Week in Review Part II: Street Bytes

Stocks finished fractionally lower on the week, with the S&P 500 (-0.2%) and Nasdaq (-0.1%) registering their first down performances of the year, while the Dow Jones lost 0.5% to close at 12801. Friday’s Dow drop of 0.7%, 89 points, was the biggest since Dec. 28, to give you a sense of how little volatility there has been thus far in 2012.

Laurence Fink, CEO of BlackRock Inc., said investors should be 100% in equities, because of depressed stock valuations and the Federal Reserve’s pledge to keep interest rates low, while Warren Buffett said low interest rates and inflation should dissuade investors from buying bonds. “They are among the most dangerous of assets.”

U.S. Treasury Yields

6-mo. 0.12% 2-yr. 0.27% 10-yr. 1.99% 30-yr. 3.14%

Inflation data this coming week will give us something to talk about here.

According to an analysis of Labor Department data by Sentier Research, inflation-adjusted median household income increased 4%, from $49,434 to $51,413, from August to December, the biggest jump since the start of the recession in December 2007. This is good. The study is consistent with recent economic data.

Real median household income is still 7% lower than it was 12/07 and 3.9% lower than in June 2009, when the recession officially ended, the study says; the result of Americans’ income continuing to fall during the recovery as a result of more workers seeking fewer jobs and the unemployed taking lower-paying jobs to get by. [Paul Davidson / USA TODAY]

There was a slew of economic data in China this week and it is hard to get a true picture due to the Lunar New Year holiday falling the last week in January (vs. February in 2011), which impacts spending but also production figures as many factories shut down for it.

For example, imports in January fell 15.3% vs. year ago figures, or the lowest since August 2009, while exports fell 0.5% over the same period, the worst showing since November 2009.

But analysts at Bank of America/Merrill Lynch said in a client note that making swift adjustments for actual days worked transformed the data.

“There were 22 working days in January last year and 17 working days this year. With the adjustment, export growth was a positive 28.7%, year-over-year, in January and import growth was at a positive 10.0% year-on-year,” the note said. [South China Morning Post…actually, easy to do on the back of a beer coaster]

Overall, Lunar New Year holiday sales were up 16% vs. up 19% in 2011.

Auto sales were also distorted as many dealerships closed for a longer period than just the holiday. Passenger-vehicle deliveries cratered 24% in the month, though many are still expecting auto sales for 2012 to accelerate 8%.

On the inflation front, January’s number surprised to the upside, with consumer prices rising 4.5% from a year earlier, up from December’s 4.1% pace. But this too was distorted by the Chinese New Year, which pushed up food prices, which has regularly been seen and is assumed to be temporary. Core inflation, stripped of food costs, rose more slowly.

As for the broad picture, China’s economy has been growing at a 10.4% clip the past decade, including 9.2% in 2011. The consensus is still for about 8.5% this year, but the IMF warns that this growth rate would be cut in half if Europe’s debt crisis worsened. Singapore’s Prime Minister Lee said China is in for a “rough landing, but they will get through it.” China’s Ministry of Industry and Information Technology warned in a statement:

“The global economy is slowing down, Europe’s sovereign debt crisis is deepening and the downside risks to the world economy are rising with international demand still slack and global commodities and financial markets continuing to be volatile.”

Canadian Prime Minister Stephen Harper traveled to China and reached agreement on a number of fronts, but no big oil deals as yet (which would be tied to the western pipeline that will inevitably be built). Regarding uranium, however, Canada, which produces 1/5th of it and exports more than 80% of its production, No. 2 after Kazakhstan, with most of the exports going to the U.S., Europe and Japan, will now start shipping to China.

Heretofore, the Chinese market was closed to Canadian producers but now the two have reached agreement whereby Canadian producers can compete with China’s suppliers in exporting for nuclear-energy generation.

One other important item for Harper and Canada; Canadian beef exports will continue after a nine-year pause.

Overall, Canada is anxious to diversify away from the U.S., which takes about 75% of all Canadian exports.

The Indian government is projecting economic growth will fall below 7% for the 2011-2012 financial year. Growth in 2010-2011 was 8.4%.

Indonesia’s fourth-quarter GDP rose a stronger than expected 6.5%, year-over-year.

Retail sales in Australia grew 2.4% in 2011, the smallest increase since records started being kept in 1984. They actually ticked down in December, when a rise was expected.

The loss for MF Global commodity customers is now an estimated $1.6 billion, up from a previous $1.2 billion.

Credit Suisse Group reported a surprise loss of $1.1 billion for restructuring costs and revenue fell 46% as the bank accelerated cuts in risky assets. Bonuses have been slashed 41% across all divisions.

UBS AG notified employees it will claw back part of bonuses due to its best-paid investment bankers. As reported by the Wall Street Journal, “The UBS board has decided to take back 50% of share-based bonuses awarded last year to investment bankers whose bonuses exceeded two million Swiss francs, or $2 million, one of the biggest clawbacks seen to date at any bank.”

Needless to say, morale there isn’t real high these days. This follows word the bonus pool is being cut 60% for investment bankers following the trading scandal last fall that cost UBS $2.3 billion.

Others, such as Deutsche Bank and Morgan Stanley, are limiting the cash portion of bonuses to about $125,000, while MS and Goldman Sachs said they would claw back pay from those whose actions put the banks at risk.

Networking giant Cisco Systems Inc. reported net income for its fiscal second quarter ending Jan. 28 grew 43.5%, while revenue increased 11%, higher growth than projected last fall. But for the current quarter, Cisco sees modest revenue growth of 5% to 7%, with CEO John Chambers calling the outlook “conservative” in light of “significant uncertainty” in the economy.

PepsiCo Inc. plans to cut 8,700 jobs, while boosting marketing spending as much as $600 million. CEO Indra Nooyi is under increasing fire. Pepsi stock has drastically underperformed rival Coca-Cola. For its part, Coke beat expectations on its earnings report.

Global food prices rose 1.9% in January, according to the UN, this as China’s food costs rose 10.5% in the month from a year earlier.

U.S. farmers will plant the most acres in a generation this year, according to a Bloomberg survey of farmers, bankers and analysts, owing to some of the highest agricultural prices in at least four decades. The USDA projects food costs will moderate and increase 2.5% to 3.5% in 2012, below last year’s 3.7% gain.

Hong Kong continues to have the world’s priciest office space, followed by London, Tokyo, Moscow and now Beijing, which supplanted New York in the fifth spot. Prime office rents in Beijing’s central business district rose 75% last year.

Terry Keenan / New York Post

“More than a quarter of all the new jobs the Labor Department expects to be created by 2020 will come from the health care and social-assistance sectors, where pay is well below that of the average manufacturing job, and pension and insurance benefits are typically sub-par.

“Compare that with the projection that only about 3.5% of new jobs will be in the highly paid financial services industry, and just 0.7% in technology, and you can grasp the growing disparity.”

Walter Hamilton / Los Angeles Times

“More than four-fifths of bankruptcy attorneys say they’ve seen a notable jump in the number of potential clients with student loan debt…

“Nearly one-quarter of attorneys say the number of potential student loan clients has risen 50% to 100%....

“The average student loan debt of 2010 college graduates topped $25,000.”

Nokia is cutting about 4,000 jobs at smartphone manufacturing plants in Hungary, Mexico and Finland, Nokia’s home base. Nokia remains the world’s largest handset maker by unit shipments and the company said it is moving device assembly closer to suppliers in Asia.

Walt Disney Co. reported revenue for the quarter ended Dec. 31 was up just 1% from a year earlier, though earnings per share rose 18%. ESPN’s prime-time ratings fell 15% in the quarter as viewership for “Monday Night Football” was impacted by “an underwhelming lineup,” according to one analyst. ESPN has become the key driver at Disney and the NBA player lockout didn’t help either.

Overall, Disney CEO Bob Iger said “The trends we’re seeing in advertising are good.”

Revenue at Disney parks and resorts rose 10% in another sign of an improving economy.

A leading real estate broker in Ireland expects further home price depreciation of at least a fifth, which would mean an eventual peak to trough decline of 60% in that country.

The cost of rebuilding the World Trade Center site has skyrocketed to $14.8 billion. The 2008 estimate was $11.5 billion. A joint report commissioned by New York Gov. Andrew Cuomo and New Jersey Gov. Chris Christie called the Port Authority of New York and New Jersey “dysfunctional.” The agency’s debt has more than doubled in the last decade to $19.5 billion from $9.1 billion in 2001.

Foxconn, the world’s biggest tech manufacturer, was hacked with highly sensitive data leaked online, according to Asher Moses of the Sydney Morning Herald. The hacktivist group known as Swagg Security broke into Foxconn’s systems “using a vulnerability contained in an old version of Internet Explorer that had been installed on a staff member’s computer.”

Foxconn is a major contract partner of Apple, as well as IBM and Dell, and its working conditions have been under fire for years, with Apple among those struggling to do damage control.

SwaggSec wrote in an online message:

“They say you got your employees all worked up, committing suicide ’n stuff…We got somethin’ served up good…real good. Your (sic) not gonna’ know what hit you by time you finish this release. Your company gonna’ crumble, and you deserve it.”

Isn’t today’s high-tech world great?!

Glencore and Xstrata announced an all-share merger that would create a $90 billion giant, combining the world’s largest commodities trading house with one of the bigger miners of coal and copper. Glencore already owns a 34% stake in Xstrata but is not permitted to vote on the proposed deal, with many leading shareholders against the move.

The House by a 417-2 vote, and the Senate, 96-3, approved legislation explicitly prohibiting members of Congress and other top officials from trading on inside information. Under the House bill, lawmakers and their aides would have to disclose new financial transactions within 30 or 45 days from when they occurred. The Senate bill requires disclosure within 30 days. The bill would also prevent members of Congress from getting access to IPOs. In 2008, Democratic leader Nancy Pelosi’s husband purchased shares in a Visa IPO while a credit-card bill was before the House. There are a few details to be worked out between the two versions.

Meanwhile, Rep. Spencer Bachus (R-Ala.) is under formal investigation by the Office of Congressional Ethics over possible insider-trading violations, first profiled a while back on “60 Minutes.” In a statement, Bachus said he welcomed the opportunity “to present the facts and set the record straight.”

I’ve always said the global warming debate is mislabeled; that it’s about global pollution. My friend Mark R. constantly brings up the issue of airplane contrails and I saw this week where the aviation industry accounts for about 3% of global carbon emissions, but, its share is rising rapidly. The issue came up when China said its airlines would not participate in Europe’s carbon trading scheme.

According to the Centers for Disease Control and Prevention, bread and rolls, not snack foods like potato chips, are the No. 1 source of salt in the American diet.

Said CDC Director Dr. Thomas Frieden, “Potato chips, pretzels, and popcorn – which we think of as the saltiest foods in our diet – are only No. 10.”

Bread and rolls account for about 7% of the salt that the average American eats in a day. Next on the list: cold cuts and cured meats; pizza; fresh and processed poultry; soups; fast-food hamburgers and sandwiches and cheese.

Dietary guidelines recommend no more than 2,300 milligrams of sodium a day, equal to about a teaspoon of salt.

For nine years I commuted over New York’s Tappan Zee Bridge when I worked in Stamford, Conn. It was clear then the bridge needed replacing and now, 13 years after it was last part of my daily routine, the Federal Highway Administration labels it “structurally deficient.” This is a major problem for the New York area. No one will be surprised if a span suddenly collapses, which would kill a few, no doubt, but 140,000 vehicles cross it each day and the economic impact would be substantial. But while a new bridge has been fast-tracked, it will be a decade or more before we see one.

Only three New Yorkers made the list of 2011’s top 50 philanthropists, down from 14 in 2010, a big drop. California boasted 14 of the top 50. Said the Chronicle of Philanthropy’s editor Stacy Palmer, “We’re starting to see a shift towards the technology money in philanthropy. We’re seeing a soaring interest in philanthropy among Silicon Valley folks and I think that will continue.”

New York’s most generous donors were George Soros, who gave away $335 million last year; Mayor Michael Bloomberg, with gifts of $311 million; and telecom mogul Gustave Hauser, who gave away $40 million.

The Oglala Sioux Tribe is suing the world’s biggest beer companies for $500 million over severe alcohol-related issues in the community. I write about this one because I know quite a bit about the tribe, which hails from the Pine Ridge Indian Reservation in South Dakota. I’ve been to Pine Ridge numerous times over the years, including to perhaps the scariest place in America, at least after noon, Whiteclay, which is on the South Dakota/Nebraska border. I’ve described Whiteclay as like a scene out of “Night of the Living Dead” and a BBC story notes that it “has four beer shops that sold nearly five million cans of beer in 2010 despite having only about a dozen residents.” That’s true.

Alcohol is outlawed on the reservation so Whiteclay is where tribal members drive to get their beer.

So the key to going through Whiteclay is to do it early enough in the day before the drunks have woken up. I was once followed for miles after passing through the town and it was clearly with an intent to scare the hell out of me.

Heck of a weather stretch in Europe. The heaviest snowfall in Rome in 27 years. Parts of Serbia received six feet in 24 hours! At least 300 have died across the continent.

Qatar bought Paul Cezanne’s painting The Card Players for more than $250 million, by far the highest price yet paid for a work of art, according to the Sydney Morning Herald. Previously a Jackson Pollock held the record at $140 million back in 2006. There are actually five Card Players paintings, part of a series Cezanne painted in the 1890s. The other four are all housed in world-class museums like the Musee d’Orsay in Paris and the Metropolitan in New York. All parties involved in the sale declined to comment.

And now you almost know…the rest of the story.