Business News: Jobs Data, FDO, CEPH, QE3, Mortgages, Japanese Autos, Canadian Inflation, Oil Inventory
Today's Business Summary highlights economic data and business news from: ADP on Private Payrolls, Challenger on Job Cuts, the Mortgage Bankers Association on Mortgage Activity, Fed indications toward QE3 completion, Family Dollar's strong quarter, Cephalon's intriguing trading and its hostile bid from Valeant Pharmaceuticals, logistical issues at Japanese automakers, Obama's energy push, the EIA Petroleum Status Report, Canadian inflation, the repercussions of Japan's disaster, Salesforce.com's acquisition and more.
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.
Relative Tickers: Nasdaq: CEPH, NYSE: VRX, NYSE: FDO, NYSE: TM, NYSE: HMC, Nasdaq: NSANY, NYSE: BP, NYSE: F, NYSE: GM, NYSE: WMT, NYSE: JPM, NYSE: TSN, NYSE: AYI, Nasdaq: AETI, NYSE: AMN, Nasdaq: AMCF, AMEX: BNX, Nasdaq: CWS, OTC: CDELB, Nasdaq: DSCI, AMEX: DRJ, Nasdaq: DRYS, Nasdaq: DIET, AMEX: LZR, NYSE: ES, Nasdaq: ENMD, AMEX: EVK, Nasdaq: VIFL, NYSE: GMR, Nasdaq: GAI, AMEX: GRZ, NYSE: GU, AMEX: INV, Nasdaq: JOSB, Nasdaq: LACO, NYSE: LNN, Nasdaq: MERR, NYSE: MOS, Nasdaq: PTIX, NYSE: SIG, NYSE: UNF, Nasdaq: UNTK, Nasdaq: VCGH, AMEX: WTT, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ
Business News: ADP and Challenger Jobs Data, FDO, CEPH, QE3, Mortgages, Japanese Autos, Canadian Inflation, Oil Inventory
By "The Greek"
ADP Private Employment Report
ADP published its best estimate today for March Nonfarm Payrolls, seeing a 201K net increase in private market jobs. The result was just slightly less than the revised February net addition of 208K jobs. ADP reports that the result was in line with consensus expectations for ADP's data and for the government's data, due on Friday. The pace of job increase was significantly better through the first quarter of 2011, versus the last quarter of 2010.
Challenger Announced Corporate Layoffs
After a spike up in February, Challenger, Gray & Christmas reported that Announced Corporate Layoffs fell 18% in March, to 41,528. First quarter job cuts, at 130,749, were the lowest measured since 1995. Job cuts were still much improved from the prior year period, down 39%. However, the public sector saw job cuts increase by 17%, as municipalities and federal government budget cutbacks force layoffs. That said, even government layoffs were down from a year ago, falling by 62%.
Mortgage Activity Eases
As rates moved back up on easing concerns about the Middle East and Japan, mortgage refinancing activity led overall mortgage activity lower. For the period ending March 25, the Market Composite Index of mortgage activity fell 7.5% on a seasonally adjusted basis. The Refinance Index dropped 10.1%, as contracted rates on fixed rate mortgages of 30-year and 15-year durations increased to 4.92% (from 4.8%) and 4.16% (from 4.02%), respectively. Purchase activity also eased, but by just 1.7% on a seasonally adjusted basis, as the spring buying season is getting underway.
Fed Men Support Completion of Quantitative Easing
Two Federal Reserve Bank Presidents, Boston's Eric Rosengren and Chicago's Charles Evans, voiced support for the full completion of the Fed's $600 billion quantitative easing program scheduled to last through June. The argument by some Fed men that the economy is on "firmer footing," and so might not need the full program, is coming into question of late, given new economic data and developments in the marketplace and global economy. The duo of Fed Presidents intimated that it was likely still too early to pull stimulus and that it appears the target figure of $600 billion is appropriate.
Obama Pushing Energy Today
President Obama is delivering a speech today to promote energy independence in the wake of disruptions abroad which highlight the vulnerability of supplies. The goal is to reduce oil imports by one-third over the next decade through the development of alternative fuels and energy. In a teaser last night, the President said, "Let's actually have a plan. Let's, yes, increase domestic oil production, but let's also invest in solar and wind and geothermal and bio-fuels and let's make our buildings more efficient and our cars more efficient."
Japan Might be Bigger Problem than Experts Suggest
Reports that the nuclear situation could drag out like the BP (NYSE: BP) oil spill did have many quick-to-speak market strategists looking foolish today. Japan's nuclear experts are now saying that it could take a substantial amount of time to stabilize Fukushima. As this catastrophe drags out, it weighs on the world's third largest economy. Uncertainty is a heavy weight for markets to bear, and it appears gurus were wrong in their overlooking what is a very complex and unique situation in Japan.
Portugal Says A-Okay for 2011
Despite bearing a downgrade by credit rating bully S&P on Tuesday, Portugal's Secretary of State for Treasury and Finance, Carlos Costa Pina, said Portugal is in position to meet its bond obligations for 2011, especially the redemptions of long-term debt that will take place in April and June. Costa Pina suggests his country will do all it can to avoid taking foreign aid, as it is viewed internally as a great burden on both public and private sector growth. Indeed, Greece also tried to avoid taking help, but the markets forced it to by pressuring its cost of borrowing beyond its ability. The recent government turnover only increased uncertainty in Portugal and pushed bond yields higher. The outlook is not a bright one for Portugal and so credit-rater S&P is probably right, but after the fact as is proving a trend on Water Street (i.e. US MBS).
Canada Contributes to Inflation Fears
Canada reported its industrial product and raw materials prices increased more than expected in February. The North reported that industrial product prices increased 0.7% in February, against expectations for a 0.3% increase. The gain followed a 0.4% rise in January and a 0.8% increase in December. Prices were up 3.4% year-to-year. The Raw Materials Price Index rose 1.8% in February, and was three times more than economists foresaw.
EIA Petroleum Status
With Saudi Arabia on its horse to make up for the supply disruption from Libya, oil inventory increased again by 2.9 million barrels in the latest week. However, for the period ending March 25, total motor gasoline inventory again dropped precipitously, by 2.7 million barrels this time. The Saudis are saying they will send more oil conducive to gasoline refining to make up for the loss of high quality oil usually delivered from Libya. Indeed, US interests are at stake in Libya, as the price of gasoline is growing intolerable to American consumers.
Corporate News Wire
Family Dollar (NYSE: FDO) reported a penny better quarterly EPS than analysts had forecast on average (even after their adjustment higher in early March), and FDO forecast annual income ahead of analysts' estimates. As a result, its shares are higher today, but down from their premarket scramble. Family Dollar sees full year EPS at $3.13 to $3.23, ahead of the analysts' consensus for $3.12.
Cephalon (Nasdaq: CEPH) is trading at a $75 and change today, above the $73 per share hostile takeover bid by Valeant Pharmaceuticals (NYSE: VRX), Canada's largest drugmaker. Valeant's bid marked a 24% premium to CEPH's closing price Tuesday. Valeant is an aggressive acquirer, and it looks like the market is anticipating Cephalon's playing hard to get might work in its shareholders' favor. Or, investors may be indicating the possibility of a bidding war. Otherwise, if the deal were accepted, CEPH's shares would be trading at a slight discount to the bid price.
Salesforce.com (NYSE: CRM) is adding a social media aspect through its acquisition of private firm Radian6, announced Wednesday. The deal, costing $326 million in cash and stock, is seen as an asset to the cloud software writer's clients ability to track customer trends on social media sites.
Japanese automakers Toyota (NYSE: TM), Honda (NYSE: HMC) and Nissan (Nasdaq: NSANY) are experiencing logistics issues tied to car parts deliveries from shutdown plants in Japan. Toyota has reportedly told its US dealers to stop ordering certain parts, for fear it will run out. Meanwhile, testing for radiation at foreign locations poses threat to further taint the Japanese automakers' brands and deliveries.
Wal-Mart (NYSE: WMT) is holding an international conference today for the investment community. The J.P. Morgan (NYSE: JPM) Global Protein Conference highlights a presentation by Tyson Foods (NYSE: TSN). The earnings schedule highlights reports from Acuity Brands (NYSE: AYI), American Electric Technologies (Nasdaq: AETI), Ameron International (NYSE: AMN), Andatee China Marine Fuel Services (Nasdaq: AMCF), Banks.com (AMEX: BNX), China Wind Systems (Nasdaq: CWS), Citadel Broadcasting (OTC: CDELB), Derma Sciences (Nasdaq: DSCI), Dreams (AMEX: DRJ), DryShips (Nasdaq: DRYS), Ediets Com (Nasdaq: DIET), Emergent (AMEX: LZR), EnergySolutions (NYSE: ES), Entremed (Nasdaq: ENMD), Ever-Glory (AMEX: EVK), Family Dollar (NYSE: FDO), Food Technology Services (Nasdaq: VIFL), General Maritime (NYSE: GMR), Global-Tech Advanced Innovation (Nasdaq: GAI), Gold Reserve (AMEX: GRZ), Gushan Environmental Energy (NYSE: GU), Innovaro (AMEX: INV), Jos. A. Banks (Nasdaq: JOSB), Lakes Entertainment (Nasdaq: LACO), Lindsay (NYSE: LNN), Merriman (Nasdaq: MERR), Mosaic (NYSE: MOS), Performance Tech (Nasdaq: PTIX), Signet Jewelers (NYSE: SIG), Unifirst (NYSE: UNF), UniTek Global (Nasdaq: UNTK), VCG Holding (Nasdaq: VCGH), Wireless Telecom (AMEX: WTT) and others.
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