What’s Happening In The World Of Business and Finance:

Consistency…
The job numbers from Friday was an early Christmas present, full of consistency as the economy added 100,000 jobs or more for 3 of the last 4 months. Below is a recap of the NFP (Non-Farm Payroll) report released early Friday morning.

• The U.S. economy generates 203,000 jobs in the month of November.

• Unemployment rate fell from 7.3% to 7.0%; mostly, this was due to the return of federal workers after the government shutdown in October.

• Unemployment rate was the lowest since November 2008.

• Hiring was strong across most industries including transportation, manufacturing, health care and construction.

• October’s job number was trimmed from 204,000 to 200,000.

• September’s job number was raised to 175,000 from 163,000.

KJ’s Take… I am a big fan of consistency. The key to a successful overall recovery is consistently creating jobs. If people have a job, they spend money, period.

Spinoff…
On Friday, Sears Holdings Corp. (SHLD) said that it had filled the paperwork, with the SEC (Securities and Exchange Commission) to spin off its Lands’ End (LE) clothing business as a separate company. The company plans to distribute the newly formed Lands’ End stock to Sears’s shareholders. Sears purchased Lands’ End, the catalog/internet clothing and home goods company, in 2002. The official date has not been announced; however, analysts think that it will most likely be before the end of
the year.

KJ’s Take: The spinoff should allow Lands’ End to shine as a separate company, away from the dim lights of Sears and its 27 quarters of sales decline.

We Do Not Fix Flats…
Last year Hertz Global Holdings Inc. (HTZ) acquired car-rental rival Dollar Thrifty last year. In an effort to make “All Things Equal” The Federal Trade Commission sought forced Hertz to sell off its Advantage Rent a Car brand, making it a new, independent competitor. That took a detour when Advantage filed for bankruptcy protection just months after a final government settlement allowing the merger. On Monday, Advantage is scheduled to go up for sale at a bankruptcy auction in Mississippi. The sale could muddy the company’s prospects as a strong competitive force in a $24 billion industry dominated by three main players: Hertz, Enterprise Holdings Inc. and Avis Budget Group Inc. Oh no good deed goes unpunished…

In The Markets:

Asia:
Asian markets started their trading week off in the green. Encouraging job numbers from the US, good trade data from China, and a weaker yen had investors ready to buy.

Europe:
European markets closed higher on Friday after US jobs data surprised to the upside and provided evidence the world’s largest economy is recovering.

US:
The S&P and Dow Jones snapped their five day losing streak on Friday. The Dow Jones closed up triple digits as investors reacted to the home run unemployment numbers for November. DJIA: +198.69 16020.20 NASDAQ: + 29.36 4062.52 S&P 500: +20.06 1805.09

In Dinner or Drink:

South Texas Snow
2 oz. Malibu® coconut rum
2 oz. Malibu® pineapple rum
3/4 oz. 99 Bananas® banana schnapps
8 oz. Sprite® soda

Fill up a blender with ice. Add the Malibu, Malibu Pineapple, and 99 Bananas and blend. Last, add Sprite. You don’t have to add all of it; you can add it to taste, depending on how strong you want your drink. This can also be served on ice, but then it would be Melted South Texas Snow

Like our drink today, click here for more.

In The News:

Grinding Halt:

The NASDAQ exchange halted trading for over two hours Thursday. Around 12:15 pm EST officials halted all trading after a glitch was discovered in the data feed that provides quotes and prices for NASDAQ-listed securities. The outage froze the prices on thousands of stocks such as Facebook and Apple, as well as on ETFs and options listed on the NASDAQ. Stocks can be listed and traded on multiple exchanges, so the effects of the NASDAQ halt rippled across numerous exchanges, dark pools and Wall Street trading platforms.  Trading resumed at 3:25 pm EST after both officials at the NASDAQ and SEC gave their blessings.

No Coverage:

UPS announced Thursday to its employees it would no longer provide healthcare benefits to 15,000 spouses. In a memo to employees the fourth largest employer announced, “Since the Affordable Care Act requires employers to provide affordable coverage, we believe your spouse should be covered by their employers.”  Coverage for spouses who do not work or lack employer-covered health plans will continue to be a part of employee benefits. This could be the first of many such announcements, as employers start to grapple with the rising cost of health care and the additional burdens of Obamacare.   [Continue reading...]

In The News:

Closer…

A tech source let it slip that Apple has requested Hon Hai Precisions Industry, one of the iPhone assembly companies,   to ship both a new high-end and low-end iPhone in early September.   If the source’s information is true then one of the longest standing iPhone rumors of this season has been confirmed.  This would be a shift in Apple’s traditional smart-phone strategy, as they typically only introduce a new high-end iPhone in September, but it may be a necessary change.  Apple has been losing ground on the smart-phone market as both Samsung and Google are both releasing more advanced smart-phones on a more frequent basis.

Oops…

Tell me if you’ve heard this one before – a financial firm had a ‘tech glitch’, submitted notification to the market bosses, and is looking to potentially cancel the trades.   No, we’re not talking about the wild ride in China on Friday; we’re talking about the tumble that happened in the US markets Tuesday morning.  Goldman Sachs trading system sent a wave of erroneous option trades on stocks and ETF’s that began with the letters I-K.  Once the error was noticed, Goldman Sachs reported the issues to US exchanges and officials began the review process.  This system glitch could cost Goldman Sachs hundreds of thousands to unwind and is a short term ding on their reputation. [Continue reading...]

In The News:

Whale Charges:

Late Friday evening it was reported that there were pending charges for two former JPMorgan employees involved in the London Whale debacle, and on Wednesday charges were officially filed.  Here are the highlights from what’s been reported so far:

• The two individuals charged are named Avier Martin-Artajo and Julien Grout.
• The charges are conspiracy to falsify books and records, wire fraud, and falsifying SEC filings.
• Bruno Iksil, the trader behind debacle, has been granted immunity in return for his assistance in helping build the case against Mr.  Grout and Mr. Martin-Artajo.

The charges against Mr.  Grout and Mr. Martin-Artajo show that the government has received enough credible information from Mr. Iksil to pinpoint blame on these individuals.   The combination of charges show that Mr.  Grout and Mr. Martin-Artajo were creatively cooking the JPMorgan books and hiding the activity from internal and external checks and balances.  The pair kept a separate book to track the real value of the portfolio that led to the huge loss to JPM, hoping someday it would rebound in value.

Music to the Ears…

Steinway Pianos, the pianos used by Rachmaninoff, have negotiated a deal with private equity guru John Paulson of Paulson & Co. to purchase the company for $512 million ($40 per share).  Last month the company appeared to have a deal in place with the private equity firm Kohlberg & Co for $35 per share,   but decided to terminate the purchase agreement and pay the $6.7 million penalty in hopes that they would receive a better offer. [Continue reading...]

In The News:

Flat Big Mac:

On Monday, McDonald’s released their Q2 earnings.   Wall Street analysts were expecting profits of $1.38 per share, and McDonald’s reported profits of $1.35 per share.   A major factor for this loss was currency movement.  A strong dollar makes the Big Mac more expensive to produce in foreign countries where their currency value is lower than the dollar; this movement can and often does eat into McDonald’s profits.

Acquisition and Attack:

Apple was in the news for several reasons today.  First, Apple announced its purchase of the transit map app Hopstop; hopefully this acquisition will help resolve Apple’s well documented map “issues”.  Next the rumor mill was in full swing with potential hints regarding the next round of iPhones and iPads, according to a report an Asian supplier is testing larger screens for both products.  Finally, the primary developer website for Apple was taken offline as a precaution due to a system breach by hackers.  Apple expects to have the site online soon.  And you thought you had a rough day?

Lower Sales:

Existing home sales slowed in June by 1.2%.  The annual rate has improved to 5.08 million, which is the second best level since November 2009.

Buyback:

Yahoo repurchased 40 million shares from the hedge fund Third Point at $29.11 per share.   This move reduces Third Points’ stake in Yahoo to less than 2%; by reaching this specific percentage Third Point is required to give up 3 seats on Yahoo’s board.  This repurchase is only a small portion of Yahoo’s $1.9 billion buyback plan.

Buybacks are good news.  First it shows that the company believes in itself and is reinvesting for the future.   Second, it reduces the number of shares outstanding in the market; fewer outstanding shares = higher share price= Happy, Happy, Happy shareholders.

Ch-Ch-Ch-Changes:

Over the weekend the G-20 Finance Ministers met in Moscow.   After some initial disagreements on agenda points the ministers were able to agree upon one issue, there needs to be more emphasis on growth instead of austerity.   This revelation marks a shift away from the global standard that austerity cures all.  Reading between the lines its clear the real message was we screwed Greece and that won’t be happening again to anyone.

 In The Markets:

Asia:

Asian Markets closed higher Tuesday. Comments from China’s Premier Li saying the line in the    sand at 7% is the lowest tolerable rate helped settle investor’s jitters.

Europe:

On Monday, investors saw that there was potential for better bank earnings, and the European markets rallied to a seven week high.

US:

US markets closed flat as investors digested a mixed bag of earnings and the news that existing home sales dropped in June.

Dinner or Drink:

Apple Pie In A Glass

Mix in blender pour into 2 glasses and sprinkle with cinnamon.

Want more about our drink of the day, click here.

In The News:

Letting Go:

China’s central bank will scrap its controls on leading interest rates instead letting bank set their own rates.

You can run but you can’t hide:

Steve Cohen, founder of the hedge fund SAC Capital, was charged on Friday with failure to stop insider trading by two employees he supervised. Over the last year the SEC has charged two of SAC employees with insider trader but failed to get the top dog or so we thought. The charges brought are civil in nature and the SEC will seek to bar Cohen from overseeing investor funds. [Continue reading...]

In News:

Who wants Hulu??? Obviously DirecTV and two other unidentified suitors since all three have reportedly submitted bids of $1 billion plus each for the company. Seven other companies have also submitted bids the streaming content provider. Current owners News Corp, Disney, and Comcast have let it slip that they will be cutting down to a “shortlist” over the next few weeks.

Better but not quite great.. What some may say about the latest EZ PMI Numbers reported on Monday. Euro zone manufacturing PMI (Producers Manufacturing Index, a measure of manufacturing strength) came in at 48.3 for May vs. 46.7 in April. The rise was a 15 month high but any number below 50 still shows an economy in contraction. There’s always next month…

Goin it Alone: Apple will head to court solo and fight allegations it conspired with five publishers to raise e-book prices. The five publishers decided to settle with the Justice Department pre-trial. Guess we will all have to stay tuned to see which side was smarter.

Shame on you.. French prosecutors have launched an investigation into the French arm of wirehouse UBS. The prosecutors are probing whether the unit’s parent company bankers encouraged (aka helped) French clients open Swiss Bank accounts allowing them to commit tax evasion.

Settlement, Maybe.. Bank of America heads to court on Monday. At stake, whether the court will approve the proposed $8.5 billion to settle claims over bad mortgage bonds. If the settlement were to be agreed Bank of America can move toward their ultimate goal of cleaning the inherited Countrywide mess up. One hurdle standing in the way… AIG opposition of the deal, saying the bank in fact owes them $8.5 Billion in damages. Luv court room drama.

Mixed Bag: Friday brought a mixed bag of economic data out of the US. On the not so good side Consumer spending was down in 0.2% in April, the first decline since May 2012. On the good/better side of the bag Chicago PMI (Producers Manufacturing Index) was up in May to 58.7 a jump from May 49.0. Also, Consumer Sentiment rocked at 84.5 in May vs. 76.4 in April. But why is this bad? Better economic data=Better economy=sooner end of QE, Weak economic data=Bad economy= QE (Quanatative Easing) not ending in the near future.

In Markets:

Asia: Asian markets tumbled in their Monday session. It was the fourth major fall in eight sessions. Global optimism over Abenomics is starting to fade on concerns that his three arrows will fall short of expectation and not getting the job done. The Nikkei has not wiped out 17% of its value since its rally in midNovember 2012 which brought gains of 80%.

Europe: European markets closed deep in red territory on Friday. Investors took profits on the final day of the month while starting to worry what the future will be like if the Fed stimulus program starts to taper off  because of the US growing economy.

US: US markets followed Europe’s footsteps tumbling Friday on better than expected economic data. Investors got a lot more squeamish thinking about how soon the fed might start tapering off as the economic is looking better

DJIA: -208.96 15,115.57  NASDAQ: -32.38 3455.91 S&P: -23.67 1630.74

In Dinner or Drink:

We pick a drink today that global investors may have been drinking after Friday’s tumble.

Harvey Wall Banger

1 oz. Stolichnaya® vodka
1/2 oz. Galliano® herbal liqueur
2 oz. orange juice
ice

Pour the Vodka, Galiano, and orange juice in to a shaker with ice and shake until well mixed. Then strain in to an appropriately sized glass filled with ice and serve.

For more info on our drink today.