Weak Manufacturing Data

April 30, 2012

Equity markets are weak this morning after soft economic data and Spain becoming the 8^th Eurozone country to fall into recession.  The Chicago Purchasing Manager Index came in at 56.2 for April, below the consensus of 60.0 and last month’s 62.2.  This is a blow to manufacturing, which has been the bright spot in the economy.  Personal spending for March came in less than anticipated at 0.3% vs. expectations of a 0.4% increase and February’s 0.9%.   Personal Income for March was slightly better than expectations at 0.4% vs. 0.3%. 

Shares of Barnes & Noble (BKS) surged this morning after Microsoft (MSFT) announced plans to invest $300 million into a new subsidiary that combines BKS’ Nook digital reader and their collegiate business.  The deal gives MSFT 18% of the subsidiary, which still doesn’t have a name.  The unit’s valuation of $1.7 billion is double BKS’ market cap at the end of last week.  As a condition of the deal, the companies also settled their patent litigation. 

Energy Transfer Partners (ETP) announced plans to acquire pipeline and gas station owner Sunoco (SUN) for $5.3 billion in cash and stock.  The deal price represents a 23% premium over Friday’s close and gives ETP 32% of Sunoco’s 7900 mile oil pipeline in addition to 4900 retail fueling stations. 

Earnings reports will be coming in like a fire hose this week as 25% of the S&P 500 companies issue earnings this week.

Treasury Secretary Timothy Geithner continues to press China to continue their recent financial reforms.  As a carrot, he has offered that the US will open its markets to China if they pursue the reforms.  “We are willing to continue to make progress on these issues, but our ability to do so will depend in part on how much progress we see from China on issues that are important to us,” said Geithner. 

The Bank of Japan has increased its asset buying to almost $500 billion, and announced plans to extend the maturity of the bonds it is purchasing from two years to three years. 

The Wall Street Journal reported Friday that US multinationals are creating jobs faster than other employers, but that 75% of the new positions are overseas. 

Yes, it’s true, the NBA Playoffs began yesterday.  I never thought I’d actually write this, but the Clippers lead Memphis 1-0 in their series after coming back from a 27 point deficit to win.

Have a great day

Ned