B followed by Medicare and National Defense, each at $56B. Customs duties, which include tariffs from imports, jumped by 75% to $56.9B YTD.  (FT)

 

U.S. consumer prices rose broadly in July, but the increase in inflation will likely do little to change expectations that the Federal Reserve will cut interest rates again next month amid worsening trade tensions.  The Labor Department said this morning its consumer price index increased 0.3% last month, lifted by gains in the cost of energy products and a range of other goods. The CPI had edged up 0.1% for two straight months. In the 12 months through July inflation is up 1.8%.  (CNBC)

 

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



The boards of CBS and Viacom were negotiating late into Sunday night, trying to hash out a price for their long-awaited all-stock merger, Bloomberg reports. The companies aim to announce a merger by today, although the timing could slip into Tuesday, capping years of failed merger attempts and board infighting. Shari Redstone, whose family investment vehicle National Amusements controls both companies, would become chairman of the combined entity, while Viacom CEO Bob Bakish would lead the firm as CEO. (SA)

 

Investment banks are shedding thousands of jobs, with almost 30,000 losses announced since April as falling interest rates, weak trading volumes and investor pressure to protect profits force the sector to shrink.  Most of the cuts have come in Europe, with Deutsche accounting for more than half the total, but in New York City jobs in commodity and securities trading have also gone.  Bank executives are under pressure from investors to cut costs and protect profits. Since long-term US interest rates began to fall in November, financials have fallen 5 per cent, while the S&P 500 has risen 6 per cent. (FT)

 

Trying to diversify away from ETFs and index funds, BlackRock (the world’s largest asset manager) has scooped up a 30% stake in Authentic Brands Group, parent company of Sports Illustrated, for $875M. Created in 2010, Authentic Brands Group also owns Aeropostale, Juicy Couture, Nine West, Spyder, and Frye. The deal values Authentic at more than $4B including debt and will see BlackRock supplant private-equity firm Leonard Green & Partners as its largest shareholder. (FT)

 

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



Stocks rose yesterday, erasing most of the steep losses from earlier in the week, as global bond yields rebounded while investors digested better-than-expected trade data out of China. 
 
Uber shares plunged 12% after the ride-hailing service reported second-quarter financial results. The company lost $5.24 billion in the quarter.  Now, Uber must convince investors that it is on a path to profitability with a realistic long-term plan for generating returns for investors
 
In Denmark’s $495 billion mortgage-backed bond market, another milestone was reached as Nordea Bank said it will start offering 20-year fixed-rate mortgage loans that charge no interest.  The development follows an announcement earlier in the week by Jyske Bank, which said it will start issuing 10-year mortgages at a coupon of minus 0.5%. Danes can also now get 30-year mortgages at 0.5%, and Nordea recently adjusted its prospectus to allow for home loans up to 30 years at negative interest rates.
 
Semiconductor materials specialist JSR Micro says it plans to build a $100 million factory in Hillsboro and begin production there sometime next year.  JSR is a Japanese petrochemical company.  JSR didn’t say why it chose Oregon, but Hillsboro is home to Intel’s Ronler Acres campus, Intel’s most advanced production site.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones.



The S&P 500 and Nasdaq ended narrowly higher yesterday, after spending mostly of the day sharply lower.

The flight to safety sent the yield on the 10-Year Treasury Note — used as a benchmark for mortgage rates and auto loans — falling to a low of 1.595%, the lowest since 2016. The yield on the 30-year Treasury Bond bottomed around 2.12%, near its all-time low reached in 2016. Yields pared some of their declines later in the session but held steady near multiyear lows.

 

Shares of the ride hailing company, Lyft spiked after the company reported second-quarter financial results. The company lost $644 million in the quarter, or $2.23 a share. Revenue soared 72% year-over-year to $867.3 million, and Lyft raised its full-year guidance to between $3.47 billion to $3.5 billion.

 

America's two largest newspaper publishers will merge to combat declining circulation and plunging advertising revenue but will still face pressure to cut costs at hundreds of already cash-strapped publications around the country.  The combination of McLean, Virginia-based Gannett and GateHouse Media, based in Pittsford, New York, will create a conglomerate that will own more than 250 daily newspapers and hundreds of weekly and community papers.  The new company will own the Statesman Journal in Salem, and the Register-Guard in Eugene.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones.



Stocks rebounded yesterday from their worst day of the year after China’s central bank indicated it plans to keep its currency at a level stronger than some investors had first feared.

 

Shares of Disney traded lower even though the company reported record quarterly revenue as expectations for record-breaking movie profit and higher earnings and sales failed to materialize.  Disney stock has been trading at record highs recently, after the opening of Endgame. The stock is at $141.87, up 29% for the year.

 

Job openings nationwide fell slightly in June but topped 7 million for a record 15th month in a row, reflecting the strongest labor market in decades even as the U.S. faces stiffer economic challenges.  Job openings rose the most in retail and real estate.

 

The iconic clothing retailer founded almost a century ago, Barneys, is filing for Chapter 11 bankruptcy protection but will keep the doors open at its 10-story Madison Avenue store.  The company has secured $75 million in financing to pay employees and vendors as it seeks a buyer.  Barneys stores in Chicago, Las Vegas and Seattle will close along with 12 concept and warehouse locations.  Stores in Beverly Hills, San Francisco and in Boston will remain open.  The picture for most traditional retailers grows worse by the year.  The number of retail store closed in the U.S. this year has already surpassed the total number in 2018.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones.



Stocks fell sharply yesterday as a trade war between the world’s largest economies intensified with China retaliating against President Donald Trump’s latest move.


The Chinese yuan sank to 7 per US Dollar yesterday which is an all-time-low, with the Chinese central bank blaming the depreciation on market forces and President Trump’s decision last week to extend tariffs on almost all Chinese imports. Mr. Trump responded on Twitter, accusing China of engaging in currency manipulation.

 

The average rate on the popular 30-year fixed mortgage hit 3.70%, the lowest in 3 years. That rate will likely dip even lower, as bond yields continue to fall.  The drop last week meant that 8.2 million 30-year mortgage holders could likely qualify for a refinance and save at least 0.75% off of their current interest rate.  While rates are now incredibly favorable for both refinance and home purchase, consumers still need to shop around for the best rate, and a full one-third of them are not, according to a new survey from Fannie Mae.

 

The yield curve in the bond market is giving the largest waring of an impending recession since 2007.   Rates on 10-year notes sank to 1.74%, close to completely erasing the surge that followed President Donald Trump’s 2016 election. In early trading, they fetched as much as 32 basis points less than three-month bills, the most extreme yield-curve inversion since just before the 2008 crisis.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones.



US Stocks had their worst week of 2019 last week after investors had to deal with a slew of mixed economic data, and more trade war sabre rattling between the US and China.
 
Warren Buffett’s Berkshire Hathaway said Saturday its second-quarter earnings rose due to unrealized investment gains, while the company’s cash pile grew to a record.  Berkshire reported second-quarter net earnings of $14 billion, from $12 billion, in the year-earlier period.  The 88-year-old Buffett, whose shrewd investments have earned him the nickname “the Oracle of Omaha,” still has plenty of cash on hand for future acquisitions as a way to drive profit. Berkshire held a record $122 billion in cash at the end of the second quarter, up from $114 billion at the end of the first quarter.

 

The University of Michigan said the final reading of its consumer-sentiment index for July was 98.4, up from 98.2 in June.  Recent consumer surveys have pointed to the most favorable personal finance expectations since May 2003, but consumers also have begun to take precautionary measures to increase savings and reduce debt.

 

The economy created a another 164,000 new jobs in July, underscoring the strength of a robust U.S. labor market that’s shown little sign of deterioration.  The unemployment rate was unchanged at 3.7% and remained near a 50-year low. In a good sign, more people entered the labor force in search of work.

 

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



Stocks fell sharply again yesterday, erasing big gains from earlier in the day, after President Donald Trump said the U.S. would impose an additional 10% tariff on another $300 billion of Chinese imports to the U.S.
 
The US economy added 164,000 new jobs in July, underscoring the strength of the US labor market.  The increase was slightly below the forecast of 171,000.  The unemployment rate remained unchanged at 3.7% which is a 50 year low.
 
 American manufacturers grew in July at the slowest pace in three years thanks to festering U.S. trade disputes that have hurt exports and undermined the global economy.  The Institute for Supply Management said its manufacturing index slipped to 51.2% last month from 51.7% in June. That’s the lowest reading since August 2016.


A big quarter at the parent company of KFC, Taco Bell and Pizza Hut. Yum! Brands beat on earnings and revenue thanks to blow-out sales at all three of its big brands. Same-store sales at Taco Bell topped 7%, while KFC was up 6%. They also saw a 2% increase at Pizza Hut, which has been lagging.  The stock rose 4% on the news.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones.



>>U.S. stocks sold off yesterday after the Federal Reserve cut interest rates by just 25 basis points, and the selloff gathered steam during Chairman Jerome Powell’s subsequent press conference, where he gave the impression that Wednesday’s cut was a “mid-cycle adjustment to policy” rather than the first in a series of actions to lower interest rates.

 

The Federal Reserve is worried about the economy, but American consumers aren’t. They’re very confident, in fact.  The consumer confidence index jumped to 135 in July from 124 in June.  The index now sits just a touch below an 18-year high of 137.9 set last October.


The nation’s businesses created 156,000 private-sector jobs in July, according to payroll processor ADP, showing that companies are still willing to hire despite stiffer headwinds for the economy such as the ongoing trade spat with China.

 

Pending home sales rose in June, with activity particularly brisk in the western part of the U.S. The National Association of Realtors said pending home sales climbed 2.8%, with gains in each of the four major regions, including a 5.4% jump in the West.  Compared to 12 months ago, sales rose 1.6%, the first year-over-year gain in 17 months.  The Case-Shiller home-price report also released showed moderating gains in prices in key Western cities, and in Seattle’s case, an outright year-over-year decline.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones.


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