US FINANCIAL MARKET
- U.S. stocks fluctuated at the open and erased some of the losses after measures of leading indicators and regional manufacturing fueled optimism in the economy, offsetting comments from Federal Reserve Chair Janet Yellen on interest rates.
- The central bank said it would trim its monthly bond purchases by $10 billion to $55 billion.
- The U.S. Federal Reserve will probably end its massive bond-buying program this fall, and could start raising interest rates around six months later, Fed Chair Janet Yellen said on Wednesday.
- Her words led the futures market for the U.S. Fed funds rate to shift to pricing in around a 50-50 chance of the first hike in May to June next year. The timing had been July to August beforehand.
- Dollar upbeat on rate rise expectations, bonds fall.
- Oprah gives Starbucks tea push a celebrity shot with chai drink. Starbucks will add a celebrity blend to its big tea push when it debuts “Oprah Chai.” According to The Tea Association of the USA, tea is the most widely consumed beverage in the world next to water.
- While tea is the more popular beverage, coffee is king when it comes to sales. Global coffee retail sales were $75.7 billion in 2012 compared to $40.7 billion for tea, according Euromonitor International.
- Starbucks is wrestling with higher costs for milk and coffee. U.S. dairy prices are at record highs and could move up a bit more in March before easing as a result of increased production.
- Starbucks Says Mobile Payments Gaining. Mobile payment now accounts for 14 % of in-store transactions in the U.S.
- General Mills, which sells Yoplait yogurt and Haagen-Dazs ice cream, earlier on Wednesday said that its Yoplait business was the main driver behind an 11 % decline in its U.S. retail segment operating profit in the latest quarter. Roughly two-thirds of that profit decline was due to dairy inflation and higher merchandising and marketing investments in its domestic yogurt business.
- Elsewhere, coffee prices recently hit a two-year high due to crop-damaging drought in Brazil, the top producer.
- Icahn changes course, urges eBay to sell 20 % of PayPal. EBay bought PayPal for $1.5 billion in 2002. EBay’s revenue from Payments were $6.1 billion (0r about 40 % of total revenue).
- Lennar Profit Tops Estimates as Home Prices Increase. Lennar, the biggest U.S. homebuilder by market value, said net income climbed to $78.1 million in the three months through February from $57.5 million a year earlier.
- Lennar’s orders by volume climbed 10 % to 4,465 homes and increased 26 % by value to $1.5 billion.
- Revenue rose to $1.36 billion from $990 million, while the number of houses delivered increased to 3,609 from 3,186 last year.
- The average sale price increased to $316,000 from $269,000.
- ConAgra Foods quarterly profit beat analysts’ lowered estimates and the maker of Hunt’s tomato ketchup and Slim Jim beef jerky maintained its full-year earnings forecast.
- The company last month cut its fiscal 2014 profit forecast for the second time, blaming weak sales in its private-label business. Total revenue rose 14.5 % to $4.39 billion. Net income rose to $234.3 million in the third quarter from $120 million a year earlier.
- Eastman Kodak reported an 18 % fall in quarterly revenue, partly due to a decline in its motion picture film business. Revenue fell to $607 million in the fourth quarter from $739 million, a year earlier. Net loss narrowed to $63 million from $402 million.
US ECONOMY & POLITICS
- The Conference Board’s gauge of the outlook for the next three to six months climbed 0.5 %, the biggest gain since November. The median forecast of 49 economists surveyed by Bloomberg called for a 0.2 % gain.
- Initial claims for state unemployment benefits increased 5,000 to a seasonally adjusted 320,000. Economists had forecast first-time applications for jobless benefits rising to 325,000. The four-week moving average for new claims fell 3,500 to 327,000, the lowest level since November.
- Fed Chair Janet Yellen said that the Fed would look not only at how close inflation and unemployment are to its goals, but how fast, or slowly, those measures are approaching those goals.
- Yellen also said harsh winter weather was a significant reason for weakness this year in economic data from housing to jobs.
- At 6.7 %, the unemployment is well above the 5.2 % to 5.6 % range Fed officials see as in keeping with full employment.
- The Fed has held interest rates near zero since late 2008 and has pumped more than $3 trillion into the economy.
- Of the Fed’s 16 policymakers, only one believes it will be appropriate to raise rates this year; 13 expect a first rate hike next year, and two others see the first rate hike coming in 2016.
- They now see rates ending 2016 at 2.25 %, a half percentage point above their December projections.
- The Philadelphia Fed’s manufacturing gauge rose to 9.0 in March from minus 6.3 the prior month. The average estimate was for an increase to 3.2.
- Sales of Existing Homes in U.S. Fall to Lowest Since 2012. Contract closings on existing properties fell 0.4 % to a 4.6 million annual rate, matching the median projection in a Bloomberg survey.
- First-time buyers accounted for 28 % of all purchases in February, up from 26 % in January that was the lowest in data going back to October 2008.
- The number of previously owned homes on the market rose 6.4 % to 2 million. At the current sales pace, it would take 5.2 months to sell those houses, the highest since April 2013, compared with 4.9 months at the end of the prior month.
EUROPE & WORLD
- Ukraine Military Concedes on Crimea as Russia Takes Hold. Ukraine said it plans to reinforce its eastern border with Russia and withdraw troops from Crimea.
- Hunt for Missing Jet Fails to Find Objects Spotted by Satellite in Indian Ocean.
- Europe strikes deal to complete banking union. The accord means that the ECB has the means to shut banks it decides are too weak to survive, reinforcing its role as supervisor as it prepares to run health checks on the still fragile sector. Thursday’s accord makes it harder for EU countries to challenge the ECB if it triggers bank closures, and establishes a common 55 billion euro back-up fund over eight years.
- Mulberry CEO Guillon quits after turbulent two years. In a brief statement, the maker of Bayswater and Alexa handbags said Frenchman Guillon had decided to step down immediately. The statement gave no reason for his departure.
- Hermes Sees Lower Profitability This Year as Yen Weakness Weighs.
- World number two truck maker Volvo’s deliveries rose 28 % year-on-year in February.
TODAY in HISTORY
- The Dutch East India Company was established. During its 196-year history, it became one of the world’s most powerful companies (1603)
- English physicist/astronomer Sir Isaac Newton died in London at age 84 (1727)
- John Lennon married Yoko Ono in Gibraltar (1969)
- Bertrand Piccard and Brian Jones became the first to fly a hot-air balloon nonstop around the world (1999)
Sources: Reuters, Bloomberg.
This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S & P 500, are unmanaged and may not be invested into directly.