Rupert Murdoch Splits News Corp. (Bloomberg)
Rupert Murdoch relented to shareholder demands, splitting his News Corp. media empire into two separate investments. Tuesday’s move was a procedure more akin to separating Siamese twins than spinning off a new company, as two new, nearly equal businesses were created. The new entities are: “News Corp.” (NNC), which consists of the Wall Street-based publishing company focused on print-based media and “21st Century Fox,” which consists of Murdoch’s faster-growing new media assets, such as Fox TV. Investors in the old News Corp will receive one share of the 21st Century Fox for every four shares they hold of the elder company. But just because Murdoch submitted to the will of his shareholders, don’t mistake that move for enough momentum to boost both companies. Shares of NNC dropped 3 percent from their initial public offering price, ending the day at $14.55. Will this reorganization be good for Murdoch’s bottom line when all is said and done? Investors will find out shortly.
Confidence Waning in Emerging Markets (CNBC)
Investors who fled to emerging markets in the aftermath of the 2008 global financial crisis had a nice run of growth. But if the findings of a new survey are accurate, the run is done. The BofA Merrill Lynch Fund Manager Survey for June showed that 9 percent of the asset allocators surveyed were opting to underweight emerging market stocks for the first time since early 2009. A good deal of the negative sentiment stems from the belief that China’s economy is entering a downward trend. In fact, 31 percent of all regional fund managers think the Chinese economy will weaken during the next 12 months and take regional emerging markets down, too. Confirming investor flight from emerging markets, EPFR Global — a global data provider — found that last week marked the year’s biggest outflow of funds from emerging markets: $5.76 billion. Now the question becomes, when do emerging markets become the contrarian pick of the year?
Inflation at 53-Year Low… Means Very Little to Middle America (Bloomberg)
The Bureau of Labor and Statistics’ Consumer Price Index (CPI) reflected a price rise of just 1.1 percent for the first four months of 2013. That remarkably low inflation rate — combined with the Federal Reserve not hitting its unemployment goal of 7.6 percent — means the United States will continue to buy bonds to the tune of $85 billion a month. Unfortunately, the 53-year-low inflation rate means little else to investors or Middle America. That’s because the CPI doesn’t include energy or food prices in its statistics: two areas where prices continue to rise the fastest and cost Americans the most money on a daily basis. If food and energy prices ever reverse course and start to come down, then you’ll have the country’s attention.