ECB Cuts Interest Rate
A widely expected cut in the European Central Banks benchmark interest rate was
announced Thursday, a cut by 25 basis points to 0.50% and on marginal lending
facility a cut by 50 basis points to 1.00%. Euro-zone annual inflation fell to
1.2% during April from 1.7% in March. European Central Bank President Mario
Draghi suggests that the decision to reduce rates today was consistent with the
medium-term inflationary outlook and cites the fact that the weak economic
outlook has extended into the spring. ECB aims to keep inflation rates below but
close to 2% over the medium term. Draghi said, "This is a measure that benefits
all kinds of banks," and, the combination of this measure and the cut in the
benchmark interest rate is "especially important" as the move represents
"liquidity insurance for the banking system." ECB President also said that the
ECB will continue conducting the main refinancing operations as
fixed-rate-tender procedures with full allotment for as long as necessary" and
at least until July 2014.
In its weekly report on Thursday, Freddie Mac said the average rate on the
15-year fixed-rate mortgage hit a record low of 2.56% in the week ending May 2,
down from 2.61% in previous week. Average rate on the 5-year Treasury-indexed
hybrid adjustable-rate mortgage hit a record low in the latest week, declining
to 2.56% from 2.58% in previous week. Also in the latest week, the 1-year
Treasury-indexed ARM declined to 2.56%, down from 2.62% in previous week.
Yelp Inc. (YELP) on Thursday, reported fiscal Q1 revenue of $46.1 million with a
loss of $4.8 million or 8 cents a share. Shares of YELP surged to a record high,
up over 25% into early afternoon trading. Yelp’s mobile app was used on
approximately 10 million unique mobile devices in the quarter, with 36% of its
local ads shown on mobile devices. The number of active business accounts on
YELP has risen by 63% to 45,000, while average monthly unique users rose to 102
million for a 43% increase over the same period in 2012. Forecast for Q2 -
revenue in a range of $52.5 million to $53.5 million and YELP raised their full
year forecast to sales between $216 million and $218 million.
"Warren is in the house," 82-year-old "Oracle of Omaha" Warren Buffett,
Berkshire Hathaway Inc chief executive officer, said on Thursday, under his new
Twitter handle "@WarrenBuffett." In just under 45 minutes, Buffet picked up over
45,000 followers. Fortune magazine, which hosted Buffett for a live webcast
Thursday said it was billed as the first social media event for the notoriously
technology-averse billionaire. Word has it that, if Twitter followers were
dollars, the 'Oracle' is having more success on Twitter than he had with one of
his best investments ever, his 2008 stake in Goldman Sachs Group Inc - a deal
that gave him preferred stock that paid dividends at $900 a minute. Buffett has
managed to gathere 1,000 followers a minute.
Facebook Inc. (FB), during aftermarket trading session on Wednesday, announced
Q1 profit of $219 million or 9 cents a share, compared to 2012 period with a
profit of 205 million or 9 cents a share. FB revenue rose to $1.46 billion from
$1.06 billion, with mobile ad revenue now at 30% of total advertising revenue,
full advertising revenue jumped 43% year-over-year to $1.25 billion. Total costs
and expenses jumped by 60%. Facebook did not give a forecast in the report.
Monthly active users on Facebook now totals 1.1 billion, up 23% from 2012 period
and active monthly mobile users totals 751 million, up 54% year-over-year.
Facebook Chief Financial Officer David Ebersman affirmed on the conference call
that users under 25 “remain among the most active and engaged on Facebook. And
then, in addition, younger users are extremely active users of Instagram.”
Zuckerberg noted that the main trend is “people sharing more in different ways
and people want to stay connected with their friends and family and all these
different folks in their lives. And they’re going to use whatever technology
they have to enable that, whether that’s desktop computers, or laptops, or
tablets or glasses.” Plans by Facebook to invest more in the business, includes
the launch of new services like Graph Search and Facebook Home. “These services
are also big long term investments, so I want to be clear up front that we’re
making these big investments because I think these are important areas for us to
focus on,” CEO Mark Zuckerberg said on the company’s earnings call. Zuckerberg
re-affirmed on the conference call that mobile is a major focus for the company,
in driving its results and said, “We think the products like Home and Graph
Search are big opportunities to deliver some unique and important services to
the world that we’re positioned to do better than anyone else.” Zuckerberg
added, “Whatever the form factor is going forward, we will be able to be able to
deliver advertising content.”
Build-A-Bear Workshop Inc. (BBW) - the do-it-yourself stuffed animals store
reported Q1 consolidated net retail sales at $102.9 million with 24 fewer
stores; consolidated net income of $13,000 or $0.00 per diluted share; adjusted
net income was $2.3 million or $0.14 per diluted share and consolidated
e-commerce sales rose 7.0%, excluding foreign exchange impact. Shares of the
company were higher by 29%, striking all time highs into late afternoon trading
Thursday. During 1997, the build-a-bear concept faded and the company has been
engineering a multi-year turnaround. During Q1, remodeled stores saw sales pick
up on average 25%. The company shut down 18 stores during the quarter, ending it
with 333 company owned shops in North America and Europe. Plans are to close
down 60 stores by the end of 2014. Other moves being made in the turn around
attempt, some stores have been relocated or downsized and, BBW increased its
advertising as a percentage of total sales. In the fall, BBW opened six stores
that allow kids to enter their name and age and other information right after
they enter a store through an interactive game. As the kids go through the
process of making and “cleaning” their stuffed animal, their personal
information is then used to further customize the experience at each step of the
U.S. Commerce Department reported on Thursday that U.S. trade deficit narrowed
unexpectedly by 11% in March to $38.3 billion. U.S. trade deficit with China
narrowed to $17.9 billion in March compared with $21.7 billion in the same month
U.S. Labor Department reported on Thursday, new unemployment claims for last
week touched the lowest level since January 2008, falling by 18,000 to 324,000.
Average of new unemployment claim over the past month dropped by 16,000 to
342,250. In the week ended April 20, continuing claims increased by 12,000 to a
seasonally adjusted 3.02 million.
U.S. Labor Department announced in its preliminary assessment that during Q1,
U.S. workers and businesses improved their productivity by an increase of 0.7%.
For Q1, output of goods and services rose 2.5% and hours worked climbed a slower
1.8%, accounting for the increase in productivity. Unit-labor costs grew a mild
0.5%, down sharply from a 4.4% spike in Q4. Hourly wages of American workers
rose 1.2% during Q1 however, after adjusting for inflation, they actually fell
0.3%. Productivity in manufacturing sector jumped 3.8% following a 2.2% increase
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