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Euro Zone Shows Signs of Continued Weakness in Economy Euro Zone Shows Signs of Continued Weakness in Economy

April 02, 2013 - Factories in the Eurozone continued losing momentum near the end of the first three months of 2013, while unemployment rose to reach record highs during January and February. This has cast doubts on the hopes of leaders of the bloc that a rebound in the economy will take place later in the year to ease the fiscal and debt crisis.

The latest evidence on the economy’s poor state could ratchet up the pressure on the European Central Bank for easing on its monetary policy at Thursday’s month meeting. A minority of the board at the bank wanted it to lower rates last month at its monthly meeting.

A data provider, Markit, announced on Tuesday that its activity gauge for factories in the eurozone had fallen at the quickest rate in more than three months during March. The drop adds to growing evidence that the economy in the common currency zone contracted during the first three months of this year.

The shrinkage would be the sixth straight quarter there has been contraction, which exceeds the length of the downturn of 2008-09 that was started by the worldwide financial crisis.

Also falling was the measurement of intake of new orders at factories. That subindex dropped to a low of three months pointing to a weakness in factories for April or longer.

The economy, which has worsened, has made it much more difficult for the leaders of the eurozone to put an end to the crisis. The crisis claimed yet another victim in March when Cyprus had to negotiate a bailout causing one of its largest financial institutes to collapse. Cyprus became the fifth nation in the eurozone to require financial help during the economic crisis joining Spain, Portugal, Ireland and Greece.

Israel Facing Challenges with Natural Gas Israel Facing Challenges with Natural Gas

April 1, 2013- Israel is finding out that their recent discovery of huge natural gas deposits offshore, that are set to start flowing soon, are a mixed blessing. Experts predict the deposits will provide enough natural gas for Israel for many decades and transform the small country, famously barren of natural resources, into an exporter of energy. However, selling the gas overseas would require the country to enter a quagmire that could risk upsetting allies and Israel’s enemies alike. Because of this uncertainty, Israel has still not formulated a complete export policy.

Israel made the discovery of two gas fields in 2009 and 2010. Tamar is one and the larger of the two is Leviathan. Tamar holds what is estimated to be over 8.5 trillion cubic feet and will start pumping gas into Israel in the next few days. Leviathan has between 16 and 18 trillion cubic feet of gas and is expected to starting pumping gas in 2016. At that time, most people believe Israel will start exporting the natural gas.

The latest discoveries are only a small portion of what reserves are in the Levant Basin. A geological survey by the U.S. estimated that three years ago that more than 122 trillion cubic feet of natural gas was recoverable in the Basin.

The finds of gas are minimal for Israel compared to Russia, Qatar or Iran but are more than sufficient for the domestic needs of the country and would help the country to lower its reliance on dirtier and costlier coal and oil.

Cyprus, located nearby and currently going through a financial crisis, has recently become resource-rice by finding its own gas deposits.

Exporting could prove to be difficult for Israel since it might risk alienating Turkey if it cooperates with Cyprus. Sending gas to Europe could be potentially a more stable area, but that could upset Russia.

Dollar Increases against Yen and Euro Dollar Increases against Yen and Euro

March 28, 2013- On Wednesday, the U.S. dollar appreciated against most major currencies, with the yen falling amid rumors of more monetary easing for Japan and the euro dropping on new caution before the upcoming holiday for Easter.

The ICE index, which is a measure of the dollar against six of the major currencies across the globe, climbed by late in the afternoon to 82.977 in Tokyo from Tuesday’s 82.86.

The euro was down to $1.2845 from its early price of $1.2861even though it appeared investors were more willing to take a risk on the currency after worries over Cyprus had hurt the currency over the last couple of days.

Against the yen in Japan, both the euro and U.S. dollar were higher, reflecting more risk confidence. The yen is considered by many in the industry as a safe haven currency, whole overall value often rises during times with there is market stress and falls when stable conditions arise.

The U.S. dollar was trading at 94.75 yen, while the common currency in Europe was receiving 121.69. The British pound remained unchanged at $1.516, and the Australian dollar dropped to $1.047.

The markets are cautiously awaiting the short trading week and will be back in high trading volume next week as the first quarter ends over the weekend and investors start thinking about upcoming earnings reports for the first three months of 2013.

Net Income Drops at Air China Net Income Drops at Air China

March 26, 2013- China’s largest international carrier, Air China Ltd (SEHK: 0753, LSE: AIRC, SSE: 601111) posted a drop in annual profit of 35% due to higher costs and less of a gain from the company’s share in Cathay Pacific Airway Ltd.

In 2012, net income dropped to $746 million from a 2011 profit of $1.13 billion. The carrier, based in Beijing announced its earnings in a filing to the stock exchange in Shanghai on Tuesday. The profit was higher than what estimates on Wall Street had for the airline.

The outlook remained uncertain for the global economy during 2012 and fuel costs were higher, which led to high cost for many in the industry, said Air China in an official statement. The airline also said its income had fallen from investments, mainly the 30% share it has in Cathay, after the carrier, based in Hong Kong, suffered a plunge of 83% in its annual profits.

Shares of Air China fell by 0.4% to end the day at HK$6.72 in trading in Hong Kong, before the report on earnings had been released. This year the stock is up by 2.6%.

Last year the airline filled more than 80% of its seats, which was 1.1% down from 2011, as growth capacity outpaced the amount of travel demand. The passenger yield is the measure of the airline’s average airfare and that dropped by 1.4%, said the airline’s statement.

Air China earned $14.4 million from its Cathay stake in 2012 compared to $153 million in 2011. Earlier in March, Cathay reported a plunge of 83% in profit for the year. Cathay holds over a 19% stake in Air China.

More Bids arrive to acquire Dell Computer More Bids arrive to acquire Dell Computer

March 25, 2013 - Dell Inc received two takeover bids besides the bid by founder Michael Dell to take the company private. The two competing bids are from Blackstone Group a private equity fund and Carl Icahn the activist investor. A committee within the company said the new bids might be superior to Dell’s that was sent in last month.

Dell offered $13.65 per share for the struggling computer manufacturer that totaled $24.4 billion. He said he would be willing to explore the possibility of working with another party on the other two proposals received. Dell’s offer has the backing of Silver Lake Partners, an investment company.

Icahn’s offer includes an equity commitment of $5 billion and the investor said he already has a large stake in Dell. He is willing to purchase $2 billion of the company’s shares for $15 each and another $2 billion for cash equity financing, over and above the current shares he and his business already own.

Blackstone Management Associates offered to buy the company for $14.25 per share and announced that the existing shareholders could stay with the new company if they chose to.

The interest of both Icahn and Blackstone came prior to a deadline for more offers that expired last Friday. Each of the two notified the computer company they were working on bids.

The plot over a takeover is thickening and that shows that some of the more influential player as far as finance sees a bright future for Dell. However, this comes as worldwide personal computer shipments are way down, while smartphones and tablet’s popularity grows each day.

Close to 50% of all of revenue generated by Dell comes from PC sales. Founder Dell was the one who kicked started the effort in 2012 over taking the business private.

The 48 year old founded Dell in 1984 from his dorm room as the University of Texas. He turned it into a powerhouse amongst personal computer businesses. He stepped down in 2004 as the CEO but returned to take the reins again in 2007.

Profits fall at Darden Restaurants Profits fall at Darden Restaurants

March 24, 2013 - Third quarter profits fell at Darden by 18%, as the company dealt with lower sales in Red Lobster. Nevertheless, the performance still was able to beat expectations on Wall Street.

The company, based in Orlando, Florida, said on Friday that its sales at Olive Garden, LongHorn Steakhouse and Red Lobster restaurants that were open at least one year dropped by 4.6% combined.

That figure is an important gauge of a restaurant’s performance since it excludes those results at restaurant that was recently opened or had just closed.

Darden’s Restaurants Inc. has struggled to regain notoriety as more diners head to chains such as Panera and Chipotle, where they feel restaurant quality food is being served at lower prices. As the chain looks for different ways to keep up with the shifting trends, a pay at the counter concept began being tested at Red Lobster in two locations close to its headquarters.

For the quarter ended February 24, Darden’s profits were $134.4 million a per share value of $1.02. That was down from just over $164 million or a per share rate of $1.25 last year during the same period. Analysts had predicted that the restaurant would earn just $1.01 per share.

Revenue for the restaurant chain was up 5% to just over $2.66 billion from last year’s $2.16 billion during the same reporting period.

Revenue for Red Lobster was off 6% as it tried to contend with more expenses and weak sales at is U.S. restaurants open a year or more. Revenue at Olive Garden was up slightly and LongHorn Steakhouse revenue jumped by nearly 7% as the two chains earned money from newly opened restaurants.

Darden said bad weather this winter hurt its sales at some restaurants. The company held to its fiscal earnings forecast for 2013 of between $3.06 a share and $3.22 a share. Analysts are predicting earnings of $3.17.


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