Focus on the Bigger Picture – Economic Indicators Signal Rebound
Posted: September 26, 2011 Filed under: Index of Leading Economic Indicators, rebound, U.S. Economy, Uncategorized | Tags: Economic indicator, Latin America, market volatility, Money supply, portfolio, recovery, U.S. economy Leave a comment »Focus on the Bigger Picture – Economic Indicators Signal Rebound
Don’t start selling your hard-won investments in a panic. The U.S. economy is recovering slowly but surely.
Fear and anxiety, rather than any real deterioration in the economy, is driving market volatility. Investors have overreacted to the downgrade in the U.S.credit rating, ongoing U.S. fiscal problems, and some weak economic data.
Look at the economic indicators-including payrolls, unemployment claims, auto sales, the money supply, retail sales, housing starts, mortgage rates, housing affordability, and oil prices-all are on the upswing.
In addition, corporate revenues soared 13.2% in the second quarter, and economic growth is continuing in emerging markets such as China, Asia, Latin America, and the Middle East. That is fueling strong U.S. corporate earnings. Moreover, the Index of Leading Economic Indicators turned upward at the end of June and points to slowly expanding economic activity.
Take this opportunity to rebalance your portfolio by purchasing assets at reduced prices. It’s an opportune time to consider selling fixed-income assets and buying stocks that have slumped, as long as doing that fits your individual goals, time horizon, and the level of risk you are comfortable with.
The recovery will take time, but it’s under way. So, don’t sell in a panic, and don’t just ride out the hysteria. Adjust your portfolio to take advantage of market turmoil by keeping focused on the bigger picture
Copyright Ian Hurwitz 2011 “Focus on the Bigger Picture – Economic Indicators Signal Rebound“
Ian’s Investment Philosophy (really Harry Markowitz’)
Posted: September 7, 2011 Filed under: Harry Markowitz, Modern Portfolio Theory, Uncategorized | Tags: Harry markowitz, investment portfolio, Investments, long term investments, Modern Portfolio theory Leave a comment »Ian’s Investment Philosophy (really Harry Markowitz‘)
Putting money in a savings account means losing money on the long term. Investing money entails risk. What to do?
Harry Markowitz won a nobel prize for his Modern Portfolio Theory, developed in the 1950′s. Shorthand – don’t just speculate, assess risk. I have studied under Mr. Markowitz. I wrote a book in the 90′s and base my investments on this long term strategy. It still works today. In my opinion it is the only thing to do.
Excerpt from my book:
What are Modern Portfolio Theory’s Advantages?
What Modern Portfolio Theory does is provide a means of accomplishing three extremely important objectives for your personal investment portfolio:
- You can pick the level of risk you are comfortable with. You pick investments that let you sleep at night.
- You can ignore day-to-day and even year-to year fluctuations in the financial markets. This is a long term strategy, and over the long term values have always risen-with remarkable consistency, as we’ll show you later in the book.
- You can count on receiving, with 99% probability, the highest possible returns for the level of risk you are comfortable with.
Sound good to you?
(more to come in the future …)
Copyright 2011 Ian Hurwitz “Ian’s Investment Philosophy (really Harry Markowitz’)“
Is It Time To Re-examine Your Portfolio Blend?
Posted: August 17, 2011 Filed under: Bonds, Currency, Debt, economy, Federal Reserve, Finance, Great Depression, Great Recession, Higher interest rates, Inflation-linked, Investments, Stock, Treasury, Uncategorized | Tags: Business, debt, debt limit, Dow Jones Industrial Average, economy, Federal Reserve System, Finance, Great Recession, Investment, Investments, Monetary policy, Standard & Poors, The Stock Market (Wiley Investment), U.S. monetary policy, United States, United States public debt, Washington D.C. Leave a comment »| Is It Time To Re-examine Your Portfolio Blend?
Examine If Market Retreat Creates A Long-Term Buying Opportunity The stock market’s mid-summer swoon took investors on a harrowing ride,
While individuals seeking growth endured paper losses amid the downturn, the
Whether you are investing for retirement or a child’s college education, or simply Indeed, there’s no near-term guarantee that the summer market meltdown is not part of |
The best advice in seeking long-term goals:
In the wake of the changing market landscape, now may be a good time to revisit your investment plan and overall strategy to identify investment opportunities that have emerged which could help enhance your ability to achieve your long-range objectives. If the market downturn has been unsettling for you (and who can blame you if it has?) perhaps its time to revisit the risk exposure in your portfolio allocation to best reflect your risk tolerance level and ability to sleep.
Copyright 2011 Ian Hurwitz “Is It Time To Re-examine Your Portfolio Blend?“
More Affordable Homes If You Act Now
Posted: August 5, 2011 Filed under: Bonds, Currency, Debt, Derivatives, Federal Reserve, Feds, Finance, Futures, Gold, Great Depression, Great Recession, Higher interest rates, Inflation-linked, Investments, Mortgage, Negative yield, Treasury, Uncategorized | Tags: Fannie Mae, Lending, Mortgage, Mortgage Bankers Association, mortgage rates, mortgage-bond, National Association of Realtors, refinancing Leave a comment »More Affordable Homes If You Act Now
Can You Lock In Your Mortgage Rate Today?
Mortgage-Bond Yields Tumble, Signaling Loan Rates Nearing Record
Yields on Fannie Mae and Freddie Mac mortgage securities that guide U.S. home-loan rates fell to the lowest in almost nine months, signaling borrowing costs to purchase and refinance houses may reach new lows.
Fannie Mae’s current-coupon 30-year fixed-rate bonds dropped 0.18 percentage point to 3.45 percent as of 3:05 p.m. in New York, according to data compiled by Bloomberg. Yields tumbled to the lowest level since Nov. 10, generally tracking drops in Treasuries, as concern the economy is slowing and Europe’s fiscal crisis will spread drove investors to U.S. debt.
The average rate on a typical 30-year home loan slumped to 4.39 percent in the week ended today, nearing the record low of 4.17 percent set in November, according to a Freddie Mac survey compiled before the additional gains in the bonds. Falling rates should in the short term help depress yields relative to Treasuries on agency mortgage securities trading the closest to face value, even though they may create wider spreads over time, according to Nomura Securities International Inc. analysts.
The mortgage bonds’ relative performance over the longer term may be “weak because of paydowns from the Fed’s portfolio, but there are several short-term positive factors that exist,” the New York-based analysts led by Ohmsatya Ravi wrote yesterday in a note, referring to the home-loan securities bought by the Federal Reserve in 2009 and 2010 to support the economy.
Home Lending
Yields on agency mortgage bonds are now guiding rates on almost all new U.S. home lending following the collapse of the non-agency market in 2007 and a retreat by banks. The $5.3 trillion market includes securities guaranteed by government- supported Fannie Mae and Freddie Mac and the bonds of government-insured loans backed by federal agency Ginnie Mae.
Lower borrowing costs have done little to boost home sales as banks keep lending standards tight, the unemployment rate sticks above 9 percent and a glut of foreclosed properties drag down prices. Sales of previously owned homes declined in June to a seven-month low, the National Association of Realtors said last month. Home values in 20 U.S. cities dropped 4.5 percent in the year ended in May, according to the S&P/Case-Shiller index.
About 22.7 percent of homeowners with mortgages were underwater in the first quarter, meaning they owe more than their properties are worth, according to CoreLogic Inc., a company that compiles mortgage market data and analytics.
Refinancing Applications
Depressed home prices and tougher standards have left refinancing applications 45 percent below last year’s high and 72 percent off 2003’s record, according to Mortgage Bankers Association data released yesterday. Further drops in rates may stoke refinancing further by pushing new loan costs below the levels in effect as borrowers qualified under stricter guidelines in recent years. Refinance applications have climbed about 50 percent from this year’s low in February.
Limited application volumes also mean that lender competition isn’t easing as interest rates drop, a difference from last year, when mortgage companies raised the rates they offer to consumers relative to bond yields to suppress demand for their services and keep their workloads manageable.
“This means that lower 10-year rates are translating into lower mortgage rates in this rally faster than last time around,” Bank of America Corp. analysts Chris Flanagan and Vipul Jain wrote today in a report. “Therefore, we will most likely reach record lows in 30-year mortgage rates that we saw last year at a higher level” of 10-year Treasury yields.
‘Underhedged’
Items that may help yields on mortgage bonds narrow relative to Treasuries in the short term include loan servicers being “underhedged” as the projected lives of their contracts shorten and needing to add debt, and the increasing appeal of “carry trades” to banks and real estate investment trusts amid speculation the Fed will hold its target for short-term borrowing costs at as low as zero for longer, according to the Nomura analysts.
Carry trades involve using money borrowed in short-term markets to invest in longer-term, higher yielding debt.
The difference between yields on the Fannie Mae current- coupon securities, which most influence loan rates because they trade closest to par, and 10-year Treasuries narrowed about 0.02 percentage point today to 0.98 percentage point, Bloomberg data show.
The spread climbed to a two-year high of 1.04 percentage point two day ago, amid concern that a default by or downgrade of the U.S. government could roil the repurchase-agreement financing markets used by mortgage-bond investors or lead to forced sales of securities.
Projected Lives
As rates decline, the projected lives of mortgage bonds and loan-servicing contracts fall, partly because potential homeowner refinancing increases. Servicers and investors who own the securities then have portfolios with shorter-than-expected durations, which may prompt them to buy longer-dated Treasuries, mortgage bonds or interest-rate swaps. Those purchases may send yields on mortgage securities even lower.
As refinancing increases, the repayment of loans in securities held by the Fed also rises, with borrowers taking out new debt that gets placed into bonds trading in the market, boosting the supply available to investors. The Fed now holds about $900 billion of home-loan securities, after buying $1.25 trillion through March 2010 in a bid to support the economy.
To contact the reporters on this story: Jody Shenn in New York at jshenn@bloomberg.net;
To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net
Copyright Ian Hurwitz 2011 “More Affordable Homes If You Act Now“
Smart Estate Tax Planning
Posted: July 28, 2011 Filed under: Uncategorized Leave a comment »Estate planning within current tax law, according to Bloomberg, reveals Dynasty Trusts Which Let U.S. Wealthy Duck Estate, Gift Taxes Forever
July 28 (Bloomberg) — Jeffrey Thomasson, 52, may pass on more than $100 million to heirs using an estate-planning strategy for avoiding gift and estate taxes.
Thomasson, who lives in Indianapolis, said he’s funding a so-called dynasty trust set up in Delaware with $8 million of equity from the expanding financial advisory business he owns, Oxford Financial Group. Putting the assets in a trust, which he figures could be worth more than $100 million by the time he dies, means the money should go to his heirs without triggering federal gift, estate or generation-skipping transfer taxes.
“Why would I want to pay estate taxes on some really, really big number 30 years from now, if the IRS is giving me this opportunity?” Thomasson said.
A dynasty trust is used to pass money on to multiple generations of descendants while paying as little in taxes as possible. The trusts have no expiration date and there are no required minimum distributions, meaning their assets may grow for an unlimited number of future generations. While the trusts can be set up in many states, Delaware offers extra breaks, including stronger protection from creditors and exclusion of assets in divorce proceedings.
“It’s an astoundingly powerful vehicle for generating long-term family wealth,” said Neal Howard, chief fiduciary counsel for Philadelphia-based Glenmede, which manages more than $20 billion on behalf of individuals and families with $3 million or more in assets.
Gift Limits
Interest in the trusts has risen because of the higher individual lifetime gift- and estate-tax exemptions of $5 million available this year and next, which means clients can put more tax-free money into the trusts, said Carol Kroch, head of wealth and financial planning for Wilmington Trust Co., a unit of Buffalo, New York-based M&T Bank Corp.
That limit will drop in 2013 to $1 million and the top federal tax rate on gifts and estates will rise to 55 percent from 35 percent, unless Congress acts. Gifts that skip a generation, such as from a grandparent to a grandchild, follow similar rules.
Northern Trust Corp., based in Chicago, has set up several dozen Delaware dynasty trusts on behalf of clients in 2011, compared with almost none in 2010, said Daniel Lindley, president of the Northern Trust Company of Delaware, who declined to provide more specific figures.
Protection in Divorce
Delaware is one of several states, along with New Jersey and Pennsylvania, that allow so-called perpetuities, or trusts that may never expire, Lindley said. It’s also an appealing state because it’s easier to modify existing trusts there, said James Bertles, managing director of New York-based Tiedemann Wealth Management, which oversees more than $6 billion on behalf of families with $20 million or more. Delaware allows trusts greater flexibility to invest in certain assets, such as hedge funds and private equity, he said.
The state also offers stronger protections from creditors and civil litigation, including divorce proceedings, said Ted Cronin, chief executive officer of Manchester, Vermont-based Manchester Capital Management, which directs $1.9 billion and provides tax- and estate-planning services for families with $25 million or more in assets.
“In effect, it acts as a prenup,” Cronin said.
Most Delaware trusts set up by out-of-state residents don’t owe state income or capital-gains taxes on accumulations within the trust, and pay these taxes only when distributions are made, Bertles said. Some states do tax the undistributed gains and income of dynasty trusts set up by residents, including Pennsylvania and Illinois, according to Glenmede’s Howard. The trusts owe federal income and capital-gains taxes on distributed and undistributed investment gains and income.
$100 Million Gift
Dynasty trusts have gained popularity since 1986 when Congress overhauled the generation-skipping transfer tax and since then several states, including Delaware, have eliminated their rules against perpetuities. In New York, by comparison, trusts may last no longer than the lifetimes of people currently alive, plus 21 years, said Bertles, who’s based in Palm Beach, Florida. Connecticut allows for the greater of 90 years or current lives plus 21 years.
Thomasson said his Carmel, Indiana-based business, which provides investment-management and financial-planning services to families with $5 million or more, has been growing at a double-digit pace in recent years. Assuming that continues, and assuming he lives until 80, his trust could provide more than $100 million for heirs by the time he dies, when the shares would be redeemed.
“With the whimsical nature of the minds we have in Washington D.C., whenever you get an opportunity to do something from a tax standpoint, you really need to consider taking advantage of it,” Thomasson said.
Potential Growth
A dynasty trust funded with $10 million from a couple today could be worth as much as $184 million in 50 years, assuming no intergenerational transfer taxes and a 6 percent annual return, and before subtracting any federal income or capital-gains taxes paid on the trust’s investment returns. By comparison, assets not placed in a trust and taxed twice as an estate in that period could be worth $39 million at the end of 50 years, assuming a $1 million exemption and 55 percent top rate.
The Standard & Poor’s 500 Index returned 9.6 percent annually over the 50 years through December, with dividends reinvested. A $10 million investment in the index over that period could be worth about $975 million before taxes.
Costs to set up a dynasty trust may range from about $3,000 to more than $30,000, depending on the complexity and attorney’s fees, said Adam von Poblitz, head of estate planning at New York-based Citigroup Inc.’s private bank.
Boosting Gifts
While there’s no minimum for setting up a dynasty trust, clients with about $20 million or more in assets have expressed the most interest in taking advantage of the full $5 million exemption, said Joan Crain, a family wealth strategist in Fort Lauderdale, Florida, for Bank of New York Mellon Corp.
Some clients increase their gift to the trusts by using the initial contribution to take out a loan, Bertles said. An individual can gift a trust $5 million, for example, then sell the trust $50 million in assets, using the initial $5 million as a down payment. The trust would issue a promissory note to the individual for the remaining $45 million.
The notes are treated as intra-family loans and must follow U.S. Internal Revenue Service rules on repayment and interest rates. As of July, the rates were 2 percent for loans of three to nine years. Any appreciation of the purchased assets above that interest rate pass on to the trust without triggering the gift tax, Bertles said.
Family Businesses
One client used this strategy to transfer partial ownership of the family’s growing winery business to his children, Lindley of Northern Trust said. The client funded a trust with $4 million, which it used to purchase a $40 million share of the business, he said.
The strategy is appealing for families with a closely held business because they may be able to sell a portion to the trust at a discount of as much as 40 percent, said Laura Zeigler, a Los Angeles-based senior vice president for Bessemer Trust Co., which provides investment-management and financial-planning services for families with $10 million or more in assets. That’s because the stakes might be difficult to sell on the open market.
The trusts are irrevocable, meaning the person starting the trust has minimal control over the assets once it’s set up, and generally may change the trust only by going to court or getting approval from all beneficiaries, said BNY Mellon’s Crain.
“The word ‘irrevocable’ doesn’t always resonate until they suddenly want the money,” she said.
Access to Funds
Individuals who feel hesitant to give such a large sum away permanently can choose to structure a dynasty trust as an asset- protection trust, in which case they can name themselves as beneficiaries in order to take withdrawals under certain circumstances at the trustee’s discretion, said Northern Trust’s Lindley.
“If it turns out they’re in dire need of financial resources they can turn to us and request a distribution,” Lindley said. If they never need it, the trust’s assets will pass on to heirs as planned.
To contact the reporter on this story: Elizabeth Ody in New York eody@bloomberg.net
To contact the editor responsible for this story: Rick Levinson at rlevinson2@bloomberg.net .
Smart estate planning should be an obvious priority, today. Don’t delay!
Texas Economy Shows Life
Posted: July 27, 2011 Filed under: Debt, economy, Federal Reserve, Feds, Finance, Great Recession, Higher interest rates, Inflation-linked, Investments, Mortgage, Real yield, Treasury, Uncategorized | Tags: Bonds, debt, economy, Federal Reserve, Feds, Finance, Futures, Great Recession, Higher interest rates, Inflation-linked, Investments, Mortgage, Real yield, Treasury, Uncategorized Leave a comment »Texas seems to be holding its own and unemployment is looks stable.
The following is the text of the Federal Reserve Board’s eleventh District — Dallas.
The Eleventh District economy expanded at a moderate pace over the past six weeks. Energy-related activity remained strong. Reports from manufacturers were mixed but mostly positive, although some construction-related producers were less optimistic than they were six weeks ago. Nonfinancial services activity rose, with strong demand for staffing services. The single-family housing sector remained weak, but the commercial real estate sector continued to improve. Financial services respondents said overall loan demand was flat during the reporting period, and contacts in the agricultural sector noted drought conditions worsened.
Prices
Selling prices were flat or higher since the last report. Most manufacturers said selling prices were stable, while several service sector companies were able to enact some price increases, including transportation and retail firms. These price increases were in response to higher input prices. Accounting, legal and staffing firms reported slight increases in rates charged for their services. Input prices increased at most responding firms, although several contacts said upward pressure from higher energy costs eased in recent weeks as oil prices declined. Transportation firms, including airlines, noted that the recent price declines for fuel will have a larger impact on input costs later in July and August. Retailers said cost pressures were squeezing margins, and food manufacturers said commodity prices were up significantly from last year.
The price of crude oil fell from over $100 per barrel in early June to about $95 at the end of the reporting period in early July. Gasoline prices fell about 15 cents during the reporting period. Natural gas prices remained in the $4-$5 per Mcf range, but edged up since the last report because of hot weather. Prices for most petrochemical products fell since the last report, according to contacts.
Labor Market
Employment levels held steady at most responding firms, although there were several reports of hiring. Staffing firms reported continued strong demand for their services. In addition, there were some mentions of moderate employment increases from automobile dealers, transportation service firms and manufacturers of primary and fabricated metals, transportation equipment, lumber and food. Legal firms noted solid demand for talented attorneys, and added that start dates for some new hires had been moved up from January 2012 to fall 2011. In contrast, one construction- related manufacturer reported a new round of layoffs, and one retail firm was considering reducing staff levels next year. Wage pressures remained minimal, although some contacts noted that they were giving modest pay raises.
Manufacturing
Reports from construction-related manufacturers were mixed. Overall, activity levels appeared to be unchanged. Multifamily activity provided a boost to some firms, although several contacts said public and government demand had diminished. In particular though, fabricated metals producers noted a pick-up in growth since the last report due to infrastructure projects. Construction-related outlooks were generally flat to slightly up, and contacts believe there will not be much rebound until residential and commercial construction recover, which may take longer than previously expected.
Respondents in high-tech manufacturing reported that growth in orders remained at a moderate pace since the last Beige Book. One respondent with greater-exposure- than-average to Japanese production said second-quarter sales were well below pre- earthquake expectations, but that growth in June was strong enough to finish the quarter slightly above their expectations. Inventories were at desired levels, although one respondent said that a one-time reduction in orders from a customer left them with slightly higher-than-desired levels. Most contacts expect orders and sales growth to remain moderate or to pick up slightly in the second half of the year.
Reports from paper manufacturers were mixed. Demand for corrugated packaging improved, but paper suppliers noted flat to slightly slower sales. Manufacturers of non-defense transportation equipment reported strong sales with demand flat to slightly up since the last report and well above year-ago levels. Food producers said sales continued to rise at a steady pace.
Petrochemical producers said demand remained strong for most products. Contacts said domestic demand has improved, and export markets have re-opened since the last report. Refinery utilization moved up to near 90 percent, and contacts in the refining industry said margins narrowed slightly but remained very strong, although demand for oil products is slightly lower than the same time last year.
Retail Sales
Retailers reported a slight increase in activity over the reporting period. Compared to a year ago, same store sales are up in the mid-to-low single digits. Apparel and jewelry are segments that have performed well recently. Concerns remain regarding the elevated level of unemployment. Texas sales increased slightly more than the nation on average, according to one large retailer. The second half of the year should see modest year-over-year growth. Automobile demand remains strong, but supply constraints stemming from Japan are limiting sales. Japanese manufacturers are primarily affected, but inventories of domestic autos are below desired levels as well. This is expected to last for another 90 days or less before improving through year-end.
Non-financial Services
Staffing firms reported continued strong demand for their services. Temp-to-hire activity has been a bright spot, with long assignment lengths and several conversions to permanent hires. Outlooks are cautiously optimistic, with most respondents expecting continued strength in demand through year-end. Accounting firms noted a seasonal slowdown in demand for their services. Legal firms reported mostly steady demand, with continued growth in transactional services.
Intermodal cargo volumes increased since the last report, but year-over-year volumes are down due to a sharp decline in Asian demand for raw materials. Contacts in railroad transportation noted a broad-based increase in shipments, with particularly strong volume growth in metallic and nonmetallic ores and grains. Container volumes declined during the reporting period, although contacts said demand has strengthened from a year ago, due to energy-related activity. Small parcel shipments rebounded in June after declining in May. Still, outlooks are more pessimistic than previously reported, partly due to high fuel costs dampeningconsumer spending. Airlines report some softening in demand in June compared with May, likely due to an increase in airfares for last-minute travel. However, passenger volumes are up on a year-over-year basis, and the outlook for the summer is positive.
Financial Services
Financial firms reported relatively flat loan demand. National banks reported less pickup in corporate loan demand following a very active first half of the year, while commercial real estate (CRE) activity has continued its trend of improvement. Regional banks noted that loan demand has been mixed, while loan pricing remains aggressive amidst a highly competitive lending landscape. Outlooks are generally positive in light of better outstanding loan quality and continued gradual improvement in lending conditions. Optimism has been tempered by consumer fear regarding economic and fiscal policy uncertainty as well as the burden and costs associated with the implementation of new regulations.
Construction and Real Estate
Single-family home sales remain weak, particularly in the lower priced segment of the market. Contacts say demand is choppy from month to month, but most expect some improvement in the second half of the year.
Apartment demand remains strong and rents continue to increase. Contacts noted the Dallas/Fort Worth area topped the national rankings in leasing activity in the second quarter.
Office and industrial real estate activity improved since the last report. Contacts say Texas markets are performing better than the national average overall. One respondent noted office demand was quite strong in Texas’ major metros and that rents were starting to rise. Investment property sales continued to improve from low levels, and prices rose slightly.
Energy
Domestic drilling activity remained strong since the last report, according to Eleventh District firms in the energy industry. The rig count continues to shift towards oil-directed drilling, and contacts noted horizontal drilling and fracturing activity remain very profitable. In the Gulf of Mexico, 15 rigs have been re- permitted–with seven currently working and near completion–although a lack of new permits this year has led to some concerns about the prospects for Gulf work later in the year. International activity remains strong, but profit margins are thin.
Agriculture
Drought conditions worsened, with about three-quarters of the district now in the most severe drought classification. Most Texas counties were designated natural disaster areas in June because they lost at least 30 percent of crops and pasture to drought. President Obama signed a disaster declaration in July for 45 counties in Texas that were heavily impacted by wildfires, which allows federal aid to help with recovery efforts. Crop conditions continued to deteriorate, causing low yields and complete crop losses in some instances. Farmers will depend heavily on crop insurance payments this year. Ranchers continued to cull herds due to very poor grazing conditions, limited hay supply and costly supplemental feeding.
Overall, we feel encouraged.
Trade Is International And Complex
Posted: July 27, 2011 Filed under: economy, Federal Reserve, Uncategorized | Tags: China, Federal Reserve, global trade, Houston, International Marketplace, Mexico Leave a comment »Trade Is International And Complex
Dont Miss this event.
The International Marketplace
July 27, 2011
Houston Branch, Federal Reserve Bank of
Dallas
In its third year, International Marketplace probes the
challenges and concerns of global interconnectedness. As global trade and
specialization continue to be a factor in economic growth and development, trade
flows are becoming more and more complex. Many of the items we purchase, or
their components, travel the globe extensively before they land on our shelves.
This year’s event not only addresses global trade but also provides an in-depth
view of two important U.S. trading partners, China and Mexico. In an
increasingly complex international landscape, it is especially important to stay
informed of the changes and challenges that our trading partners face.
In addition to this year’s content focus, skills will be
presented that enable students to become successful participants in the
international marketplace. Teachers will also receive classroom resources and
tools, provided by the Federal Reserve and the Texas Council for Economic
Education.
Wednesday, July 27
8:30 a.m.–3:30 p.m.
Try to make it.
Copyright 2011 Ian Hurwitz ”Trade Is International And Complex“
Apple iPhone is conquering Asia – now comes China Mobile with 611 million subscribers.
Posted: July 20, 2011 Filed under: Apple, Apple iPhone, China mobile, Steve Jobs, Uncategorized | Tags: Apple, Apple stock, China Mobile, IPhone, Steve Jobs Leave a comment »Apple iPhone is conquering Asia – now comes China Mobile with 611 million subscribers.
A new one year high for for Apple stock as the iPhone conquers Asia. Sales there nearly quadrupled from a year ago and helped Apple Inc. beat analyst expectations for yet another quarter.
On July 7, the financial news world was rocked after leaked information regarding an Apple-China Mobile partnership possibility. The deal consists of China Mobile offering the iPhone to its customers. This is huge considering that China Mobile is the largest wireless carrier in the world with over 611 million subscribers.
Apple also said iPad sales worldwide nearly doubled from a quarter ago, a sign that it has left the worst of its supply problems behind.
Net income in the fiscal third quarter, which ended in June, was $7.31 billion, or $7.79 per share. That’s more than double the $3.25 billion, or $3.51 per share, a year ago.
Revenue was $28.6 billion, up 82 percent from $15.7 billion a year ago. Analysts were expecting $24.8 billion.
The results were lifted by the sale of 20.3 million iPhones, millions more than analysts had expected. The phone’s popularity in Asia, particularly in China, is helping. So is the fact that Apple keeps expanding the number of carriers that sell the phone. It was the first full quarter in which the phone was sold by Verizon Wireless, the largest carrier in the U.S. Before, only AT&T sold the phone in the U.S.
Apple usually has the year’s new iPhone model out by early July. That hasn’t happened this year, and analysts expect the new model to come in September instead. Apple executives didn’t provide any specifics on a call with analysts.
Executives also resisted questions on whether Apple will produce a cheaper iPhone to compete against phones powered by Google Inc.’s Android software. Asian competitors like Samsung Electronics, LG Electronics and HTC Corp. are selling tens of millions of Android phones every quarter at prices that undercut the iPhone.
“We will only make products that we are proud of, that are the best in the world. And if we can do that, and the price is lower, then we are great with that,” Chief Operating Officer Tim Cook told analysts on the call.
IPad sales came in at 9.25 million units, also above analyst expectations. Last quarter, the company was struggling to make enough of the new iPad 2. Apple has sold nearly 29 million iPads since they first went on sale in April 2010.
In other product categories, trends were less impressive. Sales of Mac computers were 3.95 million, up 14 percent from a year ago. That’s the lowest quarterly growth rate in two years.
Cook said some people were probably buying iPads instead of Macs in the quarter, but he said more people were buying iPads over Windows PCs. He said he was pleased with 14 percent growth compared with overall PC market growth of 2.6 percent, as measured by research firm IDC.
Some buyers may also have been holding off while waiting for Lion, the new version of the Mac OS X operating system. Apple had said it would go on sale this month, and Apple confirmed on the call that it will go on sale Wednesday. Lion will cost $29.99 and mimics some of the features of the iPhone and iPad interface.
IPod sales were down 20 percent at 7.5 million, as the music and video players continue to lose out to iPhones and iPads. It was the fastest quarterly decline yet.
Cook is running day-to-day operations while CEO Steve Jobs is on indefinite medical leave. The quarter was the first full one since Jobs went on leave in January. Jobs remains involved in major decisions, including announcements of new products. Analysts don’t expect Jobs’ leave to affect the company much in the short term. All the company’s major products have still been shepherded by Jobs.
Chief Financial Officer Peter Oppenheimer said he expects earnings of $5.50 per share and revenue of $25 billion in the quarter that just started. Both figures point to a decline from the third quarter. However, the company usually lowballs its financial forecasts, and analysts are unlikely to take the forecast seriously.
Apple’s stock surged $18, or 4.8 percent, to $394.85 in extended trading late Tuesday making a new 52 week high.
Copyright Ian Hurwitz 2011 “Apple iPhone is conquering Asia – now comes China Mobile with 611 million subscribers“
