|
| Weekly Wrap Up |
Equities had a fairly solid week as the blue-chip DJIA ended gained 158.69 points and the broader S&P 500 was up 24.44 points. A slight pull back in oil prices and some encouraging economic data were two of the more important factors pushing stocks higher. On Tuesday (the first trading day of the week), oil futures fell 2.5% which enthused traders. Other commodity prices also pulled back a bit, leading some to believe that we may have seen the top of this so-called bubble. The housing market continues to be pressured as a home price index suffered its largest drop in its 20 year history. Wednesday saw stocks shake off the recent vice-like grip of oil prices as they advanced even as crude oil rose. A number of financial stocks were under pressure on Wednesday as traders wondered what else is hiding on the balance sheets of these companies. AIG (AIG: Charts, News, Offers) fell 4.7% after speculation that the insurance giant might have to raise more capital in addition to the $20 billion it is currently raising. Markets were firmly in the green Thursday as oil fell and the Commerce Department revised its first-quarter GDP estimate upwards to 0.9% from 0.6%. Dell (DELL: Charts, News, Offers) posted better than expected results after the close on Thursday providing a boost to the stock market (especially the NASDAQ) on Friday. Overall, the market continues to trade in a narrow range and a fair amount of money remains on the sidelines as traders try to feel out the direction of crude oil and the strength of the US economy, which is still, at least technically speaking, not in a recession. More Market News
|
| Economic News |
After oil hit its recent record of $135 a barrel, consumers and politicians started to lash out in every direction. Fishermen in France have been blockading ports and pouring oil on the roads in protest. British lorry drivers have paraded coffins through London as a token of the imminent demise of the haulage industry. In response, Gordon Brown, Britain's prime minister, is badgering oil bosses to increase production from the North Sea, while Nicolas Sarkozy, the president of France, wants the European Union to suspend taxes on fuel.
In America, too, politicians are haranguing oil bosses and calling for tax cuts. Congress has approved a bill to prevent the government from adding to America's strategic stocks of oil, and is contemplating another to enable American prosecutors to sue the governments of the Organisation of the Petroleum Exporting Countries (OPEC) for market manipulation. (Source: Economist) Full Story
|
Is the U.S. in the midst of an economic slowdown, or a full-blown recession? Two data reports released May 29 appeared to give fodder to debaters on both sides of the question. Releases on U.S. gross domestic product for the first quarter--revised higher--and initial jobless claims for the week ended May 24--showing a small increase--were largely in line with economists' expectations.
First-quarter real (inflation-adjusted) GDP growth was revised to 0.9%, from the 0.6% reported preliminarily, in line with the market consensus forecast. The upward revision was concentrated in foreign trade, where both exports and imports were revised lower, but exports less so than imports. Trade contributed 0.8 of a percentage point to growth. Inventories were revised downward, contributing only 0.2 of a percentage point, down from 0.8 in the advance. (Source: BusinessWeek) Full Story
|
Tuesday's Wall Street Journal strongly editorializes against the Warner-Lieberman cap-and-trade plan that allegedly will solve our alleged problem with global warming -- now called climate change. This plan is very similar to the one Sen. John McCain announced two weeks ago. The Journal argues that cap-and-trade "would impose the most extensive government reorganization of the American economy since the 1930s," including a huge tax increase, higher prices across-the-board, and significant losses to economic growth in the decades ahead.
But why do we need a planned economy for energy or anything else? Why not a fully deregulated free market for energy where prices allocate production and consumption? (Source: National Review Online) Full Story
|
| Business News |
The chief regulator of the nation's commodity markets will unveil early next week a set of policy changes to address public and political concerns that market malfunctions may be contributing to rising food and energy prices, according to people who have been briefed about the agency's plans.
The new regulatory steps will be announced by the Commodity Futures Trading Commission, which oversees exchanges that play a central role in establishing worldwide prices for commodities ranging from corn to crude oil.
The announcement may also shed some light on a commission investigation into a sharp spike in cotton prices this year, these people said. They discussed the proposal on the condition that they not be named, because the agency is still completing its plans. (Source: New York Times) Full Story
|
United Airlines (UAUA: Charts, News, Offers) is turning its attention inward to the painful cost cuts it will need to survive a forbidding economic environment as a stand-alone company now that its merger talks with US Airways (LCC: Charts, News, Offers) are ended and other tie-up possibilities exhausted.
It's an abrupt change of course for Chief Executive Glenn Tilton, a former oil executive who gained a reputation as a dealmaker after helping craft the $35 billion merger of Texaco and Chevron in 2001.
Tilton hasn't enjoyed similar success in the airline industry, where talks with Delta Air Lines (DAL: Charts, News, Offers) , Continental Airlines and US Airways failed to yield the deal he long advocated.
Now, the pressure is on Tilton to prove he's an airman. (Source: Chicago Tribune) Full Story
|
UBS (UBS: Charts, News, Offers) is expecting more losses from its property exposure as the bank’s troubles widen beyond the United States to mortgage business in other countries.
The warning from the Swiss bank, which was hit hard by the sub-prime mortgage crisis, emerged in a prospectus for a SwFr16 billion (£7.8 billion) share issue, published late on Friday.
UBS shares yesterday suffered their biggest fall in more than two months of trading, sliding nearly SwFr1.74, or 6 per cent, to SwFr28.2 in Zurich.
The group gave warning that it holds positions related to property markets in countries other than the United States on "which it could suffer losses". (Source: UBS) Full Story
|
|
| Technology Focus |
Multi-touch computing was presented this week as part of Microsoft's (MSFT: Charts, News, Offers) peek at its next operating system, but it’s not likely to be what determines its success.
The new operating system, called Windows 7, is being built upon the current one, Windows Vista, which has been scorned by many for its features, including its achingly slow performance and incompatibilities with existing software and hardware. Microsoft chairman Bill Gates and CEO Steve Ballmer, both at The Wall Street Journal's "D: All Things Digital" conference, where a preview of the new OS was shown, didn't address those issues. (Source: MSNBC) Full Story
|
Dell Inc. (DELL: Charts, News, Offers) reported a solid first quarter with earnings of $.38 per share on $16.08 billion in revenue (see conference call transcript). The results beat Wall Street estimates of $.34 EPS and $15.68 billion in sales. This is positive news for a company that has struggled greatly in the last few years, and could be read as a positive sign that the company's turnaround strategy is paying off. Since Michael Dell returned as CEO, the company has worked to become more competitive by cutting costs. The clear emphasis of this cost cutting effort has been to reduce redundant employees and in the first quarter Dell aggressively cut 3700 jobs--bringing the total over the past year to 7000. Operating expenses dropped 7% from the fourth quarter, thanks in large part to this downsizing. The company hopes to attain $3 billion in cost savings by 2011. (Source: Seeking Alpha) Full Story
|
| Your Money |
When Nitish Khanapure's second child was born he took four weeks off from his job as a technology manager for Washington Mutual Bank and got paid during his time at home bonding with his newborn.
It wasn't his employer that ponied up the money for the non-vacation time he used. The income came thanks to the paid family leave law in the state of California.
"It's kind of a incentive to take some time off and help with the newborn," he says about the law, which went into effect in 2005. (Source: MSNBC) Full Story
|
Escalating gas prices are prodding businesses and local governments to take a drastic step to curb costs: Many are cutting back to four-day workweeks, with employees generally working four 10-hour days instead of five eight-hour days.
In most cases, they're acting because of pressure from employees who want shorter workweeks, which generally mean lower driving costs. Companies and local government offices are shortening individual workweeks with staggered schedules, but in most cases, staying open five days.
It's a sign of how deeply gas prices are cutting into employees' pay and businesses' bottom lines. The last time four-day workweeks came into vogue was during the gas run-up in the 1970s. (Source: USA Today) Full Story
|
|
|
|
|
