China Watches as Jobs Fly Offshore; U.S. Economy Stays Sluggish; $17 Billion Equals Bond Record for Apple, Inc.
Karma Kickback: China Watches as Jobs Fly Offshore (YahooFinance)
A decade ago, all outsourced manufacturing roads led to China. With millions of hands ready to stitch, rivet or glue whatever a company needed to produce, China was the clear winner in the world’s never-ending quest for cheap production. Ten years later, China has been victimized by its own success in drawing companies to its shores. During that time, annual wages for its manufacturing masses have risen 20 percent annually. Those wages have jumped too much for many companies to continue operating there. Thus, companies such as Crocs, Coach, Inc. and Lever Style are now fleeing the world’s second-largest economy, looking for this decade’s cheap labor. And they’re finding it in places like Vietnam and Cambodia. As an investor, you now have to ask if those countries are solid enough for your fund.
Hello QE-Infinity — U.S. Economy Not Being Cooperative Enough (Reuters)
When the U.S. Federal Reserve’s most-recent two-day meeting breaks up today, investors won’t have to concern themselves with the end of quantitative easing. That’s because the United States’ latest economic statistics reflect weaker growth than expected. And even though the housing market seems to be gaining momentum, durable goods and manufacturing are seeing significant slippage. The weakness is so great that the unemployment rate isn’t moving in the direction needed for the Fed to take its foot off of the cash gas pedal. Combined with the expectation of even weaker performance in Q2, and we could even be looking at an increase in Fed-bred funds into the market. We’ll certainly know more today at 2:00 pm EDT (1800 GMT), when Bernanke addresses the media.
$17 Billion Equals Bond Record for Apple, Inc. (Bloomberg)
In an attempt to offset his company’s share-price plummet, Apple, Inc. CEO Tim Cook orchestrated the company’s recent record-setting bond sale. By issuing $3 billion in floating-rate bonds and $14 billion in fixed-rate notes — the company raised $17 billion. These funds will be used to help return more than $55 billion to shareholders who were victimized by the company’s share-price swan dive. The deal surpassed Roche Holding AG’s $16.5 billion bond sale in 2009, and mark’s the company’s return to debt-funded financing for the first time since the 1990s. According to Bloomberg, this change brings Apple’s combined cash position to $145 billion. And Apple intends to do its best Robin Hood impersonation through 2015 by redistributing between $15 billion and $20 billion annually to shareholders. Will that be enough to heal the company’s wounds?