U.S. stock futures are up ahead of another round of economic data that should shed further light on whether the recovery in the world’s largest economy is still picking up steam.
Dow Jones industrial futures rose 23 points to 13,195. The broader Standard & Poor’s 500 futures are up 2 points to 1,398. Nasdaq 100 futures are up 4 points to 2,716.
The market has rallied on upbeat U.S. economic data and easing worries about European debt, despite some concern over the rise in oil prices. On Thursday, the Standard & Poor’s 500 index closed above 1,400 for the first time since June 2008.
Later Friday, the focus will be on consumer inflation and industrial production figures as well as the closely watched University of Michigan consumer confidence survey.
Plastics manufacturer Spartech Corp. reported a $2.3 million loss in the first fiscal quarter, driven by increased freight costs, corporate expenses and spending on repairs and maintenance.
Clayton-based Spartech lost $2.3 million, or 7 cents a share, in the quarter ended Feb. 4, compared to a profit of $1.0 million, or 3 cents a share, a year earlier.
The company’s business units include custom sheet and rollstock, packaging technologies and color and specialty compounds.
Net sales increased 20 percent to $281.8 million in the first quarter, driven by sales in the automotive sector, construction, and food packaging.
Spartech executives plan to hold an investors’ conference call Thursday at 10 a.m. to discuss the quarterly results.
A U.K. house-price index rose to a 19-month high in February as first-time buyers moved to beat the expiration of a property-tax exemption, according to the Royal Institution of Chartered Surveyors.
The gauge based on a survey by London-based RICS increased 3 points from the previous month to minus 13, the strongest reading since July 2010, it said in a statement today. Still, with the measure below zero, that indicates more surveyors saw price declines than gains last month.
The figures partly reflect Britons looking to take advantage of a two-year stamp-duty exemption for first-time buyers purchasing a home for less than 250,000 pounds ($390,800) before it ends on March 24. While such
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Former New York Times CEO Janet Robinson retired from the newspaper publisher late last year with a severance package valued at about $23 million.
The publishing company that owns The New York Times disclosed the details of Robinson’s compensation in a Friday regulatory filing.
Robinson, 61, retired on December 31, after a 28-year career with the company. She served as CEO for the last seven years.
Since her departure, the company’s chairman, Arthur Sulzberger Jr., has been serving as interim CEO.
Robinson received $11.4 million in retirement benefits, $5.4 million in awards based on her performance, restricted stock valued at nearly $1.07 million and stock options valued at nearly $700,000.
As part of her severance, she is also being paid a previously disclosed $4.5 million consulting fee this year.
Most of the payments were part of Robinson’s original severance package. The consulting payment and one year of health coverage were added after her retirement was announced in December, according to the filing.
Like most newspaper publishers, the Times Co., which also owns The Boston Globe and the International Herald Tribune, has cut jobs and expenses in recent years to cope with a steep drop in print advertising _ a key source of revenue.
Under Robinson’s leadership, the Times Co. built one of the newspaper industry’s most successful digital operations. But the company’s gains in online advertising haven’t been nearly enough to offset the decline in print ad revenue. In Robinson’s final year on the job, the Times Co. posted a $39.7 million loss, as its revenue slipped 3 percent from the previous year to $2.3 billion.
The Swiss central bank spent 17.8 billion francs ($19.5 billion) in 2011 to stem what it called the currency
India banned all cotton exports on Monday, causing U.S. cotton futures to surge and igniting fears of another jump in prices for cotton goods.
India decided to immediately impose the ban because it’s worried about a possible supply crunch in the country. One reason: India’s cotton exports may have overshot government targets last year, its Directorate General of Foreign Trade said in a statement.
U.S. cotton futures jumped 4.5% — the most allowed in a single day of trading — to 92.23 cents per pound following the news.
"This India development really caught the entire cotton industry and traders off guard because it came with no warning," said Phil Flynn, senior market and commodities analyst with PFG Best.
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Flynn said the market reaction to India’s move reflects concerns that it could start a new rise in cotton prices that mirrors last year’s rally.
Cotton prices hit an all-time high of $2.27 a pound last March due to a global supply crunch for the commodity.
Cotton clothing manufacturers responded to that steep price jump first by raising prices for consumers and eventually using less cotton and more blended fabrics such as poly-cotton.
Flynn said cotton prices cooled off toward the end of last year and reached as low as 84.35 cents a pound.
"We’re in March again. Could we potentially have another big rally like last March? Maybe," said Flynn. "A void in the supply chain from India’s action could cause a price spike."
It would be deja vu for consumers, too.
"Cotton clothing prices have been coming down since last year as supply caught up with demand. But that could change now," he said.
Some experts say Boeing
You know that investing can be tough. Andrew Lo says it’s even tougher than you think.
Lo, an economist and finance professor at M.I.T.’s Sloan School of Management, challenges a core idea of financial theory: that markets are "efficient," meaning there’s no point in trying to time your moves in and out of stocks, since everything you could know about them is already baked into the price.
Plenty of smart people think that Lo knows what he’s talking about. In addition to teaching, he has advised the government on ways to limit the damage from future financial crises. He also runs a money-management firm that seeks to put his ideas to work.
Lo argues that the buy-and-hold method of investing (long considered gospel by index fund managers and this magazine) doesn’t effectively limit the risks of today’s markets. He explained his theories to contributor Charles P. Wallace; the conversation has been edited.
You reject the theory of efficient markets in favor of what you call adaptive markets. Meaning?
I don’t entirely reject the idea of efficient markets. It needs updating. The adaptive markets hypothesis says that all economic institutions, like our own species, develop and change over time, depending on the population of investors that are engaged with them.
So what does that mean for investors?
In a normal market, you get the independent valuations of millions of buyers and sellers trying to evaluate a given security.
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During periods of extreme fear or greed, you don’t have the proper balance between those two to generate market efficiency and you get extremes in behavior.
When there’s a strong trend upward, for example, the kind of skepticism that produces reasonable and accurate valuations of securities is not at work, and a bubble develops. It’s very exciting when you’re in the midst of it, but at some point the valuations aren’t justifiable.
It seems as if big market shifts are becoming more common.
Yes. If you rank the top 50 one-day moves in the S&P 500, a fair number of those happened within the last five or 10 years. That tells you that we’re in a different, riskier market now.
What’s going on?
A combination of a lot of smart guys and technology. People have the ability to enact a trade instantaneously. And they have a lot of complex new tools, such as hedge funds and derivatives, at their disposal.
Technological innovations often have unintended consequences. My analogy is someone clearing some brush using a handsaw. You can clear a lot more brush using a chainsaw, but you might lose a finger, or suffer other attendant consequences. We now have everybody with chainsaws going after all sorts of opportunities, and that’s really where the potential for crises can emerge.
Until we’ve learned how to develop better technologies, I think we’re going to keep seeing more crises. There’s a good chance we’ll see a pretty important shock wave coming out of Europe if they don’t get their act together with regard to European sovereign debt payday advance low fees.
But doesn’t a simple buy-and-hold strategy address a lot of these issues of risk?
Buy-and-hold doesn’t work anymore. The volatility is too significant. Almost any asset can suddenly become much more risky. Buying into a mutual fund and holding it for 10 years is no longer going to deliver the same kind of expected return that we saw over the course of the last seven decades, simply because of the nature of financial markets and how complex it’s gotten.
Okay, but even during the so-called lost decade (2000 to 2010) someone who regularly put money into a 60% stock/40% bond portfolio would have had about a 4% return. Why isn’t that good enough?
Think about how that person earned 4%. He lost 30%, saw a big bounce-back, and so on, and the compound rate of return over the period was 4%. But most investors did not wait for the dust to settle. After the first 25% loss, they probably reduced their holdings, and only got part way back in after the market somewhat recovered.
It’s human behavior. Ask actual individual investors what their net rate of return was over the last three years, and see if it’s the same rate returned by the market. I bet you it’s not.
So what choice do I have instead?
We’re in an awkward period of our industry where we haven’t developed good alternatives. Your best bet is to hold a variety of mutual funds that have relatively low fees and try to manage the volatility within a reasonable range. You should be diversified not just with stocks and bonds but across the entire spectrum of investment opportunities: stocks, bonds, currencies, commodities, and domestically and internationally.
Most of us didn’t sign up for the kind of volatility we’re seeing right now. So keep in mind that if you’re holding equities, you are probably taking more risk than you thought.
Does the government have a role in preventing these crises?
It’s not possible to prevent financial crises. But we can better understand what they are caused by, when they are likely to occur, and how we can prepare for them when they do happen.
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In the same way you cannot legislate away hurricanes, but you can do a lot to prepare for the worst of their effects. I believe we should have an independent agency to study crises, the way the National Transportation Safety Board looks at airline crashes.
Some 2,000 pages of regulations came out of the last crisis.
The Dodd-Frank Bill [which significantly strengthened financial regulations] was like a "Fire, ready, aim." It was a reaction. Now, some of that reaction was quite useful. But the laws that have been proposed, like the Volcker Rule [which would prevent banks from making some speculative investments], have hosts of unintended consequences that we won’t really understand for years until after those laws are actually implemented.
TORONTO
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