SKY News Summary 04-22-10
Corporate earnings for the first quarter are better than expected, which bodes well for the rest of the year.
Initial unemployment claims for the week ending April 17, was 456,000, a decrease of 24,000 from the previous week’s revised figure of 480,000. The 4-week moving average was 460,250, an increase of 2,750 from the previous week’s revised average of 457,500.
http://www.dol.gov/opa/media/press/eta/ui/current.htm
The Producer Price Index for Finished Goods rose 0.7 percent in March (due largely to higher-priced vegetables and gas), following a 0.6-percent decline in February and a 1.4-percent increase in January. Core PPI was basically flat at plus 0.1 percent.
http://www.bls.gov/news.release/ppi.nr0.htm
The number of mortgage applications to buy homes rose 10.1 percent last week compared to the previous week, but was still down 5.2 percent from the same week a year ago according to the Mortgage Bankers Association’s weekly survey. Existing-home sales, rose 6.8 percent, and are 16.1 percent above the 4.61 million-unit level in March 2009. It is interesting that all-cash sales are unusually high, at 27 percent in both February and March.
http://www.realtor.org/press_room/news_releases/2010/04/ehs_favorable
http://www.realtor.org/RMODaily.nsf/pages/News2010042102
Gilead
Total revenues for the first quarter of 2010 were $2.09 billion, up 36 percent compared to total revenues of $1.53 billion for the first quarter of 2009.
http://www.gilead.com/pr_1415271
Altria’s 2010 first-quarter earnings per share was up 7.7 percent.
http://www.altria.com/en/cms/company_announcements/announcement.aspx?src=press_releases&reqId=1415492
AT&T
Revenues were up $78 million, or 0.3 percent, versus the year-earlier period.
http://www.att.com/gen/landing-pages?pid=6080
Boeing’s operating margin grew to 7.7 percent.
http://boeing.mediaroom.com/index.php?s=43&item=1175
Danaher’s net earnings for the quarter rose 24% y-o-y.
http://phx.corporate-ir.net/phoenix.zhtml?c=82105&p=irol-newsArticle&ID=1416192&highlight=
UTC
First quarter earnings were up 19 percent over the year ago first quarter.
http://www.utc.com/News/Archive/2010/UTC+Reports+First+Quarter+2010+earnings?Page=1&channel=/News
Philip Morris
Net revenues, excluding excise taxes, were up by 16.1 percent.
http://media.corporate-ir.net/media_files/irol/14/146476/PMIQ12010PressRelease.pdf
Fifth Third
First quarter 2010 net loss was $10 million.
http://ir.53.com/phoenix.zhtml?c=72735&p=irol-newsArticle&ID=1416217&highlight=
Kimberly-Clark
Net sales in the first quarter of 2010 increased 7.6 percent.
http://investor.kimberly-clark.com/releasedetail.cfm?ReleaseID=462185
Pepsi reported an operating profit decline.
http://www.pepsico.com/PressRelease/PepsiCo-Delivers-Solid-First-Quarter-Revenue-and-EPS-Growth04222010.html
Nestles’ organic growth was 6.5 percent.
http://www.nestle.com/MediaCenter/PressReleases/AllPressReleases/Q1results2010.htm?Tab=2010
Sources: Nestles, Pepsi, Kimberly-Clark, Fifth Third, Philip Morris, UTC, Danaher, Boeing, AT&T, Altria, Gilead, Mortgage Bankers Association, BLS, DOL websites
SKY News Summary 12-17-09
Tuesday’s news, which showed rising inflation, is mollified, if not contradicted by today’s release of The Philadelphia Fed’s survey and CPI-U.
The Philadelphia Fed’s manufacturing survey for December contradicts the Empire State report that came out two days ago. The Philadelphia survey shows the region’s manufacturing sector is expanding with the indexes for general activity, new orders, shipments, employment and average work hours all improving. Headline index rose 3 ½ points to 20.4. The current employment index increased 7 points, to its highest reading since October 2007 and the workweek gained four points, reaching 6.4, its second consecutive positive reading. But manufacturing indexes for the next six months were not as optimistic as before. The future general activity index decreased from 36.8 in November to 24.4, its lowest reading since March. Indexes for future new orders and shipments declined this month, falling 15 points and 7 points, respectively.
http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos1209.cfm
The Federal Open Market Committee meeting announcement falls somewhere in between the Philadelphia Fed’s survey and the Empire State report. The Committee which met in November sees economic activity growing and the labor market stabilizing. The housing sector has shown some signs of improvement over recent months. “Household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment, though at a slower pace, and remain reluctant to add to payrolls; they continue to make progress in bringing inventory stocks into better alignment with sales. Financial market conditions have become more supportive of economic growth.”
http://www.federalreserve.gov/newsevents/press/monetary/20091216a.htm
Initial jobless claims rose slightly (by 7,000) in the Dec. 12 week to 480,000, although the four-week average is down 5,250 to the lowest level since September last year. Continuing claims were unchanged at 5,186,000 in the Dec. 5 week with the four-week moving average at 5,318,250, a decrease of 106,750 from the preceding week’s revised average of 5,425,000.
http://www.dol.gov/opa/media/press/eta/ui/current.htm
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in November according to the Bureau of Labor Statistics. The increase in CPT-U is a relief after the larger rise in PPI (1.8%) which we saw on Tuesday. As with the PPI, CPI-U’s increase stemmed from a 4.1 percent increase in the energy index. The index for all items less food and energy was unchanged in November, after ten consecutive monthly increases.
http://www.bls.gov/news.release/cpi.nr0.htm
The U.S. Census Bureau announced that new residential construction of privately-owned homes for November 2009 grew 6.0 percent from October, but is 7.3 percent below November 2008. Privately-owned housing starts in November were 8.9 percent above the October estimate of 527,000, but are 12.4 percent below the November 2008 rate of 655,000.
http://www.census.gov/const/newresconst.pdf
Johnson & Johnson and Acclarent, a privately held medical technology company, announced a merger agreement whereby Ethicon will acquire Acclarent for approximately $785 million. Acclarent addresses sinus problems without surgery, through devices such as Balloon Sinuplasty. “Millions of people suffer from ear nose and throat conditions, such as chronic sinusitis and obstructive sleep apnea,” said William M. Facteau, President and Chief Executive Officer for Acclarent. “The opportunity to become part of Ethicon will enable us to continue to innovate and expand our reach so that more physicians and patients worldwide will benefit from our technology.”
http://www.investor.jnj.com/releasedetail.cfm?ReleaseID=430920
Merck and Avecia Investments announced that Merck will acquire the biologics business of the Avecia group. Avecia Biologics is a contract manufacturing organization with specific expertise in microbial-derived biologics. Financial details of the transaction were not disclosed. Products currently being worked on by Avecia include medicines targeted at forms of cancer, heart disease and stroke.
http://www.merck.com/newsroom/news-release-archive/corporate/2009_1217.html
Praxair has started up a new air separation unit to supply 1,975 tons per day of nitrogen gas to support Samsung Electronics’ advanced thin-film-transistor, liquid-crystal-display factory in Tangjeong, South Korea. It is Praxair’s second air separation plant at the facility.
http://www.praxair.com/praxair.nsf/AllContent/061163D1F3AE662A8525768D006308AD?OpenDocument
‘The South African Petroleum Authorities awarded Shell a Technical Cooperation Permit for a one-year study to determine the hydrocarbon potential in parts of the Karoo Basin in central South Africa. The permit covers an area of approximately 185,000 square kilometers. The study will provide a better understanding of the area’s geology and shale gas potential, establishing the scope to pursue natural gas exploration. Shell will have the exclusive right to apply for exploration permits following completion of the study.“This onshore study and the recent award of offshore exploration acreage in the Orange Basin area together reinforce Shell’s interest in exploring for oil and gas in South Africa,” said Ceri Powell, Executive Vice President International Exploration. Shell has been active in the South African retail markets since 1904 and in refining since 1963.’
http://www.shell.com/home/content/investor/news_and_library/press_releases/2009/permit_karoo_basin_16122009.html
Sources: Shell, Praxair, Merck, Johnson & Johnson, Census, Bureau of Labor Statistics, Department of Labor, Federal Reserve, Philadelphia Fed website.
SKY News Summary 12-08-09
Health care legislation, unemployment, and consumer credit issues seem to weigh on the consumer this week. Federal Reserve Chairman, Ben S. Bernanke, spoke at the Economic Club, saying, “Despite the general improvement in financial conditions, credit remains tight for many borrowers, particularly bank-dependent borrowers such as households and small businesses.” In fact, consumer credit decreased at an annual rate of 3-1/4% in the third quarter. Revolving credit dropped by 7-1/4%. Car loans associated with Cash for Clunkers helped lessen the decline in non-revolving loans which were down 1% and gave a lift to overall consumer credit.
http://www.federalreserve.gov/newsevents/speech/bernanke20091207a.htm
http://www.federalreserve.gov/releases/g19/current/g19.htm
The ICSC- Goldman index for chain store sales showed retail spending was down 1.3% for the week of December 5, compared to the week before. Apparently, this is to be expected as shoppers rest after Black Friday and wait to begin Christmas shopping. The Commerce Department will post its retail sales numbers for the month of November on Friday.
http://www.icsc.org/homepage/research_article.php?id=76
In company news, A.G. Lafley, will retire as P&G’s board chairman as of February 25, 2010, and will be replaced by Robert A. McDonald, (56), president and chief executive officer.
http://www.pginvestor.com/phoenix.zhtml?c=104574&p=irol-newsArticle&ID=1363243&highlight=
Illinois Tool Works announced that David B. Smith, Jr. has been elected to ITW’s Board of Directors. Smith is the Executive Vice President for Policy & Legal Affairs and General Counsel at the Mutual Fund Directors Forum in Washington DC. Previously, Smith held several positions at the Securities and Exchange Commission including Associate Director of the Division of Investment Management. David B. Smith’s election comes with the retirement of his uncle, Harold B. Smith, in May 2010. The Smith family founded ITW in 1912.
http://investor.itw.com/phoenix.zhtml?c=71064&p=irol-newsArticle&ID=1362172&highlight=
Roche announced that the pivotal Phase III study CLL8 showed that patients with previously-untreated chronic lymphocytic leukemia (CLL) survived their disease longer when treated with MabThera/Rituxan (rituximab) compared to chemotherapy alone.
http://www.roche.com/media/media_releases/med-cor-2009-12-08.htm
UBS AG has nominated Wolfgang Mayrhuber for election to its Board of Directors. Wolfgang Mayrhuber is the Chairman of the Executive Board and CEO of Deutsche Lufthansa AG. In September, UBS announced that Sergio Marchionne and Peter Voser had declared their intention not to stand for reelection to the Board.
http://www.ubs.com/1/e/investors/releases?newsId=173690
Sources: UBS, Roche, ITW, P&G, ICSC, Federal Reserve websites.
Economic Comment
Many of us read the recent article in today’s Independent News entitled “The Demise of the Dollar” by Robert Fisk. http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html
Here is our rebuttal: Articles on the demise of the dollar are interesting reading and provide good food for thought (in part because writers like to be on the cutting edge, project some form of subterfuge or conspiracy, and to add more fodder to the anti-American attitudes). However, we remember from our economic studies that supporting a world currency is no easy feat. The amount of currency used to trade oil is a very big number, and we wouldn’t be surprised if the amount of total dollars circulating in international markets nearly equals the amount of dollars used domestically. The point here is that our central bank has to manage the safety, faith, and confidence in a currency that is used globally with full comfort like one’s own. No other country’s economy is big enough and strong enough to support such a huge increase in the use of a currency for world trade. By definition, the huge expansion of a country’s currency is inflationary and can easily debase the value of that currency. To some degree, America has been lucky or good, or sufficiently growth oriented, to support the expanded use of our currency on an international basis. We’d be surprised if China is willing to have international markets truly influence the value of its currency. Sure, they want us out of the picture, and sure the notion of a basket of currencies makes conceptual sense. But remember how the predecessor to the Euro was a basket of European currencies that were pegged in value, one to another, with a managed float that dictated central banking practices across all of Europe. Germany, being the biggest and strongest economy across all of Europe effectively dictated central banking practices to the rest of Europe. For some of us who did not have a lot of faith in French and Italian economic practices, this was a good thing. But the lesser countries sacrificed some autonomy to join in, something that England still refuses to do. And using gold to facilitate trade was found to be impractical years ago. So these articles feed an interesting notion, but we would be surprised if the dollar wasn’t just about as important ten years from now as it is today. If not, that could actually be a good thing if we can retire dollars and reduce the volume of dollars that circulate around the world.
Economic thoughts 1-30-08
Today, the Federal Reserve reduced their targeted interest rate for the fed funds rate by 50 basis points to 3.00%. This followed last week’s surprise reduction of 75 basis points and previous reductions during the fall of 2007. Clearly the Fed is concerned about the slowing growth of the US economy and the contractions in the housing market. More particularly, rising unemployment trends are a concern for everybody, and this also contributed to the Fed’s decision to lower rates. On Friday, 2/1, job creation data will be released along with the unemployment rate for January. This information will provide additional data for the Fed in its ongoing deliberations about interest rate levels. However today, ADP Employer Services released their data for new job formation in January and the figures were much larger than expected. While this data may not be corroborated on Friday when the federal government releases its figures, ADP’s data supports the notion that our economy is continuing to grow. While this singular data point won’t turn a tide, it does provide some encouragement. Yet only time will tell, so stay tuned.