SKY News Summary 03-04-2010
Strong retail numbers are a very promising sign when combined with Tuesday’s ISM’s Manufacturing survey showing a growing backlog of orders.
The Mortgage Bankers Association released its Weekly Mortgage Applications Survey for the week ending February 26, 2010, showing the Index increased 14.6 percent from one week earlier, due mainly to refinancing. The refinance share of mortgage activity increased to 69.1 percent of total applications from 68.1 percent the week before, as rates dropped to 4.95 percent from 5.03 percent.
http://www.mbaa.org/NewsandMedia/PressCenter/72000.htm
ADP reported that employment decreased 20,000 from January to February 2010 on a seasonally adjusted basis, and was the smallest drop since employment began falling in February of 2008. ADP’s numbers are not affected by the weather, but they do not include the hiring of temporary Census workers which will by included in the BLS estimate out tomorrow.
http://www.adpemploymentreport.com/
U.S. chain store sales rose by a strong 3.7% on a comparable store basis last month, remarkable given February’s weather. Target comparable-store sales, for example, rose 2.4 percent. Nordstrom’s same-store sales rose 10.3 percent in February.
http://www.icsc.org/homepage/research_article.php?id=112
http://investors.target.com/phoenix.zhtml?c=65828&p=irol-newsArticle&ID=1398886&highlight=
http://phx.corporate-ir.net/phoenix.zhtml?c=93295&p=irol-newsArticle&ID=1398888&highlight=
Sources: MBAA, ADP, ICSC, Target, Nordstroms, and ISM websites.
SKY News Summary 03-02-2010
The data being released for the month of February shows the influence of major snow storms around the country. These numbers should make March numbers look great. The January numbers, however, seem to indicate slow improvement.
The ICSC-Goldman Sachs chain store sales index for the week ending February 27 declined by 0.8% on a week-over-week basis, but rose by 0.7% on a year-over-year basis. Given that most of the New England was covered in snow and without power, that number looks pretty good.
http://www.icsc.org/homepage/research_article.php?id=111
On March 5, the Labor Department will release the employment report for the month of February. The report however, is based on the pay period that includes February 12 and is usually just one-week’s worth of data. The week of February 12th, the nation was buried in snow which may significantly skew the “monthly” employment situation report.
http://www.bls.gov/ces/cesprog.htm#Reference_Period
http://www.erh.noaa.gov/lwx/events/?event=20100210
The Department of Commerce released January’s construction spending figures which showed a decline of 0.6 percent in total construction spending. The weakness, however, is in private nonresidential spending which dropped 2.1 percent. Private residential construction was actually up by 0.6 percent as was public highway construction, up 1.2 percent from December. It is interesting to note that, in January, total public construction spending was $306.9 billion, while total private construction spending was $577.3 billion.
http://www.census.gov/const/C30/release.pdf
Personal income increased $11.4 billion, or 0.1 percent, in January according to the Bureau of Economic Analysis. Disposable personal income (DPI) decreased $47.6 billion, or 0.4 percent reflecting an increase in federal income taxes. Farm wages (which dropped $7.9 billion, in contrast to an increase of $5.9 billion in December), rental income (which decreased $0.9 billion in January, in contrast to an increase of $1.9 billion in December), and investment income (which decreased $20.8 billion, in contrast to an increase of $11.0 billion) were partially offset by contributions for government social insurance which increased $16.7 billion in January, compared with an increase of $0.3 billion in December. Employer contributions were boosted by $10.2 billion in January by increases in unemployment-insurance rates. Personal saving — DPI less personal outlays — was $367.2 billion in January, compared with $467.9 billion in December. Personal saving as a percentage of disposable personal income was 3.3 percent in January, compared with 4.2 percent in December.
http://www.bea.gov/newsreleases/national/pi/2010/pi0110.htm
The ISM Manufacturing Survey shows a slight decline in new export and import orders, but a strong increase in backlog of orders which may indicate a rise in employment in the coming months. Backlog of orders rose from 56.0 to 61.0 in February.
http://www.ism.ws/ISMReport/MfgROB.cfm
Applied Materials 1Q2010
http://www.appliedmaterials.com/investors/assets/1Q10fin_web.pdf
CBS FY 2009
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzIyNDZ8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
Nestle FY 2009
http://www.nestle.com/Resource.axd?Id=4EF5E333-11BC-47A5-A1A0-754E8257559E
Target
http://investors.target.com/phoenix.zhtml?c=65828&p=irol-newsArticle&ID=1394056&highlight=
Medtronic
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzI1OTZ8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
Warren Buffett’s Chairman’s letter is always interesting to read:
http://www.berkshirehathaway.com/2009ar/2009ar.pdf
Sources: Bureau of Labor Statistics, Berkshire Hathaway, Masco, Medtronic, Target, CBI, Nestle, CBS, Applied Materials, NOAA, ICSC-Goldman Sachs, Bureau of Economic Analysis, Department of Commerce, and ISM Manufacturing websites.
SKY News Summary 02-23-10
Consumers used last week’s respite in the weather to shop. If the Consumer Confidence numbers are any indication, the small surge in retail which occurred last week, may retract if the consumers’ outlook and unemployment concerns weigh on consumer spending. The Consumer Confidence report may be our best indicator for reliable unemployment numbers, and bodes ill for the February jobs report. The Administrations’ resurrection of Healthcare reform and focus on passing a new Jobs Bill added more uncertainty to the business climate as seen in Paul Otellini’s (President and CEO of Intel) prepared remarks before the Brookings Institute today. Perhaps this is showing up in Consumer Confidence. Later in the week, we will hear from Fed Chairman Ben Bernanke with his semiannual testimony before Congress, and may also see Greece conduct a debt auction. New and existing home sales come out on Wednesday and Friday.
“The ICSC-Goldman Sachs (ICSC-GS) chain store sales index for the week ending February 20 rebounded by 2.3% from the prior week (for the week that included Valentine’s Day and Presidents’ Day) and rose by 0.9% on a year-over-year basis.”
http://www.icsc.org/homepage/research_article.php?id=106
The Conference Board’s Consumer Confidence Index which had risen last month, dropped dramatically this month from 77.3 in January to 63.8 this month. Of the 5,000 households surveyed, a miniscule 3.6 percent thought the jobs market was good while 47.7 percent thought jobs were “hard to get”. “The percentage of consumers expecting fewer jobs increased to 24.6 percent from 18.9 percent. Those anticipating more jobs will become available in the months ahead declined to 13.4 percent from 15.8 percent. The proportion of consumers anticipating an increase in their incomes declined to 9.5 percent from 11.0 percent.” The Present Situation Index decreased from 25.2 to 19.4 which is the lowest it has been since February 1983. (A level of 80 usually indicates economic expansion).
http://www.conference-board.org/economics/ConsumerConfidence.cfm
Remarks by Paul Otellini, President and Chief Executive Officer of Intel at the Brookings Institute on February 23, 2010
http://www.intel.com/pressroom/kits/investinamerica/Brookings_PaulOtellini_022310.pdf
In his remarks, Mr. Otellini mentions an article by Stephen Ezell which talks about the U.S. deficiency in information technology and its causes. Here is that article:
“Explaining International Mobile Payments Leadership”, by Stephen Ezell, November 17, 2009
http://www.itif.org/files/2009-mobile-payments.pdf
Industrial production showed real improvement last month increasing 0.9 percent following a gain of 0.7 percent in December. Manufacturing production made a turnaround, increasing 1.0 percent in January, with increases for most of its major components. Progress was especially notable in consumer durables, which increased 2.7 percent mainly on automotive products, which were up 5.1 percent. The largest gains in production among the major categories of non-energy nondurable goods were for clothing, foods and tobacco.
http://www.federalreserve.gov/Releases/g17/Current/
January’s spike in energy costs was responsible for a jump in January’s headline PPI which rose 1.4 percent. The index for finished energy goods rose 5.1 percent in January, its fourth consecutive monthly increase. About two-thirds of the advance can be attributed to an 11.5-percent jump in gasoline prices. Higher prices for pharmaceutical preparations also contributed to the increase in the finished core index.
http://www.bls.gov/news.release/ppi.nr0.htm
The January Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent, also due to a rise in the energy index. The core CPI fell 0.1 percent in January, due to decreases in the indexes for shelter, new vehicles, and airline fares. The medical care index posted its largest increase since January 2008, and the index for used cars and trucks increased significantly for the sixth month in a row.
http://www.bls.gov/news.release/cpi.nr0.htm
Sources: Bureau of Labor Statistics, Federal Reserve, The Information Technology & Innovation Foundation, Intel, NASDAQ calendar, Conference Board, ICSC-Goldman Sachs websites.
SKY News Summary 02-11-10
The snow storm has delayed the release of some important economic data this week and, once again, has skewed weekly unemployment claims data. The Treasury budget statement was postponed to next week. Retail Sales data and the Business Inventories data will be released on Friday, instead of Thursday. International Trade data was released on schedule.
The Department of Commerce’s International Trade data showed total December exports of $142.7 billion and imports of $182.9 billion resulting in a goods and services deficit of $40.2 billion, up from $36.4 billion in November, revised. The November to December increase in exports of goods reflected primarily an increase in capital goods ($1.8 billion). The increase in imports of goods reflected primarily an increase in industrial supplies and materials ($4.4 billion). The goods and services deficit was $380.7 billion in 2009, down from $695.9 billion in 2008. As a percentage of U.S. gross domestic product, the goods and services deficit was 2.7 percent in 2009, down from 4.8 percent in 2008.
http://www.bea.gov/newsreleases/international/trade/2010/trad1209.htm
The Mortgage Bankers Association‘s weekly index of purchase applications (for the week ending February 5th) decreased 1.2 percent on a seasonally adjusted basis from one week earlier. The Refinance Index, however, increased 1.4 percent from the previous week. The four week moving average for the seasonally adjusted Market Index is up 3.8 percent.
http://www.mbaa.org/NewsandMedia/PressCenter/71815.htm
The Department of Labor showed a dramatic decrease of 43,000 initial unemployment claims for the week ending Feb. 6, but acknowledges that this is due to finally eliminating the backlog of claims processed. This means that prior reported claims must have been significantly misstated. The 4-week moving average may be a better indicator of actual claims filed. This week’s 4-week moving average was 468,500, a decrease of 1,000 from the previous week’s revised average of 469,500.
http://www.dol.gov/opa/media/press/eta/ui/current.htm
Earnings:
Pepsi
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjYzMjY3N3xDaGlsZElEPTM2ODYyNnxUeXBlPTI=&t=1
UPS
http://www.investors.ups.com/phoenix.zhtml?c=62900&p=irol-newsArticleEarnings&ID=1381678&highlight=
Emerson Electric
http://emerson.com/en-US/news_center/news_releases/Pages/Emerson-First-Quarter-2010-Earnings-Results.aspx
Coke
http://www.thecoca-colacompany.com/presscenter/nr_20100209_corporate_fourth_qtr_earnings.html
Philip Morris International
http://media.corporate-ir.net/media_files/irol/14/146476/Q409PMIEarningsRelease.pdf
Proctor and Gamble
http://www.pginvestor.com/phoenix.zhtml?c=104574&p=irol-newsArticle&ID=1380094
Halliburton
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjgwNDl8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
BHP Billiton
http://www.bhpbilliton.com/bbContentRepository/docs/100210InterimResultsFy10Presentation.pdf
Becton Dickinson
http://phx.corporate-ir.net/phoenix.zhtml?c=64106&p=irol-newsEarningsArticle&ID=1380030&highlight=
Abbott Labs
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzY0MDY5fENoaWxkSUQ9MzU4NDk4fFR5cGU9MQ==&t=1
Southern Company
http://files.shareholder.com/downloads/SO/843106311×0x346835/0b5392d7-0cc1-4a3e-8297-629f4210f4a3/SO_Q4_2009_Earnings_Conf_Call_27JAN2010.pdf
Texas Instruments
http://investor.ti.com/releasedetail.cfm?ReleaseID=439997
Sources: TI, Southern Co., Merck, Abbott Labs, Becton Dickinson, BHP Billiton, Chevron, Halliburton, P&G, PMI, Walgreen, Diageo, Coke, Boeing, Emerson, UPS, Pepsi, DOL, MBAA, and BEA websites.
SKY News Summary 02-09-10
The most important economic news this week may actually come from Brussels. European Union leaders will hold a special economic summit, announced by EU President Herman Van Rompuy yesterday (his first day on the job), as the bloc hopes to deal with Greece’s debt crisis and its spread. Non-euro-zone countries, especially the UK and Sweden, argue that they should have a voice in the matter, since the crisis will influence their economies, and that the International Monetary Fund should be involved. The 16 euro-zone members see IMF involvement as a setback to European economic power and wish to support Greece in its efforts to curb spending.
Government spending is entrenched in Greece, with government workers accounting for about 40% of the country’s GDP. Per capita GDP is about two-thirds of the leading euro-zone economies. EU aid accounts for 3.3% of the country’s annual GDP. Greece’s budget deficit of 12.7% of GDP which violates the EU’s Growth and Stability Pact budget deficit criteria of no more than 3% of GDP. (The U.S. deficit is 11.2% of GDP). For these reasons, Fitch Ratings cut Greece’s debt rating to BBB+ from A- and Standard & Poor’s cut Greece’s sovereign credit ratings to A-/A-2.
Thursday’s summit brings together the EU heads of government and Jean-Claude Trichet, the European Central Bank president, in an effort to convince the Greek government to cut government spending, reduce the size of the public sector and reform labor and pension systems. Unfortunately, there has already been a backlash to announced austerity measures with farmers parking plows across the country’s major highway, tax collectors closing the tax office, and more public service workers striking tomorrow. It is feared that riots could break out over these reform efforts.
Meanwhile, the Financial Times reports that “traders and hedge funds have bet nearly $8bn (€5.9bn) against the euro, amassing the biggest ever short position in the single currency on fears of a eurozone debt crisis. Figures from the Chicago Mercantile Exchange, which are often used as a proxy of hedge fund activity, showed investors had increased their positions against the euro to record levels in the week to February 2. The build-up in net short positions represents more than 40,000 contracts traded against the euro, equivalent to $7.6bn. It suggests investors are losing confidence in the single currency’s ability to withstand any contagion from Greece’s budget problems to other European countries.”
http://www.reuters.com/article/idUSLDE6182B020100209
http://www.ft.com/cms/s/0/83de2cae-15a9-11df-ad7e-00144feab49a.html?catid=2&SID=google
http://www.ft.com/cms/s/0/0330ba78-149f-11df-9ea1-00144feab49a.html
https://www.cia.gov/library/publications/the-world-factbook/geos/gr.html
http://www.cbo.gov/ftpdocs/105xx/doc10521/2009BudgetUpdate_Summary.pdf
ICSC- Goldman’s index showed chain store sales up 1.4% in the week ending February 6 as people stocked up on grocery items before the winter storm (61% of the nation was covered in snow this week). Year-over-year numbers are skewed by the change in the date of the Super Bowl which was on February 1 last year (its effects would be recorded in numbers for this week last year). The Commerce Department comes out with retail sales for January on Thursday.
http://www.icsc.org/homepage/research_article.php?id=103
http://www.nasdaq.com/asp/econodayframe.asp?page=http://anasdaq.econoday.com/byweek.asp?cust=nasdaq
Earnings:
UBS 4Q 2009
http://www.ubs.com/1/e/investors/releases.html?newsId=174737
Sources: ICSC, NASDAQ, UBS, CBO, CIA, Financial Times, Reuters websites
SKY News Summary 02-04-10
The usual post-recession cycle begins with increased productivity, indicated by increased output and hours worked. Companies hold back as long as possible before they add employees, the next part of the cycle, and finally they raise wages. Today’s productivity numbers show a steep increase, but it looks like we have not entered the second phase of the cycle, as employment continues to decrease. The Department of Labor’s important Employment Situation report for the month of January will be out tomorrow: But today, the DOL’s weekly report, ADP, and Monster all reported decreased employment. The government’s initial jobless claims figure for the week ending January 30 increased by 8,000, while the continuing claims for the week ending January 23 increased 2,000 decreasing the 4-week moving average by 51,250 to 4,617,500. ADP showed unemployment increasing 22,000 for the full month of January which was its smallest increase in unemployment since February 2008. The service-producing sector actually increased jobs by 38,000, although the goods-producing sector dropped 61,000 jobs. Monster’s online jobs data showed recruitment activity down 3 percent from January of last year. It also showed reduction in construction and wholesale trade recruitment, but an increase in job offerings in education, arts, entertainment and recreation.
http://www.dol.gov/opa/media/press/eta/ui/current.htm
http://www.adpemploymentreport.com/
http://about-monster.com/sites/default/files/employment-index/MonsterLEI_NY_Jan10.pdf
Presentations:
ConocoPhillips at the Credit Suisse 2010 Energy Summit
Exelon at the Credit Suisse 2010 Energy Summit
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjcxNzc5NnxDaGlsZElEPTM2NzE4MnxUeXBlPTI=&t=1
ExxonMobil 4Q 2009
http://www.exxonmobil.com/Corporate/Files/news_release_supp4q09.pdf
Fifth Third at the Morgan Stanley U.S. Financials 2010 Conference
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzY2OTk4fENoaWxkSUQ9MzYyMTg2fFR5cGU9MQ==&t=1
HP 2009 Annual Report
http://media.corporate-ir.net/media_files/irol/71/71087/AR2009/HTML2/default.htm
Roche
http://www.roche.com/media/media_releases/med-cor-2010-02-03.htm
Royal Dutch Shell 4Q and full year 2009
Spectra Energy 4Q and full year
http://www.spectraenergy.com/news/releases/2010/feb/20100204_01.pdf
The Air Force has awarded IBM a contract to design and demonstrate a secure cloud computing infrastructure capable of supporting defense and intelligence networks. The ten-month project will introduce advanced cyber security and analytics technologies developed by IBM Research into the cloud architecture.
http://www-03.ibm.com/press/us/en/pressrelease/29326.wss
Sources: IBM, Spectra Energy, Royal Dutch Shell, Roche, HP, Fifth Third, Exxon Mobil, Exelon, ConocoPhillips, BP, Cisco, Monster, ADP, DOL websites.
SKY News Summary 02-02-10
The University of Michigan/Reuters Consumer Sentiment survey showed that consumers were more optimistic than they have been for two years. The consumer sentiment index rose 2.6% from 72.5 in December to 74.4 in January.(The Consumer Sentiment report was more positive than last Tuesday’s Consumer Confidence report which is generated by the Conference Board and does not include the last week in January.) The January reading was 21.6% better than the year before. The report notes that, “…consumers feel quite vulnerable given the still fragile condition of their investments and reserve funds, the burden of their debts, especially those underwater on their mortgages, the negative impact of foreclosures and bankruptcies on their communities, and the impact of continued credit constraints that limit their flexibility. Although recent gains have extended to buying plans, it is still true that job and income uncertainty dominates purchase plans to a significant extent.” Diving deeper into the facts behind consumer sentiment, we find that consumer debt has, in fact, been paid down to 2007 levels and, according to RealtyTrac’s Year-End 2009 Foreclosure Market Report, foreclosure filings were up 21 percent year-over-year and 120 percent from 2007. Although it is difficult to ascertain the extent to which credit constraints limit the consumer, it is clear that credit issues are guiding their spending decisions.
https://customers.reuters.com/community/university/default.aspx
http://www.federalreserve.gov/releases/g19/hist/cc_hist_sa.txt
http://www.realtytrac.com/contentmanagement/pressrelease.aspx?itemid=8333
Personal income increased $44.5 billion, or 0.4 percent, and disposable personal income (DPI) increased $45.9 billion, or 0.4 percent, in December, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $22.6 billion, or 0.2 percent. In November, personal income increased $61.1 billion, or 0.5 percent, DPI increased $60.7 billion, or 0.5 percent, and PCE increased $69.1 billion, or 0.7 percent, based on revised estimates. Wages increased $6.3 billion in December, due mostly to services-producing industries’ payrolls, which increased $11.5 billion, compared
with an increase of $22.3 billion in November. Government wage and salary disbursements increased $2.9 billion, compared with an increase of $1.8 billion. Personal saving — DPI less personal outlays — was $534.2 billion in December, compared with $506.3 billion in November. Personal saving as a percentage of disposable personal income was 4.8 percent in December, compared with 4.5 percent in November.
http://www.bea.gov/national/nipaweb/Nipa-Frb.asp.
The ISM Report on Business showed the manufacturing sector expanding in January for the sixth consecutive month with 13 of 18 industries reporting growth, up from nine industries last month. January ISM’s New Orders Index registered 65.9 percent in January, a 1.1 percent increase from December. This is the seventh consecutive month of growth in the New Orders Index. “The 14 industries reporting growth in new orders in January — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Machinery; Wood Products; Paper Products; Food, Beverage & Tobacco Products; Primary Metals; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Transportation Equipment; Fabricated Metal Products; Computer & Electronic Products; and Chemical Products. The four industries reporting decreases in new orders in January are: Furniture & Related Products; Petroleum & Coal Products; Plastics & Rubber Products; and Printing & Related Support Activities.”
http://www.ism.ws/ISMReport/MfgROB.cfm
The Washington Post ran an article today about the solvency of the Federal Housing Administration, a government agency that insures a third of the home-purchase mortgage market with 80 percent of its purchase loans from first-time homebuyers. According to the article, “about 9.1 percent of FHA borrowers had missed at least three payments as of December, up from 6.5 percent a year ago…” “The agency had to pay out on 47 percent more loans in October and November than in the corresponding period a year earlier, according to an FHA report. The number of loans in foreclosure, including those that have not yet been billed to the agency, has also increased. They were up 26 percent in the last quarter from a year earlier.” The article continues, “If the trend continues and the FHA’s cash reserves are exhausted, the federal government would automatically use taxpayer money to cover the losses — a first for the agency, which has always used the fees it charges borrowers to pay for its losses.” Two testimonies of FHA employees, one by David H. Stevens Assistant Secretary for Housing/FHA Commissioner U.S. Department of Housing and Urban Development in a hearing before the Subcommittee on Housing and Community Opportunity, U.S. House Committee on Financial Services on October 8, 2009, and the other by Kenneth M. Donohue Inspector General Department of Housing and Urban Development, before the Committee on Financial Services Subcommittee on Oversight and Investigations, United States House of Representative give good insight into the problem. Mr. Stevens looks at the agency and how it got into its troubles, while Mr. Donohue discusses the complexities of managing fraud with the agency’s limited number of employees responsible for its “$45+ billion annual budget and… mortgage insurance premiums. Recently, the Department also received over $13 billion in the American Recovery and Reinvestment Act funding for various programs to stimulate the economy. This is in addition to the almost $4 billion received for the Neighborhood Stabilization Program in July 2008.”
http://portal.hud.gov/portal/page/portal/HUD/press/testimonies/2009-06-18
http://www.house.gov/apps/list/hearing/financialsvcs_dem/stevens_testimony_-_hud.pdf
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/01/AR2010020103527.html?hpid=topnews
Pending home sales increased 1.0 percent to 96.6 from 95.6 in November, and remains 10.9 percent above December 2008 when it was 87.1, but is still low due to the expected expiration of the first-time home buyer tax credit. It is important to note that buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30, 2010, to finalize the transaction to qualify for a tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.
http://www.realtor.org/press_room/news_releases/2010/02/stabilize_remain
Sources: NAR, Washington Post, HUD, House of Rep, ISM, BEA, RealtyTrac, University of Michigan/Reuters, Federal Reserve Websites.
SKY News Summary 01-28-10
The news continues to be better-than expected corporate earnings and slowly, haltingly, improving economic numbers.
Today’s report on new home sales in December paralleled the report on existing home sales out last Tuesday. Unemployment, tight credit markets, and the bunching of sales before the expiration in the tax credit had a negative effect on new home sales. Sales of new one-family houses in December 2009 were 7.6 percent below the revised November rate and 8.6 percent below the December 2008 estimate of 374,000. To get a sense of the historical significance of this number, please see: http://www.census.gov/const/stagemon.pdf
http://www.census.gov/const/newressales.pdf
The Federal Open Market Committee meeting left interest rates unchanged. The committee found that “economic activity has continued to strengthen and that the deterioration in the labor market is abating. Household spending is expanding at a moderate rate but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software appears to be picking up, but investment in structures is still contracting and employers remain reluctant to add to payrolls. Firms have brought inventory stocks into better alignment with sales. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability. With substantial resource slack continuing to restrain cost pressures and with longer-term inflation expectations stable, inflation is likely to be subdued for some time.”
http://www.federalreserve.gov/newsevents/press/monetary/20100127a.htm
The Census Bureau reported that durable goods in December increased $0.5 billion or 0.3 percent to $167.9 billion following two consecutive monthly decreases. Excluding transportation, new orders increased 0.9 percent.
http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf
Jobless claims fell by 8,000 in the Jan. 23 week to 470,000 and the four-week average rose by 9,500 for the second straight week. Continuing claims for the Jan. 16 week fell 57,000 to 4,602,000.
http://www.dol.gov/opa/media/press/eta/ui/current.htm
AT&T 4Q 2009 Earnings Presentation
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjU4OTUwOXxDaGlsZElEPTM2NjI4OXxUeXBlPTI=&t=1
ITW 4Q 2009 Earnings Presentation
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzY2MjQ4fENoaWxkSUQ9MzYxMTM0fFR5cGU9MQ==&t=1
Danaher 4Q 2009 results
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjgyMzZ8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
Lilly 4Q and full year 2009
http://newsroom.lilly.com/releasedetail.cfm?ReleaseID=441003“>http://newsroom.lilly.com/releasedetail.cfm?ReleaseID=441003
T Rowe
http://trow.client.shareholder.com/releasedetail.cfm?ReleaseID=441023
Microsoft
http://www.microsoft.com/msft/earnings/fy10/earn_rel_q2_10.mspx
Praxair 4Q and full year 2009
http://www.praxair.com/praxair.nsf/AllContent/664AAB1DC29E876D852576B800039FBF?OpenDocument
UTC
http://www.utc.com/utc/Static%20files/Investor_Relations/2009_q4_earnings.pdf
Sources: UTC, Praxair, Microsoft, T.Rowe, Lilly, Danaher, ITW, AT&T, DOL, Census Bureau, Federal Reserve websites.
SKY News Summary 01-26-10
Many market-moving economic indicators (new-home sales, durable goods, jobless claims, and GDP) are being released this week, and will provide a current picture of the economy.
The Congressional Budget Office projects that the federal budget will show a deficit of about $1.3 trillion for 2010. At 9.2 percent of GDP, that deficit is only slightly lower than last year’s 9.9 percent of GDP which was the largest since the end of World War II. Projected deficits average about $600 billion per year over 2011–2020. The projections assume that major provisions of the tax cuts enacted in 2001, 2003, and 2009 will expire as scheduled and that temporary changes that have kept the alternative minimum tax (AMT) from affecting many more taxpayers will not be extended. At the end of 2009, debt held by the public was $7.5 trillion, or 53 percent of GDP; by the end of 2020, debt is projected to climb to $15 trillion, or 67 percent of GDP.
http://www.cbo.gov/ftpdocs/108xx/doc10871/01-26-Outlook.pdf
According to the National Association of Realtors, existing-home sales fell as expected in December while prices rose year-over-year. Existing home sales fell 16.7 percent from November but remain 15.0 percent above December 2008. Lawrence Yun, NAR chief economist, said “It’s significant that home sales remain above year-ago levels, but the market is going through a period of swings driven by the tax credit. We’ll likely have another surge in the spring as home buyers take advantage of the extended and expanded tax credit. By early summer the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010. However, the job market remains a concern and could dampen the housing recovery – job creation is key to a continued recovery in the second half of the year.” The national median existing-home price was $178,300 in December, which is 1.5 percent higher than December 2008.
http://www.realtor.org/press_room/news_releases/2010/01/december_down
Consumer confidence improved in January to 55.9 vs. December’s 53.6, but certain facets of the index remain very depressed. The assessment of the present situation remains near historic lows at 25.0. However, the assessment of the outlook is much better, at 76.5 (with 80 being a healthy reading). ‘Says Lynn Franco, Director of The Conference Board Consumer Research Center: “Consumer Confidence rose for the third consecutive month, primarily the result of an improvement in present-day conditions. Consumers’ short-term outlook, while moderately more positive, does not suggest any significant pickup in activity in the coming months. Regarding their financial situation, while consumers were less dire about their income prospects than in December, the number of pessimists continues to outnumber the optimists.”’ Consumer sentiment numbers will be released with GDP on Friday.
http://www.conference-board.org/economics/ConsumerConfidence.cfm
Company News
American Express 4Q 2009
http://media.corporate-ir.net/media_files/irol/64/64467/EarningsSlidePackage4Q09v4.pdf
Exelon 4Q and full year 2009
http://www.exeloncorp.com/aboutus/news/pressrelease/corporate/01.22.10+-+Q4+earnings+release.htm
Johnson & Johnson 4Q and full year 2009
http://www.investor.jnj.com/releaseDetail.cfm?ReleaseID=440099&year=2010
Johnson Controls Q1 2010
http://www.johnsoncontrols.com/publish/us/en/news.html
Kimberly-Clark full year 2009
http://investor.kimberly-clark.com/releasedetail.cfm?ReleaseID=439403
Medtronic has signed an agreement to acquire Invatec, a developer of medical technologies for the interventional treatment of cardiovascular disease, for $350 million and additional payments of up to $150 million for Invatec’s achievement of specific milestones. “Medtronic’s acquisition of Invatec will accelerate the growth of our CardioVascular business, adding important new products for the coronary and peripheral vascular markets,” said Scott Ward, senior vice president at Medtronic and president of the CardioVascular business.
http://wwwp.medtronic.com/Newsroom/NewsReleaseDetails.do?itemId=1264427238226&lang=en_US
Roche announced it has invested about 190 Mio Swiss Francs in infusion-free administration device with new Herceptin formulation that would allow breast cancer patients to administer Herceptin themselves.
http://www.roche.com/media/media_releases/med-cor-2010-01-20.htm
Spectra 2010 Financial Plan
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjcyMjh8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
Target 2010 plan
http://shows.implex.tv/Qwikcast/Root/Target/3211/related_docs/Doug%20Scovanner.pdf
Applied Materials 12th Annual Needham Growth Stock Conference presentation
http://www.appliedmaterials.com/investors/assets/01142010_needham.pdf
Sources: Applied Materials, Target, Spectra, Roche, Medtronic, Kimberly-Clark, Johnson Controls, Johnson & Johnson, GE, Exelon, American Express, National Association of Realtors, Conference Board, Congressional Budget Office websites.
SKY News Summary 01-21-10
The Department of Housing and Urban Development gave us some mixed news today. Building permits in December were 10.9 percent above November’s rate and 15.8 percent above the December 2008’s rate. However, actual housing starts in December were 4.0 percent below the revised November rate and 0.2 percent above the December 2008 rate. Home completions in December were at a seasonally adjusted annual rate of 768,000, 11.2 percent below the revised November estimate and a substantial 25.3 percent below the December 2008 rate. The rise in building permits bodes well for future housing starts and completions. The poor results for December’s starts and completions should come as no surprise given the recent National Association of Home Builders/Wells Fargo Housing Market Index which indicates that home builder confidence declined in January due to the “poor job market and large number of foreclosed homes for sale….” reported in the blog for January 19.
http://www.census.gov/const/newresconst.pdf
Supporting the HUD announcement, the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending January 15, 2010 showed a significant stall in new mortgage applications which decreased 52.3 percent compared with the same week one year earlier. The refinance index was 19.1 percent lower than the same week one year ago.
http://www.mbaa.org/NewsandMedia/PressCenter/71642.htm
The following link gives a synopsis of the housing market which is worth reading:
http://www.huduser.org/portal/periodicals/ushmc/fall09/summary.pdf
The Bureau of Labor Statistics released the Producer Price Index for the month of December. The PPI for Finished goods rose slightly (up 0.2 percent) with food prices, especially pork and fresh vegetables, rising 1.4 percent and energy prices declining 0.4 percent.
http://www.bls.gov/news.release/ppi.nr0.htm
The Philadelphia Fed’s Business Outlook Survey showed slower growth in January. The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a revised reading of 22.5 in December to 15.2 in January. One positive note was labor market conditions which showed some stabilizing in recent months, “and for the second consecutive month, the percentage of firms reporting an increase in employment was higher than the percentage reporting declines. The current employment index increased 2 points, to its highest reading since February 2008.”
http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2010/bos0110.cfm
Unemployment claims from the Department of Labor were skewed by the shortened work week this week. Administrative officials explained that claims forms had piled up prior to Martin Luther King Day and were processed in bulk by Thursday. Official initial unemployment claims processed rose 36,000 from the previous week’s revised figure of 446,000, and the 4-week moving average was 448,250, an increase of 7,000 from the previous week’s revised average of 441,250.
http://www.dol.gov/opa/media/press/eta/ui/current.htm
Company News:
BOA 4Q 2009 earnings presentation
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjU5Nzc3NXxDaGlsZElEPTM2NTI4NHxUeXBlPTI=&t=1
Fifth Third 4Q 2009
http://ir.53.com/phoenix.zhtml?c=72735&p=irol-newsArticle&ID=1377410&highlight=
American Express 4Q 2009
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjcyNjF8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
It is important to remember that two important government bank supports expire February 1: The Primary Dealer Credit Facility, an overnight loan facility that provides funding to primary dealers, and the Term Securities Lending Facility, which loans Treasury securities to primary dealers for one month against eligible collateral.
http://www.federalreserve.gov/monetarypolicy/bst_lendingprimary.htm
Sources: Bank of America, Fifth Third, American Express, Department of Labor, Philadelphia Fed, New York Fed, Bureau of Labor Statistics, Mortgage Bankers Association, and HUD websites.