Financial News 10/21/12 – 10/27/12

Economy

-Spain’s GDP shrank 0.4% in the third quarter, which was less than expected, but tax revenue shortfalls could result in the country missing its budget deficit target for 2012.  10/24

-Home prices rose for the seventh month in a row in August up 0.7% from July.  10/24

-New home sales rose 5.7% in September up from August and a 27.1% jump from a year earlier.  10/25

-Business spending was flat in September as companies held tight on large expenditures with concerns about the global economy and potential tax and spending cuts hovering over decisions.  10/26

-Preliminary reports show the U.K grew at a higher than expected rate of 1.0% in the third quarter breaking a string of 3 quarters of contraction.  It was the best quarter in 5 years, but onetime events like the Olympics might have affected the results.  10/26

-Spain’s unemployment rate has topped 25% as the country struggles with recession. 10/27

-The U.S. GDP growth rate for the third quarter came in at 2% driven by government and consumer spending and beating expectations. U.S. exports declined in the third quarter for the first time in three years. 10/27

Corporate

-BP announced it will sell its stake in the Russian joint venture TNK-BP to OAO Rosneft for $26.8 billion in cash and stock.  The deal will make BP, a 20% holder of Rosneft, tied deeply with the state owned company that controls 40% of Russian output.  10/23

-Yahoo’s third quarter earnings jumped due to its sale of a portion of its interest in internet search engine Alibaba, but revenue dropped 1%.  Overall the results beat analyst expectations.  10/23

-Dow’s earnings dropped 39% and revenue dropped 10% in the third quarter and announced it would be laying off 2,400 employees in order to combat slow world growth.  Rival DuPont saw its profits drop 98%.  10/24

-United Technologies, the industrial conglomerate posted a 6.9% gain in profits, but lowered its sales forecast for the year

-Netflix’s earnings fell by 88% and it lowered its forecast for subscription growth.  10/24

-Apple introduced the iPad Mini, but investors were concerned that its price, substantially above rivals like Barnes and Noble’s Nook and Amazon’s Kindle Fire, could pose problems.  10/24

-Facebook’s profit fell on costs related to paying employees in company stock, but investors cheered the company’s ability to increase its revenue from mobile ads.  Overall revenue rose 32% in the quarter topping estimates.  10/24

-Caterpillar reported a 49% jump in profit on a 5% increase in sales. 10/25

-Internet retailer Amazon reported its first quarterly loss in over 9 years on slowing sales growth and expanding expenses from product development and infrastructure build out.  The firm posted a $274 million loss.  10/26

-Apple’s fiscal fourth quarter earnings rose 24% on revenue that gained 27%.  Sales of iPhones were up 58% from a year earlier topping estimates while sales of iPads were up 26% but fell short of estimates. 10/26

-Legg Mason reported fiscal second quarter earnings of $81 million a 43% jump over last year beating estimates. They also had their first positive fund inflows in five years. 10/27

Regulatory

-The U.S. government sued bank of America for $1billion as a result of faulty mortgage practices from Countrywide Financial, the mortgage lender Bank of America bought early on in the financial crisis.  10/25

-Rajat Gupta, a former director at Goldman Sachs, was sentenced to two years in prison for passing along inside information to a hedge fund.  10/25

Market

-Weak corporate earnings results and forecasts sent stock markets tumbling.  The Dow fell 1.8% and the S&P 500 sank 1.4%.  Over $500 billion in market capitalization has been lost in the last three trading days.  Europe fell 1.7% and commodities sold off.  10/24

-Global markets were down for the week as corporate earnings have come in lower than expected and profit forecasts have been weak.  The S&P dropped 1.5% for the week and Dow sank 1.8%.   In foreign markets Japan was down 0.8% and Europe fell 1.3%.  Oil settled at $86.28 a barrel falling over $4 over the week and gold fell to $1,710.90 an ounce.  10/27

There is no guarantee that any investment strategy, including those described here, will be successful. Any investment or investment strategy can lose money. Past performance does not guarantee or predict future results. You should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Raffa Wealth Management, LLC. This information was gathered from reliable sources but we cannot guarantee accuracy. Indexes do not reflect the fees associated with actual investments and such fees would reduce the performance illustrated.
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