Stephanie Ruhle reports on Bloomberg the breaking news from the Third Point website of Dan Loeb who criticized the business model of the Sotheby’s. Loeb criticized the directors of Sotheby’s for being “short term investors” something Loeb himself has been accused of.
“We believe the Company’s slide is a consequence of failed leadership by a Board of Directors who collectively own a scant 0.87 % stake,” Loeb stated on his website, the Third Point.
Loeb’s long, seven-page letter is a response to a letter sent by Sotheby’s not just to Loeb but to also their shareholders. Sotheby’s letter stated that ‘Dan Loeb was unable to act constructively as a director, adding no relevant skills, experience or expertise.”
Loeb lobs it back, saying in his letter that Sotheby’s has made no sincere effort to cut costs, the money is going to the wrong place, the model they employ to attract listings so they don’t end up at Christies is all wrong. In addition, Loeb states,
“Sotheby’s current challenges are well-known consequences of poor corporate governance and malfunctioning board processes. Our view is that Sotheby’s sorely lacks innovation and creativity at its most senior levels and requires an infusion of leadership, accountability and transparency.”
The massive selloff has been at the forefront of headlines as investors continued profit-taking. Hardest hit were the so-called momentum stocks – the high flying popular companies like Amazon, Google, Priceline, and Teslar. Biotechnology companies have also ben affected by this. Analysts don’t seem to think this is the end of the Bull market, but rather an adjustment back to stocks with lower prices and better value. A few days ago the Federal Reserve released minutes of their March 19th meeting. Policy makers agreed to drop the unemployment target as a condition for raising rates. There was also a reiteration in the belief that the Federal will remain “very accommodating” in an attempt to keep the recovery on track. Thursday, jobless claims for the week ending April 5, were released at 300,000 a massive 32,000 drop from the prior week.
Chairman, President and CEO of the Red Apple Group, John Catsimatidis talks about Warren Buffett’s involvement in New York City real estate. In an interview Catsimatidis explained that if Buffet finds it good to invest in New York, it must be a good investment.
Asked whether rising rents make it harder to do business, Catsimatidis answered that yes, it is “very, very, hard to operate.” Rents for grocery stores are ten times higher in New York than just outside of the city. The high rents then cause the cost of the groceries to go up, and then there is a spiral of increasing prices which becomes a burden on the consumer.
Discussing the overhaul of property taxes in New York City Catsimatidis stated that although he would hesitate to raise taxes to single family home owners, but he also does not think it is a good idea to raise taxes and chase people away from New York.
RK Walker of Financial Buzz summarized the financial news for the week of February 14 from the New York Stock Exchange.
The beginning of the week started lackluster as the economy was waiting for a resolution to the stand-off by the federal government on the budget. Things picked up on Thursday when House Speaker John Boehner said that Republicans would be willing to temporarily increase the debt ceiling in exchange for discussions with President Obama about other budget and deficit issues. During these discussions it seems that Republicans are not so interested in taking away funding for Obamacare. The Dow Jones Industrial Average and the S&P 500 both rallied more than 2% on the news of the possibility of negotiations to end the government shut-down.
In what is good news for the stock market, President Obama nominated Janet Yellen to replace Ben Bernanke as the head of the central bank. Yellen is considered dovish, meaning that she supports the easy money of the Fed. Since Yellen’s nomination was already widely expected, there was not that much of an effect on the market.
Jobless claims had a huge spike this week, coming in at 374,000, however most of the increase is due to computer problems in California, so the numbers are not very reliable. Several reports that were due to come out this week, such as the Producer Price Index and the Retail Sales Report were delayed due to the government shut down.
Reporting from the New York Stock Exchange RK Walker reviews the previous week’s financial news. The previous week the S&P reached a record high, but the activity that followed could not sustain that momentum. There is a lackluster growth, but earnings continued to rise due to cost-cutting and by-backs.
Emerging market currencies fell against the dollar creating increased worry among investors, causing a drop in interest rates. In addition the “Flash purchasing manager’s index” for China fell to 49.6 in January, down from 50.5 in December. When the index falls below 50 it is an indication that the manufacturing sector is shrinking. This was China’s first reading below 50 in half a year.
The number of unemployed for the week ending on January 18 amounted to 326,000, just 1,000 more from the previous week. Increasing home sales went up by 1% in December to 4.87 million units.
In the realm of stocks, IBM took a dive after they released the report of their fourth quarter earnings. They reported a drop in revenue of 5% from $29.3 billion to $27.7 billion.