Moody’s downgrades French credit rating
According to the Wall Street Journal, France’s credit rating was lowered by Moody’s Investor Service along with a stinging criticism of President Hollande’s attempts to turn the economy around. Hollande has implemented dramatic tax increases for the rich while extending the retirement age due to pressure of the labor unions. The credit rating was cut from Aaa to Aa1 with a negative outlook. Standard and Poor’s cut France’s rating earlier in the year. Market impact is minimal other than for companies required to invest in Aaa bonds.
Retailers worry that Americans are tightening their purse strings
Retailers are remaining cautiously optimistic about the holiday shopping season despite signs that consumers are holding back on spending. According to the Wall Street Journal, retail analysts at Bain expect holiday shopping sales to grow at 3.5 percent, compared to 3.7 percent in 2011 and 3.8 percent in 2010. In 2004 and 2005, sales increased at 5 percent. The twenty year average is 3.8 percent. Holiday sales represent one fifth or more of total annual sales for most retailers. A RBC Capital Markets survey found that 60 percent of consumers plan to decrease holiday spending.
Judge forces Hostess and its largest union into mediation
Twinkies won’t expire too easily. The bankruptcy judge ruled Hostess and the baker’s union must enter into mediation, according to CNBC. Apparently the union went on strike after rejecting the company’s latest contract offer but it never formally filed an objection to the contract offer. Mediation is expected to begin immediately. On Friday, Texas-based Hostess decided it could not go through Chapter 11 bankruptcy restructuring and asked a court to allow it to sell all of its assets when it failed to reach agreement with the baker’s union. While sales have declined in recent years, Hostess still does about $2.5 billion in sales each year.
Fiscal cliff forces corporate investment off the cliff
The Wall Street Journal reports that US companies are scaling back on investment plans at the fastest rate since the onset of the recession, thus signaling more trouble for the economic recovery. Half of the nation’s 40 biggest publicly traded companies have announced plans to curtail spending this year. Business investment in equipment and software, a measure of economic vitality, stalled in the third quarter for the first time since 2009.
Homebuilder confidence hits 6 year high
Confidence among homebuilders jumped in November to a 6 year high, as reported by the Financial Times. The National Association of Builders/Wells Fargo index of builder confidence increased to 46, its highest level since May 2006. Strict mortgage requirements continue to hold the market back. Existing home sales increased 2.1 percent for an annual rate of 4.7 million units. The national median existing home price increased to $178,600 up 11.1 percent from a year ago.
Goldman tells clients to expect an 8 percent drop in the S&P
Goldman Sachs is warning its wealthy clients that the S&P will probably drop another 8 percent by the end of the year on top of the 7 percent decline seen since the year’s high reached in September. CNBC reports that the uncertainty regarding the fiscal cliff along with the potential jump in capital gains in 2013 combined with the debt ceiling issue scheduled for February will all work together to impact the market. While Goldman does not predict the US will go over the fiscal cliff, they do not believe the US is close to a fiscal solution. The Dow jumped 200 points on Monday due to promising signs regarding an agreement about the fiscal cliff, ending at 12,795. Both European and Asian markets are mixed on Tuesday.
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.