Category: Markets

Experts Predict Increased Retail Sales in May

Economists believe that sales at U.S. retailers rose in May as the job market looks up and consumer confidence rises to boost automobile, home furnishing and clothing sales.

Experts predict a 0.4% rise, which would be the biggest in three months. April saw an increase of 0.1%, according to a forecast from a Bloomberg survey.

Gap Inc. and General Motors are two companies who have reported significant gains and hiring increases thanks to higher home and stock prices. Other brands who revealed May gains include L Brands Inc., Victoria’s Secret and Bath & Body Works.

Glenn Murphy, Gap chairman and CEO, said: “We are pleased with the positive customer response to summer product across our brands and the continued momentum in the business.”

Ted Wieseman, an economist at Morgan Stanley, explained: “Consumers are not feeling the need to pare back their spending to offset the impact of the tax increases, with confidence in the labor market rising and balance sheets improving.”

In April, payrolls rose by 149,000 workers, and last month saw another 175,000 enter the labor force.

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DWP Employee Pay Rose 15% in Five Years

According to records released this week, average employee pay at the Los Angeles Department of Water and Power rose 15% over the past few years despite the national economic slump.

DWP workers generally receive more generous pay raises than other city workers. Household income for LA residents fell from $48,882 to $46,148 over a similar period. DWP pay rose from $88,299 to $101,237.

The LA Times explains that “DWP compensation has become a central issue in the May 21 mayoral election, in which there has been much debate over whether the city’s labor contracts are too costly given the fiscal problems that have resulted in major cuts in services.

“The union representing most of the DWP’s workers has become the single biggest source of campaign cash in the race, giving $1.45 million to an independent effort backing City Controller Wendy Greuel.

“The only pay growth comparable to the DWP came at the city Fire Department, where average total salary and other payments also rose 15% over the five years to $132,131. But officials note that about 300 positions were cut from the Fire Department in that period, which required increased overtime payments to fill positions.”

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Center for Discovery Annual Economic Impact Reaches $184M

A recent analysis reveals that the Center for Discovery is one of the biggest economic engines in the history of Sullivan County. Generating $134 million every year, the Center provides more than 1,400 employment opportunities in Sullivan County alone. In the state of New York, the Center’s total economic impact reaches $184 million annually.

Patrick Dollard, Center for Discovery President and CEO, said:

“The data confirms that The Center for Discovery is a major regional economic force, and while that is an important part of our story, it isn’t all of it. What is more telling is the work we do every day, and the role we have assumed as a national leader in developing innovative care for children and adults with severe disabilities and autism spectrum disorders. Our strong commitment to patient care, education and research makes us a model in our industry.”

The Center has proposed a new $20 million project to build a High-Risk Assessment Clinic in Harris. The clinic should add around 400 new jobs over the first few years.

Dr. Theresa Hamlin, Center Associate Executive Director, explained:

“The Assessment Clinic is the only project of its kind. We feel strongly that it will not only be a game-changer for New York but for the entire world.”

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What is a Hedge Fund?

Since many individuals new to the world of investing are confused about the various terms used in this industry, here as an article that broaches the question, what is a hedge fund? In layman’s terms, a hedge fund is an investment partnership established by a money manager.  A hedge fund can be a limited liability company or a limited partnership.  Thus if the company falls into bankruptcy the creditors are not able to ask the investors for more money than they have deposited into the hedge fund. In addition, hedge fund investments are illiquid as investors generally are forced to keep their funds in for at least a year, often more.

Hedge fund managers are paid a percentage of the profits they earn on the money the investor has deposited to his/her company. When hedge funds first started out, they were seeking to turn a profit irrespective of if the market went up or down since the managers were able to either buy stocks or short them (make money when a stock plummets).  Later on, “hedge fund” became a generic term.

Going a little deeper to answer the question, what is a hedge fund, one finds that it is a group of investments that is managed utilizing advanced investment strategies.  Such hedge fund strategies include: short, long and leveraged derivative positions in domestic and international markets in an attempt to get high returns.

Furthermore, the term “hedging” is used to describe what happens when hedge fund managers try to reduce risk. In general though, this is not a common hedge fund strategy since most managers are actually seeking to maximize return on the investment.

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American Economy Sees Only Modest Growth

The U.S. economy has seen modest but consistent growth over the last quarter, up to a 2% annual rate from a 1.3% rate in April-June. The climb is a result of increased spending by both consumers and the federal government. Still, job creation remains low.

The upcoming elections have much to do with the future of America’s economy; Republican nominee Mitt Romney is known for his attacks on President Obama’s approach to the economic crisis. Growth has indeed slowed from last year, but Obama insists that it is growing steadily.

Meanwhile, analysts have yet to express optimistic outlooks.

Paul Ashworth of Capital Economics said: “We suspect that growth will slow a little in the fourth quarter, and expect it to remain close to 2 percent next year.”

Jamestownsun.com explains:

“The economy grew faster last quarter in part because consumer spending rose at a 2 percent annual rate, up from a 1.5 percent rate in the second quarter. Spending on home building and renovations increased at an annual rate of more than 14 percent.”

It adds that “federal spending surged, mainly because of the sharpest increase in defense spending in more than three years.”

 

Paul Chew and U.S Exports in 2012

Brown Advisory’s head of investments Paul Chew recently rocked the financial boat by saying that the EU crisis will have a very minor impact on American businesses this year. He explained that the rising market demand for United States exports will balance any small decrease in European demand.

“A European recession would clearly hurt U.S. exports to Europe, but the U.S. economy us not overly exposed as the EU only represents approximately 20% of the total U.S. export market,” Chew said.

He went on to explain that S&P 500 gains are currently increasing beyond historical averages, in comparison to the more sluggish GDP. The earnings are also reducing new hires and preserving tight cost restraints.  GDP has jumped a mere 1.4%, while S&P 500 earnings have reached 15%.

Last year’s trends, namely volatility and thematic investing, do not interest Chew as much for the upcoming year, as he sees equity valuations as “relatively compelling.”

U.S. Automobile Industry Shows True Recovery

In contrast to many struggling industries, the auto market has managed to dramatically increase its sales, jobs and product innovations thanks to better quality and bottled consumer demand.

Many potential car purchasers have been hesitant due to the recession, but showrooms are filling up again now that owned U.S. vehicles are more than ten years old, on average. According to experts, the volatile economy has also encouraged car buyers to feel more comfortable with large purchases.

“And that’s a big behavioral change from what we saw in ’08 and ’09. That’s good for the industry,” said Jesse Toprak of TrueCar.com.

Toprak added that vehicles sales are likely to reach $12.8 million this year, seeing as last year around 11.8 million cars and trucks were sold across the nation, to both businesses and private customers. Before the recession, more than 16 million vehicles were sold every year. Still, the slow but steady recovery of the industry has boosted U.S. economy, and especially the Great Lakes and Rust Belt regions.

U.S. Economic Optimism Boosts Asia’s Stocks

According to Andrew Pease of Russell Investment Group, “The U.S. economy is in better shape than Europe and that’s positive.” Pease is a Sydney-based senior investment strategist for the firm’s Asia-Pacific region. “Given the huge clouds hanging over the global markets from Europe and uncertainties in the Chinese property market, it’s very hard to be optimistic at this stage. Investors are also pricing in increased geopolitical risks.”

Still, as optimism towards the U.S. economy heightens, Asian stocks rise as well. Asia’s determined growth has also lessens concerns regarding the region’s real estate industry.

The MSCI Asia Pacific Index increased 0.14 point, or 0.1%, to 110.54 in Tokyo. Japan’s Nikkei 225 Stock Average also gained 0.5%, and South Korea’s Kospi Index rose 0.9%.

U.S. Criticizes China’s Trade Restrictions

The United States recently said that China’s trade restrictions and “interventionist policies” in various markets have created problems for American businesses in dealing with Asia.

According to the U.S. Trade Representative’s office, “numerous sectors” of the Chinese economy discriminate against foreign business. The institute’s annual report, which discussed Chinese compliance with World Trade Organization rules, called the government’s continuous intervention a “troubling trend.”

“China seems to be embracing state capitalism more strongly, rather than continuing to move toward the economic reform goals that originally drove its pursuit of WTO membership,” the report stated.

The USTR report was directed at Congress one day after China’s 10th anniversary of joining the WTO. Since then, China has become the largest exporter and the second-largest importer in the world. In 2001, trade in goods like appliances, toys, tools and clothing was around $510 billion, while today’s market has reached nearly $3 trillion.

Small Businesses Create Thousands of Jobs But Labor Market Remains Shaky

According to a recent survey, U.S. small businesses have created 55,000 jobs this month, though employees worked less hours and earned smaller amounts of money. Based on responses from around 71,000 small businesses, the survey covered the period between October 24th and November 23rd.

Payrolls processing company Intuit said the small business employment rise in November compared to October’s revised 60,000 count, which was reported previously as a 30,000 gain.

The average work week for such employees dropped 0.3% to 24.9 hours, and the average monthly salary fell 0.18%, to $2,637.

“Total comparison is down, part time workers aren’t getting as many hours, and there are fewer hourly employees who are working full time,” explained Susan Woodward, an economist involved in the survey’s development.

“Overall, this data is the best we could hope for given the uncertainty of the situation in Europe.”