What’s the Story? Claims up, Prices down.

by CC June 14, 2012 8:53 am • Commentary


The number of people who applied for jobless benefits last week rose again, the government reported Thursday, in another sign that the U.S. labor market has cooled off.

Jobless claims climbed by 6,000 to a seasonally adjusted 386,000 in the week ended June 9, the Labor Department said. Claims from two weeks ago were revised up to 380,000 from an original reading of 377,000, based on more complete data collected at the state level.

Economists surveyed by MarketWatch had projected claims would fall to 376,000.


U.S. consumer prices fell 0.3% in May to mark the biggest decline in three and a half years, as the cost of gas fell sharply, the Labor Department reported Thursday. The gas index sank 6.8%, the largest drop since December 2008. So-called core prices, which strip out volatile food and energy costs, rose a seasonally adjusted 0.2% last month. Economists surveyed by MarketWatch had forecast a 0.2% decrease in the main CPI but a 0.2% hike in the core rate. Consumer prices have risen an unadjusted 1.7% over the past 12 months, down from 2.3% in April. The core rate has increased 2.3% over the past 12 months, the same as in April. The government also reported that inflation-adjusted hourly wages, on average, climbed 0.3% in May. A 0.1% increase in average hourly earnings, combined with the 0.3% drop in the cost of living, accounted for the gain.


Italian government bond yields soared after its borrowing costs climbed sharply at a bond auction Thursday, while Spain’s 10-year yield hit a euro area high after Moody’s slashed the country’s rating by three notches, suggesting that the country’s bank bailout has done little to calm nerves.
Spain’s 10-year government bond yield hit a euro area high of 6.96% and at 1025 GMT was 19 basis points higher at 6.91%, according to Tradeweb. The 7% level is seen as critical, as it was the level at which Portugal, Greece and Ireland turned to European partners for bailouts.
Italy’s 10-year government bond yield was up three basis points at 6.23%, fuelling concerns that the country may have to ask for financial aid from its euro-zone partners at some point. Italy managed to sell the maximum targeted EUR4.5 billion at auction Thursday with demand totaling EUR7.473 billion.


The German chancellor warned that there were no “miracle solutions” to the eurozone crisis, even as the yields on benchmark Spanish 10-year bonds climbed above 7 per cent, a level seen as unsustainable by analysts.

But in a speech to parliament on Thursday, Ms Merkel repeated her refusal to back calls for common eurozone bonds and a Europe-wide deposit guarantee scheme for banks.

“Germany is strong, Germany is the economic engine and Germany is the anchor of stability in Europe. I say that Germany is putting this strength and this power to use for the wellbeing of people, not just in Germany but also to help European unity and the global economy,” Ms Merkel said. “But we also know Germany’s strength is not infinite.”


Foreclosure starts rose year-over-year in May for the first time in more than two years as banks resumed dealing with distressed properties after a mortgage abuse settlement earlier this year, data firm RealtyTrac said on Thursday.

The $25 billion settlement between major banks and states, formally approved in April, had been expected to jump-start foreclosure proceedings that were previously stalled by uncertainty about the liability of banks.

Overall foreclosure activity, which includes default notices, scheduled auctions and bank repossessions, affected 205,990 properties in May, a 9.1 percent increase from April.

The figure was 4.2 percent lower, however, than in May 2011, RealtyTrac said in a monthly report.

Foreclosure starts grew 12 percent from April and 16 percent on an annual basis after 27 straight months of year-over-year declines. Foreclosure starts were filed on 109,051 homes in May, the first month-to-month rise since March.

Bank repossessions increased 7 percent after sinking to a 49-month low in April, with 54,844 homes repossessed in May.


Smithfield Foods [SFD  19.57    0.34  (+1.77%)   ]– The food producer earned $0.49 per share for its latest quarter, short of estimates of $0.53. Smithfield was hurt by lower-than-expected margins in its fresh pork business.

Nokia [NOK  2.79    -0.08  (-2.79%)   ] – The handset maker warned that its second-quarter loss from its cellphone business will be wider than expected and said it plans to cut another 10,000 jobs globally.

Yahoo [YHOO  15.335    -0.135  (-0.87%)   ] – ComScore said Yahoo lost search market share for the ninth consecutive month in May. It now has a 13 percent share, trailing Google’s [GOOG  561.09    -4.0099  (-0.71%)   ] 67 percent and Microsoft’s [MSFT  29.13    -0.16  (-0.55%)   ] Bing at 15 percent.

United Technologies [UTX  73.54    -0.81  (-1.09%)   ] – The Dow Jones Industrial Average component stock has raised its quarterly dividend 11.5 percent to $0.48 per share. The increase is the company’s first since April of last year.

Ctrip [CTRP  16.47    -0.07  (-0.42%)   ] – Ctrip has announced a share repurchase program of up to $300 million involving the China travel agency’s American depositary shares.

Edwards Lifesciences [EW  90.54    -0.27  (-0.3%)   ] – The medical device maker has won U.S. Food and Drug Administration panel approval for a new artificial heart valve that can be inserted without performing open heart surgery. The FDA usually — but not always — follows the recommendations of its panels.

Supervalu [SVU  4.27    0.09  (+2.15%)   ] – The supermarket chain’s stock is getting a further boost on takeover talk, following a more than 2 percent gain in Wednesday’s trading session. Barclays analyst Meredith Adler wrote a report this week suggesting that Supervalu has become a particularly cheap leveraged buyout target.

Best Buy [BBY  19.40    -0.64  (-3.19%)   ] – The electronics retailer’s shares have been upgraded to “neutral” from “sell” by Citi, with the firm saying there’s now a more balanced risk/reward ratio following a 35 percent pullback since March 24.

Regions Financial [RF  6.19    0.01  (+0.16%)   ] – Goldman Sachs has upgraded the regional bank’s stock to “buy” from “neutral,” citing improving fundamentals and a housing recovery in the U.S. Southeast.

Pier One Imports [PIR  15.58    -0.43  (-2.69%)   ] – The retailer matched estimates with quarterly profits of $0.16 per share, but raised its fiscal 2013 outlook. It now expects to earn $1.08 to $1.14 per share, up from the prior guidance of $1.06 to $1.12, as sales increase.

Adobe Systems [ADBE  31.79    0.02  (+0.06%)   ] – Jefferies & Co. has downgraded the software maker’s stock to “hold” from “buy,” and cut the price target to $32 from $38. It cited a number of factors, including a large number of subscribers to Adobe’s Creative Cloud service taking advantage of promotional pricing.

Costco Wholesale [COST  87.43    -1.07  (-1.21%)   ] – Costco is buying the 50 percent of Costco Mexico that it doesn’t already own from its joint venture partner for $767 million.