On Tuesday, it was reported that Ruth Porat, the Chief Financial Officer of Morgan Stanley (NYSE:MS), has now been hired as the CFO for Google Inc. (NASDAQ:GOOGL). As Google invests in new projects such as internet connected eyeglasses and self-driving cars, this move is a clear indication that Google needs someone to rein in costs. At Morgan Stanley, Porat has been instrumental in executing effective cost cutting strategies. In fact, in 2015, the bank had cut its expenses by 29% of its revenue last year. That’s 34% down from their expenses in 2013. Meanwhile, costs at Google have escalated and last year, total expenses increased by 23.4% while revenue only grew 19%. After the announcement of Porat’s move, Google shares advanced on Tuesday by 2.5%. She will jump ship and start her new position on the 26th of May. How much Porat will be paid by Google has not been revealed but according to public filings by the two companies, the total compensation of the departing CFO at Google, Patrick Pichette, for the 3 years through 2013 was at $62.2 million. Total compensation for the same period for Porat was at $29.6 million. Porat, aged 57, joined Morgan Stanley in 1987 and Jonathan Pruzan who is the co-head of the bank's global financial institutions group in investment banking, will now take Porat’s place as CFO.
For the 2nd straight day, U.S. stocks have declined. This comes in response to better than expected economic reports which have prompted investors to believe that the Federal Reserve will increase interest rates by as early as June. In their last policy meeting last week, Fed Chairwomen Janet Yellen made it very clear that their decision regarding when to hike interest rates would be “data dependent”. As a result, the Dow Jones Industrial Average (DJIA) declined 0.6%, or 104.90 points, to 18,011.14. Twenty four of the blue chip index’s 30 components finished lower. Also on the downside was the Nasdaq Composite index (COMP) which dropped 0.3%, or 16.25, at 4,994.73 while the S&P 500 index (SPX) declined 0.6%, or 12.92 points, to 2,091.50. While all 10 of the index’s sectors ended with losses, the homebuilder stocks rallied in response to positive U.S. new-home sales data which showed that sales in February marked the best month of sales in 7 years at an annual rate of 539,000.
After upbeat data on new home sales and U.S. consumer price inflation, the U.S. dollar (USD) traded higher. A report showed that new home sales in the U.S. increased to an annual unit rate of 539,000 in February, up 7.8 percent. According to the Commerce Department, this marked the highest level since February 2008. Also, in a separate report, the preliminary reading of the manufacturing PMI (purchasing managers' index) in the U.S. increased in March to 55.3 from 55.1 in February. This marked the highest level since October last year. Meanwhile, the greenback was also boosted after data showed that consumer prices in the U.S. increased in February by 0.2% after declining 0.7 percent in January. This was in line with expectations. In forex trading, the euro traded lower with EUR/USD trading at 1.0904, down 0.37%, off a session high of 1.1028. Against the British pound and the yen the USD traded higher with GBP/USD down 0.63% to 1.4861 and with USD/JPY up 0.12% to 119.87. Also, the U.S. dollar index was at 97.64, up 0.42 percent.
On Wednesday, in Asian trading, crude oil prices increased. This came after the markets reacted positively to the U.S. industry data which showed a sharp drop in the supplies of gasoline and distillate. According to their weekly report, the American Petroleum Institute stated that supplies of crude oil increased last week by 4.8 million barrels. Meanwhile, gasoline supplies dropped 2.6 million barrels while distillate stocks declined by 641,000 barrels. WTI crude oil for delivery in May traded at $47.48 a barrel, up 0.39% on the NYMEX. Also, on Tuesday, Brent oil for delivery in May traded at $55.13 a barrel on the Intercontinental Exchange (ICE), down 1.41 percent.