Emerging markets are scaring Wall Street as stocks plunge. Argentina faces a potential Recession. Consumer spending over the holidays may lead to lower sales in the first quarter as income failed to increase. And an unassuming teacher leaves over $8 million to a community foundation.
Emerging European market sell-off scares stocks
European markets had dodged the recent sell-off that swept through other emerging market currencies until this week. The Wall Street Journal reports that the Hungarian forint dropped 1 percent against the dollar on Thursday and the Polish zloty and Czech korma also fell. Emerging market stock funds saw their second-largest withdrawal on record last week. The ETFs had $2.7 billion in net outflows in the week ended Jan. 29. The European nations do not have as many problems as Turkey and South Africa. Hungary, unlike Turkey and South Africa, has a surplus in its current account, a broad measure of its trade and investment balance, and thus is not reliant upon foreign financing. It does, however, have a large amount of external debt that it needs to roll over.
US consumers spend more but income doesn’t increase
CNBC is reporting that US consumer spending rose more than expected in December, but weak income growth could lead to an economic slow-down in the first quarter. The Commerce Department said that consumer spending increased 0.4 percent in December, after increasing a revised 0.6 percent in November. That is the strongest gain in three years in the fourth quarter and helped to spur the economy to a 3.2 percent annual growth rate. Income, however, was unchanged last month and rose only 0.2 percent in November. It is anticipated that this will slow consumer spending in the first quarter as consumers work to make up for holiday expenditures.
Amazon lifts sales but misses targets
Despite a 20 percent increase in fourth quarter revenue, Amazon’s shares tumbled in after-hours trading due to increased expenses. The Wall Street Journal reports that expenses increased because the company hired an additional 70,000 temporary workers in expectation of sales gains. Shipping problems, however, caused some customers to get their packages after Christmas requiring Amazon to issue $20 purchase credits. Amazon reported net income of $239 million, or 51 cents per share, compared to $97 million or 21 cents a share earlier. Analysts were expecting 66 cents per share. Operating expenses jumped 20 percent. Amazon said revenue took a $258 million hit from foreign currency impact. Amazon forecasts first-quarter sales of $18.2 billion to $19.9 billion, below the analysts’ expectations.
Argentina loses $1.25 billion of foreign-currency reserves
Argentina’s central bank has shed $1.25 billion of its foreign currency reserves since it devalued the peso last week. According to the Wall Street Journal, the central bank has tried to defend their currency at around 8 pesos to the dollar, after letting it slide 15 percent last week. The country’s reserves are down by $2.3 billion this year after dropping $4.1 billion in the fourth quarter of 2013. In January of 2011, the country had reserves of $52.6 billion. The reserves now stand at just under $28.3 billion. Argentines were allowed to withdraw US dollars from banks last week. Despite having to pay a hefty tax to withdraw dollars rather than pesos, residents withdrew $125 million from banks. Citizens remember the 2002 crisis in which the government swapped dollars for devalued pesos. The fear is that the crisis will plunge the country into recession.
Unassuming teacher leaves $8.4 million gift to Community Foundation
A Greenville, South Carolina woman, who lived modestly and was a former teacher, left $8.4 million to the Community Foundation of Greenville to benefit animals and children. According to USA Today, it is the largest donation the foundation has ever received. Margaret Southern taught special needs children, cared for her ailing brother, and doted on her dachshund. She lived in a modest town home. She lived off the dividends of stocks that she had chosen. When she passed away, she asked for no one to be at her funeral nor to be mentioned in the paper.
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.