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Michael Michaud is the founder of Invest2Success.com (http://www.invest2success.com/) and the Invest2Success Blog (http://invest2success.blogspot.com/). He has been investing and trading in the financial markets since 1989. He founded Invest2Success.com to empower individual institutional... More
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  • Tesla Motors Beats Delivery Forecast With 52% Quarterly Surge

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    Tesla Rises After Second-Quarter Deliveries Top Forecast By Bloomberg

    Tesla Motors Inc. gained the most since April after the electric-car maker beat its car-sales forecast for the second consecutive quarter with a 52 percent surge in the three months through June.

    The shares rose 4 percent to $280.02 at the close in New York for the biggest daily advance since April 27. Tesla has climbed 26 percent this year, outpacing the Russell 1000 Index's 1.3 percent increase.

    Tesla delivered 11,507 Model S sedans in the second quarter, according to a statement of preliminary figures Thursday. The Palo Alto, California-based company predicted in May that it would sell 10,000 to 11,000 of the cars, its only model, during the period.

    The preliminary total brings first-half sales to 21,552, less than 40 percent of Tesla's full-year target of 55,000 vehicles. Output and deliveries are projected to increase with the introduction of the Model X sport utility vehicle this quarter.

    "Tesla still has to deliver on the Model X promise," Dan Dolev, a Jefferies LLC analyst, said in a telephone interview. With the Model S, "the execution is there, the demand is there, the delivery is there, so that all these areas are positive is encouraging."

    The company said that the second-quarter figure may be adjusted slightly and that quarterly financial results are also affected by cost of sales and other inputs.

    'Pretty Solid'

    "What has kept enthusiasm on the stock down after Q1 was that the guidance for Q2 did not show a lot of growth," Dan Galves, a Credit Suisse analyst, said in a telephone interview. "It made the back half look real tough. Now that you've done 15 percent growth versus Q1 it's pretty solid. The company only has to do maybe 13 percent per quarter on the back half now."

    Galves and Dolev both recommend buying the shares.

    The automaker, whose biggest shareholder is Chief Executive Officer Elon Musk, reworked its Model S lineup in April, replacing the cheapest version with an all-wheel-drive car costing 7.1 percent more at $75,000. Tesla also plans to begin selling a lower-priced third car in 2017.

    The company is building the world's largest battery factory near Reno, Nevada, to try to reduce costs and increase auto production to 500,000 in 2020.

    Tesla's first-quarter sales jumped 56 percent from a year earlier to 10,045 vehicles, exceeding the company's forecast by 5.7 percent. The second-quarter total was a record for the carmaker, which was founded in 2003 and began deliveries of the Model S in 2012. Tesla is also developing large-scale energy-storage systems for homes and businesses.

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  • US Jobs Report Shows Economy Continuing To Improve Slowly

    American Non-Farm Payrolls

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    Labor Market Runs in Place; More Jobs, Participation Lowest Since 1977 By Bloomberg

    The U.S. labor market took one step forward and one back in June as job creation advanced while wages stagnated and the size of the labor force receded.

    The addition of 223,000 jobs followed a 254,000 increase in the prior month that was less than previously estimated, a Labor Department report showed Thursday in Washington. The jobless rate fell to a seven-year low of 5.3 percent as people left the workforce.

    American Non-Farm Payrolls

    The figures indicate the economy is improving slowly following a first-quarter slump rather than surging ahead as consumer spending strengthens. That will probably keep Federal Reserve policy makers on course to raise interest rates later this year with subsequent increases coming only gradually.

    "The labor market is good, there's just not any wage pressure," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, who correctly projected the drop in unemployment. "The disappointment is on wages and on the participation rate."

    Earnings at private employers held at $24.95 an hour in June on average and rose 2 percent over the past 12 months, matching the mean since the current expansion began six years ago. Wages had increased 2.3 percent in the year ended in May.

    Seasonal adjustments, or a calendar bias, probably explained some of the downward pressure on the wage figures in June after artificially boosting them in May, according to economist Ted Wieseman of Morgan Stanley and Lou Crandall, chief economist at Wrightson ICAP LLC.

    Calendar Bias

    The Labor Department surveys employers for the week that includes the 12th of the month. That means the survey week last month ended on Saturday, June 13. Those getting paychecks bi-monthly would normally not be paid until the 15th, which has tended to distort the wage readings when the survey week comes so early, Wieseman in New York said in a research note.

    American Non-Farm Payrolls

    "We've got to pick up the pace on wages," Labor Secretary Tom Perez said in a phone interview. "There's still significant slack."

    Stocks fell, with equities posting their biggest weekly decline since March, as investors waited for Greece's weekend referendum on austerity measures. The Standard & Poor's 500 Index declined less than 0.1 percent to 2,076.78 at the close in New York. The weak wage reading lifted Treasuries, dropping the yield on the benchmark 10-year note to 2.39 percent from 2.42 percent late on Wednesday.

    The median forecast in a Bloomberg survey projected payrolls would advance 233,000. Estimates of 97 economists ranged from gains of 160,000 to 350,000 after a previously reported 280,000 increase for May. Revisions subtracted 60,000 jobs from the previous two months' readings.

    American Non-Farm Payrolls

    Jobless Rate

    American Non-Farm Payrolls

    The unemployment rate, which is derived from a separate Labor Department survey of households, was the lowest since April 2008, falling from 5.5 percent in May. The labor force shrank by 432,000 people last month, accounting for the bulk of the drop in joblessness.

    The participation rate, which indicates the share of the working-age population in the labor force, decreased to 62.6 percent, the lowest since October 1977, from 62.9 percent. Labor force participation slumped among teens, with a more moderate decrease among men 20 years and older.

    There were positive developments among those who had been struggling. The share of people out of work for 27 weeks or longer -- the so-called long-term unemployed -- dropped to 25.8 percent, the lowest since March 2009. The 2.8 point drop from May's 28.6 percent was the biggest one-month decrease since records began in 1948.

    Less Slack

    Also, the number of Americans working part-time for economic, rather than personal, reasons fell to 6.5 million, the fewest since 2008.

    That caused the underemployment rate, which includes discouraged workers who are no longer looking for a job and the part-timers who'd rather be full-time, to decrease to 10.5 percent, the lowest since July 2008, from 10.8 percent in May. The rate has dropped 1.5 percentage points over the past year compared with a 0.8 point decline in total joblessness.

    Such decreases in so-called slack are among reasons Fed policy makers may begin to raise the benchmark interest rate this year.

    Central bank officials want to see continued improvement in the job market and have confidence inflation will pick up before they raise the benchmark federal funds rate, which they have held near zero since December 2008. They have two more jobs reports before their September meeting.

    Consumer Spending

    Recent data underscore why employers are adding staff. Consumer purchases, which account for about 70 percent of the economy, rose 0.9 percent in May, the biggest gain since August 2009, Commerce Department figures showed last week.

    Households are feeling upbeat about employment prospects as more respondents than at any time since early 2008 said jobs were plentiful, a Conference Board report showed on Tuesday.

    A separate report from the Labor Department showed applications for unemployment benefits held below 300,000 for a 17th straight week. Jobless claims rose by 10,000 to 281,000 in the week ended June 27. The median forecast called for 270,000 applications.

    The US non-farm payroll data report is the largest economic report in the financial markets.

    The US non-farm payroll report is the monthly change in employment excluding the farming sector. Non-farm payrolls is the most closely watched indicator in the employment situation, considered the most comprehensive measure of job creation in the US. Such a distinction makes the NFP figure highly significant, given the importance of labor to the US economy. Specifically, political pressures come into play, as the Fed is responsible for keeping employment in a healthy range and utilizes interest rate changes to do so. A surge in new Non-farm Payrolls suggests rising employment and potential inflation pressures, which the Fed often counters with rate increases. On the other hand, a consistent decline in Non-farm Employment suggests a slowing economy, which makes a decline in interest rates more likely.


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  • Stronger US Job Market And Higher Wages

    US June Non-Farm Payroll Report Due Thursday July 02, 2105

    Stronger US Job Market and Higher Wages

    Lowest-Paid Americans Lead Wage Gains as Job Market Tightens at Fed By Bloomberg

    From the drive-through clerk at McDonald's to the greeter at Wal-Mart, unskilled workers are getting raises, signaling a broadening of labor market gains that could give Federal Reserve Chair Janet Yellen reason to begin raising interest rates this year.

    Average hourly earnings in industries paying less than $12.50 an hour a year ago rose 3.2 percent in the 12 months through April, about 1 percentage point more than wage growth for the job market as a whole, according to Goldman Sachs Group Inc.

    This development may be the start of a long-awaited catch-up for lower-wage workers, who suffered disproportionately during the recession and recovery. It is being driven in part by state governments raising their minimum wages, and also through voluntary decisions by companies to raise employees' pay.

    The Fed has been looking for evidence that improvement in the labor market isn't just confined to jobs in high-paying industries requiring specialized skills. Policy makers see continued wage increases as bolstering consumer spending and helping bring inflation up to the Fed's 2 percent target.

    "The Fed probably finds it encouraging that even the less skilled segments of the population are seeing wage gains," said Roberto Perli, a former Fed economist who is now a partner at Cornerstone Macro LLC in Washington. "It's another sign that slack in the labor market is diminishing."

    Payrolls Report

    Central bank leaders will get another read on the job market Thursday, when the government issues its monthly payrolls report a day earlier than usual because of the U.S. Independence Day holiday.

    Employers probably added 230,000 jobs in June, above the monthly average for 2015, and the unemployment rate dropped to 5.4 percent from 5.5 percent, according to the median forecasts of economists surveyed by Bloomberg News.

    The declining unemployment rate doesn't provide a complete picture of the job market, Yellen said in a press conference on June 17.

    "There appear to be unusually large elements of slack," she said. Among them: Some 6.7 million Americans were working part-time for economic reasons in May, well above the 5.5 million average since 1995.

    Hopeful Sign

    Yellen cited "tentative signs of stronger wage growth. I think it's not yet definitive, but it is a hopeful sign."

    Lower-wage workers suffered more than others during and after the 18-month recession that ended in June 2009. The unemployment rate for U.S. workers with only a high school education peaked at 11 percent and remained at 5.8 percent in May. For those with a bachelor's degree or more, unemployment peaked at 5 percent and has fallen to 2.7 percent.

    Atlanta Fed researchers found the biggest wage gains following the recession went to full-time workers and those with college educations. Now, those at the low end of the pay scale are catching up, according to a new wage-tracking index that the Atlanta bank introduced this week.

    "A lot of the wage increases happening now are going to people who basically haven't got a raise in five years," said Ethan Harris, co-head of global economics research at Bank of America Corp. in New York.

    Wal-Mart Workers

    McDonald's Corp. announced plans in April to increase pay at U.S. company-owned stores by at least $1 above the local minimum wage. Wal-Mart earlier this year increased the pay of U.S. workers to at least $9 an hour. That was followed by pay raises at Target Corp. and TJX Cos.

    Raising wages has helped Wal-Mart Stores Inc. retain workers and attracted more job applicants, Greg Foran, president of Wal-Mart's U.S. operations, said at a meeting with investors in June.

    "That low-wage workers are getting bigger pay increases signals a broader acceleration in wage gains," said Mark Zandi, chief economist at Moody's Analytics in West Chester, Pennsylvania.

    The Federal Open Market Committee repeated in June it will raise rates from near zero when there is "further improvement in the labor market" and it is confident inflation will return to the 2 percent goal. Zandi expects that in September.

    The median estimate of all 17 FOMC officials' quarterly projections for the benchmark federal funds rate implied two rate rises in 2015. The number of officials forecasting fewer than two moves mounted to seven from three in March.

    Broader Demand

    ManpowerGroup Inc. has started to see "some wage inflation" with broader demand for workers across industries.

    "The hot skills are getting good wage increases and they have been for some time," said Jeffrey Joerres, executive chairman of Milwaukee-based ManpowerGroup. "We're starting to see some wage increases in general manufacturing jobs, service jobs, call center jobs, slowly across the board."

    Some of the wage gains have been prompted by government actions. The minimum wage was raised in 20 states from Hawaii to Connecticut on Jan. 1, according to the National Conference of State Legislatures.

    The gains by the lowest paid represent a turnabout as employers have offered increasing pay incentives for college-educated workers.

    "For three decades, there have been long-term increasing premiums for education," said Enrico Moretti, University of California, Berkeley economist who has studied wages of workers by education. "I don't think this is a reversal but they are making up a little bit of lost ground."


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    Jul 01 10:38 PM | Link | Comment!
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