Micron surges 16% after one of the biggest beats in U.S. semis history
Stocks fell for a second straight week as the Dow Jones lost 1.7% to close at 12820, while the S&P 500 dropped 1.1% and Nasdaq lost 0.8%. All three major averages are at their lowest levels in three months.
But next week it’s all about Facebook, which is slated to price on Friday. At least we hope it is mostly about Facebook. That would be a good sign; as in less talk of Europe. Now ask me if this is a likely outcome.
U.S. Treasury Yields
6-mo. 0.14% 2-yr. 0.26% 10-yr. 1.84% 30-yr. 3.01%
Treasuries continue to rally not only as a result of the turmoil in Europe and increased talk of a bailout for Spain, but also because of slowing economic activity around the world.
The Federal Reserve approved Industrial and Commercial Bank of China’s (ICBC) plans to acquire the U.S. subsidiary of Bank of East Asia, the first such U.S. approval for a Chinese firm. The Fed also gave permission to two other Chinese banks to increase their presence in the U.S.
In a statement the Fed said: “China’s largest banks, such as ICBC, use the ‘big four’ accounting firms. There is no evidence that Chinese accounting methods or practices…are unreliable.”
[On Friday, the Wall Street Journal reported that “China has instructed the Big Four auditors to hand over control of their Chinese operations to local partners by the end of the year and put a Chinese citizen at the top within three years.” Local CPAs currently account for 50% of all Big Four partners, according to the Ministry of Finance.]
Meanwhile, regarding the Chinese economy, the government released a slew of data on Friday. Inflation slowed to 3.4% in April from 3.6% in March vs. the government’s target of 4% for the year. Last year’s peak was 6.5%. [Food inflation has moderated to 7%.] The producer price index fell 0.7% from a year ago.
China’s home sales fell 16% in April from the prior month as the government continued its curbs on housing in toughening requirements for down payments and mortgages, as well as restrictions on the number of homes each family can buy.
Industrial production increased 9.3% last month from a year earlier, the slowest pace since 2009, while retail sales rose a less than expected 14.1% over year ago levels, also the least since ’09, and fixed-asset investment increased 20.2% in the first four months of the year, the slowest pace since 2001.
Earlier in the week, we learned April exports rose just 4.9% from a year ago (they were up 8.9% in March), while imports increased only 0.3%.
So all of the above, especially the last two items, speak to slowing external and internal demand, which in turn should allow the government to ease on the monetary front, especially in front of the political transition taking place later in the year. You want the people to be happy this fall, it goes without saying.
Authorities in Beijing said they plan to get rid of 1,200 high-polluting enterprises by 2015 to improve air quality in the capital. The worst polluters are foundries, chemical plants and furniture factories, according to the South China Morning Post.
India’s industrial production for the month of March fell unexpectedly 3.5%.
Iraq produced 3.03 million barrels of oil a day in April, or almost as much as Iran’s 3.2 mbd, according to the latest data out of OPEC. That’s quite an accomplishment as Iraqi production seemed stuck in the 2-2.5 mbd range since Saddam was ousted. Of course it helps that the likes of Exxon Mobil and BP are developing new fields. Plus it’s not as if Iraqis care if these two spill a few million barrels, as is their wont. [Sorry, cheap shot.]
The National Association of Realtors reported that the U.S. had 2.37 million existing homes for sale at the end of March, down 22% from a year ago, which is good. Better sales and declining inventories will help prices. In some areas such as Phoenix, Seattle and suburban Washington, D.C., there are shortages of lower-priced homes.
In another hopeful sign for housing, Fannie Mae reported a first-quarter profit and – for the first time since the government seized it in 2008 – does not need a quarterly infusion of taxpayer money. [Washington Post]
Coupled with sibling Freddie Mac, the two own or back 60% of the nation’s mortgages.
Net of dividends paid back to the government, the overall cost of Fannie’s bailout is $93.6 billion. Freddie’s net is $53 billion owed to taxpayers.
Despite the losses sustained by the studio’s epic flop, “John Carter,” Walt Disney reported strong fiscal second-quarter profits of $1.1 billion. Revenues at its parks and resorts jumped 10%, but studio revenues dropped 12%. However, the opening of “The Avengers” has staunched the bleeding on that front. The picture has already made more than $700 million globally before this weekend.
Separately, cable network ESPN continues to power Disney’s media networks as revenue in that segment of the operations increased 9% to $4.7 billion.
Sony shares tumbled to a 31-year low after the company reported a record annual loss of $5.7 billion. Sony, after four years of losses, is trying to convince analysts it will return to profitability in the current financial year.
Shares in Vertex Pharmaceuticals almost doubled after interim results showed its combination therapy for cystic fibrosis showed promise. One of the two drugs, Kalydeco, sells for nearly $300,000 a year.
McDonald’s reported a so-so global sales increase in April of just 3.3% at stores open at least 13 months, short of expectations. The figure in the U.S. was also 3.3%, while sales rose 3.5% in Europe and just 1.1% in the Asia/Pacific, the Middle East and Africa. Positive results in China were offset by negative results in Japan.
Berkshire Hathaway held its annual meeting last Saturday and the only memorable comment I saw was from Charlie Munger, Warren Buffett’s long-time partner, who compared program traders to rats in a granary. Couldn’t agree more. But as the Wall Street Journal’s Jason Zweig points out, Berkshire’s Class B shares “have underperformed the S&P 500 by 3.5 percentage points for the year to date through (5/4), by nearly five points in the past 12 months and by an annual average of eight percentage points in the past three years.”
According to the New York Times’ Nathaniel Popper and Credit Suisse Trading Strategy, “In April, the average daily trades in American stocks on all exchanges stood at nearly half of its peak in 2008: 6.5 billion compared with 12.1 billion.”
High-frequency traders now account for over half of all stock market activity, but even they have been doing less.
Separately, the New York Stock Exchange reported trading in the first quarter was down 16% quarter-over-quarter.
The U.S. Postal Service backed off its plan to close up to 3,700 low-revenue rural branches and instead will maintain lobby areas and P.O. boxes while reducing staff and hours. The USPS will also offer buyouts for postmasters, noting that more than 80% of its postal costs in rural areas are labor-related, and replace them with part-time workers.
California Gov. Jerry Brown said he needs far more than the $4.2 billion in spending reductions he requested in January, raising the specter of deeper cuts to education and state services if his bid for tax hikes fails. A proposal for hikes will be on the November ballot it seems. Tax revenue has lagged by $3.5 billion and state spending is $2.1 billion more than expected so far in the current budget. [Los Angeles Times]
The U.S. Department of Agriculture raised its forecast for near-term supplies of corn and projected a record harvest this autumn. Corn prices fell 2.5% on the news.
Toyota Motor Corp. sold the most cars and trucks in the world in the first three months of the year, after being the world’s biggest automaker from 2008 to 2010. Toyota’s recovery from the natural disasters in Asia (including the flooding in Thailand) is basically complete. Toyota also forecast its profit would double to a five-year high in 2012. [GM is back to No. 2 and Volkswagen No. 3.]
Shares in Fossil Inc. fell almost 40% following a disappointing first-quarter earnings report. Have any of you actually purchased anything in one of their stores?
Nothing like a great American success story and so we note the passing of hairstyling pioneer Vidal Sassoon at the age of 84. I had no idea until reading his obituary that he had served in Israel’s War of Independence in 1948. Sassoon opened his first salon in his native London in 1954 but moved to the States in the 1960s, and then Los Angeles in the early 70s, where he decided to make his home and perfect his wash-and-wear styles and products bearing his name. His advertising slogan, “If you don’t look good, we don’t look good,” was all over the television airwaves back in the day.
Growing up poor in London, Sassoon wanted to be a soccer player but his mother said he should be a hairdresser and as he once put it, “the mother got her way.”
And we note the passing of game show impresario, Bob Stewart, at the age of 91. All he did was create the hits “Password,” “To Tell the Truth,” and “The Price is Right.” Stewart once told the Washington Post in 1978, “People are curious about new shows. By the time they find out that what they are watching is crap, they’ve already watched it.”
According to a Rutgers University study, nearly 50% of grads over the last five years are unemployed or underemployed.
Sotheby’s sold Edvard Munch’s “Scream” for $120 million and this week, Christie’s sold a Mark Rothko painting from 1961, “Orange, Red, Yellow,” for $86.9 million.
Munch’s work is art. Rothko’s is garbage. But seeing as how his work was only expected to bring $45 million, there are some folks willing to pay up for crapola.
Now for you abstract expressionist fans out there who I’ve just offended, I do like Jackson Pollock’s work.
New Zealand is already fired up over the prospects for increased tourism as a result of the upcoming “Hobbit” movies, the first of which is due for release in December. The government is expecting Sir Peter Jackson’s two flicks to give an even bigger boost than the three “Lord of the Rings” pictures. After the 2001-2003 run for the latter, tourism spiked 40%.
My portfolio: Nothing to say on the China holding some of you are aware of. The company remains silent.
But next week it’s all about Facebook, which is slated to price on Friday. At least we hope it is mostly about Facebook. That would be a good sign; as in less talk of Europe. Now ask me if this is a likely outcome.
U.S. Treasury Yields
6-mo. 0.14% 2-yr. 0.26% 10-yr. 1.84% 30-yr. 3.01%
Treasuries continue to rally not only as a result of the turmoil in Europe and increased talk of a bailout for Spain, but also because of slowing economic activity around the world.
The Federal Reserve approved Industrial and Commercial Bank of China’s (ICBC) plans to acquire the U.S. subsidiary of Bank of East Asia, the first such U.S. approval for a Chinese firm. The Fed also gave permission to two other Chinese banks to increase their presence in the U.S.
In a statement the Fed said: “China’s largest banks, such as ICBC, use the ‘big four’ accounting firms. There is no evidence that Chinese accounting methods or practices…are unreliable.”
[On Friday, the Wall Street Journal reported that “China has instructed the Big Four auditors to hand over control of their Chinese operations to local partners by the end of the year and put a Chinese citizen at the top within three years.” Local CPAs currently account for 50% of all Big Four partners, according to the Ministry of Finance.]
Meanwhile, regarding the Chinese economy, the government released a slew of data on Friday. Inflation slowed to 3.4% in April from 3.6% in March vs. the government’s target of 4% for the year. Last year’s peak was 6.5%. [Food inflation has moderated to 7%.] The producer price index fell 0.7% from a year ago.
China’s home sales fell 16% in April from the prior month as the government continued its curbs on housing in toughening requirements for down payments and mortgages, as well as restrictions on the number of homes each family can buy.
Industrial production increased 9.3% last month from a year earlier, the slowest pace since 2009, while retail sales rose a less than expected 14.1% over year ago levels, also the least since ’09, and fixed-asset investment increased 20.2% in the first four months of the year, the slowest pace since 2001.
Earlier in the week, we learned April exports rose just 4.9% from a year ago (they were up 8.9% in March), while imports increased only 0.3%.
So all of the above, especially the last two items, speak to slowing external and internal demand, which in turn should allow the government to ease on the monetary front, especially in front of the political transition taking place later in the year. You want the people to be happy this fall, it goes without saying.
Authorities in Beijing said they plan to get rid of 1,200 high-polluting enterprises by 2015 to improve air quality in the capital. The worst polluters are foundries, chemical plants and furniture factories, according to the South China Morning Post.
India’s industrial production for the month of March fell unexpectedly 3.5%.
Iraq produced 3.03 million barrels of oil a day in April, or almost as much as Iran’s 3.2 mbd, according to the latest data out of OPEC. That’s quite an accomplishment as Iraqi production seemed stuck in the 2-2.5 mbd range since Saddam was ousted. Of course it helps that the likes of Exxon Mobil and BP are developing new fields. Plus it’s not as if Iraqis care if these two spill a few million barrels, as is their wont. [Sorry, cheap shot.]
The National Association of Realtors reported that the U.S. had 2.37 million existing homes for sale at the end of March, down 22% from a year ago, which is good. Better sales and declining inventories will help prices. In some areas such as Phoenix, Seattle and suburban Washington, D.C., there are shortages of lower-priced homes.
In another hopeful sign for housing, Fannie Mae reported a first-quarter profit and – for the first time since the government seized it in 2008 – does not need a quarterly infusion of taxpayer money. [Washington Post]
Coupled with sibling Freddie Mac, the two own or back 60% of the nation’s mortgages.
Net of dividends paid back to the government, the overall cost of Fannie’s bailout is $93.6 billion. Freddie’s net is $53 billion owed to taxpayers.
Despite the losses sustained by the studio’s epic flop, “John Carter,” Walt Disney reported strong fiscal second-quarter profits of $1.1 billion. Revenues at its parks and resorts jumped 10%, but studio revenues dropped 12%. However, the opening of “The Avengers” has staunched the bleeding on that front. The picture has already made more than $700 million globally before this weekend.
Separately, cable network ESPN continues to power Disney’s media networks as revenue in that segment of the operations increased 9% to $4.7 billion.
Sony shares tumbled to a 31-year low after the company reported a record annual loss of $5.7 billion. Sony, after four years of losses, is trying to convince analysts it will return to profitability in the current financial year.
Shares in Vertex Pharmaceuticals almost doubled after interim results showed its combination therapy for cystic fibrosis showed promise. One of the two drugs, Kalydeco, sells for nearly $300,000 a year.
McDonald’s reported a so-so global sales increase in April of just 3.3% at stores open at least 13 months, short of expectations. The figure in the U.S. was also 3.3%, while sales rose 3.5% in Europe and just 1.1% in the Asia/Pacific, the Middle East and Africa. Positive results in China were offset by negative results in Japan.
Berkshire Hathaway held its annual meeting last Saturday and the only memorable comment I saw was from Charlie Munger, Warren Buffett’s long-time partner, who compared program traders to rats in a granary. Couldn’t agree more. But as the Wall Street Journal’s Jason Zweig points out, Berkshire’s Class B shares “have underperformed the S&P 500 by 3.5 percentage points for the year to date through (5/4), by nearly five points in the past 12 months and by an annual average of eight percentage points in the past three years.”
According to the New York Times’ Nathaniel Popper and Credit Suisse Trading Strategy, “In April, the average daily trades in American stocks on all exchanges stood at nearly half of its peak in 2008: 6.5 billion compared with 12.1 billion.”
High-frequency traders now account for over half of all stock market activity, but even they have been doing less.
Separately, the New York Stock Exchange reported trading in the first quarter was down 16% quarter-over-quarter.
The U.S. Postal Service backed off its plan to close up to 3,700 low-revenue rural branches and instead will maintain lobby areas and P.O. boxes while reducing staff and hours. The USPS will also offer buyouts for postmasters, noting that more than 80% of its postal costs in rural areas are labor-related, and replace them with part-time workers.
California Gov. Jerry Brown said he needs far more than the $4.2 billion in spending reductions he requested in January, raising the specter of deeper cuts to education and state services if his bid for tax hikes fails. A proposal for hikes will be on the November ballot it seems. Tax revenue has lagged by $3.5 billion and state spending is $2.1 billion more than expected so far in the current budget. [Los Angeles Times]
The U.S. Department of Agriculture raised its forecast for near-term supplies of corn and projected a record harvest this autumn. Corn prices fell 2.5% on the news.
Toyota Motor Corp. sold the most cars and trucks in the world in the first three months of the year, after being the world’s biggest automaker from 2008 to 2010. Toyota’s recovery from the natural disasters in Asia (including the flooding in Thailand) is basically complete. Toyota also forecast its profit would double to a five-year high in 2012. [GM is back to No. 2 and Volkswagen No. 3.]
Shares in Fossil Inc. fell almost 40% following a disappointing first-quarter earnings report. Have any of you actually purchased anything in one of their stores?
Nothing like a great American success story and so we note the passing of hairstyling pioneer Vidal Sassoon at the age of 84. I had no idea until reading his obituary that he had served in Israel’s War of Independence in 1948. Sassoon opened his first salon in his native London in 1954 but moved to the States in the 1960s, and then Los Angeles in the early 70s, where he decided to make his home and perfect his wash-and-wear styles and products bearing his name. His advertising slogan, “If you don’t look good, we don’t look good,” was all over the television airwaves back in the day.
Growing up poor in London, Sassoon wanted to be a soccer player but his mother said he should be a hairdresser and as he once put it, “the mother got her way.”
And we note the passing of game show impresario, Bob Stewart, at the age of 91. All he did was create the hits “Password,” “To Tell the Truth,” and “The Price is Right.” Stewart once told the Washington Post in 1978, “People are curious about new shows. By the time they find out that what they are watching is crap, they’ve already watched it.”
According to a Rutgers University study, nearly 50% of grads over the last five years are unemployed or underemployed.
Sotheby’s sold Edvard Munch’s “Scream” for $120 million and this week, Christie’s sold a Mark Rothko painting from 1961, “Orange, Red, Yellow,” for $86.9 million.
Munch’s work is art. Rothko’s is garbage. But seeing as how his work was only expected to bring $45 million, there are some folks willing to pay up for crapola.
Now for you abstract expressionist fans out there who I’ve just offended, I do like Jackson Pollock’s work.
New Zealand is already fired up over the prospects for increased tourism as a result of the upcoming “Hobbit” movies, the first of which is due for release in December. The government is expecting Sir Peter Jackson’s two flicks to give an even bigger boost than the three “Lord of the Rings” pictures. After the 2001-2003 run for the latter, tourism spiked 40%.
My portfolio: Nothing to say on the China holding some of you are aware of. The company remains silent.