Expanding margin debt could signal market top. Toyota increasing wages for Japanese workers due to government request. Men's Wearhouse and Jos. A Bank agree to merger. El Nino predicted. Candy Crush prepares for IPO. Diamond unearthed in Arkansas park.
Expanding margin debt could signal peak of bull market
The amount of money investors borrowed from Wall Street brokers to buy stocks rose for a seventh straight month in January to a record $451.3 billion, according to USA Today. Experts indicate that this could be a potential warning sign because, in the past, record margin debt has coincided with irrational exuberance and stock market tops. While borrowing money or using leverage to buy a house or a car is a sign of confidence, borrowing from a broker to buy stock is often seen as overconfidence. The current amount of “margin debt” is much smaller, however, compared to the past two market peaks in 2000 and 2007.
Toyota to increase employee wages
The New York Times reports that Toyota Motor will give its workers based in Japan their biggest pay raise in 21 years in the financial year beginning in April. Toyota will raise the base pay of its workers by 0.8 percent of total monthly pay. The increase is due to a government call to bolster the economy by sharing its surging profit with its employees. When the average annual bonus payment is calculated, the total average raise in compensation is 7.6 percent from a year ago. Toyota is expected to announce record profits for its most recent fiscal year. Other large Japanese companies, including Nissan, Hitachi, Panasonic and Daihatsu Motor, are also increasing wages due to the government request.
Men’s Wearhouse to acquire Jos. A Bank
After a six-month war of words between the two men’s clothiers, Men’s Wearhouse and Jos. A Bank will merge with a combined value of $1.8 billion. According to the Wall Street Journal, Men’s Wearhouse will pay $65 a share for Jos. A Bank. That’s a premium of 56 percent to the share price on Oct. 8, before Jos. A Bank originally tried to purchase Men’s Wearhouse. Shares of Men’s Wearhouse are up 62 percent over the same period. The deal will be subject to review by regulators to ensure that it does not violate any anti-trust provisions. The new company will have more than 1700 stores in the US and 23,000 employees. Annual sales are projected at $3.5 billion. Jos. A Bank is abandoning the purchase of Eddie Bauer as part of the deal.
El Nino weather pattern could impact farmers, investors
The US weather forecaster announced last week that there was a 50 percent chance of an El Nino weather pattern developing this summer. According to CNBC, Australia’s Bureau of Meteorology said on Tuesday that the tropical Pacific subsurface had warmed substantially in the past few weeks and that sea surface temperatures were likely to rise in coming months. An El Nino refers to a warming of the Pacific sea surface temperatures that occurs naturally every few years and can trigger droughts in some parts of the world and floods in others. The last strong El Nino in 1997-98 caused billions of dollars worth of agricultural damage in the US. Experts indicate that cocoa and palm oil have already increased more than 9 percent in price due to weather fears. Wheat, sugar, cotton and rubber are also expected to be impacted as is fishmeal because temperature change would affect the fishing industry.
Candy Crush maker prices IPO at $21 to $24 per share
King Digital Entertainment, best known for the hit mobile phone game Candy Crush Saga, expects to price its initial public offering of 22.2 million shares at between $21 and $24 per share. CNBC reports that King, founded in Sweden, will have an equity valuation of $7.56 billion.
Man unearths 2.89 carat diamond in Arkansas
Fox News is reporting that a Louisiana man, Brandon Kalenda, has found a 2.89 carat white diamond at Arkansas’ Crater of Diamonds State Park in Murfreesboro. The diamond was found on March 6 and is the fourth diamond weighing more than a carat to be found in the park since mid-February. The conditions at the park are said to be “perfect” due to recent rain and the fact that the staff plowed the diamond search field at the end of February. Kalenda found the diamond after searching for only 20 minutes. He named the diamond “Jax Diamond” after his infant son and plans on keeping the jewel.
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.