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| Weekly Wrap Up |
Equities tried a number of times during the past week to stage a rally but each time were held in check and sent sharply down by a number of events, primarily the continued rise in crude oil prices. The blue chip DJIA had its worst week in three and a half months as it dropped over 500 points or about 3.9%. The other major indices including the S&P 500 (off 3.46%) were also comfortably in the red for the week. Crude oil prices rose 4.7% during the week and have been on the rise all May. This has put a premature end to the springtime really that we saw a little bit of in April because oil is such an overriding factor especially as far as consumer spending is concerned. The other major events during the week included news that Microsoft (MSFT: Charts, News, Offers) may be going after Yahoo (YHOO: Charts, News, Offers) again in some shape or form, the producer price index (PPI) rose more than expected, the Fed put out signals indicating that it is pretty much done cutting interest rates for now, the index of leading economic indicators came out stronger than expected (supporting those people who think this recession will be shallow and is close to being done) and Ford (F: Charts, News, Offers) announced that it doesn’t think it will return to profitability in the US in 2009, as earlier expected. The housing sector continues to be weak as demonstrated by a couple of economic reports, including existing home sales. Anheuser-Busch (BUD: Charts, News, Offers) is reportedly the target of European brewing giant InBev though all signs indicate that the American beer maker won’t agree to a takeover without a serious fight. More Market News
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| Economic News |
Sounding a gong couldn't have made it clearer. Federal Reserve officials are putting out the word that further interest rate cuts are unlikely.
Fed Governor Kevin Warsh ditched the central bank's cryptic word tangles and actually waxed poetic. "Even if the economy were to weaken somewhat further, we should be inclined to resist expected, reflexive calls to trot out the hammer again," Warsh said, referring to the Fed's key interest rate.
Speaking more central-bankerly, the Fed's No. 2 official, Vice Chairman Donald Kohn, said the current stance of interest-rate policy "appears to be appropriately calibrated for now." Janet Yellen, president of the Federal Reserve Bank of San Francisco, called the current level of rates "appropriate." (Source: Associated Press) Full Story
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Financial markets received a jolt on May 20 after a hotter-than-expected reading on a widely watched measure of wholesale inflation in April. The headline producer price index (PPI) rose 0.2% in April, but the core PPI, which excludes food and energy prices, rose 0.4%. The consensus estimate of economists was for the reverse: 0.2% for the core rate and 0.4% for the total.
U.S. stock indexes slumped on May 20 after the release of the report, as inflation-wary investors headed for the exits. Of the major U.S. market benchmarks, the blue-chip Dow Jones industrial average was the worst performer, sinking nearly 200 points, or 1.5%, on the session. Treasuries rose on the back of a flight to safety out of equities, while the dollar declined vs. other major currencies. (Source: BusinessWeek) Full Story
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When T. Boone Pickens talks, oil traders listen.
The legendary oilman, who runs a multibillion-dollar commodities hedge fund in Dallas, appears frequently on CNBC to predict oil prices. He's often correct. So nearly every time he makes a new prediction, the market moves that very day in the direction he forecasts.
"I think you're going to see $150 before the end of the year," Mr. Pickens told CNBC viewers Tuesday.
Sure enough, oil futures ended the day 1.6 percent higher at $129.07 a barrel, another record. (Source: Dallas Morning News) Full Story
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| Business News |
Power company NRG Energy (NRG: Charts, News, Offers) has made an unsolicited bid to buy competitor Calpine for about $11 billion in stock, the companies said on Wednesday.
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Calpine, which emerged from bankruptcy earlier this year, said it was reviewing the bid to determine if it was in the best interests of its shareholders.
It said it received the unsolicited proposal from NRG on May 14. Under the terms of that proposal, Calpine shareholders would receive 0.534 shares of NRG stock for every Calpine share. That would value Calpine shares at around $22.70 a share, giving shareholders a premium of about 6.7 percent based on the shares' Wednesday closing prices. (Source: New York Times) Full Story
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America's cornerstone home-building-renovating retailer Home Depot (HD: Charts, News, Offers) released quarterly earnings numbers pre-market but most of the damage had already been done through lowered expectations as the housing and credit mess in the United States started to spill over into the general economy.
Simple fact: Lots of bad mortgages, and corresponding foreclosures mean that folks aren't likely to go out and buy that circular saw and loads of 2x4s for that 2nd story home extension. Expectations had been lowered tremendously for Home Depot on a year over year basis and the company only grazed by when using typical Wall Street accounting math.
Earnings fell over 60%, from $1Billion to $356Million ($0.21/share) and at the top line, Revenue fell from $18.5Billion to $17.9Billion. (Source: iStockAnalyst) Full Story
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U.S. airline shares fell on Friday on new concerns about unrelenting fuel cost pressures as global oil prices moved higher again.
A new Wall Street forecast of widening quarterly losses for the airlines further stoked the view that a steep decline in fuel costs appears the only way for some carriers to avoid bankruptcy.
US Airways Group Inc (LCC: Charts, News, Offers) led the sector decline with shares dropping 85 cents, or 16 percent, to $4.37 in afternoon trading on the New York Stock Exchange.
United Airlines, a unit of UAL Corp (UAUA: Charts, News, Offers), was off nearly 6 percent to $7.67; Continental Airlines Inc (CAL: Charts, News, Offers) fell 7 percent to $13.30; Delta Air Lines Inc (DAL: Charts, News, Offers) was down nearly 3 percent to $5.61; and American Airlines, a unit of AMR Corp (AMR: Charts, News, Offers), was 2 percent lower to $6.42. (Source: Reuters) Full Story
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| Technology Focus |
Even when the sky is blue over Quincy, clouds hang in the air. The small town in the centre of the state of Washington is home to half a dozen huge warehouses that power the global "computing clouds" run by internet companies such as Yahoo! (YHOO: Charts, News, Offers) and Microsoft (MSFT: Charts, News, Offers). The size of several football pitches, these data centres are filled with thousands of powerful computers and storage devices and are hooked up to the internet via fast fibre-optic links.
Yet even more intriguing than the buildings' size is their location. Quincy is literally in the middle of nowhere, three hours' drive from the nearest big city, Seattle. But it turns out to be a perfect location for data centres. As computing becomes a utility, with services that can be consumed from everywhere and on any device, ever more thought is being put into where to put the infrastructure it needs. (Source: Economist) Full Story
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Canada's highest court is moving to settle a dispute over the buyout of the country's largest telecom company that could set an important precedent on the legal position of bondholders.
The Supreme Court of Canada said Monday it would expedite an appeal by BCE (BCE: Charts, News, Offers) of a lower court ruling that blocked the C$34.8 billion ($35.2 billion) leveraged buyout of the parent company of Bell Canada by the Ontario Teacher's Pension Plan.
On Wednesday, an appeals court unexpectedly ruled against the takeover, siding with bondholders who had sued to prevent the deal on the grounds that it would load the company with debt and devalue their holdings. (Source: Forbes) Full Story
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Although the Internet was started here, the U.S. can't seem to catch up with other developed nations when it comes to giving citizens access to high-speed connections.
For the second year running, the U.S. ranked 15th among the 30 members of the Organization for Economic Cooperation & Development in terms of broadband availability. Denmark ranked first again in the annual OECD survey, followed by a host of European and Asian nations. Indeed, while the number of Americans with access to broadband service rose 20% last year, to nearly 70 million people, the most in the OECD, that amounted to just 23 of every 100 residents. By contrast, the top five countries in the OECD ranking all sport per-capita penetration rates of better than 30%.
Why isn't the U.S. up to speed online? (Source: BusinessWeek) Full Story
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| Your Money |
The rubber is meeting the road in automakers' quest for a quick gas mileage boost.
Automakers have developed a budding affection for "low-rolling-resistance" tires to squeeze a few extra miles per gallon from every model.
"They are putting much more emphasis on fuel economy than ever before" when it comes to picking tires, says Mike Martini, president of the Bridgestone division that supplies automakers.
Gas-saving tires have rolled out in the past, but attracted limited interest in an era of low-cost fuel. (Source: USA Today) Full Story
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No one ever said parenting was easy. That said, some parenting issues can be much harder to navigate than others.
What do you do, for instance, if your grown child is struggling under the weight of serious financial problems?
Every family and every circumstance is different, of course, but the dilemma many parents face is the same: Should you or should you not come to the rescue? (Source: MSNBC) Full Story
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