U.S. Jobs Report Shows 165,000 Jump in Payroll and Unemployment Drop (Bloomberg)
The U.S. non -farm payroll report this morning beat expectations by showing a 165,000 rise in April payrolls, compared to economists’ expectations of new 145,000 jobs for the month. That jump was a nice increase over March’s horrific 88,000 new jobs. The job gains also unexpectedly led to a reduction in U.S. unemployment to a four-year low of 7.5 percent. Does this jobs increase mean any less quantitative-easing (QE) spending for the United State? A 5 basis point rate cut yesterday by the European Central Bank and Japan’s promise to inject $1.4 trillion in its economy now have three of the world’s largest markets committing to more easy cash and liquidity. Is the U.S. report the third shoe to drop, indicating a market correction? Or will this three-headed easy-money effort finally trigger a global rally? Don’t hold your breath on a quick answer.
Retail All-Stars Come up Far Short When It Counts (YahooFinance)
JCPenny’s attempt to cobble together an all-star team to resurrect yester-year’s retail leader ended up costing them a lot more than a return to the top of the heap. Not including salaries or incentives, JCPenny’s spent more than $170 million in cash and stock to place Ron Johnson and three teammates atop its corporate structure. That payment includes severance for former CEO Myron Ullman. And the company’s return on investment? A 25 percent sales plunge and 50 percent loss in share price — not a winning combination. In this respect, the Los Angeles Lakers actually got a better return, as their hobbled all-star team did make it to the playoffs. In JCPenny’s case, the playoffs could have been a return to profitability, but even that was beyond the retail all-stars’ ability. Now investors and remaining company leaders have to decide on next year’s roster…
Berkshire Hathaway Makes Insurance Grab (Bloomberg)
Value-investor extraordinaire Warren Buffett’s latest bet is on the insurance space, but not in the way we’ve come to expect from the “Oracle of Omaha.” That’s because Buffett just hired four executives from American International Group, Inc. (AIG) to lead Berkshire Hathaway’s (BRK/A) new venture into the commercial insurance industry. Buffett shared this tidbit from Omaha, Neb., before his much-anticipated annual shareholders’ meeting, stating “We would like to get into the commercial-insurance business very big time.” What “very big time” means for the world’s second-richest man is up for debate, but you can believe that investors took notice of this move. Generally, where Buffett leads, profits follow.