SKY News Summary 09-02-10
Tomorrow’s important “employment situation report” out of the Department of Labor should show very little change in employment based on the recent reports, including today’s jobless claims report. Home sales showed signs of life as homes under contract increased slightly in July, the first sign of stability since the stimulus program expired.
The weekly jobless claims report decreased by 6,000 from the previous week’s revised figure of 478,000. The 4-week moving average was 485,500, a decrease of 2,500 from the previous week’s revised average of 488,000. Continuing claims during the week ending Aug. 21 decreased by 23,000 but this may be due to expiring benefits.
http://www.dol.gov/opa/media/press/eta/ui/current.htm
According to the National Association of Realtors, pending home sales rose 5.2 percent in July, reversing two months of post-stimulus declines. The national index had fallen 29.9 percent in May and another 2.8 percent in June.
http://www.realtor.org/press_room/news_releases/2010/09/pending_rise
The Mortgage Bankers Association’s Survey for the week ending August 27, 2010 showed mortgage loan application volume increasing 2.7 percent from the week before. The Refinance Index increased 2.8 percent from the previous week and is at its highest level since May 1, 2009. Michael Fratantoni, MBA’s Vice President of Research and Economics said, “Despite the slight increase in purchase activity in the past week, the continued low level of purchase applications indicates we are unlikely to see an increase in new home sales reported for August or existing home sales reported for September.”
http://www.mbaa.org/NewsandMedia/PressCenter/73827.htm
Construction spending during July 2010 fell 1.0 percent from the revised June estimate of $813.1 billion, and is 10.7 percent below the July 2009 estimate of $901.2 billion. During the first 7 months of this year, construction spending amounted to $460.3 billion, 11.8 percent below the $522.0 billion for the same period in 2009.
http://www.census.gov/const/C30/release.pdf
Labor productivity decreased by 1.8 percent during the second quarter of 2010, as hours increased 3.5 percent and output increased 1.6 percent. From the second quarter of 2009 to the second quarter of 2010, productivity and output both grew 3.7 percent and hours were unchanged.
http://www.bls.gov/news.release/prod2.nr0.htm
Sources: BLS, Census, MBAA, NAR, and DOL websites.
SKY News Summary 08-31-10
It’s all about the consumer today. Consumers seem to be saving a little less (but saving all the same!) and spending a little more. The savings rate, which was as low as 1.4% in 2005, is currently at 6.2%. The Consumer Confidence index for August shows the consumer being slightly more optimistic.
http://www.bea.gov/national/nipaweb/Nipa-Frb.asp
ICSC-Goldman Sachs reported that chain store sales for the week ending August 28 rose an anemic 0.1% from the prior week. However, this is the first time in four weeks that there has been growth. The hot weather is being blamed for stagnant sales as consumers are not interested in the fall items stocked by retailers. http://www.icsc.org/homepage/research_article.php?id=192
The Conference Board’s Consumer Confidence Index rose to 53.5 in August from 51.0 in July. Most notably, consumers were pessimistic about employment prospects but that was offset by optimism about the short-term outlook. http://www.conference-board.org/data/consumerconfidence.cfm
Personal income increased $30.0 billion or 0.2 percent in July, according to the Bureau of Economic Analysis. Personal consumption expenditures increased $44.1 billion, or 0.4 percent. In June, personal income decreased $2.7 billion, and personal consumption decreased $4.0 billion, or less than 0.1 percent, based on revised estimates. Private salary disbursements increased $23.3 billion in July, in contrast to a decrease of $5.0 billion in June. Government wage and salary disbursements decreased $1.1 billion, compared with a decrease of $3.3 billion as layoffs of temporary workers for Census 2010 subtracted $1.4 billion from federal civilian payrolls in July and subtracted $3.4 billion in June. Personal saving as a percentage of disposable personal income was 5.9 percent in July, compared with 6.2 percent in June.
http://www.bea.gov/newsreleases/national/pi/2010/pi0710.htm
Company news:
Exelon Corporation today announced an agreement to acquire John Deere Renewables, for approximately $860 million with a provision for up to an additional $40 million upon commencement of construction on the advanced development projects. Under the terms of agreement, Exelon will acquire John Deere Renewables’ 735 megawatts of installed, operating wind capacity—enough to power 160,000 to 220,000 households—spread across 36 projects in eight states. Approximately 75 percent of the operating portfolio is already sold under long-term power purchase arrangements. As part of the acquisition, Exelon also has the opportunity to pursue 1,468 megawatts of new wind projects that are in various stages of development, including the 230 megawatts in advanced stages of development.
http://www.exeloncorp.com/Newsroom/pr_20100831_EXC_Deere.aspx
Sources: Exelon, BEA, Conference Board, and ICSC websites.
SKY News Summary 08-26-10
Repeating Tuesday’s theme of uncertainty, companies put new orders for capital goods on hold as indicated by the 2.8 percent drop in July’s new orders number. On a positive note, new jobless claims dropped substantially for the week of August 21, the delinquent mortgage rate improved over the quarter, and companies continue to make positive moves.
The jobless claims number for the week ending Aug. 21 was 473,000, a decrease of 31,000 from the previous week’s revised figure of 504,000. The 4-week moving average was 486,750, an increase of 3,250 from the previous week’s revised average of 483,500. Continuing claims for the week ending Aug. 14 decreased 62,000 from the preceding week’s revised level of 4,518,000. The 4-week moving average was 4,508,750, a decrease of 28,000 from the preceding week’s revised average of 4,536,750.
http://www.ows.doleta.gov/press/2010/082610.asp
New orders for manufactured durable goods in July increased 0.3 percent to $193.0 billion, after two consecutive monthly decreases including a 0.1 percent June decrease. However, excluding transportation, new orders decreased 3.8 percent. Transportation equipment increased 13.1 percent to $52.6 billion. Shipments of manufactured durable goods in July, up four of the last five months, increased 2.2 percent to $200.6 billion following a 0.2 percent increase in June. Unfilled orders for manufactured durable goods in July, down following three consecutive monthly increases, decreased $1.1 billion or 0.1 percent to $802.8 billion. Nondefense new orders for capital goods in July decreased $1.8 billion or 2.8 percent to $64.1 billion.
http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf
“The delinquency rate for mortgage loans dropped to 9.85 percent of all loans outstanding as of the end of the second quarter of 2010, a decrease of 21 basis points from the first quarter of 2010, and an increase of 61 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The percentage of loans on which foreclosure actions were started during the second quarter was 1.11 percent, down 12 basis points from last quarter and down 25 basis points from one year ago. The seriously delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 9.11 percent, a decrease of 43 basis points from last quarter, but an increase of 114 basis points from the second quarter of last year.
“These latest delinquency numbers contain a mixture of somewhat good news and somewhat bad news. The good news is that foreclosure starts are down and the inventory of homes anywhere in the process of foreclosure fell for the first time since 2006 and had the largest drop since 2005. Loans 90 days or more past due, the largest share of delinquent loans, also fell. The fact that both the 90+ delinquency rate fell and the foreclosure start rate fell means that a significant number of these seriously delinquent loans have been successfully modified and reclassified as performing, current loans,” said Jay Brinkmann, MBA’s chief economist.
“The disappointing news is that, after declining since the beginning of 2009, the rate of short-term delinquencies is going up and the increase in these short-term delinquencies may ultimately drive the foreclosure measures back up. The percent of loans one payment behind had peaked in the first quarter of 2009 at 3.77 percent and fell to 3.31 percent by the end of 2009. Unfortunately that rate has now risen to 3.51 percent. The causes are likely two-fold. First, 30-day delinquencies are very closely tied to first-time claims for unemployment insurance. The number of first-time claims fell through most of 2009 but leveled off in 2010 and have started to rise again. This increase in unemployment directly impacts mortgage delinquencies. Second, some percentage of the loans modified over the last several years has become delinquent again because those borrowers, by definition, have weak credit.
“Ultimately the housing story, whether it is delinquencies, homes sales or housing starts, is an employment story. Only when we see a consistent increase in employment will we see an increase in sales and starts, and a sustained improvement in the delinquency numbers. Until we see the increase in the number of households that comes with an increase in the number of paychecks, all measures of the health of the housing industry will continue to be weak,” Brinkmann said.’
http://www.mbaa.org/NewsandMedia/PressCenter/73799.htm
Sales of new single-family houses dropped 12.4 percent in July and were 32.4 percent below the July 2009 estimate of 408,000 as the tax credit expiration phenomenon continues. The seasonally adjusted estimate of new houses for sale at the end of July was 210,000. This represents a supply of 9.1 months at the current sales rate.
http://www.census.gov/const/newressales.pdf
Company news:
Applied Materials unveiled a new product that the company feels has enormous potential:
http://www.appliedmaterials.com/investors/index.html
Merger mania continues as Cisco announced its intent to acquire privately-held ExtendMedia, a leading provider of software-based Content Management Systems. The systems manage the entire lifecycle of video content through monetization for pay media and ad-supported business models. Based in Newton, Mass., with the majority of its employee base in Toronto, Canada, ExtendMedia will enable Cisco to help service providers deliver multi-screen offerings as the market transitions to IP video.
http://investor.cisco.com/releasedetail.cfm?ReleaseID=502684
HP today announced it has acquired Stratavia, a privately held database and application automation company based in Denver. Terms of the deal were not disclosed.
http://www.hp.com/hpinfo/newsroom/press/2010/100826a.html
A US$12-billion joint venture between Shell and Cosan S.A. moved closer to reality today when the two companies signed binding agreements. The proposed joint venture, will produce, commercialize and transport ethanol and power from sugar cane and in Brazil. With annual production capacity of over 2 billion liters, the proposed joint venture will be one of the world’s largest ethanol producers.
http://www.shell.com/home/content/investor/news_and_library/2010_media_releases/
Sources: HP, Shell, Cisco, Applied Materials, Census, MBAA, and DOL websites.
SKY News Summary 08-24-10
“Uncertainty” is the keyword. Last week’s Empire State index and Philly Fed indexes indicated that business respondents are “uncertain” about next six months. Specifically, the Philly report shows that labor costs and taxes are the source of uncertainty. Business’ uncertainty translates to fewer new hires which, in turn, effects the decision to move or upgrade housing, and make consumer purchases. As a result, today’s chain store sales index and existing home sales show declines.
http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2010/bos0810.cfm
http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html
The ICSC-Goldman Sachs chain store sales index for the week ending August 21 declined by 0.4% from the prior week. This is the fourth consecutive week of a decline and is supposedly due to hot weather.
http://www.icsc.org/homepage/research_article.php?id=186
It should be no surprise that existing-home sales were sharply lower in July following expiration of the home buyer tax credit. Sales were down 27.3 percent. But as Lawerence Yun, NAR chief economist points out, “Even with sales pausing for a few months, annual sales are expected to reach 5 million in 2010 because of healthy activity in the first half of the year. To place in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years.” Home prices continued to gain, according to the National Association of Realtors, with the national median existing-home price for all housing types up 0.7 percent to $182,600 from a year ago. The median price in the Northeast was $263,800, up 4.8 percent from July 2009. Distressed home sales are unchanged from June, accounting for 32 percent of transactions in July; they were 31 percent in July 2009. Total housing inventory at the end of July increased 2.5 percent to 3.98 million existing homes available for sale, which represents a 12.5-month supply at the current sales pace, up from an 8.9-month supply in June. According to Lawrence Yun, “Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired. Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September,” he said. “However, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs.”
http://www.realtor.org/press_room/news_releases/2010/08/ehs_fall
Sources: New York Fed, Philadelphia Fed, ICSC, NAR websites.
SKY News Summary 08-12-10
Today’s big news in the market was a small increase in initial unemployment gains, which given the erratic nature of this government report, does not actually seem newsworthy. The bigger picture shows the federal deficit shrinking and Cisco’s earnings looking strong.
The Treasury’s deficit improved by $15.7 billion from this time last year, at $165.0 billion vs. last July’s $180.7 billion. The year-to-date deficit is $1.17 trillion vs. $1.27 trillion this time last year.
http://www.fms.treas.gov/mts/index.html
http://www.fms.treas.gov/mts/mts.xls
In the week ending Aug. 7, initial jobless claims was 484,000, an increase of 2,000 from the previous week’s revised figure of 482,000. The 4-week moving average was 473,500, an increase of 14,250, and the highest since February. It is possible that some of the increase is due to distortions from summer factory closings although the government does not mention this in its report. Continuing claims during the week ending July 31 decreased 118,000 from the preceding week’s revised level of 4,570,000. The 4-week moving average decreased 64,500 from the preceding week’s revised average of 4,583,000.
http://www.dol.gov/opa/media/press/eta/ui/current.htm
The Mortgage Bankers Association’s Market Composite Index for the week ending August 6, 2010, showed mortgage loan application volume increased 0.6 percent from one week earlier. The refinance share of mortgage activity increased to 78.1 percent of total applications from 78.0 percent the previous week as existing mortgage holders took advantage of a drop in the mortgage rate from (for 30-year fixed-rate mortgages) 4.60 percent to 4.57 percent This was the lowest 30-year contract rate ever recorded in the survey.
http://www.mbaa.org/NewsandMedia/PressCenter/73634.htm
The trade deficit grew to $49.9 billion in June, up from $42.0 billion in May, as exports were $2.0 billion less than May exports of $152.4 billion and imports were $5.9 billion more than May imports of $194.4 billion. Exports of capital goods (down $1.4 billion) and industrial supplies and materials (down $1.0 billion) were responsible for most of the decline in exports. Exports of automotive vehicles, parts, and engines actually increased (up $0.2 billion). Imports of consumer goods (up $3.1 billion) and automotive vehicles, parts, and engines (up $1.3 billion) were responsible for most of the increase in imports. The June figures show surpluses, in billions of dollars, with Hong Kong $2.0, Australia $1.1, Singapore $1.0, and Egypt $0.2. Deficits were recorded, in billions of dollars, with China $26.2, OPEC $8.9, European Union $7.8, Mexico $6.2, Japan $5.2, Germany $3.1, Canada $2.6, Nigeria $2.3, Ireland $2.3, and Venezuela $1.7.
http://www.bea.gov/newsreleases/international/trade/2010/trad0610.htm
An IBM report shows retailers of electronics and appliances in the U.S. are expected to grow sales of those products by $739 million in September and October. The forecast represents a five percent increase compared with the same period last year.
http://www-03.ibm.com/press/us/en/pressrelease/32311.wss
Earnings
Cisco
SKY News Summary 08-10-10
The recovery continues at a slow pace, with spending and employment slightly ahead of where we were last year.
The FOMC announcement for the August 10 FOMC policy meeting leaves the fed funds rate at between zero and 0.25 percent, but will keep its balance sheet constant….(keeping securities) at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The Committee will continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature.”
http://www.federalreserve.gov/newsevents/press/monetary/20100810a.htm
The ICSC-Goldman Sachs chain store sales index for the week ending August 7 declined by 0.2% on a week-over-week basis. On a year-over-year seasonally-adjusted basis, sales were 3.7%.
http://www.icsc.org/homepage/research_article.php?id=182
After five quarters of productivity growth, labor productivity declined by 0.9 percent in the second quarter as an increase in hours worked (up 3.6 percent) outpaced an increase in output (up 2.6 percent). Hourly compensation fell 0.7 percent. Manufacturing sector productivity grew 4.5 percent in the second quarter of 2010, as output rose 8.3 percent and hours worked increased 3.6 percent. Durable manufacturing sector productivity increased 11.2 percent as the increase in output outpaced the increase in hours.
http://www.bls.gov/news.release/prod2.nr0.htm
Initial jobless claims for the week ending July 31 increased 19,000 from the previous week’s revised figure of 460,000. The 4-week moving average rose 5,250 but is still below last month at this time. Continuing claims during the week ending July 24 decreased by 34,000 from the preceding week’s revised level of 4,571,000.
http://www.dol.gov/opa/media/press/eta/ui/current.htm
Total nonfarm payroll employment decreased by 131,000 in July as a drop in federal payrolls was only partially offset by an increase in private employment. Federal payrolls declined as state and federal government revenue reductions forced job cuts and 143,000 temporary Census 2010 workers were released from federal government payrolls. Total private employment was up 71,000 for July and up 630,000 year-to-date. Motor vehicles and parts had fewer seasonal layoffs than normal for July, contributing to a seasonally adjusted employment increase of 21,000. Over the past 12 months, health care employment has risen by 231,000.
http://www.bls.gov/news.release/empsit.nr0.htm
Sources: BLS, DOL, ICSC, Federal Reserve
SKY News Summary 08-03-10
Many economic indicators have been released in the past few days. It is easy to be confused by what is old news, meaning it happened in June, and what is more current news. Reports from June show housing sales and personal income were flat. July’s ISM report shows a slowing of new orders and production, but improved employment.
The ISM report on business shows a drop in new orders and production, but improvement in deliveries and inventories in the month of July.The New Orders Index registered 53.5 percent, which is a decrease of 5 percentage points when compared to the 58.5 percent reported in June, but still indicates growth. This is the 12th consecutive month of expanding economic activity in the manufacturing sector, and demand is reasonably strong in 10 of 18 industries. “Ten of the 18 manufacturing industries are reporting growth in July, in the following order: Plastics & Rubber Products; Miscellaneous Manufacturing; Paper Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Primary Metals; Textile Mills; Computer & Electronic Products; Fabricated Metal Products; and Chemical Products. The four industries reporting contraction in July are: Nonmetallic Mineral Products; Furniture & Related Products; Food, Beverage & Tobacco Products; and Machinery.”
ISM’s Employment Index registered 58.6 percent in July, which is 0.8 percentage point higher than the 57.8 percent reported in June. This is the eighth consecutive month of growth in manufacturing employment. Manufacturers’ inventories grew for the first time following three consecutive months of contraction. The Inventories Index registered 50.2 percent in July, indicating a slight increase when compared to June. The index is 4.4 percentage points higher than the 45.8 percent reported in June.
http://www.ism.ws/ISMReport/MfgROB.cfm
The ICSC-Goldman Sachs chain store sales index for the week ending July 31 slipped by 0.1 percent on a week-over-week basis, as warm weather hurt sales of back-to-school and fall items. On a year-over-year seasonally-adjusted basis, the pace of spending held relatively steady at 3.9% in the latest week.
http://www.icsc.org/homepage/research_article.php?id=178
Despite all the bleak predictions for a double dip, the advance 2nd quarter gross domestic product increased at an annual rate of 2.4 percent in the second quarter of 2010. In the first quarter, real GDP increased 3.7 percent. The increase in real GDP in the second quarter primarily reflected positive contributions from nonresidential fixed investment, exports, personal consumption expenditures, private inventory investment, federal government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 0.1 percent in the second quarter, compared with an increase of 2.1 percent in the first. Excluding food and energy prices, the price index for gross domestic purchases increased 0.9 percent in the second quarter, compared with an increase of 1.6 percent in the first. Personal current taxes increased $1.3 billion in the second quarter, compared with an increase of $19.6 billion in the first.
http://www.bea.gov/newsreleases/national/gdp/2010/gdp2q10_adv.htm
Personal income remained flat in June, increasing less than 0.1 percent after having increased by a healthy 0.3 percent in May. Disposable personal income also remained flat. Personal consumption expenditures (PCE) decreased $2.9 billion or less than 0.1 percent in both May and June. Wages decreased $5.2 billion in June, in contrast to an increase of $19.2 billion in May, reflecting the decline in the number of temporary workers for Census 2010. Personal interest income plus personal dividend income increased $1.9 billion in June, compared with an increase of $4.1 billion in May. Personal saving as a percentage of disposable personal income was 6.4 percent in June, compared with 6.3 percent in May.
http://www.bea.gov/newsreleases/national/pi/2010/pi0610.htm
Factory orders for June show new orders for manufactured goods down 1.2 percent, following a drop of 1.8 percent in May. Inventories, down two consecutive months, decreased $0.5 billion or 0.1 percent to $520.0 billion following a 0.4 percent May decrease.
http://www.census.gov/manufacturing/m3/prel/pdf/s-i-o.pdf
June’s Pending Home Sales Index, declined 2.6 percent from May, and is 18.6 percent below June 2009 when the stimulus plan was in full bloom. Lawrence Yun, NAR chief economist, said, “There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve,” he said. “Over the short term, inventory will look high relative to home sales. However, since home prices have come down to fundamentally justifiable levels, there isn’t likely to be any meaningful change to national home values. Some local markets continue to show strengthening prices.”
http://www.realtor.org/press_room/news_releases/2010/08/pending_ease
Construction spending during June increased 0.1 percent, higher than expected. The June figure is 7.9 percent below the June 2009 estimate of $907.7 billion. Year-to-date, construction spending is 11.2 percent below the $438.7 billion for the same period in 2009. Private construction decreased 0.6 percent from May. Public construction increased 1.5 percent from May.
http://www.census.gov/const/C30/release.pdf
Sources: Census, NAR, BEA, ISM, ICSC websites
SKY News Summary 07-29-10
Much fuss was made yesterday of the headline new orders for durable goods number that decreased $2.0 billion or 1.0 percent to $190.5 billion in June. But if one looks carefully at the report, stripping away the volatile defense and aircraft orders, it shows growing demand in the business sector and increasing consumer confidence. The report is based on results from 4,200 manufacturers in 89 industries, and, excluding defense and transportation, is an effective gauge of consumer confidence. The remaining new orders mostly represent purchases (both domestic and foreign) of high-priced consumer products such as boats, wide-screen TVs, computers and dishwashers. New durable goods orders, without transportation and defense declined only 0.1 percent in June, having grown 1.5 percent in May. Year-to-date, new durable goods, excluding transportation and defense, has grown 13 percent.
Nondefense capital goods orders (excluding aircraft), which economists refer to as the “core capital goods orders,” and which is a very good indication of business investment, grew 0.6 percent to $61 billion and has grown steadily from $53.7 billion at the beginning of the year. It is generally agreed that, “Capital goods orders rebound anywhere from three to 18 months after the economy hits a recession bottom.”1
However, one area of concern is the steady growth in inventory which could precede a reduction in output. Inventories grew 0.9 percent in June, 1.1 percent in May, and 0.8 in April.
http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf
In the week ending July 24, initial jobless claims decreased 11,000 from the previous week’s revised figure of 468,000. The 4-week moving average was 452,500, a decrease of 4,500 from the previous week’s revised average of 457,000. However, continuing claims for the week ending July 17 was 4,565,000, an increase of 81,000 from the preceding week. The 4-week moving average was 4,548,250, a decrease of 18,000 and the lowest level since December 2008. The highest insured unemployment rates in the week ending July 10 were in Puerto Rico (6.9 percent), Pennsylvania (5.1), Oregon (5.0), New Jersey (4.8), Nevada (4.6), Wisconsin (4.6), California (4.5), Connecticut (4.5), Massachusetts (4.5), and Alaska (4.4).
http://www.dol.gov/opa/media/press/eta/ui/current.htm
Earnings:
Boeing
http://boeing.mediaroom.com/index.php?s=43&item=1354
Southern Company
http://files.shareholder.com/downloads/SO/843106311×0x390841/e3f82b16-9d8d-47b4-81dd-8090d161b501/SO_Q2_2010_Earnings_Conf_Call_-_post_call_28JUL2010.pdf
1 Bernard Baumohl, The Secrets of Economic Indicators ( Upper Saddle River, New Jersey: Wharton School Publishing, 2008), 124-130.
Sources: CB&I, Southern Company, Praxair, Exxon Boeing, Census, DOL
SKY News Summary 07-27-10
Today’s economic numbers indicate the consumer is beginning to release pent up spending. The Conference Board’s Consumer Confidence Index, while slipping on expectations and the present situation, showed an increase in consumers planning to buy a car or a major appliance in the next six months. Perhaps we will see this reflected in tomorrow’s durable goods report for June.
The Conference Board Consumer Confidence Index for July is 50.4, down from 54.3 in June. The Present Situation Index decreased to 26.1 from 26.8. The Expectations Index declined to 66.6 from 72.7 last month. Those claiming jobs are “hard to get” increased to 45.8 percent from 43.5 percent, while those saying jobs are “plentiful” remained unchanged at 4.3 percent. According to NASDAQ, the good news is that buying plans have picked up in some categories. “Those planning to buy a car within six months rebounded to 4.5 percent from 4.1 percent in June. Those planning to buy a major appliance within six months jumped to 28.5 percent in July from 23.7 percent in June. However, those planning to purchase a house edged down to 1.9 percent from 2.0 percent in June.”
http://www.conference-board.org/data/consumerconfidence.cfm
http://www.nasdaq.com/asp/econodayframe.asp?page=http://anasdaq.econoday.com/byweek.asp?cust=nasdaq
The ICSC-Goldman Sachs chain store sales index for the week ending July 24 rose 0.6%. On a year-over-year seasonally-adjusted basis, the pace of spending was 3.8% in the latest week.
http://www.icsc.org/homepage/research_article.php?id=174
Sales of new single-family houses in June 2010 were very soft, but at least showed a comeback from last month’s epic plunge. Sales, at an adjusted annual rate of 330,000, were 23.6 percent above the revised May rate of 267,000, but is 16.7 percent below June 2009. The median sales price of new houses sold in June 2010 was $213,400; the average sales price was $242,900.
http://www.census.gov/const/newressales.pdf
Intel announced an important advance in the quest to use light beams to replace the use of electrons to carry data in and around computers. ”The company has developed a research prototype representing the world’s first silicon-based optical data connection with integrated lasers. The link can move data over longer distances and many times faster than today’s copper technology; up to 50 gigabits of data per second. This is the equivalent of an entire HD movie being transmitted each second. Today computer components are connected to each other using copper cables or traces on circuit boards. Due to the signal degradation that comes with using metals such as copper to transmit data, these cables have a limited maximum length. This limits the design of computers, forcing processors, memory and other components to be placed just inches from each other. Today’s research achievement is another step toward replacing these connections with extremely thin and light optical fibers that can transfer much more data over far longer distances, radically changing the way computers of the future are designed and altering the way the datacenter of tomorrow is architected.”
http://www.intel.com/pressroom/archive/releases/2010/20100727comp_sm.htm#story
Earnings:
American Express
http://home3.americanexpress.com/corp/pc/2010/2Q10.asp
Exelon
http://www.exeloncorp.com/Newsroom/pr_20100722_EXC_q2earnings.aspx
Fifth Third
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NTQzNjF8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
Johnson Controls
http://www.johnsoncontrols.com/publish/us/en/news.html
Kimberly-Clark
http://investor.kimberly-clark.com/releasedetail.cfm?ReleaseID=491216
Lilly
http://investor.kimberly-clark.com/releasedetail.cfm?ReleaseID=491216
Masco
http://investors.masco.com/releasedetail.cfm?ReleaseID=492260
Roche
http://www.roche.com/media/media_releases/med-cor-2010-07-22.htm
T. Rowe Price
http://corporate.troweprice.com/ccw/files/pressReleases/TROWQ22010EarningsRelease.pdf
UBS
http://www.ubs.com/1/e/investors/releases?newsId=182327
Sources: UBS, T. Rowe, Masco, Lilly, Kimberly-Clark, Johnson Controls, Fifth Third, Exelon, American Express, Altria, Intel, ICSC, NASDAQ and Conference Board websites.
SKY News Summary 07-22-2010
Much has been made of the cash buildup in the nonfinancial corporate sector. A recent Wall Street Journal article on acquisition activity notes that, “At the end of March, nonfinancial companies in the U.S. were sitting on $1.84 trillion in cash and other liquid assets, up 26% from a year earlier….” It is interesting to look at the original Federal Reserve report that shows the significant growth of cash since the first quarter of 2009.
http://www.federalreserve.gov/releases/z1/Current/z1.pdf
http://online.wsj.com/article/SB10001424052748703720504575377433203558498.html?KEYWORDS=184+trillion
Initial unemployment claims rose the week of July 17, but not as much as it appeared. Claims reported in the week before were distorted by manufacturing shutdowns which normally occur, but did not occur this year, and by the July 4th holiday. The initial claims number for July 17 was 464,000, an increase of 37,000 from the previous week’s revised figure of 427,000. The 4-week moving average was 456,000, an increase of 1,250 from the previous week’s revised average of 454,750, and slightly lower than this time last month. Continuing unemployment claims during the week ending July 10 was 4,487,000, a decrease of 223,000 from the preceding week’s revised level of 4,710,000. The 4-week moving average was 4,567,000, a decrease of 21,500 from the preceding week’s revised average of 4,588,500.
http://www.dol.gov/opa/media/press/eta/ui/current.htm
The National Association of Realtors reported that May’s existing home sales, fell 5.1 percent, but are 9.8 percent higher than the 4.89 million-unit pace in June 2009.Lawrence Yun, NAR chief economist, said, “June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months.” The national median existing-home price was $183,700 in June, which is 1.0 percent higher than a year ago. Distressed homes were at 32 percent of sales last month, compared with 31 percent in May; it was also 31 percent in June 2009. Regionally, existing-home sales in the Northeast rose 7.9 percent to an annual level of 960,000 in June and are 17.1 percent above June 2009. “The median price in the Northeast was $244,300, down 1.2 percent from a year ago. Existing-home sales in the Midwest dropped 7.5 percent in June to a pace of 1.23 million but are 11.8 percent higher than a year ago. The median price in the Midwest was $155,900, down 0.1 percent from June 2009. In the South, existing-home sales fell 6.5 percent to an annual level of 2.01 million in June but are 11.0 percent above June 2009. The median price in the South was $163,600, unchanged from a year ago. Existing-home sales in the West dropped 9.3 percent to an annual pace of 1.17 million in June but are 0.9 percent higher than a year ago. The median price in the West was $221,800, up 1.5 percent from June 2009.”
http://www.realtor.org/press_room/news_releases/2010/07/ehs_june_above
Federal Reserve Chairman, Ben S. Bernanke’s, Semiannual Monetary Policy Report to the Congress before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, July 21, 2010 can be found at:
http://www.federalreserve.gov/newsevents/testimony/bernanke20100721a.htm
Earnings:
Fifth Third
http://ir.53.com/phoenix.zhtml?c=72735&p=irol-newsArticle&ID=1450532&highlight=
UPS
AT&T
http://www.att.com/Investor/Financial/Earning_Info/docs/2Q_10_slide_c.pdf
Sources: Fifth Third, AT&T, UPS, Federal Reserve, NAR, DOL, Wall Street Journal, Federal Reserve websites.