What’s the Story?

by CC July 6, 2012 9:18 am • Commentary

Calculated Risk

Nonfarm payroll employment continued to edge up in June (+80,000), and the unemployment rate was unchanged at 8.2 percent, the U.S. Bureau of Labor Statistics reported today.

Both the civilian labor force participation rate and the employment-population ratio were unchanged in June at 63.8 and 58.6 percent, respectively.

The change in total nonfarm payroll employment for April was revised from +77,000 to +68,000, and the change for May was revised from +69,000 to +77,000.


New steps by three major central banks to boost global growth failed to impress investors on Friday, sending Spanish borrowing costs back near unsustainable levels and hitting European stocks.

Reflecting the impact of the European Central Bank’s decision to cut lending rates to 0.75 percent and deposit rates to zero, German government bond yields were weaker with the yield on two-year debt briefly turning negative.

German two-year government bond yields fell to zero and briefly turned negative on Friday after the European Central Bank cut interest rates the previous day.

Two-year yields fell as low as minus 0.001 percent, two basis points lower on the day.

Spanish 10-year government bond yields extended their rise to go past 7 percent on Friday, with investors dumping risky assets as they fret about the efficiency of the anti-crisis tools available at the moment.

Ten-year Spanish yields were last 22 basis points higher on the day at 7.006 percent.

Data released on Friday showed Spain’s industrial output fell for the ninth straight month in May, keeping an economy crippled by weak domestic demand and sliding exports on track for a third quarter of contraction.

Calendar-adjusted industrial output fell 6.1 percent year-on-year, data from the National Statistics Institute showed on Friday, less gloomy that forecasts for a drop of 8.5 percent and compared to a drop of 8.3 percent a month earlier.


Amazon.com (AMZN 0.00%) is developing a smartphone to compete against Apple’s (AAPL 0.00%) iPhone and devices that run Google‘s (GOOG 0.00%)Android operating system, Bloomberg reported, citing two people with knowledge of the matter. Foxconn International Holdings, the Chinese mobile-phone maker, is working with Amazon on the device, said one of the people, Bloomberg reported. Amazon seeks to complement the smartphone strategy by acquiring patents that cover wireless technology and would help it defend against allegations of infringement, other people with knowledge of the matter told Bloomberg. Shares of Amazon ticked up 94 cents, or 0.41%, in premarket trading Friday to $228.

Seagate Technology (STX 0.00%) said it expects report fourth-quarter revenue of $4.5 billion, down from its previous estimate of about $5 billion. “The June quarter’s shortfall was due primarily to two factors,” CEO Steve Luzco said Thursday. “First, we did not achieve our planned market share growth as we reduced shipments in response to the industry’s faster-than-expected​ recovery from their supply chain disruption. Second, we experienced an isolated supplier quality issue that affected one of our enterprise product lines. This product issue impacted enterprise product unit shipments by approximately 1.5 million units and drove our non-GAAP gross margin below our targeted plan. While this disruption to our business was disappointing, we acted quickly and conservatively by suspending shipments of the affected products. We have resolved the issue and have resumed fulfilling our supply commitments to customers. The company will report fourth-quarter earnings on July 30. Shares of Seagate fell 3.43% in premarket trading Friday to $24.22.

The race to become Yahoo’s (YHOO 0.00%) next CEO appears to have come down to current interim CEO Ross Levinsohn and Hulu CEO Jason Kilar, according to Reuters. According to two sources with knowledge of the situation, Levinsohn and Kilar are the last names left on the Yahoo board’s shortlist for permanent CEO of the Internet company.

Netflix (NFLX 0.00%) shares got a lift Thursday from a Facebook blog post by CEO Reed Hastings that said the company’s monthly viewing exceeded 1 billion hours for the first time ever in June. Hastings expects a couple of upcoming shows to increase viewership. “When House of Cards and Arrested Development debut, we’ll blow these records away,” he said

JPMorgan Chase (JPM 0.00%) was ordered by a federal judge to explain why the bank shouldn’t have to turn over e-mails sought by U.S. regulators in a probe of potential energy-market manipulation. U.S. District Judge Colleen Kollar-Kotelly in Washington on Thursday gave JPMorgan until the end of the day on July 13 to respond, Bloomberg reported. The U.S. Federal Energy Regulatory Commission sued JPMorgan on July 2 to release 25 e-mails in an investigation of possible manipulation of power markets in California and the Midwest by J.P. Morgan Ventures Energy Corp., the report said.

Japanese athletic retailer ABC-MART has agreed to buy LaCrosse Footwear (BOOT 0.00%) for about $138 million, or $20 a share, which represents an 82% premium over LaCrosse Footwear’s stock closing price on Thursday.