Week In Review Part II: Street Bytes

The Dow Jones snapped back after its worst week of the year, finishing up 1% to 13212, while the S&P and Nasdaq each added 0.8%.

There was a feeding frenzy for the IPO of Annie’s organic food company, rising 89% in its first day. Then Millennial Media (mobile ad-aps) more than doubled on Thursday, jumping to $27.90 its first day of trading vs. the $13 it was priced at.

Meanwhile, Facebook appears to be targeting May for its IPO, with the company’s valuation now pegged at $102 billion.

U.S. Treasury Yields

6-mo. 0.13% 2-yr. 0.33% 10-yr. 2.21% 30-yr. 3.35%

While the Fed is projecting an unemployment rate of 7.4% to 8.1% for Q4 2013, research from the Federal Reserve Bank of New York forecast the jobless rate could drop to as low as 6% by the first half of 2013. Holy Toledo! Were this to occur, the nation would form one giant conga line and sing “Happy Days Are Again!” Peace and brotherhood would be in the air. We’d slow down at pedestrian crossings and stop texting while driving….OK, I’m getting a little carried away.

Small businesses, those with fewer than 500 employees, account for about 65% of jobs created in the past 20 years, according to the Business Roundtable.

There were further signs of a significant slowdown in China as industrial company profits for Jan. and Feb. declined at the fastest pace since 2009. All eyes are on next week’s slew of economic data, while I’ll be focused on the release of Macau’s gaming numbers for another signal as to the pace of the slowdown.

Retail sales in Japan rose at a significant 3.5% rate in February vs. a year earlier, but industrial production was down 1.2% for the month.

Canada hiked the eligibility age for its Old Age Security (OAS) benefits from 65 to 67, starting in 2023, as part of the government’s new budget that includes cuts in defense, health care and agriculture. Plus the minting of pennies has been stopped, though they can still be used in purchases.

Canadian Finance Minister Jim Flaherty said of the OAS change:

“Canadians are living longer and healthier. Canada has changed. Old Age Security must change with it.”

That’s leadership. Ohhh Caaa-na-daaaa!!

[A U.K. study out this week said that of the 826,000 births in that country expected in 2012, one in three will reach age 100.]

An independent investigation into working practices at Chinese plants making Apple iPhones and iPads found “significant issues.” But this is way overblown.

The U.S. Fair Labor Association (FLA) was hired by Apple itself to investigate working conditions at Foxconn after reports of long hours (horror!!!) and poor safety (eh).

Apple said it “fully accepted” the report’s recommendations. “We share the FLA’s goal of improving lives and raising the bar to manufacturing companies everywhere,” it said in a statement.

Apple CEO Tim Cook visited Foxconn facilities this week and met with Chinese government leaders.

Now I understand that there have been a number of suicides at Foxconn facilities, and wages need to rise so that some aren’t working so hard just to keep up, but as one who has taken one week off in 13 years of writing this column, you get no sympathy from me on work hours.

China’s legal limit on hours is said to be 49 per week. That’s nothing, though Foxconn said it would comply with the FLA’s standards by July 2013. From the looks of the hippie/60s throwback leader of the FLA, I’m guessing he works 30 hours a week.

FLA President Auret van Heerden said, “The eyes of the world are on (Apple) and there’s just no way they can’t deliver. It’s a real showstopper.”

Hardly.

In 2007, the Russian government’s budget balanced at less than $30 a barrel of crude whereas predictions for 2012 put the measurement above $115. [Moscow Times] I’d say that’s a growing dependency on high oil prices, wouldn’t you?

As the Washington Post editorialized, Hong Kong’s new chief executive, Leung Chun-ying, “was muscled through by pressure from Beijing despite his unpopularity with the local business elite. As for the general population, an online poll in which 220,000 people took part recorded 54% for none of the candidates, followed by 17% for Mr. Leung.”

Leung is allegedly a secret member of the Chinese Communist Party and has favored repression by force in the past, charges he denies.

So Hong Kong still has free speech and assembly, but not free elections.

Britain’s energy policy “is in tatters,” as the London Times put it, after two German energy giants, E.ON and RWE, scrapped plans to build up to six new nuclear reactors in Britain, citing funding constraints and the decision to phase out nuclear power in Germany following the Fukushima disaster. So only the French seem willing to build new reactors in the U.K., but the plan on the part of EDF Energy and Areva has been delayed by two years.

The utilities are dying. One government official said, “We need more power generation, and we need it from a range of sources including nuclear. Without enough reliable and affordable power to underpin our economy, businesses will find it harder to deliver growth. This decision is disappointing, and the Government needs a far better energy strategy to ensure the lights stay on and the factories keep running.”

Inventories of natural gas are at record highs in the U.S., owing to the mild winter and new production techniques, so the price fell this week to another decade low, closing at $2.12 a million BTUs. The outlook is for even lower prices as we enter the injection season, April through October.

Eventually, however, the cycle will reverse as more and more production is shut off due to the same low prices and should we return to normal weather next winter, this will be a terrific investment. [Which means you start nibbling around June, I’m guessing.]

The USDA reported that America’s farmers will plant 95.9 million acres of corn this spring, the most since 1937 and above expectations. Worldwide demand is soaring and the U.S. is the leading exporter of the crop. But, with more corn being planted, plantings of soybeans are expected to fall 1%, while the cotton crop could come in 11% below 2011.

As a Bloomberg story pointed out, the “Arab Spring” has not done wonders for the Tunisian and Egyptian economies, both of which shrank in 2011. For Tunisia, it was the first decline since 1986, and for Egypt its first contraction in “decades.”

Home prices in Ireland fell another 2.2% in February, according to the official statistics office in Dublin, bringing the total decline from the peak to 50%, though as I’ve written recently, some say it’s closer to 70% in many parts of the country. Apartment prices in Dublin have fallen 23% in just the past year (57% from their peak). Economist Alan McQuaid sees another 10% decline in 2012, nationwide.

BlackBerry maker Research In Motion Ltd. continued to plummet into the depths of Commodore Computerdom as it announced an overhauling of its executive suite while exploring strategic options, including a sale. RIM shares have lost about 75% of their value in the past year as companies move away from BlackBerrys at lightspeed in favor of Apple’s iPhone and other competitors. Revenue for the quarter ending March 3 dropped by 25% from year ago levels and the company said it was writing off $267 million worth of unsold BlackBerry 7 models, its newest device. Yikes.

[RIM did still sell 11.1 million BlackBerrys for the quarter, but this was 21% fewer than the previous one.]

Regarding the issue of some employers requiring job applicants to hand over confidential passwords to Facebook and other social networking sites, I’d tell the interviewer to “Blank off” and then post the specifics.

Of course I’d only do that if I had $1 million in cash lying in the bank.

But this is a no-brainer, as it’s being explored by Democratic Senators Schumer (N.Y.) and Blumenthal (Conn.). No way should employers be able to ask for that.

Speaking of lots of cash, I’m one of the countless millions who has never played the lottery but broke down this week for Mega Millions. Yup, plopped down $10.

I also got a kick out of the stories of long lines because I had none where I purchased mine. [Pssst….Summit residents…for future reference the liquor store across from Marco Polo.]

MF Global assistant treasurer Edith O’Brien pleaded the fifth amendment, refusing to give evidence to a congressional committee looking into the collapse of MF, the eighth largest bankruptcy in U.S. history with $1 billion of client funds still missing. O’Brien is believed to have knowledge of the critical final days and a crucial transfer of MF Global funds that may, or may not have, involved client money.

And in another classic case of “wait 24 hours,” there have been conflicting reports as to just what former CEO Jon Corzine knew and what he actually approved in terms of the transfer of $200 million to meet an overdraft in a JPMorgan Chase account, though the edge appears to go to him at this point.

BATS Global Markets Inc.’s directors removed Joe Ratterman as chairman, though supported him as CEO after the collapse of the exchange operator’s IPO.

BATS, by the way, cited a “software bug” / server issue for creating the chaos that prevented its stock from opening, as well as causing a momentary halt in Apple trading, as exchanges group servers for different securities, normally alphabetically, and, presto! Apple is one of the first in order.

Best Buy, the nation’s largest specialty electronics retailer, announced it would close 50 of its big-box stores, cut 400 corporate jobs and trim $800 million in costs.

But, the company, with 1,400 locations, also plans to open 100 smaller and more profitable Best Buy Mobile stores. “More doors…less square footage,” is the new mantra. Makes sense. Earnings for the period ending March 3 exceeded Street expectations handily, though revenues fell short.

According to the Financial Times, investment banking fees from mergers and acquisitions, equity and debt capital markets were down 24%, year-on-year, in the first quarter.

Former Goldman Sachs banker Greg Smith, who resigned via the New York Times op-ed for which he is receiving his 15 minutes of fame, is said to be close to receiving $1 million for his memoir on life inside Goldman. I will not buy this one.

In a study by Kantar Media, auto ad spending totaled $13.9 billion in 2011, accounting for 20% to 25% of total ad revenue for cable systems and local TV stations. As reported by Crain’s New York Business, “Combined with the summer Olympics and the November elections, higher auto sales could lead to a record upfront advertising market in May, and a strong market for spot advertising in the second half of the year,” according to Moody’s in a separate report, where Moody’s forecasts a 9.3% increase in auto sales this year over last.

CBS Corp. is poised to benefit as it receives 63% of its revenue from advertising.

An investor group led by NBA Hall of Famer Magic Johnson acquired the Los Angeles Dodgers for $2 billion, a record for a professional sports franchise. According to a media analyst, the value of the New York Yankees is now $2.85 billion. It’s all about television rights. People love to watch sports.

Former owner Frank McCourt could make as much as $1 billion, which is outrageous seeing as he looted the coffers and ran the franchise into the ground. Only in America. [Or Russia, actually…China…]

JetBlue pilot Clayton Osbon faces a lengthy prison sentence for his meltdown on Flight 191 that could have resulted in catastrophe for the 135 passengers and crew on board had the co-pilot not heroically acted in the fashion he did, along with passengers and flight attendants.

Atlantic City is counting on a new $2.4 billion resort, Revel, to kickstart the casino industry there. The place is getting excellent initial reviews. It’s the 12th casino in A.C. and first to open since Borgata in 2003.

Still no word on my China holding as it put in for a two-week extension on reporting earnings (which is legal) due to its large acquisition last November of a feedstock company and the first extensive official valuation of same. I have no problem with this, but now I won’t know what the results are until April 13, or thereabouts. The company already announced its conference call would be April 17, which is a good sign.