Unemployment claims increase and money market funds selling short-term debt. The political stalemate is impacting the markets, but Burger King is giving away free Satisfries.
US jobless claims jump to 374,000
The Associated Press is reporting that the number of people applying for unemployment benefits jumped by 66,000 to a seasonally adjusted 374,000. This number represents a six -month high. The spike was because California processed a large backlog of claims and the partial government shutdown prompted some contractors to cut jobs. The sharp increase comes a week after applications hovered near a 6-year low. Federal workers impacted by the furloughs may also file for unemployment, although their numbers are reported separately and published a week later than other applications.
Short-term debt markets impacted by political stalemate
The prospect of a US default in the coming weeks has prompted many banks, securities dealers and money market funds to sell any US debt that they believe bears default risk, including any securities the could be used as collateral for repo loans. According to the Wall Street Journal, money market funds are increasing their liquidity in case they are hit with redemptions from investors. In some cases, funds are moving away from Treasurys and into “prime” investments that include cash of highly rated short-term debt issued by companies. USA Today reports that Fidelity Investments, the nation’s largest money market mutual fund, has sold all of its short term US government debt. The last time Fidelity, who manages $430 billion in money market mutual funds, took this step was in the summer of 2011, when the US government came close to a default and Standard and Poor’s downgraded the nation’s credit rating. Fidelity no longer holds any US debt that comes due in late October or early November.
Health exchange rollout gets poor reviews
An Associated Press poll indicates that only 7 percent of Americans have tried to sign up for insurance through the health care exchanges. Additionally, only 7 percent of Americans say the rollout has gone well. Of those polled who tried to sign up, 75 percent said they experienced problems trying to sign up. Only 1 in 10 actually purchased insurance. Twenty eight percent of Americans polled support the healthcare reforms, 38 percent oppose the law, and 32 percent did not have an opinion. When asked whether those without health insurance should face a fine, 68 percent opposed the fine.
Versace seeks to sell 20 percent to raise cash
Versace SpA, the Italian fashion house known for its sexy designs and celebrity clients, is trying to sell 20 percent to investors to raise cash and close the revenue gap that opened with rivals after the murder of its founder, Gianni Versace, in 1997. The Wall Street Journal reports that the deal is drawing interest from Blackstone Group and KKR & Co. Versace’s investment bankers will draw up a short list by next week. The deal is difficult because the current owners, the brother and sister of the founder, are asking for an investment of about $338 million, and the investor must accept the current strategy and have no say on the design direction.
Burger King to give away free Satisfries
This Saturday and Sunday, Burger King plans to hand out free Satisfries to all customers. According to USA Today, Burger King believes this is the best way to get consumers hooked on its new lower-calorie lower-fat fries. The fries will be the value-size Satisfries that generally sell for $1.29. Burger King expects to give away upwards of 10 million orders. The fries have 30 percent less fat and 20 percent fewer calories. Burger King’s “buzz score” among health focused consumers peaked within days of the roll-out on social media.
Catherine S. McBreen is President of Millionaire Corner. McBreen plans and develops content for Millionaire Corner. Catherine balances editorial content to meet the informational needs of both new and seasoned investors. She designs special monthly surveys on topical issues affecting the economic environment.
McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law. She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.
Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences. She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth. Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.
McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)
Catherine is the mother of four and is involved in many school and community events.