Income and savings slightly up, savings rate drops and other top news stories of the day
Income and Savings Up Slightly, Savings Rate Drops
The Commerce Department announced on Friday that personal income was up .2 percent and consumer spending increased .8 percent, the most in 7 months, as reported by CNBC. The economy is predicted to expand at 3 percent in the first quarter. However, consumer spending outpaced savings, with the savings rate at 3.7 percent, the lowest since 2007.
European markets up due to finance minister agreement
European finance ministers met today in Copenhagen to discuss whether to increase the bailout funds available to the EU. The agreement of 800 billion euros was supported by Germany, the country most likely to raise objections, according to the Associated Press. Of the 800 billion euros, 300 has already been spent with bailouts of Greece, Ireland and Portugal. There are 500 billion euros remaining but markets are worried about Spain and potentially Italy. Despite riots in Spain, the government indicates that it will go ahead with austerity measures planned for a vote this weekend. European markets are up.
Q1 predicted to end on a positive note
The Financial Times is predicting that Q1 will end on a positive note. The S & P 500 had its best start since 1998. Asian markets were mixed today but European markets are up. The Dow closed up 19 points on Thursday closing at 13,145.
Junk bonds having best quarter on record
As investors seek return, junk bonds are having their best quarter since Thomson Reuters began tracking in 1980, as reported by the Wall Street Journal. Investors are willing to take on slightly more risk and are seeking return. Junk bonds are the only fixed income tool to provide this option. As corporations find it more difficult to obtain credit, issuing junk bonds has become a win-win for both investors and corporations. Issuance of junk bonds is up 12 percent from a year ago. The danger is that if the economy tanks, the issuers of the bonds may also default.
Best Buy to retreat from Big Box stores
After a season of poor earnings results, Best Buy has indicated that it will close 50 stores and review changing the format of existing stores, probably moving away from Big Box stores. According to the Wall Street Journal, Best Buy is being challenged by online stores that sell similar products. Additionally, individuals are now more likely to review prices and purchase online. Best Buy will begin "showrooming", highlighting its technology products, especially smartphones, and not holding all products onsite. Best Buy's own online sales have increased.
Sears to sell Land's End product line
The Wall Street Journal reports that Sears is shopping its Land's End product line to venture capital firms in order to raise cash. Last year Land's End represented $1.7 billion of sales for Sears. Total sales were $42 billion. Sears was never able to attract and capitalize on the preppy Land's End customer and draw them into its stores. Analysts indicate that it seems that Sears is merely going through it own long liquidation.
Medical marijuana store to open near White House
In a move that many Americans find offensive, a store called weGrow will open up in Washington, DC just 2 miles from the White House, according to USA Today. The store, known as the Walmart of Weed, sells supplies to those who use marijuana for medical purposes. weGrow is already operating in several states. Sixteen states and the District of Columbia have allowed for the smoking of marijuana for medical purposes. Fourteen states are considering decriminalization of marijuana. The Substance Abuse and Mental Health Services Administration indicate that 7 percent of Americans, or 17.4 million, smoked pot in 2010 up from 5.8 percent in 2007. Experts predict that this could grown into a $9 billion industry.