Month: January 2013

Airlines stick with Boeing 787, despite growing problems

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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One day after the FAA and aviation authorities around the world grounded the 787 Dreamliner, essentially saying it is not safe to fly, Boeing customers are standing by the beleaguered plane.

From Korean Air to LOT Airlines out of Poland, many of the 57 customers that have ordered a Dreamliner are reaffirming their plans to wait for their 787, even if they face the possibility of even more delays.

Also read: Boeing Could Be in ‘Deep Flavored Yogurt:’ Expert

Japan: The Test Case for Boeing’s Dreamliner Woes?

Why are airlines sticking instead of running from the Dreamliner? It comes down to two reasons: faith in Boeing and a lack of options.

Faith in Boeing

Ever since All Nippon Airways ordered the first 787 back in 2006, airline executives have been eagerly anticipating the Dreamliner and for good reason. In an industry saddled with aging, gas guzzling planes, the fuel and cost efficiency of the Dreamliner has been tantalizing. Even as the 787 fell behind schedule during development, it was the promise of ultimately getting new, fuel efficient planes that kept those airlines on the order book.

Many are longtime Boeing customers who have worked closely with the plane maker over the years. They know Boeing and Boeing knows them. Those relationships have often been the glue that kept airlines from straying as the 787 ran into delays.

Those airlines are also being briefed by Boeing on a regular basis. They know Boeing executives, engineers and staff members. Also for many of those airlines, there is the belief Boeing will eventually get the Dreamliner back in the air.

“Boeing has always been candid. They have never been withdrawn with discussing the facts,” said former Continental Airlines CEO Gordon Bethune. “I don’t believe Boeing agrees with the FAA to the severity of this problem, but never the less it’s going to get it resolved and I think relatively quickly.”

Lack of Options

Even if airlines currently scheduled to get a Dreamliner in 2015 or 2016 decided they no longer wanted the 787, their choices are limited. They could cancel their orders, but then what would they do? (Read more: Japan: The Test Case for Boeing’s Dreamliner Woes?)

“Cancelling your airplane orders is a big deal because you do your planning years in advance,” Bethune said. “This is way premature to be talking about cancelling orders of airplanes in out years. It is an issue, it will get resolved, how quickly it gets resolved is going to be a measure of its success.”

Also, the reason airlines ordered the Dreamliner in the first place was to have newer, more cost effective planes replace their older, less efficient models. If the airline drops its Boeing order and goes to Airbus, it may have to wait even longer to get the A350 because airbus has its own, lengthy backlog of orders.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

What will it take to get the Fed to stop easing?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With no apparent signs that the Federal Reserve’s aggressive stimulus is causing harm, the measures likely will continue despite persistent signs of economic recovery.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Are Dreamliner glitches just ‘teething issues?’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As major airlines around the world start grounding Boeing’s Dreamliner passenger jets amid safety concerns, analysts tell CNBC they are confident the US aircraft manufacturer will fix the 787’s “teething issues,” which arise each time new technology is introduced.

Jason Gursky, senior analyst, aerospace and defense at Citi Research says, historically, new aircraft face such issues. He cites the example of European aircraft maker Airbus‘ super jumbo A380 passenger jet, which was released commercially in 2007, and faced a series of issues “right out of the gate,” and was also grounded.

“I’m confident that orders are going to stick, this plane [787] is going through these teething issues that are going to get fixed,” Gurksy told CNBC Asia’s “Squawk Box” on Thursday. “Aircraft makers go through a process of learning how to make aircraft and there are manufacturing issues that come up from time to time when introducing a new aircraft into the fleet.”

David Dietze, president and chief investment strategist at Point View Wealth Management added that with Boeing being America’s largest exporter and companies around the world having a stake in the Dreamliner’s success, its manufacturing issues will be handled quickly.

“I think we can be sure that all the world’s experts can be focused on this,” Dietze said. “I think hopefully we’ll see a resolution on this sooner rather than later.”

The grounding of Boeing’s highly-anticipated Dreamliners by the U.S., Europe, India and Japan on Thursday comes a day after a second incident involving battery failure caused one of the passenger jets to make an emergency landing in Japan. The US Federal Aviation Administration has said airlines would have to prove that the Dreamliner’s lithium ion batteries, which are a part of new technology that helps burn 20 percent less fuel than rival aircraft, were safe before they could resume flying.

(Read more: US, Others Ground Boeing Dreamliner Indefinitely)

Boeing has responded by saying it is confident the 787 was safe and the company is working around the clock to resolve the issues. The Dreamliner, at a list price of USD 207 million, is viewed by many as the future of commercial aviation, being the world’s first mainly carbon-fiber aircraft. But, the jets have been plagued by cost overruns, years of delays and a line of mishaps like fuel leaks, a battery fire and wiring problem.

Gurksy of Citi Research says that while it’s too early to know whether the Dreamliner’s problems are related to its design or manufacturing, signs are right now pointing to manufacturing issues, which should be an easier fix.

“If it’s a manufacturing issue, that’s part of the learning curve, I think Boeing and its suppliers will figure it out. If it’s a design issue then you’ve got more cost and more time to go back and fix the design,” Gursky said.

Limited Impact

Meanwhile, Wolfgang Driese, CEO and chairman of DVB Bank, which finances aircraft for airlines, says Boeing’s issues will not have an immediate impact on its lending business.

“We have in total a portfolio of 800 aircraft which we are financing and out of this, three are Dreamliners and more likely, there will be more to come,” Driese said. “It has mainly an impact on the airlines, they need the aircraft, because they need the capacity and they need the latest technology, because of the fuel savings. So it will be a setback for the profitability of the airlines.”

Nicholas Cunningham, transport analyst at Macquarie, however, points out that Japan’s All Nippon Airways (ANA), which made the emergency Dreamliner landing on Wednesday and is one of two Japanese airlines that have grounded 24 of the aircraft, will see a fairly minimal impact from the aircraft’s problems.

(Read More: Japan: The Test Case for Boeing’s Dreamliner Woes?)

“As of today, ANA has canceled 35 domestic flights,” Cunningham said. “In terms of profitability if we assume that for ANA their Dreamliners are grounded for a month, that would be approximately just under 1 percent impact to earnings.”

Both ANA and Japan Airlines account for about half of the 50 Dreamliners delivered worldwide.

– By CNBC.com’s Rajeshni Naidu-Ghelani; Follow her on Twitter @RajeshniNaidu

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Hungary attacks Roubini over currency ‘advice’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A spat has broken out between Hungary’s Economy Ministry and Roubini Global Economics about who is to blame for the downward spiral of the national currency, the forint, after Roubini’s firm Roubini Global Economics (RGE) recommended shorting the currency.

Hungary’s Ministry for National Economy said in a statement that the forint began to depreciate after economist Nouriel Roubini – dubbed Dr Doom for his pessimistic forecasts – said in a newsletter that failure to secure a deal with the International Monetary Fund was bad news for the currency.

The forint has been in decline since last week hitting seven-month lows earlier this week but has since gained some ground.

Hungarian officials rounded on Roubini saying; “On Thursday speculators seem to have taken Roubini’s advice and attacked the forint.”

But Roubini economists cited comments made by Economy Minister Gyorgy Matolcsy in a newspaper column, in which he seemed to favor the country adopting more unorthodox economic policies as the reason for the currency’s weakness.

Jelena Vukotic from RGE said in a report that Matolcsy’s statement that “the policy of a strong forint between 2002 and 2010 was a mistake” was the main reason for the forint’s slide.

Vukotic added that the government’s controversial policy reinforced their view that the currency would “continue to feel the heat.”

Her comments were refuted by the Ministry on Wednesday.

“It has become clear that the weakening of the forint since the middle of the week was not triggered by an article of the Minister for National Economy,” instead, the ministry suggested that it was speculators who were using this as “an excuse to mask their attack.”

The country has battled balancing economic growth with a ballooning public debt after having been hit hard by the financial crisis of 2008. The Organization of Economic Development (OECD) warned that the country faced “severe headwinds” hampered by “controversial domestic policies,”in its Economic Survey of Hungary 2012.

Laszlo Wolf, deputy CEO of OTP Bank, told CNBC that there was better growth potential for the eastern European region, including Hungary,than in Western Europe.

“[Hungary] had zero growth in 2012 but we expect a better situation in 2013,” Wolf told CNBC Wednesday.

By CNBC’s Shai Ahmed; Follow her on Twitter @shaicnbc

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Apple earnings will be test for ‘painful’ selloff: Expert

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The pessimism that has pushed Apple’s stock to its lowest level in nearly a year is “painful,” a portfolio manager who owns the stock told CNBC Wednesday, adding that he hopes next week’s earnings will salve investors’ frayed nerves.

This week, Apple’s shares sank below $500 for the first time since February 2012. Channing Smith, co-portfolio manager of the Capital Advisers Growth Fund, told CNBC’s “Squawk on the Street” that the focus on Apple’s margins is souring sentiment against the tech giant’s stock.

“Back in September, Apple could do no wrong, and today they can do no right,” the longtime Apple shareholder said. He said next week’s earnings report could help restore confidence.

“If you get any type of the beat, we think you’ll see a relief rally,” Smith said, adding that the stock’s fair value was well above USD 600.

As competitors like Samsung eat into market share for smartphones, and with its dominance in tablet devices under threat, Apple has seen key metrics like its margins shrink. Smith said he was still confident in Apple as an investment.

“Apple is the greatest technology company we’ve ever seen. There’s still tremendous growth, the fund manager said. “We think Apple will continue to gain market share, will continue to grow earnings at 20 percent, and the valuation…has nowhere to go but up,” Smith said. He called Apple’s current valuation “extremely cheap.”

-By CNBC.com’s Javier E. David

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Disclosures:

Channing Smith is a major Apple shareholder.

Disclaimer

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Debt ceiling battle: Why no one agrees on anything

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The debt ceiling is as much a war over words as it is numbers.

Amid an increasingly acrimonious debate over the debt ceiling, it appears that how each party even explains the way the government spends money depends on what party they belong to and whether that party holds the White House or Congress. (Read More: Why Debt Ceiling Is Far Scarier Than Fiscal Cliff)

In 1993, two researchers at the University of Missouri fingered the importance of party when it came to the issue of debt:

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

What India’s IT earnings say about the west

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s top two exporters of software services – Tata Consultancy Services (TCS) and Infosys – surprised the markets this week with strong 2012 fourth quarter earnings, pointing to a recovery in demand from their key markets, the United States and Europe.

India’s USD 100 billion information technology services sector is largely dependent on western demand, with more than 75 percent of revenue for both TCS and Infosys, for example, coming from North America and Europe.

While a pullback in global technology spending amid an uncertain economic climate, has impacted India’s IT sector in recent months, now the tide seems to be turning with both companies offering an optimistic outlook for the coming months, particularly regarding demand out of Europe.

(Read More: India’s Infosys Unexpectedly Raises Forecast, Shares Surge)

“Companies in Europe are definitely driving optimism and efficiency. And that is opening up opportunities. We are working with a large number of European clients and we are signing deal sizes which are larger than it used to be before,” TCS CEO N. Chandrasekaran told CNBC TV-18 on Tuesday after announcing quarterly results.

The company’s profit rose by a better-than-expected 23 percent in October-December, from a year earlier. It reiterated that revenue for its fiscal year that ends in March should outpace forecasts by the sector’s industry body National Association of Software and Service Companies, which expects growth to come in at the lower end of 11-14 percent.

(Read More: India’s TCS Shares Surge on ‘Picture Perfect’ Earnings)

Infosys board member and former CFO, V Balakrishnan, added that while there are a lot of challenges in Europe, client spending is increasing. “They [Western corporates] are offshoring to gain some efficiency in their operations.”

The company secured eight large outsourcing deals, worth USD 731 million – seven of which were located in Europe and the US – over October to December.

(Read More: Europe Looks Good; Won’t Clip Pricing to Drive Revenue: Infosys)

Overall, the Bangalore-based firm, which unexpectedly raised its annual revenue forecast after reporting earnings that beat estimates, said it remained “cautiously optimistic” for the remainder of the fiscal year.

Infosys has had a string of disappointing earnings performances in the recent quarters. For the July-September quarter, the company’s earnings just about met market expectations, following lower-than-expected profits in the previous three months. TCS, on the other hand, has seen resilient earnings due to its focus on the traditional outsourcing business, which has held up as companies cut costs.

In 2012, global headwinds including escalating euro zone debt crisis and U.S. growth concerns led corporates to delay their technology investment decisions.

However, global IT spending is projected to rise to $3.7 trillion in 2013, a more than 4 percent increase from 2012 spending of $3.6 trillion, according to research firm Gartner.

“With U.S. elections and ‘fiscal cliff’ issues behind us and sentiment improving, we believe that possibility of an uptick in IT spends remains high,” Surendra Goyal, director and head of research at Citi wrote in a report.

Discretionary Spending Key

Goyal added that one segment he will be watching closely for a clearer indicator of demand is discretionary IT spending, or non-essential initiatives that can be pulled back when times are tough.

Both TCS and Infosys saw an uptick in discretionary spending in the last quarter, he said. “Both Infosys and TCS saw good growth in consulting and package implementation – which are discretionary in nature – if this sustains, it will tie in with a better demand environment,” said Goyal.

Package implementation is a service provided by IT firms to assist companies in implementing and maintaining software they have purchased.

“The increase in spending is tied to the stability in Europe and the US When things are uncertain, clients don’t make decisions, even if they make economic sense. Now that confidence is there, decisions are being taken, which is a big help for India’s IT sector,” he added.

Pankaj Kapoor, diretor at Standard Chartered Securities, however, said it remains unclear whether discretionary demand will continue to improve.

“I would be cautious in the outlook for discretionary spending – the economic environment hasn’t improved so much that people are committing money to long-term technology projects,” he said.

“It’s too early to extrapolate the latest quarter’s results into what we can expect for fiscal year 2014,” Kapoor added.

Wipro, India’s third largest software services provider, which is due to release its latest earnings on Friday, will provide further clarity on how the sector is faring. The company is expected to report a quarterly profit gain of 6.7 percent, according to Reuters.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Germany wants its gold back – Should you worry?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The world’s second-biggest holder of gold reserves, Germany, is planning to bring home some of its gold held in New York and Paris – a move that would mark a breakdown of trust between the world’s major central banks, analysts said.

The Bundesbank, Germany’s central bank, will announce on Wednesday the repatriation of some of its gold holdings at the New York Federal Reserve and Bank of France, German business daily Handelsblatt reported on Tuesday.

The Bundesbank confirmed to CNBC’s senior economics reporter Steve Liesman that it will move a small part of its gold reserves from the New York Fed, Liesman said on Twitter.

Germany has almost 3,400 tons of gold, the world’s second-largest holdings after the United States, valued at almost USD 177 billion at the end of December, according to the Bundesbank. It moved the bulk of its reserves abroad during the Cold War in case of an attack on West Germany by the Soviet Union.

News that Berlin wants to bring some of that gold back home is causing a stir, with Bill Gross, the managing director at bond giant PIMCO tweeting: “Report claims Germany moving gold from NY/Paris back to Frankfurt. Central banks don’t trust each other?”

Ric Spooner, chief market analyst at CMC Markets in Sydney told CNBC Asia’s “Squawk Box,” “Whether or not their action really does reflect a lack of trust in the Fed (US Federal Reserve) is a moot point, but it is certainly likely to be taken that way by some sectors of the market. The general inference is that if there was a real debt crisis in the US, then they (German authorities) would feel a little more confident about having their assets at home.”

The US fiscal woes are firmly in focus with Washington expected to reach its debt limit by the end of February. Finding long-term debt sustainability without hampering an economic recovery remains a challenge for policymakers, Fed chief Ben Bernanke said earlier this week.

(Read More: Bernanke: ‘We’re Not Out of the Woods’)

“The reason the Bundesbank is doing this, repatriating the gold back home, is to instill confidence in the German consumer as to the solidity of the Bundesbank,” Societe Generale’s senior currency strategist Sebastien Galy told CNBC.

“Right now it is just a sign that the system is breaking down, that confidence is lower across the board and the entire financial system has basically become a domestic financial system, where you have the euro zone, a dollar zone and the yen zone,” he added.

(Read More: If Trust in Currencies Erodes, Gold Will Skyrocket)

Dominic Schnider, global head of commodity research at UBS Wealth Management told CNBC, “Holding gold in key financial centers (New Tork, London or Paris) makes sense and can give access to foreign currencies like the US dollar. On the other hand, we have seen how easy money printing is. Thus, we don’t need gold anymore as collateral.”

He added: “Nevertheless, holding some gold at home is not a bad idea in an age of ballooning central bank balance sheets. As a reference, Hong Kong also shipped its gold back home from London some years ago.”

Analysts, however, did not expect any immediate reaction in gold or currency markets to any gold repatriation from the Bundesbank.

(Read More: The Germans Are Coming for Their Gold)

“For the gold market, it doesn’t make any difference to the overall supply and demand situation. The Bundesbank is the owner of the gold regardless of where it’s located,” Spooner said.

For some analysts the question was not so much whether Germany would move its gold reserves, but whether it would sell the gold once it was back home.

“What Germany intends to do with its gold once it’s repatriated would be interesting,” said Nick Trevethan, senior commodities strategist at ANZ Research in Singapore. “We know that Venezuela sold some of its gold,” he added, referring to a decision by Venezuela’s government in 2011 to repatriate foreign bullion reserves from bank vaults in the West.

Mere Audit Check?

But despite all the theories about mutual central bank distrust and lack of faith in fiat currencies, or currencies that are not back by gold reserves, the Bundesbank’s move – if push does come to a shove – may have a much more prosaic explanation: stock-taking.

In October, Germany withdrew two-thirds of its gold holdings from the Bank of England, according to media reports and in the same month a German federal court said the Bundesbank could conduct annual audits and physically inspect its gold reserves worldwide.

“Maybe it is triggered by a need to physically audit,” David Kotok, chief investment officer at Cumberland Advisors said. “It is unusual so it triggers speculation about the motive. It may also be benign and markets just accept it.”

There’s some substance in this. Germany’s international broadcaster Deutsche Welle reported on its website on Tuesday that the Bundesbank is reacting to a recent report by the Federal Audit Office which has criticized the lender for failing to thoroughly check the amount and authenticity of the bullion stored abroad,.

While such checks would still be needed in the future, the Bundesbank would have more of its reserves under its direct control by bringing home some of its stockpiles. The central bank is to disclose more details of its plan on Wednesday.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US financials report as markets hit key pivot point

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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There’s a lot at stake this earnings season, and the financial sector, the biggest stock market winner of the past year, will be put to the test Wednesday.

Both Goldman Sachs and J.P. Morgan, viewed as the best of breed, report ahead of the opening bell. But the bar is low this quarter for J.P. Morgan, expected to report a decline from third quarter profits to USD 1.16 per share on revenues of USD 24.42 billion.

Capital markets revenues are expected to be lower than the third quarter, but not as weak as the year ago quarter or earlier guidance. The bank is also expected to release details of a lengthy internal report on the London “whale trade” debacle that resulted in a more than USD 6 billion loss last year.

Earlier this week, J.P. Morgan received the first sanctions in response to the botched trades and was hit by four enforcement actions from the Federal Reserve and Comptroller of the Currency, aimed at lapses in risk management and money laundering controls.

Goldman Sachs, meanwhile, is expected to report earnings of USD 3.78 per share on revenues of USD 7.91 billion, according to Thomson Reuters. Other financial companies reporting include US Bancorp, Bank of NY Mellon, Northern Trust,Charles Schwab and M&T Bank also report before the market open. Citigroupand Bank of America report Thursday. Besides the financials, eBay reports after the closing bell Wednesday.

The financial sector is up 30 percent since January of last year. J.P. Morgan and Goldman, as two major pillars of the sector will be most scrutinized. “I think people are going to look long and hard at these businesses and what interest income looks like,” said Steve Massocca of Wedbush Securities of J.P. Morgan. “They’re going to want to get into the weeds and see how these businesses are doing.”

(Read More: Bank Earnings: What to Watch)

Massocca and others say the market is at an important pivot point. He said poor earnings could drive the market into correction, but it’s too early in the reporting season to tell which way things are going.

The S&P 500 closed 1 point higher at 1472, and the Dow was up 27 at 13,534 Tuesday.

“We’ve been hanging around the September high for four days in a row so something is going to break one way or the other,” he said. “I think if we break through it, we could run back to the old 2007 high. Conversely, if we fall through it, we’ll go to (SandP) 1400. We’re at an important juncture.”

“Estimates have really been whittled down. If you look at where estimates were in October and November, the estimates were much lower than they are today. I would have said a month ago, it’s going to be a disappointing earnings season, but I don’t know because they’ve been revised down so much,” Massocca said.

(Read More: Four Stocks Rising on Big Market Volume)

As the Dow edged up slightly Tuesday, the Dow Transports rose 0.7 percent to a new high. “It’s significant. It’s going to get all the Dow theorists back out again, but I think you want to wait and see if you get follow through with the industrials,” said Art Cashin, director of floor trading at UBS.

As the theory goes, the industrials must confirm the move in the transports for the market to move higher. Massocca said the move in the broader indexes, like the SandP 500, are more important.

“In the next two weeks, earnings are going to be the really big news. Once that’s passed, all eyes will be focused on that great sequel – fiscal cliff two,” he said, of the pending debt ceiling and spending debate.

What Else to Watch

There are several economic reports Wednesday, including CPI at 8:30 a.m. ET, Treasury international capital flows at 9 a.m., and industrial production at 9:15 a.m. The National Association of Home Builders releases its sentiment survey at 10 a.m., and the Fed Beige book on the economy is released at 2 p.m.

Minneapolis Fed President Narayana Kocherlakota speaks at 10 a.m. and 8 p.m. at two different events. Dallas Fed President Richard Fisher speaks at 7 p.m. at the National Press Club on why it’s important to downsize institutions that are too big to fail.

In Washington, President Barack Obama is expected to announce new controls on firearms at 11:45 a.m.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Millionaires return to stocks, but it’s no endorsement

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The wealthy may be bearish on the economy, but they’re bullish on stocks.

A new survey from Spectrem Group found that 55 percent of American millionaires plan to put money into stocks this year, up from 45 percent in 2010.

When asked which sectors they plan to invest in, the millionaires ranked tech first. Next came health care followed by pharma. This may be due in part to the average age of the millionaires: a health-care intensive 63 years old.

This doesn’t mean that the wealthy are entirely sanguine about the economy and the market. Their least favorite sectors are construction, autos and transportation – the very sectors that are supposedly leading the recovery.

(Read more: Tax Hikes on Rich May Boost Charitable Giving)

George Walper, president of Spectrem, said that along with stocks, more than half of millionaires are also putting more money into cash – whether it’s money markets or everyday savings accounts.

“They’re hedging their bets,” he said. “They see a sporadic recovery” in housing and autos, he added.

He said the reason millionaires are easing back into stocks is their need for higher returns and the relative strength of the stock market last year.

(Read more: Millionaires Want Their Kids to Inherit Values, Too)

“It’s really that they’re looking for an improved rate of return,” he said.

About half of America’s millionaires are investing overseas. But they’re not piling into the BRICS like they used to. While Brazil and China still top their list of preferred countries for investing, Canada and Europe ranked third and fourth. Russia ranked last and India was also low on the list.

Walper said that the wealthy are looking for economic growth, but they also value stability.

“Canada is seen as stable,” he said. “And they don’t have the same health-care issues we have.”

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow