'Mother' Jones; More Taper Caper; P&G CEO Shelved
Recapping the day's news and newsmakers through the lens of CNBC.
Don't Let Your Daughters Grow Up to Be Traders
It appears that hedge fund heavyweight Paul Tudor Jones is working from the notes of Larry Summers with his controversial comments that women will never surpass men as great investors or traders. He went so far as to link the life-changing, emotional experience of breastfeeding, one he admits a man will never fully understand, to a sudden change in priorities for women and leading to an unwillingness or lack of desire to understand why investments will go up or down.
Jones' controversial comments were made at a University of Virginia symposium last month, but were just released publicly. He later apologized, saying "my remarks offended."
"My off-the-cuff remarks at the University of Virginia were with regard to global macro traders, who are on call 24/7 and of whom there are likely only a few thousand successful practitioners in the world today. I believe great success is possible in any field […] as long as a woman or a man has the skill, passion and repetitions to work through the inevitable life events that arise along with way."—Jones, founder of Tudor Investment Corp.
The Taper Caper
Testimony by Fed Chairman Ben Bernanke on Wednesday continued to color market movements. Even moderately positive durable goods orders (see below) could be construed as bad news when viewed through the taper lens. Accordingly, St. Louis Federal Reserve CEO James Bullard was enlisted to assuage traders and economists and say that when the Fed finally does start tapering, it will most likely be a very gradual process.
Bullard said that when and how fast tapering happens will depend on how the data evolve and won't just be a single, nasty dose of medicine. And reversing course will be an option depending on how it goes. He added that U.S. inflation is still too low (at about 1 percent for the last year) for the taper to start.
Meanwhile, with all this taper talk, pundits are being asked to speculate on just when it will go down, which, no surprise, is all over the calendar. It'll depend on jobs, most agree.
"What I'd like to see if we do start tapering is that we go in relatively small amounts, that we just lower the pace of purchases so movement is in response to data and we allow more data to come in and affirm the direction that we think the economy might be going in."— Bullard.
"I think the key is jobs. I think the key threshold is 200,000 in monthly job gains on a consistent basis, say, on a 12-month moving average basis. At the moment we're at 175 and it feels like we're moving down to 150 as opposed to moving up to 200. I don't see them doing any tapering until the end of the year."— Mark Zandi, chief economist at Moody's Analytics.
P&G CEO Shelved
Procter & Gamble, the world's largest consumer products company, announced a switch in its CEO seat, with the return of the legendary A.G. Lafley and the exit of Bob McDonald, who spent 33 years in all with the company.
McDonald, who faced a storm of criticism from unhappy shareholders, most notably hedge fund manager Bill Ackman of Pershing Square Capital, will retire at the end of June. McDonald alluded to the attacks on his management in a letter obtained by CNBC.
Last October, Ackman referred to P&G as one of the greatest companies of all time, but called P&G "very fat and very bloated" under the current leadership. Ackman owns a significant stake in the consumer products company.
Lafley was CEO of P&G from 2000 to 2009.
"When we get to a point where too much attention becomes a distraction, it's time to change that dynamic."--McDonald, in a letter obtained Friday by CNBC.
"I think McDonald is very focused on keeping his job and succeeding, that's a good dynamic. … I think the board wants to give a little bit more time and see if he can make some progress."—Ackman, on CNBC's Squawk Box last October.
"A.G. Lafley is one of the greatest CEOs and we're delighted to have him back."—Ackman, after the announcement of McDonald's retirement on Friday.
"He'll come in as any leader would and look at the culture, look at the pipeline of innovation, look at the leadership team, and I think that company is so full of great brands, great people and lots of cash. He'll step up the innovation and pace of decision making and I think you're going to have some great results."—Jim Stengel, president and CEO of consultancy The Jim Stengel Co.
Built to Last?
U.S. orders for durable goods pointed to economic growth holding steady this spring, bolstered by more demand for aircraft and robust business investment. Of course, that led to more speculation as to when the Fed will start tapering its $85 billion a month bond-buying program. So, more hand-wringing over how good news might actually mean bad news.
Overall, orders were up 3.3 percent in April, the Commerce Department said. That follows a 5.9 percent decline in March for orders on goods meant to last more than three years.
Machinery and electronics orders were both up last month, perhaps pointing to a greater level of confidence and leading to less fear among investors that manufacturing could drag down the economy later in the year. Shrinking government spending and rising taxes had created anxiety that orders would shrink.
"What aspect of this is the failure [of the Fed] to communicate, to define what is 'substantial improvement?' Substantial compared to what? Improvement compared to when?"—Steve Liesman, CNBC senior economics reporter.
With a broad selloff this week in Asia and Europe, and Japan's aggressive moves over the past six months to devalue its currency, it's clear there's been a sea change among the world's central banks. With the European Central Bank and the central banks of Australia, New Zealand and Turkey all trying to weaken their currencies there can be only one counterpart, and that's the dollar, and that makes HSBC bullish on the U.S. dollar as the most likely winner of the currency war. But they'll have to tread lightly; a devaluation of more than 5-10 percent could provoke a reaction from the U.S.
"We believe the currency war will be a key element of the relative performance of currencies going forward. It is a development that points to a stronger dollar than we previously had penciled into our forecasts."—David Bloom, HSBC's global head of foreign exchange strategy.
_ By Doug Cubberley, Special to CNBC