News Analysis for the Investor on Jan. 25, 2012

Shining Apple

Apple once again exceeded expectations with a stunning earnings report released after the market closed on Tuesday.  Stocks soared 7 percent in after hours trading, according to CNBC. Record profits, driven by iPhone and iPad sales, exceeded $46 billion, well above the $26.7 billion at the end of 2010.  Reuters reports that Apple sold over 37 million iPhones and 15.4 million iPads in the fourth quarter.

Dow closes down 33 points on Tuesday

The Dow lost 33 points on Tuesday to close at 12,675, as reported by CNBC. European markets are mostly down on Wednesday and Asian markets were flat or closed due to a lunar holiday.

Affluent Household Confidence Index Increases for fifth month

The Spectrem Affluent Investor Confidence Index increased to a -8 this month, the fifth increase in a row. While the overall confidence remains in neutral territory, it is no longer bearish.  The Spectrem Millionaire Investor Confidence Index increased to -2. Investors remain concerned about the economic environment while Millionaires are concerned about the political climate.

Halt of Facebook trading on secondary market fuels speculation of IPO

Shareholders of Facebook Inc, are facing a three day suspension of trading on the secondary markets this week, according to Bloomberg.  Facebook is considering raising about $10 billion in an IPO that would value the company at $100 billion.  Companies often suspend trading ahead of a filing to make sure that investors can’t buy or sell until all of the information is public.

IMF warns of global recession

The International Monetary Fund dropped its estimate for 2012 global growth to 3.3 percent, down from 4 percent, according to Reuters. The IMF also warned that growth could fall as low as 1.3 percent if Europe does not resolve its crisis quickly.  Growth for 2013 is predicted to be only 3.9 percent.  The IMF is pushing to increase the size of its euro rescue fund and calling for the Europeans to work out the debt crisis, especially the Greek default negotiations, as quickly as possible in order to avoid another global recession.

Stanford Claims Business Was Legit and not a Ponzi Scheme

R. Allen Stanford claims he founded a legitimate business that was brought down by the SEC after his arrest, according to the Wall Street Journal. The government claims Stanford used his securities brokerage network to sell CDs held by the Stanford International Bank in Antigua.  The CDs were touted as safe and secure but prosecutors claim the assets were used to invest in speculative real estate assets and private businesses.  The funds also supported Mr. Stanford’s lavish lifestyle which included sponsoring cricket tournaments, a yacht, two airlines and other exotic expenses.  Stanford claimed until recently that a beating in prison caused him to lose much of his memory.

Labor Department to curb children working on family farms

The Labor Department will prohibit children under the age of 16 from driving tractors and combines. Those under age 18 will be barred from working at grain elevators, silos, feedlots and livestock auctions.  Youths under the age of 15 cannot work on tobacco farms and youths cannot operate electronic devices while operating equipment.  USA Today reports that the proposed rules drew more than 18,000 comments.  The DOL indicates the rules are necessary to keep children safe while farmers vehemently object.  Children will still be allowed to clean barns and participate in 4-H, but farmers feel they inherently teach caution to their children and resent the government involvement in running the family farm.