Tuesday, September 9, 2014

Lower markets on worries about the future of low interest rates

Dow dropped 97, decliners over advancers almost 4-1 & NAZ lost 40.  The MLP index rose 1 to the 537s & the REIT index fell 2 to the 312s.  Junk bond funds were lower & Treasuries sold off.  Oil was even & gold fell to 3-month lows as the dollar climbed to the highest in more than a year, crimping demand for precious metals as alternative investments.

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Apple new iPhones are threatening to make the plastic in wallets obsolete.  The iPhone 6 & iPhone 6 Plus include a payment system called Apple Pay that will let consumers shop in stores & online using the tap of a finger on a phone instead of the swipe of a credit or debit card.  The service relies on the card networks & banks.  With customers lining up to buy the phones, the decision to team up, rather than develop a payment system from scratch, could funnel more spending to the networks & card-issuing banks as transactions shift from cash & plastic cards to mobile phones & other digital devices.  At stake is a mobile-payments market that will probably more than quadruple to about $90B by 2017, according to Forrester Research.  Apple Pay will use fingerprint scanners to verify users & near-field communication, a radio-based technology that exchanges data between devices that are held or swiped within a few inches of each other.  The mobile devices will add another layer of security by using a dynamic security code, replacing the static data on the magnetic strip of a typical card.  The one-time codes eliminate the need for merchants to receive sensitive customer account information, making the system less susceptible to fraud & hacker attacks.  With cards “we’re totally reliant on the exposed numbers and the outdated and vulnerable magnetic-stripe,” CEO Tim Cook said.  “It’s so easy to lose your card, or have it compromised, it’s no wonder that people have dreamed of replacing these for years.”  Still, the change in technology doesn’t exclude existing card networks and issuers.  The new payments system will be available in the US next month.  AAPL known for unveiling products in slickly produced presentations, stumbled when unveiling its new batch of gadgets: live video.  Viewers tuned in to the website today to find a TV test pattern or Philip Schiller, senior VP of marketing, speaking with Chinese translated over his voice.  The presentation eventually worked properly.  The stock lost chump change.  If you would like to learn more about AAPL, click on this link:

Apple’s New Payment System Seen Benefiting Card Networks

Apple (AAPL)

EU govs tomorrow will reopen discussions about the viability of a cease-fire in Ukraine as the bloc weighs whether to pull the trigger on tougher sanctions against Russia.  Talks follow the EU’s abrupt decision yesterday to put on hold for at least a “few days” a 2nd package of economic penalities against Russia over its encroachment in Ukraine.  The delay offered more time to assess the effectiveness of the cease-fire without risking further trade retaliation by the Kremlin.  The planned sanctions, originally due to be published in the Official Journal today, include barring some Russian state-owned defense & energy companies from raising capital in the EU, according to a leaker.  “Now it’s up to the member states to look at this situation again and examine the implementation of the cease-fire agreement and decide how to take this forward,” a spokeswoman for EU foreign-affairs said.  The Sep 5 cease-fire between the Ukrainian gov & pro-Russian separatists has raised the prospect of a lasting truce that would be the biggest breakthrough yet to end a conflict that has killed at least 3K & soured Russia’s relations with its former Cold War foes.  The agreement to halt fighting came in the midst of an EU push to ratchet up penalties against Russia in coordination with the US in a bid to force Russian pres Putin to end support for the rebels in eastern Ukraine.  Putin’s backing of the separatists & the annexation of Crimea have jolted the security order in Europe.

EU to Assess Ukraine Truce as New Russia Sanctions Eyed

General Mills to Buy Organic-Food Maker Annie’s
Photo:   Bloomberg

General Mills will acquire Annie's (BNNY) for about $820M, gaining a popular lineup of natural & organic foods.  Annie’s investors will receive $46 a share in cash, 37% above its closing price yesterday.  The deal, slated to close this year, will pair BNNY products with GPS existing organic foods, including the Cascadian Farm & Food Should Taste Good brands.  Large packaged-food companies are increasingly looking to natural products to help spur growth in a sluggish industry.  BNNY is known for its bunny-shaped crackers as well as organic macaroni and cheese.  The deal should start boosting GIS profit within the first year, excluding transaction expenses, the company said.  “Annie’s competes in a number of attractive food categories, with particular strength in convenient meals and snacks -- two of General Mills’ priority platforms,” CEO Jeff Harmening said.  BNNY posted sales of $204M in its most recent fiscal year.  That compares with about $330M in revenue for the GIS organic-product division, which also includes Muir Glen tomatoes & Larabar energy bars.  BNNY said that the GIS takeover will help boost distribution of the company’s products while preserving its mission.  “Annie’s has proven you can indeed do well by doing good,” the company said.  “These values and the magic of the Annie’s brand are key elements of our success -– and something General Mills admires.”  GIS stock slipped pocket change & BNNY rose $12.59 to go over the $46 buyout price.  If you would like to learn more about GIS, click on this link:

General Mills Adds Organic Foods With Purchase of Annie’s

General Mills (GIS)

Markets are becoming nervous about the future of low interest rates.  Resistance to throwing more money away in Europe did not go over well there, causing stock selling in the US.  In the US, the QE program should end soon, but there is no sign that the Federal Reserve is anxious to raise rates in the near future, especially with an economy that is not adding enough jobs to raise household income significantly.  Traders are nervous, not a good sign about the underlying strength of the stock market.

Dow Jones Industrials

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