News Summary: May 30, 2015

PLEASE NOTEThe stories reported below are for informational purposes only to educate our clients on the weekly news stories; real, funny, educational, and otherwise. The source of most news will stem from the Wall Street Journal (WSJ), Financial Times (FT), Barrons (B), Business Week (BW), and Bloomberg (Bbg). The purpose of this is NOT to solicit any offers to buy or sell stocks, mutual funds, commodities, or other financial assets – merely to report the news. Please call us to discuss any investment questions you may have. Additionally, we will not take sides in any political or religious news that we report, we will only present the objective facts, and perhaps opine on them from a neutral perspective. Finally, the opinions represented are those of David Abuaf, and not necessarily of Forman Investment Services or Raymond James or its affiliates. 

A quick list of shortcuts: DoJ (Dep’t of Justice), ECB (European Central Bank), EZ (Euro Zone), EU (European Union), BoE (Bank of England), BoJ (Bank of Japan), example: BoX (Bank of X country), SCOTUS (Supreme Court), Ccy (Currency), WH (White House), HY (high yield – bonds), IG (investment grade – high quality bonds), OECD (Org for Economic Coopeartion & Dev), IMF (Int’l Monetary Fund)

After a short hiatus, we are back. We hope everyone had a great Memorial Day weekend and took at least a moment of respect to remember our fallen service-men and women. 

News for Week of 5/26/2015 – 5/30/2015

Government / Political / Economic 

1.     Afghanistan has been relying on local militias to counter the Taliban, raising fears violent factionalism among warlords could return.

2.     Putin signed legislation giving Russian authorities power to shut down “undesirable” foreign-backed groups. I wonder when the UN is going to step up and start trying to get Russia to realize they can’t be a world-wide bully, especially as a country permanently on the UN Security Council?

3.     Nearly 17,000 homes, or 8%, in Baltimore are deemed unfit for habitation.

4.     A faction of Syriza (Greek ruling party) says it favors default and an exit from the EZ over swallowing cuts to pensions and other measures creditors are demanding. What is wrong with the Greek voters!? How were they so unaware of who they were electing to office; this would be a calamitous event!

5.     The IRS said identity thieves used one of its online services to obtain prior-year tax return info for about 100k US households.

6.     China is expanding their Navy amid US tensions.

7.     Nebraska scrapped the death penalty as the state legislature overturned the governor’s veto!

8.     Hit by stagnating growth and weakening investor confidence, Turkey’s ruling party is entering an election with a majority of voters saying the economy is poorly run.

9.     US surveillance shows China has put weaponry on an artificial island it is developing in the South China Sea. 

 

General Markets / Economic

1.       China is trimming tariffs in a bid to fashion a spending spree to boost GDP growth.

2.     US business investment is picking up. Durable-goods orders fell in April, but excluding the volatile transportation sector, orders increased. Remember that business investment is one of the only four drivers in GDP.

3.     New home sales rebounded in April and prices climbed.

4.     New antitrust suits are alleging blue Cross/Blue Shield is functioning as an illegal cartel. I doubt that; they’re not stopping competitors from entering their market, though I wouldn’t be surprised if the entire medical insurance field was considered a cartel!

5.     China will be easing limits on overseas investments.

 

Company News

1.     Charter Communications reached a $55B merger deal with Time Warner.

2.     GM is likely to face criminal charges over an ignition-switch defect but details of a settlement with prosecutors have yet to be completed.

·       It’s somewhat funny, and sad, that corporations dealing with criminal charges always manage to settle and nobody gets sent to jail!

3.     Express Scripts is seeking deals with drug companies that would set pricing for some cancer treatments based on how well they work.

4.     Hormel agreed to buy Applegate for about $775m, giving it a foothold in the organic-meats category.

5.     Data-storage giant EMC agreed to buy Virtustream for $1.2B in cash.

6.     Taco Bell and Pizza Hut are looking to remove artificial flavors and coloring.

7.     Apple is set to issue Yen denominated bonds. While I normally wouldn’t even post this, it’s interesting to see how Apple has migrated its financial policy since even 2006. Back then they didn’t have even a single penny of debt. Now, they have this Yen denominated debt; they launched their first debt in 2007 (I believe), I guess when you’re looking to grow incrementally, every dollar you can borrow to fund growth is crucial!

8.     Avago is in advanced talks to buy Broadcom at about $35B.

9.     McDonalds said it plans to stop disclosing monthly sales figures as it offered some details of its turnaround plan. I just got caught up on my last few BusinessWeek magazines, and there was a COLLECTION of anti-McDonald’s turnaround reports there, so let’s see what happens.

10.  Amazon will be adding its own line of Food.

11.  Caterpillar is quickly becoming an Airbnb like rental facilitator for construction companies.

 

Interesting Stories

1.     In China, toilet paper and bathrooms are called, in English, Happy paper and Happy room. When I asked why, the response was, “because you are happy that you had them available to use.” That is so incredibly logical!

2.     There are a number of places in China that do not use the word bathroom or Happy room, and instead use the word ‘toilet’ when describing the bathroom. Here’s my problem with that, in so many of these places there is NOT a toilet and only a squatter!

3.     A 76 year-old Chinese man attributed his strength and vitality to a daily dose of snake wine. I tried it, along with his personal concoction of wasp wine…my thoughts, “eh”… 

4.     Wang Sicong, the son of China’s richest man, started a social media furor this week when he posted photos of his dog wearing NOT one, but two gold Apple Watches, with a caption titled “I’m supposed to have four watches, but that seems too vulgar”.

5.     In the last week, at least 1,400 people have died as a result of a massive heat wave in India, with temperatures reaching all-time records of 117 degrees Fahrenheit.

6.     Like the show Cold Case? Scientists this week announced the discovery of the world’s longest cold case, a 430,000 year old skull unearthed in Spain (though how do they know the perpetrator wasn’t caught?).

7.     Feminine hygiene products are still subject to Australia’s 10% VAT. Student activists successfully lobbied Australian Treasurer Joe Hockey to oppose this tax this week.

8.     Apparently Pope Francis hasn’t watched TV since July 15, 1990.

9.     The National Spelling Bee ends in a tie for the second year in a row.

·       I remember watching this on ESPN back when I was in middle school. I found it to be a real competition back then. In the 20 years since, I believe this has transformed from a typical spelling bee into a memorization game.

10.  An Indiana woman from Delaware county was arrested last week after stabbing another woman in the eye with a fork in a fight over the last rib at a BBQ.

11.  More and more companies are making straws out of all sorts of materials, including thick paper, to meat, including bacon!

 

 

This information is not a complete description of the securities, markets, or developments discussed and has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  This information is not intended as a solicitation or an offer to buy or sell any security referred to herein.