Friday Finance Weekly 83RD Edition

Posted on July 5, 2013 by institute B

Greetings folks and a warm welcome to the 83RD Edition of Friday Finance Weekly. My apologies for tardy state of this newsletter. I am switching to a new system over the next several weeks and this will ensure timely delivery of spicy finance news.

Zero Hedge recently wrote an article on 19 reasons to be deeply concerned about the Global Economy. Here is my top five:

• Velocity of money in the US has plunged to an all-time low. Basically money is not flowing through the system and banks aren’t lending. If the velocity has slowed down due to increased credit standards that makes sense, but I think banks are hoarding cash to improve balance sheets. Both factors aren’t necessarily bad, but nothing will happen if both the chicken and the egg are stagnant. That being said, I hope the government doesn’t try to kick start things.
• Fall of the Egyptian government will result in increased instability and a spike in oil prices. This is especially problematic as summer travel results in increased oil consumption. One has to wonder if oil traders are secretly funding instability movements in the Middle East. Okay that was my one Snowden moment of the day.
• The European debt crisis is going to come in our radar again. The Portuguese Finance and Foreign Ministers quit within two days. Also it is expected that Italy will need another bailout within six months. Hey at least Berlusconi won’t party with the extra dough.
• PIMCO the bond trading heavy weight is starting to see massive capital pullouts. In June, investors pulled out $9.6B in capital. It is the largest single outflow since 1993. That being said, it could be that more capital is flowing from debt to the equity market, which is considered to be a good sign. This is a ‘meh’ sign at best.
• Perhaps the most troubling sign is that the percentage of companies providing negative earnings guidance for this quarter is at a level never seen before. Even Samsung was on this boat.

To sum up, all is not well, but summer is here and the beer is cold. I wouldn’t bother with the rest of the list as it’s a bit repetitive. (Source: Zero Hedge)

Six years in the making, Adidas is launching a radically new running shoe, the “Springblade,” on August 1. The shoe has 16 “blades” extending from the sole, each one composed of a transparent, highly elastic polymer that is intended to return energy forward with each step. Springblade is aimed at those who don’t identify themselves as runners, specifically high school and college athletes who run as a means of conditioning for sport. Adidas themselves is in a much-needed boost in the running department. According to SportsOneSource, Adidas suffered a decline in running sales in the month of May while five other companies, including category leader Nike, recorded gains of at least 20 percent. If you are interested in check it out please click the following: http://bit.ly/1a8pLVy While this shoe is revolutionary in every way, it has a small problem. Mud has a tendency of getting stuck in it. Thought that would have been a design requirement. (Source: USA Today)

In 2011, Nordstrom’s spent $270 million to buy HauteLook, which sells clothes to members in “flash sales,” online offers that expire within hours. Now, the Company is expanding its online presence through its investment in online specialty gift retailer, Wantful. The companies recently launched a joint platform, which works like this: after users enter some information about who they are buying for and how much they would like to spend, the company sends the gift recipient a customized catalogue of up to 12 potential items to select from. Nordstrom’s investment essentially functions as an inexpensive means for research and development, as the retailer strives to further grow its e-commerce business, which currently represents 11% of total revenue. Nordstrom has always been smart and continues to innovate. That being said this is a company that thrives on providing superior customer service. I am not sure how this will translate in the online space. (Source: Business Week)

Congress established the Interagency Working Group in 2009 to set guidelines on advertising healthy foods to children, and public comments on the guidelines are now being posted. General Mills appeared among the most alarmed by the IWG proposals, according to its comments on the Federal Trade Commission website (as disclosed by Scientific American in May). Of the 100 most commonly consumed foods and beverages in America, GM asserted, 88 would fail the IWG standards, and if everyone in America started following the health recommendations, General Mills asserts that the cost of feeding the entire nation would increase $503 billion per year. No worries, let’s just add it to the national debt. I wonder however if health care costs would decrease in such a case. (Source: Scientific America)

Have a fantastic weekend and please don’t hesitate to forward this newsletter. Many thanks,
Sam