- “Betting against the American consumer is one of the biggest mistakes Wall Street bears have made this year,” Tom Petruno says.
- No one wants to back down in this Apple/Adobe tiff. Adobe CTO Kevin Lynch offers his two cents in a blog post. And Adobe CEO Shantanu Narayen sits down with WSJ’s Alan Murray and fires back at Apple. Here’s Jobs’ lengthy missive posted yesterday on Apple’s website.
- Yahoo (YHOO) CEO Carol Bartz tries to downplay the recent exodus of executive talent. But BoomTown blogger Kara Swisher begs to differ. “The continuous brain drain is perhaps the company’s most profound dysfunction.”
- Economy has been expanding for three consecutive quarters, but the overall picture remains mixed, The Economist’s Free Exchange blog says. “Growth is clearly better than no growth. But there are real concerns with the composition of output.”
- GDP growth at 3.2% should confirm the recession’s over. But delving deeper into the details shows the report’s not quite so rose. “But I suppose an optimist could see in all this the potential for much better numbers to come once the recovery gets on track,” James Hamilton writes.
- The new GM’s back and its poised for success. At least that’s the message Vice Chairman Bob Lutz relays on GM’s FastLane Blog today, which marks his last day at GM. “I only have about 47 years of experience on which to base this opinion, but I believe GM is poised to win.”
- “Was Goldman a badder bank than other banks? No. Did other firms put their own free-wheeling interests before those of their clients? Yes. Is Goldman now a victim of its own, home-grown, blinding arrogance? Absolutely,” FT’s Alphaville says.
- “Google is going to have a problem because Google is only known for search,” Yahoo CEO Carol Bartz tells BBC. “They’ve got to find other things to do. Google has to grow a company the size of Yahoo every year to be interesting.”
- In the wake of Microsoft (MSFT) shelving plans for its two-screen, tablet-style device, is Hewlett-Packard (HPQ) also stopping the development of its tablet computer? That’s what Michael Arrington alleges at TechCrunch, citing a source who has been briefed on the matter.
- The Kentucky Derby looks even more wide open than ever this year.
US stocks plunge and close near session lows, capping off a volatile week, as financials lead the selloff amid reports of a criminal probe into Goldman Sachs.
DJIA closes down 159 to 11009, marking its third triple-digit move this week. The Dow dropped 214 points on Tuesday amid renewed contagion fears in Europe. But the Dow recovered much of the losses on Wednesday and Thursday, gaining 122 points yesterday before today’s big plunge. The volatility marks a contrast from the slow and steady rise the markets experienced through much of April.
JPMorgan, Caterpillar, American Express and GE all drop more than 3%. Still, the Dow closes up 1.4% in April, marking the third straight month of gains. Index has also risen in 12 of the last 14 months overall.
But today’s losses and increasing regulatory scrutiny of Wall Street leave some doubt about the rally’s sustainability as the calendar flips to May.
S&P 500 drops 20 to 1187 and Nasdaq Comp declines 51 to 2461. Financials, tech and industrials lead the declines as weaker-than-expected earnings and a drop in consumer confidence weigh on the market. 1Q GDP also comes in slightly weaker than expected.
Goldman falls 9.4%, finishes April down 15%, its worst month since October 2008 and seventh biggest monthly percentage drop in the stock’s history.
I gotta tell you, after Madeleine and I taped this segment, the two of us walked away and said to each other, wow, that was really gloomy. And we didn’t even coordinate the black clothing.
I know everybody wants to just go with the flow on this smiley-faced recovery thing, but there are still some serious, actual issues out there. They’re embedded in today’s GDP numbers, they’re embedded in the Greece situation, they’re even embedded in Goldman’s theatrics.
If you’re wondering, or have been wondering, where the bailout express ends, the answer may be it doesn’t. At least, that’s the way it’s looking these days. Back in the day, it was the odd one-off, like Chrysler. Then it was emergency bailouts, Mexico, Long-Term Capital Management. Then it was serial bailouts, AIG, Citigroup, Northern Rock…ah, you know, everybody.
Now, it’s becoming nations, not just the kinds of “developing” nations that everybody expects will muck up their finances, but “developed” nations, mature, advanced, cultivated nations, like Greece.
European leaders are going to dither this weekend about Greece this year, when the market has not only moved on to years two and three, but it’s also thinking about who’s going to be next. Spain? Portugal? Italy? “Basta” is Italian for “enough,” although it sure doesn’t seem like anybody’s saying it in any language.
If you say yes to Greece, how do you say no to the others? And the others, incidentally, are all larger than tiny Greece. And lest you think this is just some European problem, know two things. Europe is the United States’ largest trading partner. And, if the IMF is taking the lead here, the United States is that organization’s biggest contributor. So indirectly, and not all that indirectly either, We the People will once again be bailing out Them the Profligates.
Gluskin Sheff’s David Rosenberg nails it, I think:
First we have governments bailing out banks (and auto companies and mortgage providers), homeowner debtors, and now we have governments bailing out governments. When does someone finally say — enough is enough!
Oh no — bank ABC is too big to fail. Company XYZ is too complex to fail. And now country GRK is too interconnected to fail. Give me a giant break.
Look, Greece is not going to “fail”. They are going to default. There will be a debt restructuring. And there will be some recovery. Bondholders will take a haircut — why shouldn’t they? Why should Angela Merkel care if German banks own Greek bonds? Greece has been in default in its recent 200-year history almost half the time. So has most of Latin America come to think of it. What about Russia?
Let’s see if we can find a common string in today’s data.
Gross domestic product in the first quarter rose at a 3.2% annual rate, “driven by businesses stocking up on goods for a strengthening consumer demand stoked by the lowest core inflation number in 51 years.” The “core” inflation rate, excluding food and energy, rose 0.6% in the first quarter, a big drop from 1.8% in the fourth.
That was the lowest reading since 1959, back in the Elvis and Sputnik days. Oh, let’s twist again, like we did last summer.
Let me ask you this: how strong can consumer demand possibly be if inflation is downright disinflationary? We’ve seen the Fed pump more money into the system than at any time in its history, and yet inflation keeps slipping. That’s simply because consumers aren’t spending more money.
Inflation is driven by the velocity of money, basically how rapidly a dollar passes from one person to another to another. If people aren’t spending money, you won’t get inflation. Which is why despite the Fed’s ZIRP rates policy, despite the nearly $2 trillion cash injection, there’s no sign of inflation. People aren’t spending. Don’t get me wrong. People are spending some money — I’ve got to buy a Communion present this weekend, and I need some new work shirts, and we got pizza last night — but they’re not spending enough to drive even “normal” inflation, forget some kind of inflation the Fed would actually, like, have to worry about.
So you tell me where this big recovery’s coming from.
You’d think that with the jobs market on the mend, as they say, that the nation’s big publicly traded staffing firms would be going gangbusters. But staffing companies are caught at the same point as the jobs market itself, not in free fall anymore, but not really that strong either. From today’s Upshot:
Results from job-staffing and services companies indicate healing in the labor market, but a rebound based on new job creation remains in the future.
The pace of improvement “is a little uneven, it’s more measured than we would like,” said Robert Half International Inc. Finance Chief Keith Waddell on Tuesday. Robert Half’s first-quarter revenue fell 10% to $737 million, while net income eased about 3% to $8.5 million.
Staffing companies are at the heart of the biggest question surrounding the economy: the health of the job market. Judging by results of companies including Robert Half, Manpower Inc. and Heidrick & Struggles International Inc., there is no momentum in the labor market.
To be honest, we took the tone we took because we were surprised to find that the staffing companies not doing better. We expected they’d show some fairly gangbuster results, given that temp has been the one bright spot for the jobs market.
But Heidrick & Struggles posted a 1Q loss Tuesday that missed Street views, and investors pounded the stock, sending it down 9.5%. Robert Half posted first-quarter results on Wednesday that were also deemed unsatisfactory by the Street, and investors drove the shares down 10%. The market clearly expected more from those guys.
We don’t want to make too much out of it, well, more than a column in any case, but it’s interesting nonetheless.
Little sign of follow-through to yesterday’s run-up in US stock markets, with premarket futures pointing to a flat open. Asian stocks were solid overnight, but European markets are mostly lower. Dollar’s weaker, USD index recently at 81.78.
Stream of earnings reports eases a bit, Chevron reports 1Q before the open. First look at 1Q GDP due at 8:30 a.m., expectations looking for growth around 3.3%. NY ISM April business conditions index also at 8:30 a.m.; Chicago’s ISM set for 9:45. Reuters/Univ of Michigan final look at April consumer sentiment at 9:55 a.m.
Goldman Sachs shares off 3.2% premarket on word that Federal prosecutors are conducting a criminal investigation of the firm.
S&P futures up 1.40, DJ futures up 14. Ten-year flat, yield at 3.73%.
- The Apple/Adobe war over Flash jumps to a new level: Apple (AAPL) CEO Steve Jobs uncharacteristically pens a post weighing in on his decision not to support Flash.
- Hewlett-Packard (HPQ) acquiring Palm prompts Digital Daily blogger John Paczkowski to ask: “Why spend $1.2 billion on a company whose downward spiral has been the talk of Silicon Valley for the past year?” The answer is relatively simple — H-P wants its own operating system, which is exactly what Palm has to offer.
- Hewlett-Packard (HPQ) is taking a page out of Apple’s playbook: It wants an operating system it completely controls without relying on Microsoft’s (MSFT) Windows. Unfortunately, Dan Frommer at Silicon Alley Insider isn’t optimistic about the plan.
- “The uptrend remains in place, and until it is broken we maintain an upside bias,” Barry Ritholtz says. “We are not at the sorts of extremes yet that make the contrarian in us scream ‘sell.’”
- Initial jobless claims dropped 11,000 to 448,000 last week. “If you’ve been following the soap opera with this data series you know that we’ll need to see something more dramatic before the central bank changes its monetary tune of standing pat,” James Picerno writes at The Capital Spectator.
- Paul Kedrosky looks at stocks vs flows relating to consumer solvency.
Far as I’m concerned, traders are just whistling past the proverbial graveyard if they think this sovereign-debt thing has been solved just because S&P didn’t downgrade anybody for a day, but whatever. Let the kids have their fun.
US stocks post their biggest gain in almost two months as investors put worries about European debt woes aside for a day and focus on strong earnings reports and improving manufacturing conditions in the Midwest.
DJIA rises 122 to 11167, its biggest gain since March 5. S&P 500 jumps 15 to 1207 and Nasdaq Comp rises 40 to 2512. All 10 S&P 500 sectors finish higher, with finanicals, industrials and consumer discretionary leading the way.
Investors were jittery after S&P downgraded Greece, Portugal and Spain. But no one’s downgraded today and stocks soar.
Go figure.
Hewlett-Packard (HPQ) proves to be Palm’s white night, swooping in and buying the embattled smartphone pioneer late yesterday for about $1B. Palm shares soared 26% to $5.84, above H-P’s $5.70 bid. H-P drops 0.8% to $52.88.
Exxon’s 1Q earnings soared 38%, but still fell short of analysts’ expectations, in part due to a $200 million charge tied to US health care legislation. Shares fell 0.8% to $68.66.
And WSJ just reported Continental (CAL) and UAL Corp.’s (UAUA) United Airlines are expected to announce Monday that they’re merging. A combination would form the world’s largest airline by traffic.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
David Oreck, founder of a well-known maker of vacuums and air purifiers, says he’s upset his namesake company is in bankruptcy. He says Nashville, Tenn.-based Oreck Corp. was a perfectly profitable company when he sold his stake in it to a private equity firm in 2004. He blames the firm, New York-based American Securities Capital […]
