Jun 20, 2012

Mr. Softy Battling the Legacy of Jobs

Despite the robust rally yesterday, JC Penney (JCP) was a notable loser, dropping 10% after president Michael Francis, a recent recruit from Target (TG), was asked to step down.  Francis was charged with the company’s new marketing, branding and pricing program, which has stumbled out of the blocks,  driving comps down 19% in the most recent quarter. 

The G-20 finalized their meetings with a draft communique supporting further stimulus.  “Should economic conditions deteriorate significantly further, those countries with sufficient fiscal space stand ready to coordinate and implement discretionary fiscal actions to support domestic demand, as appropriate,” said the communique.  The Fed will be winding up their two day meeting this morning, the last before Operation Twist officially ends.  Expectations are for additional Fed stimulus, at a minimum an extension of Operation Twist.

Nearly 80% Chartered Financial Analysts expect the European debt crisis to last for several more years.  Only 3% thought it was close to being over. 

Walgreen (WAG) has announced plans to acquire a 45% share of Alliance Boots, a UK based health and beauty retailer.  WAG has an option to purchase the remaining 55% within three years.  The first stage of the deal is valued at $6.7 billion.

According to the JOLT (Job Openings and Labor Turnover Survey), the number of vacant US jobs dropped to their lowest level in five months in April.  The 8% decline from March was the largest drop in eight years. 

Microsoft (MSFT)announced their new tablet, the Surface, on Monday.  Optimized to work with the new Windows 8 operating system, which I ballyhooed in a note in January, the product should be available in the fall.  This product represents MSFT’s first hardware launch since they launched their own mouse and keyboard, and may cause friction with hardware partners such as Lenovo, HPW, and Dell.  Two versions of the device will be available:  one based upon Intel powered chips and one relying upon ARM powered chips by Nvidia (NVDA).

China is starting a trial program to securitize bank loans which would free up more capital for lending.  The plan is another step in the country’s efforts to build and deepen their capital markets. 

UCLA and Florida are both out in the CWS.  Arkansas and Arizona both look strong.

Have a great day


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