Editor’s Note: This is the Paw Print Rewind, a daily recap of the top news headlines.
U.S. manufacturing contracts; rest of economy humming along
U.S. manufacturing contracted in November for the first time in three years as the sector buckled under the weight of a strong dollar and deep spending cuts by energy firms, but robust automotive sales suggested the economy is still on solid footing.
Other data released Tuesday showed a sturdy increase in construction spending in October.
“Manufacturing is being pummeled by the stronger dollar and the weakness of global demand, but the other 88 percent of the economy continues to perform well. This won’t prevent the Fed from raising interest rates at the mid-December meeting.”
-Steve Murphy, Capital Economics economist
According to the Institute for Supply Management, its national factory index fell to 48.6 last month from 50.1 in October. That’s the weakest reading since the recession ended in October. While a reading below 50 suggests a contraction in manufacturing, the index remains above 43.1, which is associated with a recession.
Factory activity has also been undercut by business efforts to reduce an excessive inventory build, which is putting pressure on new orders. According to the ISM, a gauge of new orders tumbled four percentage points to 48.9 last month.
Manufacturer inventories continued to shrink and their customers reported stocks of unsold goods were too high for a fourth consecutive month.
10 out of 18 manufacturing industries, including apparel, machinery, primary metals, electrical equipment, appliances, components, and computer/electronic products reported contractions in November. Five industries reported growth.
According to Autodata, auto sales have dipped to a seasonally adjusted annualized 18.19 million-unit pace from October’s 18.24 million rate.
Zuckerberg giving 99 percent of shares to charity
Facebook CEO Mark Zuckerburg and his wife Priscilla Khan said Tuesday that they will give away 99 percent of their Facebook shares, currently worth $45 billion, to a new charity in a letter addressed to their week-old daughter Max.
The Chan Zuckerburg Initiative aims to “advance human potential and promote equality,” according to a post Zuckerburg made on his Facebook page.
The limited liability company will begin by focusing on personalized learning, curing disease, Internet connectivity, and community building.
Zuckerberg still plans to remain Facebook’s CEO for “many, many years to come,” and Facebook expects him to be the company’s controlling shareholder for the foreseeable future.
U.S. CEOs cautious on economy for third consecutive quarter: poll
For the third consecutive quarter, U.S. CEOs expressed growing caution about the country’s economic prospects in the short term and more expected to curtail capital investments over the next six months, according to a survey released on Tuesday.
The Business Roundtable CEO Economic Outlook Index – a composite of CEO projections for sales, investment and hiring plans over the next six months – fell 6.6 points to 67.5 in the fourth quarter, its lowest level in three years.
The index’s long-term average is 80.1 points.
The survey by Business Roundtable, an association of leading U.S. companies’ CEOs, found expectations for sales and plans for capital expenditure both fell. Hiring plans remained consistent.
Of the 140 CEOs surveyed, 60 percent of them expected sales to increase over the next six months, down from 63 percent in the previous quarter.
The proportion of CEOs that expected their capital spending to decrease over the next six months rose to 27 percent from 20 percent in the third quarter.
“Capital spending as a percentage of the U.S. economy is at historically low levels. We’re hampering and we’re burdening capital investment in the U.S.”
-Randall Stephenson; Business Roundtable chairman, AT&T CEO
Cyber Monday sales top $3 billion
Shopping on mobile devices soared on Cyber Monday, accounting for over a quarter of the $3 billion in sales on the day, but many online retailers struggled to get mobile shoppers to do so as much as those on desktops.
Bigger discounts and strong demand for toys and electronics made Cyber Monday the biggest ever day for online sales in the United States, according to Adobe’s Digital Index report.
The report was based on data from 200 million visits to 4,500 retail websites on the busiest day of the year for Internet sales.
According to Adobe, shoppers using mobile devices accounted for 26 percent of total online sales, up from 19 percent a year earlier.
According to IBM’s Watson Trend report, mobile traffic accounted for 47.9 percent of all online traffic, compared to 41.2 percent last year.
Top-selling items included Lego Star Wars collections, the Barbie Dream House, Samsung’s 4K television sets, and Apple’s iPad mini.
According to Adobe, Star Wars toys were among the items most frequently out of stock.
According to IBM, the average order value from online shoppers was $123.43, down 0.6 percent from last year due to a rise in mobile shoppers.
On average, mobile shoppers spent $102.02/order, well below the $128 spent by desktop users.
Only 2.19 percent of visits to websites resulted in a sale, compared with 2.18 percent last year.
“The fact that we haven’t improved the mobile conversion rate is a little depressing to be honest.”
-Scot Wingo, ChannelAdvisor executive chairman
Cyber Monday refers to the Monday after Thanksgiving where workers return from the Thanksgiving holiday, and can take advantage of their work’s high-speed connections.
According to Adobe, the average discount on items sold on Cyber Monday was 21.5 percent.
Among participants, Amazon stood out with a 21.1 percent rise in Cyber Monday sales, according to e-commerce software provider ChannelAdvisor. According to e-commerce analysis company Clavis Insight, Amazon’s discounts averaged 40 percent.
Bosch sued over alleged role in VW diesel emissions
Bosch has been accused of conspiring with Volkswagen to evade diesel emissions standards in at least 11 million vehicles worldwide in a class action lawsuit filed late Monday.
The lawsuit filed by a New York diesel owner in Detroit’s U.S. District Court named Bosch – the world’s largest auto supplier – along with VW, former VW CEO Martin Winterkorn, and VW U.S. chief Michael Horn.
“Volkswagen’s fraudulent scheme was facilitated and aided and abetted by defendant Bosch, which created the software used in Volkswagen’s defeat device.”
The lawsuit also accuses the parties of violating civil racketeering laws and consumer fraud.
Bosch also faces similar class-action lawsuits in Atlanta, Chicago, Cincinnati, Alabama, and Alexandria (Virginia).
“As early as 2007, Bosch warned Volkswagen that using its software in vehicles that were driven on the road would constitute a criminal offense. Nevertheless, Bosch proceeded to sell or license 11 million of the component devices to Volkswagen over the next seven years.”
The lawsuit cited a report from Germany’s Bild am Sonntag newspaper in September that said VW’s internal probe turned up a 2007 Bosch letter that also warned against the possible illegal use of Bosch-supplied software technology.
Under U.S. law, Bosch would be made a co-conspirator under anti-racketeering laws, making the company liable for triple damages for the fraud caused to U.S. consumers, according to the lawsuit.
A U.S. judicial panel will meet in New Orleans today to consider consolidating more than 350 lawsuits filed against VW in connection with the emissions scandal. VW and the Justice Department both want the lawsuits centralized in Detroit.
New York proposes banking rules to prevent illicit financing
New regulations proposed by New York Governor Andrew Cuomo on Tuesday would require banks operating in the state to adopt rigorous measures to prevent money laundering and the financing of terrorism.
The proposed regulations will, among other things, require a bank’s chief compliance officer to certify whether a bank maintains the types of systems outlined in the rule to detect and prevent illicit money transfers, according to New York’s Department of Financial Services (NCDFS), the state’s financial regulator, which is writing the rules.
According to the proposal, chief compliance officers could face criminal penalties for filling false certifications.
According to NYDFS, the regulations stem from “serious shortcomings” uncovered during a series of investigations over the past four years focusing on terrorist financing and anti-money laundering compliance at financial institutions that have branches in New York.
“A lack of robust governance, oversight, and accountability at senior levels of these institutions has contributed to these shortcomings.”
The proposed rules, which would also require beefing up computerized programs that automatically block transactions by suspicious individuals, are similar, though not exactly the same, as existing federal regulations, according to American Bankers Association lawyer Rob Rowe.
New York’s proposed requirements would create new responsibilities solely for New York state-chartered banks.
According to Rowe, the new state-specific requirements could lead to confusion and gaps that criminals could exploit.
Banks have 45 days to comment on the proposal.
DoubleLine Capital posts 22nd straight month of inflows
DoubleLine Capital, the investment firm with $80 billion in assets overseen by widely followed co-founder Jeffrey Gundlach, posted net inflow of $1.08 billion in November, the 22nd month it has attracted new money.
The Los Angeles-based company had a net inflow of $895.2 million in November. The fund, with $51.07 billion in total assets, primarily invests in mortgage-backed securities.
DoubleLine Total Return is posting returns of 2.53 percent so far this year, beating 99 percent of its category. The DoubleLine Core Fixed Income is posting returns of 1.47 percent, surpassing 92 percent of its category. Gundlach oversees both funds.
The $5 billion DoubleLine Core Fixed Income Fund also attracted new money last month.
DoubleLine Core, which actively allocates among different sectors of the fixed income market like corporate bonds and loans, emerging markets debt, Treasuries, and MBS, received $100.6 million in November, for a year-to-date net inflow of $1.58 billion.
“Before the events of September 2014 down in Newport Beach, the DoubleLine Core Fixed Income Fund averaged net inflows that years of about $35 million a month. Now the fund this year has been averaging monthly net inflows of about $100 million.”
-Loren Fleckenstein, DoubleLine analyst