IMF Lowers Global Outlook
As part of its world economic outlook published twice a year by the
International Monetary Fund, estimate of U.S. and global economic growth was
lowered. The IMF feels the world now has a three-speed recovery and said,
"Emerging market and developing economies are still going strong, but in
advanced economies, there appears to be a growing bifurcation between the United
States on one hand and the euro area on the other." The IMF said the sequester,
while decreasing worries about debt sustainability, "is the wrong path to
proceed." Per the IMF report, global growth for 2013 is expected at 3.3%, global
growth for 2014 expected at 4%, U.S. growth expected at 1.9% for 2013 and U.S.
growth for 2014 expected at 3%. Forecasts represent declines of 0.2 percentage
points in 2013 and no change for 2014. Forecasted growth for the U.K. in 2013 is
at 1.6% and 1.4% growth in 2014.
As the takeover process unveiled in mid-February for a controversial $24.4
billion takeover by its founder Michael Dell along with investment firm Silver
Lake Partners unfolds, Dell Inc. (DELL) and billionaire investor Carl Icahn,
have come to terms on an agreement where he and his affiliates have agreed not
to collectively own more than 15% of the PC makers shares. The takeover offer by
Michael Dell and Silver Lake Partners would be aided by a $2 billion loan from
Microsoft Corp. (MSFT) and $13.75 billion in new bank debt. While capping
Icahn's share ownership will "maximize the chances of eliciting a superior
proposal" from Mr. Icahn, the special committee on Tuesday said it believed
granting the waiver protects shareholders against "potential accumulation of an
unduly influential voting interest." The special committee also determined the
proposal by Icahn could reasonably be expected to result in a superior proposal.
Icahn argues the takeover deal "undervalues Dell and hurts shareholders." In a
statement, Icahn said Dell investors "are entitled to a free exchange of ideas
as they make this important decision and that includes the right of shareholders
to evaluate all alternatives."
The U.S. Department of Commerce on Tuesday reported that during March, new home
construction rose 7% to a seasonally adjusted annual rate of 1.04 million,
striking the highest level seen since June 2008 as starts rose for apartments,
but fell for single-family homes. From the same period in 2012, March new home
starts were up 47%, for the largest year-over-year growth since 1992. Starts for
single-family homes fell 5% to a rate of 619,000. Starts for buildings with at
least five units rose to a rate of 392,000 in March, striking the highest level
seen since January 2006. Building permits, a sign of future demand, fell 3.9% in
March to a rate of 902,000.
U.S. Bureau of Labor Statistics reported Tuesday that Consumer Price Index in
March decreased on a seasonally adjusted basis by 0.2%. For the previous 12
months, the all items index increased 1.5% before seasonal adjustment. CPI for
all items less food and energy increased 0.1% in March. Energy index fell 2.6%
in March, food index remained unchanged and index for food at home declining
Eli Lilly & Co. (LLY) reported on Tuesday that its investigational long-lasting
treatment for type 2 diabetes - dulaglutide - showed positive results in
additional Phase III studies. Latest long-term studies showed Lilly's drug was
more effective in reducing hemoglobin A1c, an indicator of blood sugar levels,
in patients with type 2 diabetes compared with other diabetes treatments. In
another series of Phase III studies in October 2012, Lilly reported dulaglutide
showed positive results in lowering overall blood glucose levels. Lilly expects
to submit dulaglutide for regulatory approval this year. Lilly recently unveiled
plans to add nearly 300 sales positions to the side of their business that sells
Coca-Cola Co.'s (KO) reported Q1 earnings fell by 15%, with reported net income
of $1.75 billion, compared with $2.05 billion in Q1 of 2012. Per share earnings
for Coke came in at 39 cents, down 13% from 2012 with adjusted earnings per
share at 46 cents. Cola maker reported a 4% sales volume growth in Q1, with 3%
growth in the Americas and 5% growth internationally. Shares of Coke surged to a
high not seen since 1998 during mid-day trading on Tuesday.
The Federal Reserve reported March industrial production rose a seasonally
adjusted 0.4%. Due to unusually cold weather, utilities output rose 5.3% while
manufacturing and mining output decreased. Capacity utilization edged up
slightly to 78.5% in March from 78.3% in February.
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April 16, 2013