What Is Important in the Financial World (4/29/2013)
Consumer Confidence in Europe
In another blow to the recovery of the European economy, consumer confidence across the region fell in April. The reading was the lowest since December and is another marker that whatever brief recovery there might have been late last year is over. Europe's number can be added to evidence in the United States that its economic activity has slowed. That leaves the world's two largest economies tipping more negative. (The EU is often measured as on nation for GDP measurement purposes). Some data out of China show that its normally white hot economy has flagged also. Bloomberg said of economic confidence in Europe:
Economic confidence in the euro area decreased more than economists forecast in April as the 17- nation currency bloc struggled to emerge from a recession and the bailout of Cyprus renewed debt-crisis concerns.
An index of executive and consumer sentiment dropped to 88.6 from a revised 90.1 in March, the European Commission in Brussels said today. That's the lowest since December. Economists had forecast a decline to 89.3, according to the median of 26 estimates in a Bloomberg News survey.
Business confidence and investor sentiment in Germany, Europe's largest economy, dropped more than expected in April.
Avon Chairman Departs
In another sign that the nonexistent turnaround at Avon Products Inc. (NYSE: AVP) may be in even more trouble, its non-executive chairman, in office for only a few months, is leaving - without explanation. Avon's fortunes have been awful for two years, mostly because former CEO Andrea Jung ruined the company through wild expansion. Her replacement, Sheri McCoy, has done nothing to reverse the slide. Avon announced both Chairman Fred Hassan's departure (he severed his relationship so sharply that he will not stay on the board) and the name of his replacement:
Fred Hassan has resigned from the Avon Board of Directors in order to focus more time on his other professional commitments. Mr. Hassan serves as a non-executive chairman of Bausch + Lomb and is a Managing Director, Partner at Warburg Pincus LLC. He also serves on the Board of Time Warner, Inc.
Doug Conant, who currently serves on the Board, has been elected to the position of non-executive Chairman. Both are effective immediately.
"Avon is a great company and I am honored to have served on the Board of Directors," said Mr. Hassan. "However, my other professional commitments have intensified, requiring more focus. So I have decided it is in the best interest of Avon for one of my Board colleagues to take on the Chairmanship."
If he was so honored to serve, why did he leave so quickly?
Disappointing Corporate Revenues
Earnings may be up as U.S. public companies report their quarterly results. Revenues, however, are not. This may be a sign of trouble ahead, perhaps driven largely by a slowing in exports to Europe. The USA Today reports on U.S. corporate revenues:
Investors were hoping by this point in the economic cycle, companies would be able to find growth selling new products and services or tapping new customers. But in the first quarter, revenue is coming in 0.6% lower than in the year-ago period, down from the 0.9% growth expected at the beginning of the year, Butters says. Just 44% of companies have beaten revenue estimates, while 56% have missed, making it the third quarter in the past four with more cases of revenue falling short than coming in better than expected.
Much of the revenue weakness is hitting companies that rely most on Europe, says Sam Turner of RiverFront Investment Group. The biggest sources of upside revenue surprises have been sectors such as utilities and telecom, which don't rely on Europe, while large technology and industrials have been hurt most, Turner says. Of the 23 Dow Jones industrial average components to report so far, 15 have missed expectations, including International Business Machines, Caterpillar and United Technologies, Butters says.
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