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Business News Archives for 2019-11


In the past 66 years, the Dow Jones has only posted 16 losses on the Wednesday and Friday surrounding the holiday. Notably two of those 16 times were the past two years. (Stock Trader’s Almanac)

 

Farm incomes are falling according to the Kansas City Federal Reserve. Iowa farm debt hit $18.9 billion in the second quarter, the highest level in the nation. Nationwide U.S. farm bankruptcies in September surged 24% to their highest level since 2011. The U.S. Department of Agriculture projects farm income in 2019 to reach $88 billion – the highest net farm income since 2014’s $92 billion, but still 29% below 2013’s record high.

 

A seedling shortage a decade ago has left some Oregon Christmas tree farmers with no trees to sell this year. Oregon produces about 4.2 million Christmas trees annually and is on track to get close to that number this year. (Oregonian)

 

The Conference Board's Leading Economic Index (LEI) rose 0.3% year over year in October, tying June 2016 for the slowest growth of the expansion. Even though the gauge barely eked out a year-over-year gain last month, we see signs of stabilizing growth in domestic leading indicators.

 

Bumble Bee Foods announced it has filed for Chapter 11 bankruptcy protection and will sell its assets to Taiwan-based FCF Co. Ltd. for $925 million.



Chinese and U.S. top trade negotiators held another phone call this morning Beijing time in which consensus was reached on properly resolving issues holding up the phase-one trade deal, according to a Chinese Ministry of Commerce statement. Should they fail to reach an agreement by Dec. 15, President Donald Trump will have to decide whether to carry out his threat of further tariffs on the Asian nation. Market reaction to the statement has so far been muted. (Bloomberg)

 

This year’s Christmas tree shopping season is beginning to look a lot like 2018, with a tight supply and similar prices, according to Oregon State University.  Oregon leads the nation in Christmas tree production, with 383 licensed Christmas tree growers selling about 4.6 million trees last year.  Mexico is the top international importer of Oregon Christmas trees.  (KTVZ)

 

eBay agreed to sell its StubHub business on Monday to Viagogo Entertainment, a significant competitor internationally - and particularly in the U.K. and Europe. Already among the largest players in the growing secondary market for sports, music and live-entertainment, the combined company expects to sell hundreds of thousands of tickets each day across more than 70 countries. The $4.05B deal is also a major cash windfall for eBay, which scooped up StubHub for $310M in 2007. (SA)

 

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



Intellectual property has been one of the major sticking points in trade talks between the U.S. and China, so markets are taking a positive view of moves over the weekend by authorities in Beijing to address some of those issues. The country will raise penalties on violations of intellectual property rights and examine lowering the thresholds for criminal punishment for rule breakers.  Chinese government-controlled media say both countries are “very close to the phase one trade deal.” There is also no sign of China’s appetite for dollar debt waning, with the country planning a record sale of bonds denominated in the U.S. currency. There was less good news for U.S. farmers, as delays at China’s ports meant October saw the lowest level of soybean imports in three months.  (Bloomberg)

 

A spurt of deal-making to close out 2019 -- LVMH has agreed to buy Tiffany & Co. for $16 billion after raising their original offer for the U.S. jewelry retailer to $135 a share. The all-cash deal is expected to close in the middle of next year. Charles Schwab has  agreed to acquire TD Ameritrade in an all-stock transaction valued at about $26 billion and Novartis AG has agreed to buy Medicines Co. for $9.7 billion, giving the Swiss drugmaker a new promising cholesterol drug. (Refinitiv)

 

Disney’s Frozen 2 hauled in $127M domestically and $223M worldwide, resulting in the highest-grossing debut ever for any animated film globally. The motion picture marked a new high in the U.S. and Canada for an animated release outside the summer season and was the largest opening ever for Walt Disney Animation Studios. It's also likely to be Disney's sixth film to net more than $1B at the box office in 2019.  (SA)

 

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



Aside from PMIs, it is a fairly quiet end to the week on the data front. University of Michigan consumer sentiment and Kansas City Fed Manufacturing are both published later this morning, and there are no monetary policy speakers scheduled for today. Foot Locker Inc. and JM Smucker Co. are among the last companies reporting earnings this quarter.  (Bloomberg)

 

Entering into the most profitable corner of the U.S. auto market, Tesla has unveiled its all-electric pickup called Cybertruck. The futuristic, trapezoid-shaped vehicle will start at a competitive $39,900 - with 7,500 pounds of towing capacity and 250 miles of range per charge. Dual motor and tri-motor models extend towing capacity to 10K and 14K pounds, as well as a 300 and 500 mile range. Expected to arrive in late 2021 and 2022, the pickups also feature a cargo bed that can hold and charge an electric ATV. (SA)

 

Xerox has given HP an ultimatum in its effort to acquire the PC and printer maker, threatening to turn its bid into a hostile one unless the company agrees by next week to pursue a “friendly combination”.  HP turned down the $22-a-share bid last weekend, saying it “significantly undervalues” the company, and asked for more information about Xerox’s business prospects. HP left the door open to “a potential combination” of the two companies.  Xerox launched its unsolicited bid on November 5, a month after HP announced its intention to cut jobs under a turn-around plan. HP’s shares were down 4 per cent year-to-date as of Thursday. Xerox has gained more than 95 per cent. (FT)

 

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



Stocks traded lower yesterday, pulling back from record highs after Reuters reported a so-called phase one trade deal between China and the U.S. may not be completed by the end of 2019.
 
Federal Reserve officials are more upbeat about the economy than they had been only six weeks earlier, according to minutes of their policy discussion released yesterday.  Officials “generally viewed the economic outlook as positive,”.  “Uncertainties associated with trade tensions as well as geopolitical risks had eased somewhat.  Making it likely the Fed is done cutting interest rates.
In corporate news, Target shares jumped more than 14%, after the retailer posted quarterly results that easily beat expectations. Target also raised its full-year profit outlook. Lowe’s advanced 4% on stronger-than-forecast earnings and an improved profit forecast for 2020.
 
The House Judiciary Committee approved a bill Wednesday that legalizes marijuana on the federal level, removing it from Schedule 1 of the Controlled Substances Act.  The legislation has a high chance of approval in the full House where Democrats control the chamber. It’s likely to face a tougher battle in the Republican-controlled Senate, where Majority Leader Mitch McConnell opposes marijuana legalization.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones.



US Stocks traded mixed yesterday as investors look for a catalyst to move stocks.
 
U.S. homebuilding rebounded in October and permits for future home construction jumped to a more than 12-year high, pointing to strength in the housing market amid lower mortgage rates.  The report also showed an increase in home completions, which could help to ease a supply squeeze that has plagued the housing market.
 
Shares of the home improvement retailer Home Depot fell more than 5% after the company once again cut its 2020 forecast and reported same-store sales growth of 3.6%, well below the expected growth of 4.7%. Revenue for the third quarter also missed estimates.  Shares of other retailers Kohl’s and Macy’s also fell more than 10% after both companies reported weaker than expected earnings and earnings forecasts.
 
The House passed a temporary government funding bill to hold off a shutdown for a few more weeks.  The bill would fund the government at current levels through Dec. 20th. It heads to the Senate then to the President.  Senate Majority Leader Mitch McConnell said that the White House indicated President Donald Trump would support a plan to keep the government running through Dec. 20. The president’s backing suggests the GOP-held Senate will pass the measure.  Funding will lapse Friday if Congress cannot pass a funding plan.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones.



Stocks made fresh records yesterday before closing little changed as investors digested mixed signals around U.S.-China trade talks.
 
Home builders are still quite optimistic about what the future holds for the housing market.  The National Association of Home Builders’ monthly confidence index dipped one point to 70 in November.  The previous month’s figure had represented a 20-month high.  Despite the monthly decrease, index readings over 50 are a sign that confidence is improving.

 

Ford is unveiling its first all-electric SUV, marking the start of an avalanche of battery-powered vehicles coming from mainstream and luxury automakers during the next two years that industry analysts say will boost electric-vehicle sales.  The “Mustang Mach E,” which will go 230 miles to more 300 miles per charge depending on how it’s equipped, will be unveiled Sunday night ahead of the Los Angeles Auto Show press days.

 

According to University of Oregon economics professor Tim Duy the Oregon economy is slowing even though our unemployment rate remains low at 4.1%.  The weakening in Oregon’s economy has mostly come from the manufacturing sector attributed slower global growth.  Duy said he doesn’t see the signals that a recession is imminent.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones.



White House economic adviser Larry Kudlow said that negotiations over a phase one trade deal with China are down to the final stages, with both sides in communication every day. Talks are focusing on details such as the timeline of Chinese purchases of agricultural goods and Beijing’s demand for the removal of existing tariffs as part of a deal. This morning global shipping giant A.P. Moller-Maersk A/S added its voice to those warning about the fallout from the trade war, saying it is less optimistic about growth as the standoff dents the economic outlook. (Bloomberg)

 

The 50 state and territory attorneys general investigating Google for antitrust violations are set to expand their probe into the search and Android businesses, after initially focusing only on its ad business. The AGs will write up civil investigation demands to help the inquiry, but sources told CNBC the subpoenas might not be served immediately. Google already received a $5B fine in the EU for favoring its Android operating system, and the U.S. Department of Justice is reviewing the tech giant's business practices. (SA)

 

Amazon will appeal the Trump administration’s decision to grant a $10bn defense contract to its rival Microsoft, accusing the US government of having shown “unmistakable bias” in its procurement process.  The company said on Thursday it was lodging a legal case against the decision, following accusations that Donald Trump manipulated the process to harm Jeff Bezos, Amazon’s founder.  The Pentagon awarded the so-called Jedi cloud computing contract to Microsoft last month after several rounds of bidding.  (FT)

 

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



Disney shares surged 7% to a record high on Wednesday after passing 10M subscribers to streaming service Disney+, which only debuted a day earlier. With a market capitalization now totaling $268B, the Mouse House is now twice as valuable as Netflix which has seen its market value tumble to about $124B amid slowing revenue growth and increasing competition. Important to note: Disney's increase was aided by its $71B acquisition of 21st Century Fox's entertainment assets, which was completed in March. (SA)

 

Walmart has sent a reassuring signal over the financial health of the American consumer ahead of the holiday shopping season, lifting annual profit forecasts on the back of higher quarterly sales. The world’s biggest retailer brushed aside rising world trade tensions and turmoil elsewhere in the sector to report accelerating sales growth, sending shares up over 3 per cent in pre-market trading.  Walmart’s US business led the way in the quarter, helping offset weakness in some overseas markets. Revenues across the group rose 2.5 per cent to $127bn.  (FT)

 

In testimony to Congress yesterday, Fed Chairman Jerome Powell further warned that the federal budget is on "an unsustainable path," and with the national debt now topping $23T, it could make it difficult for the economy to recover from future market downturns. According to the Treasury Department, the federal deficit reached $134B in October - the first month of fiscal 2020. The figure has spiked following the GOP tax law and multiple bipartisan agreements to increase spending on defense and domestic programs. (WSJ)

 

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



The Dow, S&P 500 and Nasdaq all closed at record highs Friday, as the S&P finished a fifth consecutive week of gains and the Nasdaq posted its sixth straight weekly advance. The S&P 500 is on track for its best year since 2013, registering a 23.4% gain so far this year. U.S. stocks are open for regular trading today, but the Veterans Day holiday will see the bond market, banks and government offices closed, and there will be no mail delivery today. (CNBC)

 

Some 33% of people who traded in cars to buy new ones in the first nine months of 2019 had negative equity, compared with 28% five years ago and 19% a decade ago, according to Edmunds. Those borrowers owed about $5,000 on average after they traded in their cars, before taking on new loans. Five years ago the average was about $4,000.

 

Bi-Mart plans to stop filling prescriptions in 13 stores in the Portland area, blaming rising medical costs and a new Oregon business tax that kicks in January 1. The new tax Oregon lawmakers approved in May will raise taxes by $1 billion a year.

Just 44 days till Christmas and the shopping season is on.  Black Friday is November 29th this year.

 

Unemployment is at a five-decade low, workforce participation is at the highest level in six years and yet, 44% of Americans are low-wage workers. The median wage is $10.22 an hour, and their annual pay is $17,950.



Stocks rallied to record highs yesterday after the world’s two largest economies reportedly agreed to remove existing trade tariffs, sparking a huge rotation into equities and out of bonds.
 
The number of people who applied for unemployment benefits in early November fell to the lowest level in a month and clung near a half-century low, reflecting the resilience of the strongest labor market in decades.
 
Shares of Disney are higher after the company reported an earnings beat for its fiscal fourth-quarter.  The company earned $1.07/share, vs. 95 cents that was expected.  Disney’s fiscal fourth-quarter earnings arrive just days before the company’s long-awaited streaming service, Disney+, is set to launch on November 12. The service costs $6.99 per month, or $69.99 per year, and will feature content from Disney, Pixar, Marvel, Star Wars and more.
 
Mortgage rates dropped in the past week after rising in six of the last nine weeks, including most of the month of October.  The 30-year fixed-rate mortgage averaged 3.69% during the week ending Nov. 7, down three basis points from the previous week.  The rate on the 30-year mortgage is over a full percentage point lower than it was at this same time a year ago, when rates averaged 4.94%.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones



US Stocks rose slightly yesterday to a fresh record high lifted by strong economic data and new developments between the U.S. and China on trade.
 
The service side of the U.S. economy rebounded in October after growth tapered off in the prior month to a three-year low, aided by reduced trade tensions between the U.S. and China.  The Institute for Supply Management’s said its non-manufacturing index rose to 54.7% last month from a 52.6% reading in September.  13 of the 17 industries tracked by ISM said their businesses were expanding.

The number of job openings in the United States slipped in September for the fourth month in a row to 7 million from 7.3 million.  Openings have declined as companies cut back on hiring with the U.S. economy growing more slowly. The percentage of people in the private sector who chose to leave their old jobs, known as the quit rate, edged down to 2.6% from 2.7%.

 

It turns out workers get more done and hate their jobs less when they are in the office less.  Last summer, Microsoft's Japan office tried an experiment. For one month, the office closed on Fridays, giving workers an extra day off, while paying them a full-time salary. Management also decided that no meetings would last more than 30 minutes and urged employees to cut down the amount of time they spent responding to emails. Called the "Work Life Choice Challenge," the experiment was wildly successful.  Measured by sales per employee, productivity reportedly went up 40 percent compared to the same time period the year before. The company also used 23 percent less electricity.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones



We have been climbing a wall of worry. Ongoing recession fears, a trade war, a slowing global economy, an inverted yield curve and Brexit to name a few. All that wall climbing pushed the Dow, S&P 500 and the Nasdaq to new record highs.  

The paper mill in West Linn is back open, two years after it closed.  The Willamette Falls Paper Co. began operation two months ago and is producing new classes of paper made from pulp and agricultural waste instead of wood. Willamette Falls employs 120 persons.

 

The percentage of Americans declaring bankruptcy age 55 to 64 has risen 66% from 1991 to 2016. The percentage declaring bankruptcy age 65 to 74 increased 204% from 1991 to 2016. Roughly 12% of bankruptcy filers are now 65 and older, up from about 2% in 1991. Why are so many older adults going bankrupt? One major factor behind the rise of these bankruptcies: medical debt. In fact, six out of 10 people 65 and older who file bankruptcy do so because they can’t afford to pay medical bills. 

 

Oregon Public Utility Commission has approved rate hikes for the state's three gas utilities, only the third time in the last ten years. The increase in the cost of natural gas is blamed on a pipeline explosion last winter. Typical residential customers will see their bill increase by $2.31, or 4.4 percent. 

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Ride sharing leader Uber reported $1 billion quarterly losses in Q3.  The company has never made a profit.



Stocks rose sharply on Friday and are now at all time highs as investor sentiment got a lift from much stronger-than-expected U.S. jobs data.
 
Saudi Arabia formally started its long-anticipated initial public offering of their state-run oil giant Saudi Aramco yesterday in hopes of raising billions of dollars for the kingdom.  Prince Mohammed hopes for a very-optimistic $2 trillion valuation for Aramco, which produces 10 million barrels of crude oil a day and provides some 10% of global demand.
 
Shares of Exxon Mobil traded lower after the company reported their third-quarter profit nearly halved, hit by lower oil prices and weaker margins in refining and chemicals, with its three major business reporting lower year-over-year profit.
 
About 70% of S&P 500 companies have reported quarterly earnings thus far, and of those companies 75% have reported better-than-expected earnings.
 
Gert Boyle, the longtime chairwoman of Oregon based Columbia Sportswear and the caustic star of the most memorable advertising campaign in outdoor apparel history, died yesterday morning at the age of 95.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones



Stocks traded lower yesterday despite better-than-expected earnings from Facebook and Apple and the Federal Reserve’s third rate cut of 2019. Investors took a pause and turned their focus to U.S.-China trade negotiations.
 
A measure of factory activity in the Midwest weakened further in October.  The Chicago Purchasing Management Index sank to 43 in October from 47 the prior month. This is the lowest level since December 2015. Economists had expected a reading of 48.  Any reading below 50 indicates deteriorating conditions.


Americans spent more on new cars and trucks in September. Falling interest rates have made it less expensive to buy big-ticket items such as automobiles or homes. Spending on health care also increased.  Consumer spending rose 0.2% last month, which was a touch below the 0.3% forecast.


In other corporate news, Italian-American automaker Fiat Chrysler announced a landmark merger with French rival Peugeot, which will create the world’s fourth-largest car maker.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones


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