Pick up trucks lead May auto sales
The Associated Press is reporting that US auto sales in May were led by the sale of pickup trucks. Automakers sold 173,972 full-size pickups in May, the highest total since December. Ford’s F-Series pickup, the country’s best-selling vehicle, rose 31 percent to a 6 year high. Ford is adding 2000 workers to its Missouri plant that produces the F-series. Car dealers are also increasing the number of employees from an average of 53 to 55.
US Manufacturing Gauge falls
The Institute for Supply Management released its Purchasing Managers Index on Monday and the measure fell to 49 in May, down from 50.7 in April. This is the lowest level in nearly four years, according to the New York Times. A reading under 50 indicates that an economy is contracting. The gauge of new orders fell to 48.8, the lowest number in more than a year, and production and employment also fell. Manufacturing has struggled due to the recession in Europe and many US businesses are holding back on re-investment.
Regulators to oversee non-banks
According to the Wall Street Journal, US regulators proposed that a first round of nonbank financial companies, including AIG, face tougher government oversight. The Financial Stability Oversight Council, led by the Treasury Department, voted to propose designating several companies as “systemically important”. While the complete list was not identified, AIG, Prudential and GE Capital were part of the list. This move will help close the regulatory gap that contributed to the 2008 financial crisis. It is not clear yet how the oversight will be structured or the impact on these companies.
Wall Street responsible for the uptick in housing prices
The New York Times is reporting that large investment firms have recently spent billions of dollars buying homes in depressed markets, resulting in the uptick of prices and squeezing out traditional buyers. Fitch Ratings indicates that the housing growth in the US is being fueled by institutional investors. Nationwide, 68 percent of the damaged homes sold in April went to investors and only 19 percent went to first time buyers. Despite recent gains in prices, home values are still 40 percent below their 2006 values.
IMF says France needs more economic reforms
The International Monetary Fund has lowered its growth projections for France and says the country needs more reforms to improve its economy, according to the Associated Press. The IMF predicts the French economy will shrink 0.2 percent this year down from a previously expected fall of 0.1 percent. France’s economy is currently in recession. The IMF says that France must reduce spending and not just rely on tax increases.
US bond funds lose in May
The Financial Times is reporting that every one of the US mutual funds investing in bonds lost money in May, highlighting the risks for investors as interest rates rise. Bond yields around the world increased from some of the lowest levels in decades last month as investors anticipated the end of the Federal Reserve’s quantitative easing program. US funds that invest in higher rated bonds with an average maturity under 10 years lost an average 1.8 percent in May, the worst performance since October 2008.
Zynga lays off 520
Zynga, the San Francisco based game maker, said it will lay off 18 percent of its workforce worldwide, according to USAToday. This will result in the loss of 520 jobs and will save the company $70-80 million. Zynga anticipates a second quarter loss of $28.5 to $39 million. Shares fell 12 percent on Monday bringing share prices to $2.99, far below its IPO price of $10 per share.
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.