Featured Advisor
Ed Meek founded Edge Portfolio in 2005. Prior to that he was the Senior Financial Consultant and Account Executive at Fidelity Investments Private Access Group, Oak Brook for 11 years. In his downtime, Ed enjoys spending time with his wife and three kids, playing and following basketball, playing golf and participating as an advisory board member for Breakthrough Urban Ministries.
Srbo Radisavljevic joined Edge Portfolio in Jan 2011. Prior to joining Edge, Srbo was the founder and...
Dow rallies just short of 5 year high
The Dow rose 84.79 points on Thursday to close at 13,596, as reported by the Wall Street Journal. The markets rose after Republican Paul Ryan said the Republicans are discussing whether to support a short term increase in the debt ceiling. Jobless claims also fell more than expected on Thursday and building permits rose in December. The Japanese indicated that they were ready to further stimulate their economy. All of these factors led the market to rally just short of a five year high.
Debt ceiling talks complicated by timing
The fact that the debt ceiling talks are falling within the months in which the US cash flow fluctuates the most is making the actual deadline less clear. According to the Financial Times, because January through April represent the months in which taxpayers are paying their taxes, the actual amount of cash available continues to change. In February 2012, daily tax refunds varied from a low of $140 million to a high of $14.7 billion. Secretary of Treasury, Tim Geithner, has asked Congress to raise the debt ceiling as soon as possible, but unlike 2011, he is unable to pin down a date in which the Treasury would actually be in default. Because Congress has only been able to reach decisions when threatened with an ultimate deadline, their ability to negotiate the debt ceiling will be challenged.
Chinese economy grows but not strongly
China’s economy strengthened in the fourth quarter but experts warn it is vulnerable to a possible downturn in global trade. The Associated Press reports that growth rose to 7.8 percent in December, up from 7.4 percent the previous quarter. Experts predict growth will exceed 8 percent in the first half of 2013. The World Bank predicts 8.4 percent growth for China. Beijing is trying to rely more on domestic demand for goods, making the economy self-sustaining rather than relying upon global demand.
Food stamp program fails to respond to rising food prices
In a report commissioned by the Department of Agriculture to review the effectiveness of the Supplemental Nutrition Assistance Program, or SNAP, the report found several challenges. The SNAP program, otherwise referred to as food stamps, rose to 47.7 million people as of September 2012. The new report indicates that the government’s response to increasing food prices lags the market by about 16 months. Fox News reports that the program also does not equip participants to eat a healthier diet. As basic ingredients increase in price, the SNAP program does not respond to market changes.
Chipotle likely to raise prices
Chipotle currently has about 1350 location in the US but the benefit of being the “new kid” is fading. According to the Wall Street Journal, Chipotle is facing middle age. On Thursday the company indicated it is likely to raise prices this year due to the increase in costs. In 2011, Chipotle has revenues of $2.26 billion. Its shares reached $442 in April but plunged in July after it missed second quarter same store growth expectations. It is expected to have grown 3.8 percent in the fourth quarter. Shares closed at $290 on Thursday.
American Airlines rolls out new look
American Airlines is rolling out a new look and making the first fleetwide change since 1968. According to USA Today, the changes include a new corporate logo and a new look for its planes. The company has chosen silver mica paint. The rollout includes the phrase “Red, White and New”. American Eagle jets will also have the new look.
Well Fargo starts jet leasing venture
According to the Wall Street Journal, Wells Fargo unveiled plans to start its own aircraft leasing company on Thursday. The new venture is in conjunction with an Irish aircraft leasing firm named Avolon. The two companies are taking a majority stake in a new Dublin based firm that plans to build an initial fleet of 10 jets valued at $500 million. This will provide a new source of revenue for the bank while it puts some of the bank’s existing cash to work. Wells Fargo has invested in other revenue sources in recent years including commercial real-estate loans, an asset based lender and an energy lending business. The company reported record net income of $18.9 billion, up 25 percent from a year ago. Its net interest margin, however, has fallen to 3.56 percent. The net interest margin is the difference between the interest it pays to depositors and the rate it charges borrowers.
Catherine S. McBreen is President of Millionaire Corner. McBreen plans and develops content for Millionaire Corner. Catherine Balances editorial content to meet the informational needs of both new and seasoned investors. She designs special monthly surveys on topical issues affecting the economic environment.
