Saks Exploring Company Sale
Saks Incorporated (SKS) shares were higher by 15% into late afternoon trading on
Wednesday after reporting they retained Goldman Sachs (GS) to explore strategic
alternatives. Saks flagship - its main store on Fifth Avenue in New York alone,
has an estimated worth of more than $1 billion. On Tuesday, Saks Chief Executive
Steve Sadove said even though demand has improved throughout Q1 as weather
improved, concerns over income tax hike and fiscal issues subsided, the industry
is getting promotional, prompting the company to raise its discount level during
its friends and family sale during the quarter.
Internal Revenue Service official Lois Lerner on Wednesday told members of the
House Oversight Committee, "I have not done anything wrong." Lerner invoked her
Fifth Amendment right not to incriminate herself, before the HOC during their
probe of the IRS targeting conservative groups. Lerner is head of the IRS's
division overseeing tax-exempt organizations, and first disclosed the extra
review of tea-party groups earlier this month.
Federal Reserve Board Chairman Ben Bernanke warned Wednesday in testimony to the
Joint Economic Committee of Congress that a premature move to tighten monetary
policy could strangle the recovery. “A premature tightening of monetary policy
could lead interest rates to rise temporarily but would also carry a substantial
risk of slowing or ending the economic recovery and causing inflation to fall
further,” Bernanke said. The move would keep rates lower for an extended period,
lead to a poor return on assets and pose a risk to financial stability, Fed Boss
said. Bernanke urged lawmakers to replace some of the near-term fiscal
restraint, now in law, with a longer-term plan that would reduce the deficit
more gradually in the near term but, more substantially in the longer run.
Bernanke said in the current economic environment, “monetary policy is providing
significant benefits,” and the Fed continues to closely monitor for signs of
financial instability. “At its most recent meeting, the Fed made clear that it
is prepared to increase or reduce the pace of its asset purchases to ensure that
the stance of monetary policy remains appropriate as the outlook for the labor
market or inflation changes,” he said. Fed Chairman said the job market “remains
weak overall” despite some improvement recently. Some of the headwinds holding
back growth have begun to dissipate recently but Bernanke did not seem overly
concerned about low inflation. Bernanke said that measures of longer-term
inflation expectations have remained stable and that the central bankers expect
longer-term inflation to run at or below the 2% target rate.
New York Fed President William Dudley - voting member of the Fed's
policy-setting committee - said on Wednesday that Federal Reserve officials need
three to four more months before they know if the economy can shrug off the drag
from fiscal policy budget cuts. Dudley said, "Three or four months from now I
think you're going to have a much better sense of, is the economy healthy enough
to overcome the fiscal drag or not."
The National Association of Realtors reported Wednesday that existing-home sales
rose 0.6% in April to a seasonally adjusted annual rate of 4.97 million,
striking the highest rate seen since November 2009 when a buyer tax credit
deadline approached, pointing to a continuing recovery. Existing homes for sale
inventories rose 11.9% in April to 2.16 million. Median homes for sale prices
hit $192,800 in April, for the highest rate seen since 2008. Supply of existing
homes for sale rose to 5.2 months in April. Distressed property sales fell to
18% of all transactions during April, striking the lowest level seen since data
collection began in 2008.
Target (TGT) announced Q1 profit fell to $498 million or 77 cents a share, from
$697 million or $1.04 a share in 2012. Sales reportedly rose 1% to $16.7
billion. Q1 included losses due to the early retirement of debt, per-share
earnings dilution related to Target’s Canadian business and gains from the sale
of its consumer credit-card receivables portfolio to TD Bank Group. Target said
adjusted per-share earnings fell to $1.05 from $1.11 in 2012. Into late
afternoon on Wednesday, shares of Target were lower by 5%.
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