Via The New York Times

Despite recent improvement in the job market, the Federal Reserve needs to continue its stimulus efforts to avoid endangering the recovery, the Fed chairman, Ben S. Bernanke, told Congress on Wednesday.

While acknowledging the risks of historically low interest rates and the Fed’s aggressive policy of buying government bonds to help stimulate the economy, Mr. Bernanke said in testimony that “a premature tightening of monetary policy could lead interest rates to rise temporarily but also would carry a substantial risk of slowing or ending the economic recovery.”

After his opening statement, however, Mr. Bernanke seemingly opened the door a bit wider to tapering down.

Under questioning by Representative Kevin Brady, a Texas Republican who chairs the Joint Economic Committee, Mr. Bernanke said the Fed could prepare to “take a step down” in the next few meetings if the outlook for the labor market improved.

“It’s dependent on the data,” he said. “If the outlook for the labor market improves, we would respond to that.”

Mr. Brady asked if the tapering could begin before Labor Day, prompting Mr. Bernanke to say, “I don’t know.”

“We are buying a certain amount of assets each month,” he continued. “We are looking for increased confidence and in steps respond to that.”

[Full article here]

Via Bloomberg.com

New-home construction in the U.S. jumped more than forecast in March as multifamily projects climbed to the highest level in more than seven years.

Starts climbed 7 percent to a 1.04 million annual rate, the most since June 2008, after a revised 968,000 pace in February that was larger than previously reported, Commerce Department figures showed today in Washington. The median estimate of 80 economists surveyed by Bloomberg called for 930,000. Building permits, a proxy for future construction, fell.

Builders are rushing to satisfy growing demand for rental units, propelling the jump in construction that will help support economic growth. Work began on fewer single-family houses last month, adding to evidence that part of the market is pausing.

“Whether it’s driven by demand from homebuyers or renters, it doesn’t really matter because it’s roofs over peoples’ heads,” said Aneta Markowska, chief U.S. economist at Societe Generale in New York, who had the highest starts forecast in the Bloomberg survey. “There’s still a lot of room for improvement in housing, both for activity and for prices. This is critical for the U.S. economy.”

The cost of living in the U.S. declined in March for the first time in four months as cheaper gasoline and clothing kept inflation in check, another report today showed. The consumer- price index dropped 0.2 percent after a 0.7 percent jump in February, according to data from the Labor Department.

[Full article here]

Via The Wall Street Journal

Goldman Sachs Group Inc. GS -1.88% posted higher profits for the first quarter, but the bank’s cautious tone sapped investors’ confidence for a strong 2013.

First-quarter net income rose 7.2%, as revenue gains from the underwriting businesses overcame a drop in trading results. Goldman posted a profit of $2.26 billion, compared with a year-earlier profit of $2.11 billion. Earnings per share—reflecting the payment of preferred dividends—stood at $4.29 from $3.92.

Net revenue, including net interest income, edged up 1.4% to $10.09 billion. Analysts polled by Thomson Reuters expected per-share earnings of $3.88 on revenue of $9.72 billion.

But Goldman’s shares slipped $4.17, or 2.9%, to $142.29 in midmorning trading in New York, as Wall Street dialed into the bank’s conference call to hear its chief financial officer, Harvey Schwartz, describe a quarter that began with very promising economic data that emboldened clients. By March, Mr. Schwartz said, concerns for Europe’s economies and a prolonged budget impasse in the U.S. “impacted client activity and risk appetite.”

Although investment-banking revenue rose sharply from a year ago and more trading clients returned to the markets in early 2013 from late last year, Goldman officials sounded wary. The New York-based bank pared its expenses, including compensation costs, during what is typically one of the busiest quarters for Wall Street.

[Full article here]

Via Bloomberg

Tyco International Ltd.’s slimmed- down focus on commercial fire and security products coupled with its projected 52 percent profit growth is making the company takeover bait, again.

Tyco spun off its home-security and flow-control units in September, the company’s second breakup in five years. The separation whittled Tyco down to a business providing video- surveillance systems and smoke detectors in hotels and office buildings that analysts estimate will boost net income by 52 percent in the next two years. That’s the second-fastest rate among the 60 industrial companies in the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

The Swiss company’s dominant market share would bolster complementary building services at Schneider Electric SA, Siemens AG or General Electric Co., said FBR & Co. Almost two years ago, Bloomberg News reported Schneider weighed a bid for Tyco. The company now may fetch at least $34 a share, according to Langenberg & Co., implying a takeover value of about $17 billion including net debt. While data compiled by Bloomberg show that would be the biggest industrial acquisition since Goodrich Corp. in 2011, Citigroup Inc. said a deal makes sense because U.S. commercial construction is starting to rebound.

[Full article here]

Via CNN Money

The tech bellwether announced Wednesday that it earned $2.7 billion on $12.1 billion in sales for the second fiscal quarter. Both up single-digit percentages over the year. Both figures beat analysts’ expectations. Cisco (CSCO, Fortune 500)shares lost about 2% in after-hours trading.

Cisco also continued to grow its impressive cash hoard, which now sits at $46.4 billion.

Cisco’s core switching and routing businesses make up roughly half the company’s revenue. But those sectors are declining, and the real story is in Cisco’s strategic services. Those divisions, which include data centers and online video services, are a smaller part of Cisco’s overall business, but they’re growing at a rapid clip.

That has helped Cisco, whose stock is trading right around its 52-week high, fare significantly better than its main rivals.

[Full article here]