Sunday, January 29, 2012

Market slips after rally as housing sputters

Wall Street dipped on Thursday as housing and financial stocks declined after weaker-than-expected housing data gave investors reason to pause after a recent rally.

Housing-related stocks declined after data showed sales of new single-family homes fell for the first time in four months in December and were shy of Wall Street expectations. The data followed Wednesday's soft pending home sales report and dented optimism that the housing market may have reached a bottom.

Traders said the market's surprising advance at the start of 2012 meant investors are paying close attention to economic reports that differed from the trend of an improving recovery.

"They are paying attention to everything, with the market up where it is right now. For the fire to continue burning, you need more fuel," said Uri Landesman, president at Platinum Partners in New York

Stocks began higher, helped in part by the Federal Reserve's vow on Wednesday to keep interest rates near zero at least until the end of 2014. Investors bet more money would be driven into risky assets, contributing to a rise in the benchmark S&P index of more than 5 percent for the year.

Toll Brothers Inc (NYSE:TOL - News) lost 3.2 percent to $22.47. The PHLX housing sector index (Nasdaq:^HGX - News) declined 1.1 percent. Banks, which stand to benefit from a recovery in housing, also fell. The KBW Bank index (Philadelphia:^BKX -News) dropped 1.8 percent. SunTrust Banks Inc (NYSE:STI -News) shed 5.2 percent to $20.50 after Deutsche Bank lowered its rating on the stock.

Stocks rose at the start of the session after data showed orders for durable manufactured goods rose more than expected in December, while unemployment benefit claims last week rose only moderately.

Caterpillar Inc (NYSE:CAT - News) kept the Dow in positive territory as its shares gained 2.7 percent to $112. The manufacturer posted a jump in quarterly earnings that far exceeded Wall Street expectations on increased global demand for construction machinery and mining equipment.

The Dow Jones industrial average (DJI:^DJI - News) gained 11.27 points, or 0.09 percent, to 12,768.23. The Standard & Poor's 500 Index (SNP:^GSPC - News) dropped 4.26 points, or 0.32 percent, to 1,321.79. The Nasdaq Composite Index (Nasdaq:^IXIC - News) lost 8.45 points, or 0.30 percent, to 2,809.86.

3M Co (NYSE:MMM - News), a conglomerate with operations throughout the economy also supported the Dow after it reported higher-than-expected quarterly earnings as demand from industrial and transport markets offset weak sales to makers of consumer electronics. The shares rose 1.4 percent to $87.71.

This is one of the busiest weeks of earnings season, with 117 S&P companies expected to report. According to Thomson Reuters data, 59 percent of the 152 companies in the S&P 500 that have reported earnings beat analysts' forecasts, down from the 70 percent beat rate in recent quarters at this stage.

AT&T Inc (NYSE:T - News) posted a $6.7 billion quarterly loss on a break-up fee for its failed T-Mobile USA merger and a pension-related charge on top of costly subsidies for smartphones. The shares fell 2.2 percent to $29.54.

Amgen Inc's (NasdaqGS:AMGN - News) shares fell 1.3 percent to $68.30 and weighed on the Nasdaq after the world's largest biotechnology company said it would pay more than $1 billion to buy Micromet Inc (NasdaqGS:MITI - News), a deal that would give it access to the company's novel cancer treatment technology.

Micromet's shares jumped 31.9 percent to $10.92 and were the most heavily traded on Nasdaq.

(Reporting By Chuck Mikolajczak; Editing by Kenneth Barry)

Saturday, January 28, 2012

Release of Oil Reserves Not in the Cards Now: IEA|related|story|text|&par=yahoo

Despite reports suggesting that Iran is considering a halt to all oil exports to Europe as a response to European Union and US sanctions, the head of energy watchdog the International Energy Agency said that releasing reserves under its control is not something under consideration now.

Maria van der der Hoeven, the executive director of the IEA told CNBC on Thursday that "releasing strategic reserves would only be a question if there is a real and serious disruption of supply. And that is not the case at this moment."

Weighing in on the actual likelihood of Iran implementing a ban, van der Hoeven said that it was very difficult to predict what will happen. However, she explained: "As far as I can see now, Iran is very dependent on its oil exports to generate income. On the other hand, we all know what is going on, and many industries are already looking for alternatives if something like that happens."

In previous supply shocks, Gulf Cooperation Council (GCC) member states have stepped in to meet energy demand. Will they do it again to preserve stability? "Yes," van der Hoeven said, "at this moment, based on what I'm hearing from producers in the Gulf, I'm confident that they will do it again."

World Economic Forum in Davos

Commenting on the possibility of an Iranian ban on imports to Europe, Olivier Jakob from energy research firm Petromatrix wrote that "given that the EU embargo officially only starts in July, that would move Iran from being a 'victim' to being an aggressor and would also provide justification for the GCC countries to replace Iran, hence we are not sure that Iran has a lot to gain politically from being pro-active on sales restrictions to Europe."

On Wednesday, the International Monetary Fund warned that a halt in Iran oil could push crude prices up by 30 percent, or $20 to $30.

© 2012

Friday, January 27, 2012

Dimon: Impact of Greek Default on US Banks Almost Zero


The impact of a Greek default on American banks would be negligible, JP Morgan Chase CEO Jamie Dimon told CNBC on Thursday, and while there are chances of a bad outcome in Europe, he is not concerned about unpleasant surprises in the region.

"The direct impact of a Greek default is almost zero," Dimon said.

"The effect it has on the global economy will obviously filter down to the American banks too," he added, but although "there may be a surprise somewhere", he expressed little concern over such a development.

"There's a teeny chance of a catastrophic outcome, which is why the muddle-through is the only good strategy. There is no other good strategy," the JP Morgan Chase (NYSE: JPM - News) CEO said.

Not wanting to diminish Europe's problems, Dimon said Greece, Portugal and Ireland were not the main issue.

"The real issue is Spain and Italy," he said.

According to Dimon, the European Cental Bank took the "cascade problem" off the table, where a large bank would need to be bailed out and people would start taking deposits out of banks.

The ECB's long-term refinancing operation in December had taken the bank liquidity problem off the table in Europe, he said.

"I've always believed they're going to muddle through," Dimon said.

"Unraveling the euro is a terrible thing," according to Dimon. "This is a 50-year endeavor to get this continent together and that's a wonderful endeavor. And now they run into a bump in the road..."

He said Europe's leaders were devoted to finding a solution, but that the situation was complex. "There are 17 nations, there are flaws in the Maastricht Treaty."

Dimon said Greek debt needed to be restructured and Italy and Spain both had to show austerity and growth policies.

A Greek default would not be a surprise, he said. "I don't think that in and of itself is going to be the disaster."

No More Too Big to Fail

Dimon, who has been a vocal critic of a series of regulatory reforms in the United States, stressed that the idea that any bank was "too big to fail" needed to be addressed swiftly.

"We should subscribe it as bankruptcy for big dumb companies. Including banks," Dimon said, adding: "We have to get rid of too big to fail."

"What the American public wants to know is that it is not going to cost me money, and I think that could be done," he said.

"We did learn a lot of lessons. We've agreed with a lot of regulatory changes. Embedded in Dodd Frank and Basel...there are the seeds of it....we have to prove it to the world," Dimon said, referring to new financial legislation.

Dimon argued that Lehman Brothers was too big to fail when it did in 2008, but "if Lehman or even AIG had gone bankrupt in 2004, it would have been an isolated sole event the world could have taken care of".

"At that point in time we were seeing failure after failure after was just too much at the time," he said.

But former Treasury Secretary Hank Paulson, Federal Reserve Chariman Ben Bernanke and current Treasury Secretary Timothy Geithner saw the danger and did the right thing by stopping the unraveling of the system, Dimon said.

"It should be very different," he said, arguing that an isolated failure should be possible without causing the whole system to start to unravel.

Dimon praised Bernanke, saying he had been "a total adult the whole time".

"You've never heard him scapegoat, point fingers. If it hadn't been for some of the actions the Fed took...the system could have got much worse," he said. "I think he's been an outstanding citizen and an outstanding Fed chief."

Thursday, January 26, 2012

Apple’s ‘Secret’ Recipe for Success: Tech Giant Is Like the CIA, Lashinsky Says


The power of Apple's business model was on full display this week, when the company reported astonishingly strong fiscal first-quarter results. The company's shares surged on Wednesday, bringing Apple's market cap to over $416 billion, just a hair below ExxonMobil's as the world's most valuable company. (See: STAY STOKED APPLE FANS: This Should Be One Heck Of A Year!)

In his new book, Inside Apple, Fortune's Adam Lashinsky delves far beyond one quarter and seeks to understand what makes Apple so successful, and so unique.

His conclusion: "Think Different" isn't just a marketing slogan.

"They do things exactly the opposite from the way most companies do business and, indeed, the way business is taught in business school," Lashinsky says.

For example, while most Fortune 500 firms believe senior managers should be capable of performing multiple functions within an organization, Apple "values expertise," he says.

Similarly, while most companies focus on employee development and "upward mobility" within a firm, Lashinsky notes Apple's attitude is: "If you're really good at this, keep doing it."

Apple's famed design chief Jonathan Ive is a great example of how Apple does things different. Instead of grooming Ive to be Apple's next CEO — as some outsiders wrongly speculated in recent years — Apple let Ive do what he does best: Focus on design which, Lashinsky reports, is what he wants to do above all else.

Another way Apple is different — very different — is that while most companies value transparency and cooperation, Apple is opaque and keeps secrets, including from its own employees.

"It's not an exaggeration to compare [Apple] to the CIA or some other intelligence agency," Lashinsky says. "They believe everything that happens inside is a secret and that pertains not just to…outsiders but also internally. They don't share their secrets [and] you're expected to mind your own business."

This culture of secrecy may be off-putting to some, but Lashinsky speculates it helps limit the politicking and infighting that sometimes corrupts big companies. If you're not aware of what's going on in other departments -- or even within your department -- you're more inclined to focus on the task you've been assigned, he speculates; furthermore, intense dedication to the task at hand — even seemingly 'simple' issues such as the design of the boxes for Apple products — is also a big part of the Apple culture, and the lack of information about goings on elsewhere helps employees stayed focused.

In addition, Apple is organized along functional lines rather than product lines, meaning there is just one department for marketing, sales, finance, manufacturing, etc., instead of redundant department around different product lines as is common elsewhere. This too helps limit the creation of little fiefdoms and the "tiny kings" that often accompanying them.

As with almost everything at Apple, the firm's corporate culture flows from its co-founder Steve Jobs. A big question for Apple is whether the values Jobs instilled at the company will prevail after his passing. Lashinsky believes the culture is so deeply ingrained in new CEO Tim Cook and other Apple employees that it's destined to last for the foreseeable future, at least.

So far so (very) good, judging by the company's first full quarter since Jobs' death.

See also: Apple Reports Record Quarter: But Should the Company Heed Obama's Call to Bring Jobs Home?

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him at

Thursday, January 19, 2012

Invest in Yourself to Retire Well


I have a particularly resourceful friend who lives a pretty good life, despite never having quite enough money. She is hardworking and popular with her wide circle of friends, neighbors and colleagues. She networks, barters and works for what she really wants.

A former chef turned teacher, she finessed enough grant money to pay for a two-week trip to cooking school in Italy. She knows where all the good used furniture stores are, has bartered home cleaning for a two-week stay in a vacation home in Vermont, and is working on an arrangement now that will get her free housing in France for several weeks this summer. Tres bien!

I'm pretty sure my friend will do really well in retirement, though I strongly suspect she has nowhere near the $1-million plus that you would think her lifestyle would require. She has a different kind of capital: skills, smarts, and a great social network.

"Everyone is focused on the money, but when somebody retires, they usually manage," said Larry Cohen, director of Consumer Financial Decisions, a consulting group that studies consumer behavior. "If they don't have the money, they have human capital like skills and education, and social capital in terms of friends, neighbors or a church. All these things help."

Cohen predicts that "The (retirement) solutions for the future are going to involve more of these other forms of capital."

Experts are increasingly focusing on the non-financial assets that workers can bring into retirementto help them manage on fewer dollars than might be optimal.

The Retirement Income Industry Association, a group that represents a cross section of insurance, investment and research firms, has its own program for training and certifying "retirementmanagement analysts." The training handbook used in that program includes items such as membership in religious and civic organizations, and the ability to earn money as forms of "capital" that are foundational in the new retirement world.

So what are the best non-financial forms of capital that pre-retirees can invest in now to ensure a good retirement? Here are a few.

Investing knowledge. Even (or especially) in this era of auto-enrollment in 401(k)s and the proliferation of financial advisers and products, nothing good can come of being uninformed about investing. The more you know, the more you can grow small contributions into a retirement kitty you can live off of. Break it into small bits and learn a little every month. Learning about mutual funds, stocks, taxes, portfolio management and the like will help you, at the very least, choose the right adviser. And it will also help you stretch your income after retirement.

A money-earning skill. The baby boom may well have psychological problems adjusting to the "withdrawal" era of their lives. It could be harder than you think to pull money out of a treasured 401(k) plan to go see a movie or make a car payment. So develop something now that can earn money in the future. Some popular money-earning side business include eBay sales, handyman work, cooking, babysitting and driving.

Practical money-saving skills. Gardening, appliance repair, lawn mowing, scratch cooking, vacuuming... got it? If you're the kind of person who currently pays others to do all of these things for you remember this: In retirement you'll have more time and less money. For every $100 a month you want to pull out of your tax-deferred retirement account, you need to have roughly $37,500 in assets in that account. So, save $200 a month in do it yourself activities and that's $75,000 you won't need to have saved.

Good friends and neighbors. Can you drive each other to the airport? Share big bargain packages of toilet paper and tomatoes? Check in on each other when you haven't surfaced for a while? Does someone in the crowd make their own tomato sauce and another fix cars? Or own a beach house or a garden tiller? There's no end to the savings that a supportive collective like that can generate. And, of course, people who are connected to others enjoy life more and may be able to entertain themselves more cheaply.

The best body possible. Healthcare costs for retirees will top $350,000 for their lifetimes, the Insured Retirement Institute, an industry group, reported yesterday. And that's for the healthiest folk. The better shape you are in going into retirement, the less you'll spend on pain pills, back braces and more. Of course, you can't control everything that befalls you, but moving into retirement with strong bones and muscles, a good sense of balance, and cardiovascular fitness will improve your retirement fun and cut your retirement expenses.

That hard-to-define craftiness. Retirement can be like a second chance; the rules come off and you can do things you might not have considered while you were in your main buttoned-down job. Practice creativity now, just like my friend, and you'll be ahead of the game when your new job is making that smaller-than-you'd-hoped retirement fund last a long and happy time.

The World Is Profoundly Under-Invested in U.S. Stocks: Jeff Saut

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Like golfers and LeBron James, traders need short memories lest they become haunted by their failings in critical moments. Both life and trading are about living in the now, regardless of past humiliations.

And so it is for those who missed the stock market's screaming rally over the last two months. Those who did can't blame Jeff Saut. The Raymond James chief investment strategist went aggressively bullish the day after Thanksgiving. Since that time the S&P500 is up over 130-points, more than 11% and some 50-points above the levels at which the index started, and finished at in 2011.

Returning to today's tape, Saut has been looking for some sort of pullback to relieve our overbought condition. He's gotten something better as "all we've done is go sideways," albeit only since January 10th. It's good enough for Saut, given the relatively small number of traders caught off guard by market leap.

Saut notes that hedge funds are less than 50% long by some measures and in his view, "the world is profoundly under-invested in U.S. stocks." He has a laundry list of bullish catalysts, including Europe's ability to continue to "paper over" its growing list of woes takes the Continent off the table, at least for the time being.

Disagreeing with all but the most recent of Breakout! views, Saut says that a strong U.S. dollar is bullish for stocks, "provided it's not too strong." Too strong is relative in currencies. By implication and assertion, Saut's notion that Europe can fake it 'til they make it will keep the Euro from going to something resembling zero --the fake currency's intrinsic value.

Saut's view of the coming elections are making him more bullish still. Citing Adam Smith, the strategist contends the economy's animal spirits have been constrained by inefficient, excessive, government involvement. "The American public is angry with all politicians," he says.

Come November when the political bums get tossed from office, stocks will have yet another reason to move higher; not that Jeff Saut thinks the bulls need one.

Is the world under-invested in U.S. stocks? Let us know if you agree with Saut in the comment section below or visit us on Facebook.

Wednesday, January 18, 2012

Apple Macs Land on More Corporate Desks


General Electric Co. would seem to be the last place that Apple Inc. laptops and desktops would appear in workers' offices, but the technology is slowly seeping into daily life at the 120-year-old conglomerate.

Under a year-old pilot project, GE employees can choose Apple's Mac notebooks or Mac desktops instead of a Windows PC. It now has about 1,000 Mac users and expects their ranks to expand further as more employees become aware of the program.

It is just a toehold: GE has about 330,000 computers, most running Windows-based software on PC hardware.

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Apple has been working to get its products before corporate customers, relying mainly on the pull from employees who ask their employers to support the devices they use at home. A spokesman said the company is "excited" the Mac is helping businesses recruit.

Apple has very little of the corporate computer market but is making progress, according to market researcher Forrester Research, which estimates the Cupertino, Calif., company will sell $9 billion worth of Macs and $10 billion worth of iPads to businesses this year, up about 50% from last year.

In comparison, corporate spending on PCs and tablets not made by Apple will decline 3% this year to $69 billion, the firm projects.

Expanding its presence at a large customer like GE would give a boost to Apple and could put pressure on the conglomerate's incumbent PC suppliers including Dell Inc. and Lenovo Group Ltd. The development echoes Apple's initial effort in smartphones that later became a real threat to companies like BlackBerry maker Research In Motion Ltd.

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GE started offering its employees the iPhone as an alternative to BlackBerrys in 2008. Now, it says about 10,000 GE employees carry the Apple smartphone, compared with 50,000 using BlackBerrys.

The Fairfield, Conn., conglomerate hasn't trumpeted the Apple option for computers and laptops internally, and as a result employee awareness is limited.

But staffers across GE businesses are eligible as long as there aren't security clearance issues, such as devices for defense work, or big compatibility problems with needed software.

"All businesses are participating at some level in making this [option] available to their employees," said Greg Simpson, GE's chief technology officer.

"To find out that we support Apple, we support iPhones, we support Macs, it does take away one question for people, 'Are they a contemporary company or not?'" Mr. Simpson said. "I think that is a recruiting-positive thing."

Apple is now the No. 3 U.S. personal computer vendor, with about 11% of the market, compared with about 23% for market-leader Hewlett Packard Co., according to Gartner and IDC.

Apple was the only one of the top five U.S. computer sellers to expand sales in the fourth quarter. Apple's corporate share is much smaller, at less than 1%, while H-P, Dell and Lenovo have about 25% apiece.

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Dell declined to comment but pointed to its ranking. Lenovo didn't comment, but has launched an expensive marketing campaign to build its brand among consumers.

H-P said it is aware that Apple is making inroads into the business market and is working to make its own notebooks thinner, lighter, smaller and sleeker.

"We'll get the best of both worlds and provide a product that wins in that space," said Carol Hess, H-P's head of commercial PC. "We do focus on the corporate and enterprise customer, and I am not so sure that is the target market for an Apple-type of product."

Cost and compatibility with existing systems continues to hold Apple back at companies, said Rich Adduci, chief information officer at Boston Scientific Corp. "The reality is they make a terrific product, but there are some compatibility challenges with our corporate computing infrastructure," Mr. Adduci said.

That isn't the case for the iPad. The medical device maker worked with Apple the day after the iPad was released to use the device for sales and has rolled out about 4,500 globally.

By the end of the year, Boston Scientific expects to be able to begin shifting entirely to the iPad. "Technically, we will be able to support everything on an iPad," he said.

GE says discounts on its PC purchases have grown less generous. Mr. Simpson points out the price gap has narrowed for more advanced machines on both sides of the divide, with the Macbook Air starting at $999 and competing ultra-light laptops running $899 to $1,400.

At this month's annual leadership meeting in Boca Raton, Fl., each of GE's top 600 officers came armed with an iPad.

"There is a learning curve, and we recognize that it may not work perfectly yet," Mr. Simpson said of the Apple computer project. "I think it will continue to grow on [employee] demand."

—Jessica E. Vascellaro contributed to this article.