Rob Black's Morning Market Notes -Dimon on Capital Hill, Retails Sales Slow, Dell Dividend, Palo Alto R.E. & More

By: Rob Black - Wed, 13 Jun 2012 11:11:00 -0800

Loser: JPMorgan Senate Committee Hearing

Dimon sits before the Committee to discuss private losses the executives of Fannie and Freddie have yet to testify about millions of dollars of taxpayer money lost

JP Morgans’s switch to a new risk model may have helped fuel a $2 billion trading loss at the chief investment office, Chief Executive Officer Jamie Dimon told a U.S. Senate panel today.

Protesters yelled at him.

the causes of the loss, which he described as part of a hedging strategy.

Government wants to know how long senior executives knew about the CIO’s swelling bets and losses.
Clawbacks likely.  Clawbacks where  JP Morgan asks for money back from executives.

Mistakes in risk judgment shouldn’t be penalized “too much.”

Senators will be looking closely at whether they need to tighten exemptions in the so-called Volcker rule that bans proprietary trading by banks.

Dimon said ,” no client, customer or taxpayer money was impacted. He said the second quarter would be “solidly profitable.”

 Loser: Retail Sales Declined for 2nd Month

Retail sales fell in May for a second month as slower employment and subdued wage gains damped demand, a sign the world’s largest economy is cooling.

The 0.2 percent decrease followed a similar decline in April that was previously reported as a gain.
Sales excluding automobiles slumped by the most in two years.

Limited gains in payrolls and unemployment exceeding 8 percent signal it’ll be tough for consumer spending.

At the same time, lower prices at the gasoline pump are providing relief for Americans, helping sustain sales at retailers like Target.

Cars and light trucks sold at a 13.7 million annual rate in May, the weakest this year and down from April’s 14.4 million pace.

Winner:  Dell Initiates Quarterly Dividend

Dell the third-largest personal-computer maker said it will pay a dividend for the first time, following peers such as Apple  and Microsoft in returning more cash to shareholders.

The quarterly payout of 8 cents a share and that equals a yield of  2.7 percent.

Dell  has been acquiring makers of data storage, networking gear and business software to diversify beyond PCs and revive growth. At the company’s annual meeting last July, a shareholder proposal for a dividend was defeated.

Apple, the world’s largest company by market value, in March said it would pay its first dividend in 17 years, heeding investors who urged it to return part of its cash hoard.

 
Loser: Palo Alto Real Estate Follows Facebook

Housing prices in Silicon Valley's tony neighborhood soared before the Facebook IPO. Now inventory is soaring.

You can take the pulse of the prospects of Silicon Valley by checking stock prices, revenues, profits, hiring, even press clippings of various companies. Or instead maybe you should just look at the real estate market in Palo Alto, California.

The shortcomings of one iconic company, Facebook, now seem to be taking their toll in Palo Alto.
Before Facebook's May 18 IPO Palo Alto’s housing market was going especially bonkers.

That's because so many sellers kept their homes off the market. For the first quarter of this year, for example, the median price of a single-family Palo Alto home went up 11% while inventory declined 57%.

All that changed when the Facebook IPO flopped.

The result in Palo Alto has been a flood of houses going on the market. It's a small set of data. Right now, there are 104 houses on the market -- more than double the number over the winter

. Even compared to last June, inventory is up 44%.

Loser: Burger King’s Bacon Sundae

Burger King wants to lure customers this summer with a barbecue party -- and a bacon sundae.
Vanilla soft serve with fudge, caramel, bacon crumbles and a piece of bacon.

The salty-sweet dessert clocks in at 510 calories, 18 grams of fat and 61 grams of sugar.
The limited-time items are designed to  win back customers with a revived menu and reverse sliding market share.

Earlier this year, Burger King launched its biggest-ever menu expansion including fruit smoothies, snack wraps and new salads. The items were intended to go after a broader audience of moms and families, a shift from the chain's previous strategy of courting young men with calorie bombs.

The rest of Burger King's summer menu includes:
--Memphis Pulled Pork BBQ Sandwich.
--Carolina BBQ Whopper or Chicken Sandwich.
--Texas BBQ Whopper or Chicken Sandwich.
--Sweet potato fries.
--Frozen Lemonade.
The items will be available until Sept. 3 or while supplies last.

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