Greetings folks and a warm welcome to 68TH Edition of Friday Finance Weekly. For those of you in Vancouver I hope you are enjoying the sunshine.
Let’s start with the economy:
- Positive US economic data and soothing words from Angel Merkel was sufficient to drive most global markets upwards. Finland and Germany have effectively but potential Euro breakup conversations to bed (at least for the time being). The Stoxx Europe 600 Index added 0.6 percent at 11:50 a.m. in New York, headed for an 11th week of gains. The Standard & Poor’s 500 Index fluctuated between gains and losses near 1,416, its highest level since April. Spain’s 10-year bond yield fell eight basis points to 6.44%, the lowest since July 5. Ten-year U.S. Treasury yields lost four basis points to 1.80% after yesterday reaching the highest level since May. In addition to the assurances, US consumer confidence is up to 73.6 from 72.3 last month. I’m of the opinion that the Spanish bonds are priced correctly on a risk adjusted basis, but US bonds are mispriced. Especially given the fact that there is still no clear plan to reduce government deficits. Obama wants to spend the US out of a deficit and Romney wants to hang the average consumer with debt.
- Platinum for October delivery jumped as much as 2.3 percent to $1,468.40 an ounce, the highest since July 6, after 34 people were killed at Lonmin Plc (LMI)’s Marikana platinum mine in South Africa, according to the country’s police commissioner.
- Oil fell for the first time in four days, paring a third weekly advance in New York, on speculation that its rise to a three-month high was not sustainable. Oil for September delivery fell as much as 62 cents to $94.98 a barrel in electronic trading on the New York Mercantile Exchange. If the economy is indeed recovering, oil should continue its appreciation over the $100/barrel mark.
- Sources: Bloomberg, Google Finance, Reuters
Let’s get some retail action:
- With Abercrombie & Fitch Co. giving away 1,000 iPads and J.C. Penney Co. offering $10 million in haircuts, U.S. retailers are pulling out all the stops to make sure they get a share of what may be the best back-to-school shopping season in a decade. Back-to-school sales, second only to the end-of-year holiday shopping season, may rise 2.5 percent to a record $40.4 billion this year, as consumers replenish wardrobes with more disposable income and an increase in number of students, according to the ICSC. Retailers, stinging from lackluster sales in the first half of the year, are tempting shoppers with promotions to distract them from anxiety tied to the U.S. economy, where the unemployment rate has been above 8 percent for more than three years. Kmart is providing free flu shots to loyalty members who spend at least $100, and Gap Inc.’s Old Navy gave out backpacks and OfficeMax Inc. coupons to shoppers who spent $50 or more. I must admit that giving flu shots is a truly novel way of sorting the US health care issue. Maybe they will give 2 for 1 heart transplants in the near future. (Source: Businessweek)
- What was up with those neon-yellow shoes that Olympic athletes were wearing? Two words, ‘Guerrilla Marketing’. As the Olympics wind down, marketing experts are awarding a gold medal in ambush marketing to Nike, which scored with bold commercials, smart PR moves and its distinctive, ubiquitous neon-yellow Volt shoes. Nike, which always manages a high Olympic profile despite its non-sponsor status, outwitted big-money Olympic backers such as Visa, McDonald’s and Adidas – which reportedly paid $155 million for its official London 2012 sponsorship. “The shoes were one of the first things I noticed during the Games,” said Leslie Smolan, co-founder of Carbone Smolan Agency, a design and branding firm in New York. She just returned from London. “I thought Nike’s approach was absolutely brilliant. Nike managed to integrate themselves into the games — the best way to show your product, not just talk about it.” So they didn’t pay to be a sponsor, but since athletes can wear whatever shoes they wanted, Nike gave them shoes. Nike is up 1.39% for the week and is presently trading at $95.81/share. Given that back to school is around the corner and the 52 week high is $114.81/share more gains may be in sight. (Source: NBC News)
Chicago staged its annual gun buy-back program in June (a $100 gift card for every firearm turned in) amidst its worst homicide epidemic in years, in which 259 have died on city streets in the first six months of 2012. However, the program appears to be, inadvertently, a win-win project for both anti- and pro-gun forces. The city reported that 5,500 guns were removed from circulation (bringing the total to 23,000 since the program was inaugurated), including several machine guns. On the other hand, 60 of this year’s guns were handed in by a local pro-gun organization, Guns Save Life, which promised to use its gift cards to buy ammunition for a National Rifle Association which supported shooting camp for kids. This is ridiculous; I sincerely hope an American president will take a stand on gun control this year. (Source: Chicago Sun-Times)
Have a fantastic weekend and please don’t hesitate to forward this newsletter. Many thanks,