Three Straight Days of Positive News Recoups $1 Trillion in Share Value (Bloomberg)
Federal Reserve Chairman Ben Bernanke???s promise to preserve quantitative-easing (QE) stimulus for the foreseeable future had the desired effect on U.S. markets. Yesterday, the S&P 500 rose 1.4 percent. That gain translates to roughly $1 trillion in share price value that had been lost in the previous seven weeks. The good news about the continuance of QE also came on the heels of a favorable jobs report and an uptick in consumer spending and confidence this week. At the sector level, durable goods and home sales led the way. Perhaps more telling about America???s fledgling recovery is the fact that 131 companies on the S&P 500 list beat analysts??? 52-week forecasts. However, the real test of the economy???s apparent comeback will happen when the Fed does start to ease off of QE stimulus. Until then, we???ll have to be content with assuming that the economy is on the right track. Unfortunately, when we assume???
Microsoft Continues Sweeping Organizational Reforms
Ever since Steve Ballmer took over Microsoft???s CEO position from Bill Gates, he has focused on streamlining the company???s processes to improve internal collaboration and eliminate redundancies. Investors seem to have greeted Ballmer???s grand plans with a big yawn, which is slightly better than the noise coming from some of the media???s talking heads. Pundits and analysts are condemning the reorganization for stripping away the flexibility of individual businesses to pursue their own agendas, along with those from corporate. In fact, some even claim that Ballmer???s stringent new guidelines are more knee-jerk reaction to the industry???s trend toward mobile computing — a trend that seemed to catch Microsoft flat-footed — than the next logical step in Microsoft???s corporate lifecycle. Should the company???s new structure fail to increase revenue from the year???s projected $74 billion, more reorganization may be in store, starting with the CEO.
House Republicans Set the Table for Epic Food Fight (AP)
To pass the latest farm bill, House Republicans voted to remove the food-stamp portion from the bill, stating that food stamps would be dealt with as a separate issue. What this provision really means is that Washington???s setting the table for what could be an epic food fight. Even separating food stamps from the farm bill was an enormous departure from the norm, as the two had been linked since the 1970s. Claiming that skyrocketing food prices will supersize the food stamp program that already costs the country some $80 billion a year, Republicans also see this as an opportunity to tackle a particularly thorny issue by itself, without the protective shell of the farm bill. It is anyone???s guess as to how the program will look in the end, but what is clear is that commodity investors should be ready for a shake-up in the performance of the agricultural portion of their portfolios???