June 16, 2014 – June 20, 2014
Another good week for the markets, despite continued violence in Iraq. On Monday, the Empire State manufacturing survey for June was up slightly over May, and at a 4 year high of 19.28. New orders growth was particularly strong. The Fed also released their Industrial Production Report for May, up .6% and much better than April’s .3% decline.
On Tuesday, the consumer price index for May was up .4%, slightly higher than expected and housing starts fell 6.5% for May at a little over 1 million units.
On Wednesday, the Federal Reserve concluded its meeting with bond purchases cut another $10 billion to $35 billion monthly starting in July. The Fed remains concerned with unemployment rates and expects interest rates to stay low for a considerable time after the bond purchases end. In addition, the Fed lowered estimates for the GDP, however, the S&P 500 closed at a record high attributed to a lack of any surprises coming from the Fed.
On Thursday, jobless claims for the week ending June 14th showed a decrease of 6,000 to 312,000. The VIX volatility index continued to hover near 7 year lows. The index of U.S. leading indicators in May rose by .5%, the fourth straight month of increases, and the Philadelphia Fed survey showed general business conditions for June at 17.8, indicating the largest rate of monthly growth since October of last year. Once again the S&P 500 closed at a record high.
Now let’s take a look at some stocks.
Starbucks (NASDAQ: SBUX) announced Monday a partnership with Arizona State University to launch their tuition program, Starbucks College Achievement Plan. This will allow their U.S. employees to complete an online bachelor’s degree through the university. Under the terms of the program, the only requirement is that employees must be working 20 hours or more per week. Approved employees will receive partial tuition for their first two years and full tuition for the remaining two years of their bachelor’s program.
Medtronic, Inc. (NYSE: MDT), a medical device manufacturer, shot up Monday morning and continued its upward trend after announcing that the company will be acquiring Covidien (NYSE: COV), a global healthcare technology and medical supplies provider for $42.9 billion. Once finalized, the combined companies will operate under the brand Medtronic PLC and will have a revenue of approximately $27 billion. The acquisition will allow Medtronic to take advantage of Ireland’s corporate tax rate of 12.5% as opposed to as high as 35% in the U.S.
British Petroleum (NASDAQ: BP) on Tuesday signed a supply deal with China National Offshore Oil Corporation (CNOOC) that is worth $20 billion. BP will be will be supplying CNOOC with liquefied natural gas for 20 years, and the deal will act as a bridge between China and the UK for future trade talks.
Amazon.com (NASDAQ: AMZN) shares went up slightly Wednesday after the company unveiled their first cellphone, Fire Phone. It was revealed that the Fire Phone will offer 3D capabilities as well as motion controls, where the user can change an image’s perspective by simply moving their heads instead of tilting the phone or scrolling through pages. This isn’t the first time a company tried to implement a 3D feature into a cellphone, and there is some skepticism about the device.