SkyIG

SKY News Summary 10-29-09

Goldman Sachs dropped its estimate in advance of the GDP report to 2.7%. GDP was actually 3.5%. Consensus projected inflation, as measured by the GDP price index, up 1.4 percent. It was up 0.8 percent, following no change in the second quarter. Half the companies in the S&P 500 have reported earnings and 81% have exceeded expectations.
http://blogs.wsj.com/economics/2009/10/28/will-thursdays-gdp-release-disappoint/
http://www.usatoday.com/money/companies/earnings/2009-10-28-earnings-improve-doubt-remains_N.htm

Real gross domestic product increased at an annual rate of 3.5 percent in the third quarter of 2009 according to the “advance” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 0.7 percent. The increase in real GDP in the third quarter was due to increased personal consumption expenditures (PCE increased 3.4 percent with durable goods up 22.3 percent largely due to the Cash for Clunkers program), and residential fixed investment (up 23.3 percent perhaps due to the first time homebuyers credit) partly offset by an upturn in imports (up 16.4 percent), a downturn in state and local government spending (down 1.1 percent), and a deceleration in federal government spending (up 7.9 percent compared with an 11.4 percent increase in the second quarter). The personal saving rate — saving as a percentage of disposable personal income — was 3.3 percent in the third quarter, compared with 4.9 percent in the second.
http://www.bea.gov/newsreleases/national/gdp/2009/gdp3q09_adv.htm

September’s durable goods numbers increased $1.6 billion or 1.0 percent according to the Census Bureau. This followed a 2.6 percent August decrease. Excluding transportation, new orders increased 0.9 percent. Excluding defense, new orders increased 0.5 percent. Machinery, up five of the last six months, had the largest increase, increasing $1.7 billion or 7.9 percent to $23.4 billion. Inventories of manufactured durable goods in September, down nine consecutive months, decreased $3.1 billion or 1.0 percent to $305.0 billion. This followed a 1.5 percent August decrease. Nondefense new orders for capital goods in September increased $1.3 billion or 2.5 percent to $53.6 billion, supporting views that consumer spending is increasing.
http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf

September’s housing Market Composite Index, a measure of mortgage loan application volume, decreased 12.3 percent on a seasonally adjusted basis from one week earlier. However, the seasonality adjustment understates real prices (see below). On an unadjusted basis, the Index decreased 2.8 percent compared with the previous week, which included the Columbus Day holiday. These results should aid efforts to extend the first-time homebuyer credit.
http://www.mbaa.org/NewsandMedia/PressCenter/70785.htm

Here’s a great article on seasonality:
http://mam.econoday.com/reports/rc/2009/Resource_Center/Archives/ST-Archive/10-28-09/index.html?cust=mam&year=2009

In the week ending Oct. 24, the advance figure for seasonally adjusted initial jobless claims was 530,000, a decrease of 1,000 from the previous week’s unrevised figure of 531,000. The 4-week moving average was 526,250, a decrease of 6,000 from the previous week’s unrevised average of 532,250. Continuing claims from the week of October 17th, was 5,797,000, a decrease of 148,000 from the preceding week’s revised level of 5,945,000. The 4-week moving average was 5,960,750, a decrease of 78,750 from the preceding week’s revised average of 6,039,500. This data may be skewed as it does not reflect those unemployed for whom benefits have expired or those who have given up looking for a job. Next Monday’s ISM manufacturing employment index and Wednesday’s ADP report may shed light on the actual unemployment numbers.
http://www.dol.gov/opa/media/press/eta/ui/current.htm

3Q 2009 Earnings Presentations:
CBI
http://b2icontent.irpass.cc/1705%2F100213.pdf?AWSAccessKeyId=1Y51NDPSZK99KT3F8VG2&Expires=1256856697&Signature=JwuJESf4%2Bxuz4qHm%2FLUjiv5ctnw%3D

ConocoPhillips
http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/EarningsReleaseQ309.pdf

Exxon
http://www.exxonmobil.com/Corporate/Files/news_release_earnings3q09.pdf

BP
http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/B/bp_third_quarter_2009_results.pdf

Praxair
http://www.praxair.com/praxair.nsf/AllContent/8545AFF0A265082C8525765C00773241?OpenDocument

Shell
http://www-static.shell.com/static/investor/downloads/financial_information/quarterly_results/2009/q3/q3_2009_presentation.pdf

Sources: Wall Street Journal, USA Today, Shell, Praxair, BP, Exxon, ConocoPhillips, CBI, Department of Labor, Econoday, MBAA, Census Bureau, Bureau of Economic Analysis

SKY News Summary 10-27-09

This should be a busy week for economic indicators as Durable Goods are reported Wednesday, GDP for the third quarter is announced on Thursday, and Personal Income numbers are reported on Friday. The Conference Board’s Consumer Confidence numbers came out today.

According to NASDAQ, the Conference Board’s index “fell more than 5-1/2 points to 47.7 in October, barely above 47.4 seen in July. The assessment of current conditions is alarming, at 20.7 for a nearly 2-1/2 point decline and the lowest reading yet of the cycle. Job readings are very weak for the present situation with 49.6 percent, that is nearly half of the 4,000 sample, saying jobs are hard to get, that’s up more than 2-1/2 points from September.”
http://www.nasdaq.com/asp/econodayframe.asp?

ICSC-Goldman’s weekly sales index, up 0.1 percent, confuses the picture given the bleak consumer confidence job loss numbers. According to Econoday, Redbook also reported improved chain store sales, “with its index up a year-on-year 0.7 percent in the Oct. 24 week. The report said Halloween sales are better than last year including gains for adult costumes. It notes that this year’s Halloween falls on a Saturday which it said should drive more people to celebrate the event.”
http://www.icsc.org/homepage/research_article.php?id=59
http://mam.econoday.com/byshoweventfull.asp?fid=437742&cust=fidelity&year=2009#top

The State Street Investor Confidence Index fell 10 points from September’s level of 118.4. This index “measures investor confidence on a quantitative basis by analyzing the actual buying and selling patterns of institutional investors.” North American and European investors’ confidence fell to 101.1 and 101.8 respectively while Asian investors’ confidence improved to 95.3. (A level of 100 represents a neutral reading “where institutions are neither allocating towards nor away from risky assets.”)
http://pr.statestreet.com/us/en/20091027_1.html

Standard and Poor’s Case-Shiller “composite 10” index increased 1.28 percent in August to 157.93 indicating improved home prices in almost every region (Cleveland, Charlotte, and Las Vegas being the exceptions). Minneapolis is the winner, with home prices up 3.18 percent.
http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_History_102706.xls

The Department of Energy announced stimulus funding of $3.4 billion, plus the $4.7 billion in utility matching funds, for smart grid technology. Four early recipients are Florida Power & Light, Baltimore Gas & Electric, Cobb Electric Membership Corp., and San Diego Gas & Electric. Plans call for 18 million smart meters and 175,000 load management devices, 700 automated substations, and 200,000 advanced transformers. GE is a major player in the smart grid market.
http://www.itsyoursmartgrid.com/blog/2009_10_27_doe.jsp

UBS appointed Robert J. McCann Chief Executive Officer of UBS Wealth Management Americas and Member of the Group Executive Board of UBS AG. Mr. McCann, 51, will immediately assume responsibility for the firm’s domestic wealth management businesses in the United States and Canada, including all international business booked in the US.
http://www.ubs.com/1/e/investors/releases?newsId=172049

ConocoPhillips has an interesting interactive website that shows unexpected ways we use petroleum products.
http://www.conocophillips.com/EN/about/energy/pages/petroleumhouse.aspx

3 Q 2009 Earnings Presentations:

Amex
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTgyMTF8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
Exelon
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzU1NzcxfENoaWxkSUQ9MzQ2ODYwfFR5cGU9MQ==&t=1
Johnson Controls
http://www.johnsoncontrols.com/publish/etc/medialib/jci/corporate/investors/2009.Par.32335.File.tmp/Q409%20Earnings%20Presentation.pdf
Roche
http://www.roche.com/irp3q09e.pdf
T. Rowe
http://corporate.troweprice.com/ccw/files/pressReleases/3Q09EarningsReleaseFINAL.pdf
BP
http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/B/bp_third_quarter_2009_results_presentation_slides.pdf

Sources: BP, T. Rowe, Roche, Johnson Controls, Exelon, Amex, ConocoPhillips, UBS, It’s Your Smart Grid, Standard and Poor’s, State Street, ICSC, Econoday, NASDAQ, websites.

SKY News Summary 10-22-09

The Philadelphia Fed’s Beige Book gives a clear picture of an improving economy with weakness in employment.

Here are some interesting articles from Foreign Affairs regarding the dollar:
http://www.foreignaffairs.com/articles/23937/william-f-butler-and-john-v-deaver/gold-and-the-dollar
http://www.foreignaffairs.com/articles/65475/c-fred-bergsten/the-dollar-and-the-deficits

The Beige book released by the Philadelphia Fed showed that the manufacturing sector is continuing to show signs of recovery, with indexes for general activity, new orders, and shipments registering positive readings for the third consecutive month. However, indexes for employment and work hours remained negative, but trends suggest that employment losses have moderated in recent months.
http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos1009.cfm

Initial jobless claims for the week of October 17th were 531,000, an increase of 11,000 from the previous week’s revised figure of 520,000. The 4-week moving average was 532,250, a decrease of 750 from the previous week’s revised average of 533,000. This was the seventh consecutive decrease in the moving average. Continuing claims for the week of October 10th show a decrease of 0.1 percent to 4.5 percent, although it is unclear what part of this is benefits expiring. Next Tuesday’s Consumer Confidence report from the Conference Board should shed light on job market perceptions.
http://www.dol.gov/opa/media/press/eta/ui/current.htm

GE and Lilly announced new technology that maps biomarkers in cancer patients. The biomarker technology can simultaneously map more than 25 proteins in tumors at the sub-cellular level. “Currently, a diagnosis of cancer and the decision of which therapy to prescribe are based on the histology of the tumor and, in some cases, the expression of just one or two biomarkers inside the patient’s tumor. With this new molecular pathology technology developed in GE’s Biosciences laboratories, researchers can now look at a visual map of the tissue sample, seeing a cancer cell’s comprehensive biomarker signaling pathway, and the interplay of signaling networks inside the tumor. To date, the new technology has been tested successfully on colon and prostate cancer tissue samples and is believed to be applicable to all types of cancer.”
http://www.genewscenter.com/content/detail.aspx?ReleaseID=8769&NewsAreaID=2

Anne M. Mulcahy, Chairman of Xerox Corporation was appointed to the Board of Directors of Johnson & Johnson. Mulcahy was both chairman and chief executive officer of Xerox until July when she retired as CEO after eight years in the position. She is a board director of the Target Corporation, Citigroup, and The Washington Post.
http://www.investor.jnj.com/releasedetail.cfm?ReleaseID=417431

3Q 2009 Earning Presentations:
Altria
http://www.altria.com/investors/02_00_NewsDetail.asp?pubdt=20091021&reqid=1344395

AT&T
http://www.att.com/Investor/Financial/Earning_Info/docs/3Q_09_slide_c.pdf

Boeing
http://www.boeing.com/companyoffices/financial/2009q3/2009q3.pdf

Coke
http://www.thecoca-colacompany.com/presscenter/nr_20091020_corporate_third_qtr_earnings.html

Danaher
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTgwNjZ8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1

Kimberly-Clark
http://files.shareholder.com/downloads/KMB/711878925×0x325465/b9688da4-69dc-4df7-911e-823e228271b8/KMB%20Q3%202009%20presentation.pdf

Lilly
http://files.shareholder.com/downloads/LLY/710994381×0x325263/7112078a-6b0a-46d3-b26b-a88418a6bdc4/Q3_2009_Slides_FINAL.pdf

Merck
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzU1NTMzfENoaWxkSUQ9MzQ2NTIxfFR5cGU9MQ==&t=1

Fifth Third
http://ir.53.com/phoenix.zhtml?c=72735&p=irol-eventDetails&EventId=2447799

UPS
http://www.ups.com/pressroom/us/press_releases/press_release/Press+Releases/Homepage+Press+Releases/ci.UPS+Releases+3rd+Quarter+Results.syndication

Philip Morris
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTgxMDh8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1

Gilead
http://www.gilead.com/pr_1344209

Nestle
http://www.nestle.com/Resource.axd?Id=C1AD4437-A46B-4852-867A-81E70DAE60C2

Sources: Nestle, Gilead, Philip Morris, UPS, Fifth Third, Merck, Lilly, Kimberly-Clark, Danaher, Coke, Boeing, AT&T, Altria, Foreign Affairs Magazine, Philadelphia Fed, Department of Labor.

SKY News Summary 10-20-09

We continue to see signs of recovery with retail sales up, company earnings improving, and inflation (as measured by PPI) slowing. Housing continues to be a sticking point.

ICSC-Goldman’s weekly chain store sales index for October 17 was up 0.2 percent from the prior week and up 2.8 percent year-over-year. This was the strongest year-over-year increase since August 2, 2008.
http://www.icsc.org/homepage/research_article.php?id=58

Building permits, an indicator of future construction, fell by 1.2 percent in September, from the revised August rate of 580,000 and 28.9 percent below the September 2008 estimate of 806,000. Single-family housing starts in September were 3.9 percent above the revised August figure of 482,000.
http://www.census.gov/const/newresconst.pdf

NAHB Chief Economist David Crowe commented that, “As our latest member surveys have indicated, new-home production is continuing at a very low level with few signs of improvement as builders confront the multiple challenges of a severe credit crunch for builder loans, inappropriate appraisals, and the impending expiration of the home buyer tax credit. In particular, the fact that builders are pulling fewer permits right now is an indication of the increasing uncertainty about where this market is headed. Clearly the positive momentum we have seen in the housing market has begun to stall, and congressional action to expand and extend the tax credit may be the only way to keep us from moving back down the hill.”
http://www.nahb.org/news_details.aspx?sectionID=148&newsID=9888

The Bureau of Labor Statistics reported that the Producer Price Index for Finished Goods declined 0.6 percent in September. Over ninety percent of the finished goods decrease was the result of lower energy prices, which moved down 2.4 percent. The indexes for finished goods less foods and energy and for finished consumer foods also contributed to the decline in finished goods prices, both edging down 0.1 percent.
http://www.bls.gov/news.release/ppi.nr0.htm

Jay Brinkmann, Chief Economist and Senior Vice President of Research and Economics for the Mortgage Bankers Association (MBA), testified recently before the Senate Committee on Banking, Housing and Urban Affairs at a hearing titled, “The State of the Nation’s Housing Market.”
Below is Mr. Brinkmann’s oral statement to the committee, as prepared for delivery.
“Good morning. I am Emile J. Brinkmann, Chief Economist of the Mortgage Bankers Association.
Whenever I am asked when the housing market will recover, I explain that the economy and the housing market are inextricably linked. The number of people receiving paychecks will drive the demand for houses and apartments and the recovery will begin when unemployment stops rising. Since September 2008, we have lost 5.8 million jobs in the US, more than five times the number the previous year. Job losses of this magnitude put incredible strains on all of our systems, especially housing.
What is different about this recession is that we entered it with an already weakened housing market. In past recessions, it was unemployment that increased delinquencies and weakened the housing market. Prior to the onset of this recession, the housing market was already weakened due in part to the heavy use of loans like pay option ARMs and stated income loans by borrowers for whom these loans were not designed. Together with rampant fraud by some borrowers buying multiple properties and speculating on continued price increases, this led to very high levels of construction to meet that increased demand, demand that turned out to be unsustainable. When that demand disappeared, a large number of houses were stranded without potential buyers. The resulting imbalance in supply and demand drove prices down, particularly in the most overbuilt markets like California, Florida, Arizona, and Nevada – markets that had previously seen some of the nation’s largest price increases.
Thus the nature of the problem has shifted. A year ago, subprime ARM loans accounted for 36 percent of foreclosures started, the largest share of any loan type despite being only 6 percent of the loans outstanding. Now prime fixed-rate loans represent the largest share of foreclosures initiated. Perhaps more significantly, almost 40 percent of all prime fixed-rate foreclosures are in the states of California, Florida, Arizona and Nevada. So even though those four states consistently have about two-thirds of foreclosures involving pay option ARMs and stated income ARMs, they now also have a disproportionate share of the prime fixed-rate problem.
It is difficult to overstate the degree to which those four states continue to drive the national mortgage delinquency numbers. The national quarterly foreclosure rate reported by the MBA for the second quarter of this year was 1.36 percent. However, in the four states I mentioned, it was 2.34 percent, roughly 10 times the rate we saw in those states during the boom years. Without those four states, the national foreclosure rate would be about 1.04 percent, roughly double the rate we saw for the rest of the country during the boom years.
Unfortunately, the consensus is that unemployment will continue to get worse through the middle of next year before it slowly begins to improve. While we have seen certain good signs like a stabilization of home prices and millions of borrowers refinancing into lower rates, we still face major challenges.

The most immediate challenge is what will happen to interest rates when the Federal Reserve terminates its program for purchasing Fannie Mae and Freddie Mac mortgage-backed securities in March. The Federal Reserve has purchased the vast majority of MBS issued by these two companies this year and in September purchased more than 100% of the Fannie and Freddie MBS issued that month. The benefit has been that mortgage rates have been held lower than what they otherwise would have been without the purchase program, but there is growing concern over where rates may go once the Federal Reserve stops buying and what this will mean for borrowers. While the most benign estimates are for increases in the range of 20 to 30 basis points, some estimates of the potential increase in rates are several times those amounts. The extension of the Fed’s MBS purchase program to March gives the Obama administration time to announce its interim and, perhaps, long-term recommendations for Fannie and Freddie in February’s budget release.
All of this, however, points to the need to begin replacing Fannie Mae and Freddie Mac with a long-term solution. MBA has been working on this problem for over a year now and recently released its plan for rebuilding the secondary market for mortgages.
MBA’s plan envisions a system composed of private, non-government credit guarantor entities that would insure mortgage loans against default and securitize those mortgages for sale to investors. These entities would be well-capitalized and regulated, and would be restricted to insuring only a core set of the safest types of mortgages, and would only be allowed to hold de minimus portfolios. The resulting securities would, in turn, have a federal guarantee that would allow them to trade similar to the way Ginnie Mae securities trade today. The guarantee would not be free. The entities would pay a risk-based fee for the guarantee, with the fees building up an insurance fund that would operate similar to the bank deposit insurance fund. Any credit losses would be borne first by private equity in the entities and any risk-sharing arrangements put in place with lenders and private mortgage insurance companies. In the event one of these entities failed, the insurance fund would cover the losses. Only if the insurance fund were exhausted, would the government need to intervene.
We believe this proposal represents an important improvement over the present structure in a number of areas and we are eager to discuss it further with the members of this committee as well as other proposals detailed in the written testimony. Thank you.”
http://www.mortgagebankers.org/NewsandMedia/PressCenter/70673.htm

3 Q 2009 Earnings Presentations:

GE
http://www.ge.com/pdf/investors/events/10162009/ge_webcast_presentation_10162009.pdf
http://files.gecompany.com/gecom/investors/events/ge_healthcare_analyst_meeting_oct_20.pdf

ITW
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzU1MTc5fENoaWxkSUQ9MzQ2MDE5fFR5cGU9MQ==&t=1

J&J
http://files.shareholder.com/downloads/JNJ/711878248×0x324004/369d4381-a027-401a-842b-5b6f9df415e4/WEB_Analyst_3Q_Gorsky_16×9_v19.pdf

Bloomberg interview of Bill Burns, CEO Roche Pharmaceuticals
http://www.roche.com/home/media.htm

TI
http://investor.ti.com/releasedetail.cfm?ReleaseID=416547

UTC
http://www.utc.com/utc/Static%20files/Investor_Relations/2009_q3_earnings.pdf

IBM
http://www.ibm.com/investor/sharedv3/auditorium.phtml?/investor/3q09/webcastini

Halliburton
http://www.halliburton.com/public/news/pubsdata/press_release/2009/Q309_Earnings_Release_final.pdf

Walgreen
http://files.shareholder.com/downloads/WAG/711896905×0x321436/de00abe9-8edc-4245-924e-ccfa263ecfd1/WAG%20Complete%20-%204Q09%20earnings%20slides%209-28%202.pdf

Sources: IBM, J&J, Walgreen, IBM, UTC, TI, GE, MBA, BLS, NAHB, Census, ICSC websites.

SKY News Summary 10-13-09

Retail sales continue to get good news from the latest ICSC-Goldman chain store results.   The U.S. Department of Commerce releases monthly retail sales numbers for September tomorrow.
ICSC-Goldman released its chain store sales weekly results for October 10. According to NASDAQ, chain store sales rose 0.6 percent for year-over-year rate of 1.0 percent.
http://www.nasdaq.com/asp/econodayframe.asp?page=http://anasdaq.econoday.com/byweek.asp?cust=nasdaq

According to National Association for Business Economics’ latest survey, ‘ “…the vast majority of business economists believe that the recession has ended but that the economic recovery is likely to be more moderate than those typically experienced following steep declines. The NABE panel upgraded the economic outlook for the next several quarters, compared with the previous survey,” said NABE President-elect Lynn Reaser, chief economist at Point Loma Nazarene University. “Following a sharp 6.4 percent (annual rate) contraction in the first quarter of this year and another 0.7 percent drop in the second quarter, NABE forecasters expect real GDP to rise at an above trend 2.9 percent rate in the second half. The more-than-three-year downturn in the housing market is very close to coming to an end, with substantial growth (from a low base) expected for next year. According to the survey, the key areas of concern involve the large increases in federal debt and unemployment rates that are expected to remain very high through next year.”’
http://www.nabe.com/publib/macsum.html

Here is a well-written article by Assistant Secretary for Economic Policy Alan B. Krueger before the National Association for Business Economics on “Stress Testing Economic Data”:
http://www.ustreas.gov/press/releases/tg316.htm

GE Oil & Gas is using satellite connections to remotely tune and test gas turbine combustion systems at eleven pipeline stations owned by Reliance Gas Transportation Infrastructure Limited of Mumbai, India. These pipelines are in remote areas and will be operational at the end of next month.
http://www.genewscenter.com/content/detail.aspx?ReleaseID=8629&NewsAreaID=2

IBM announced that it has signed a 10-year strategic outsourcing agreement with Korea Investment & Securities Co. of South Korea. The project, valued at $157 million, provides KIS with IT services, including design, building and installation of an IT infrastructure system.
http://www-03.ibm.com/press/us/en/pressrelease/28613.wss

Cisco announced it will acquire Starent Networks, a supplier of IP-based mobile infrastructure solutions for a purchase price of approximately $2.9 billion. The acquisition has been approved by the boards of directors of both companies.
Starent Networks was founded in 2000 and completed its initial public offering in 2007. The company is based in Tewksbury, Mass. and has approximately 1,000 employees worldwide. For the year ended Dec. 31, 2008, Starent Networks reported revenue of $254.1 million, up 74 percent from the prior year.
http://investor.cisco.com/releasedetail.cfm?ReleaseID=415379

J&J 3rd Quarter 2009 earnings presentation is available at:
http://files.shareholder.com/downloads/JNJ/711878248×0x324004/369d4381-a027-401a-842b-5b6f9df415e4/WEB_Analyst_3Q_Gorsky_16×9_v19.pdf

Intel’s 3rd Quarter 2009 earnings presentation is available at:
http://files.shareholder.com/downloads/INTC/717196182×0x324110/71404b95-1f0c-4807-94f5-dec76e41b56f/CFO_Commentary_on_Q3_2009_Results.pdf

Sources: IBM, J&J, Cisco, Intel, GE, U.S. Treasury, National Association for Business Economics and NASDAQ websites.

SKY News Summary

The economic numbers continue to give us signs of improvement.

In the week ending Oct. 3, initial claims dropped by 33,000 compared to the week before. The 4-week moving average was 539,750, a decrease of 9,000 from the previous week. Continuing claims for the week ending Sept. 26 was 6,040,000, a decrease of 72,000. http://www.dol.gov/opa/media/press/eta/ui/current.htm 

Consumer credit decreased at an annual rate of 5-3/4 percent in August 2009.  Revolving credit decreased at an annual rate of 13 percent, and nonrevolving credit decreased at an annual rate of 1-1/2 percent. Most of the decrease was in pools of securitized assets, not in commercial bank loans.

http://www.federalreserve.gov/Releases/G19/Current/g19.htm

Boeing’s board of directors has elected retired U.S. Navy Adm. Edmund Giambastiani, Jr. as its newest member. Admiral Giambastiani was previously vice chairman of the Joint Chiefs of Staff, from 2005 to 2007 and was the second-highest ranking officer in the U.S. military

http://boeing.mediaroom.com/index.php?s=43&item=873

 Medtronic announced the CE (Conformité Européene) mark and international launch of the Captivia Delivery System for the Valiant Thoracic Stent Graft, a minimally invasive treatment for aneurysms and other lesions of the thoracic aorta.

http://wwwp.medtronic.com/Newsroom/NewsReleaseDetails.do?itemId=1255020953191&lang=en_US

Gilead Sciences announced the European Commission has granted conditional marketing authorization for Cayston 75 mg powder and solvent for nebuliser solution (aztreonam lysine) for the suppressive therapy of chronic pulmonary infections due to Pseudomonas aeruginosa (P. aeruginosa) in patients with cystic fibrosis (CF).

http://www.gilead.com/pr_1334875

Sources:Gilead, Medtronic, Boeing, Federal Reserve and Department of Labor websites 

SKY News Summary 10-06-09

Economic news continues to include both positive and negative indicators, but nothing startling.  Meanwhile, corporate news indicates strategic maneuvers with an eye toward the future.

The ICSC-Goldman Sachs chain store sales index for the week ending October 3 rose by 0.3% from the prior week. However, for the full month of September, sales are expected to be down year-over-year.

http://www.icsc.org/homepage/research_article.php?id=52

The Bureau of Labor Statistics released its Consumer Expenditure Survey for 2008. Average annual expenditures per consumer rose 1.7 percent in 2008 following an increase of 2.6 percent in 2007.  “The spending increase was less than the 3.8-percent increase in prices from 2007 to 2008 as measured by the average annual change in the Consumer Price Index (CPI-U). The increase in spending in 2008 was the smallest increase since the 0.3-percent rise in 2003.   Increases in spending for housing (1.1 percent) and food (5.1 percent) were somewhat offset by decreases in spending for transportation (-1.8 percent) and apparel (-4.3 percent) resulting in the small overall increase in 2008. Among the other major components, spending increased for healthcare (4.3 percent), personal insurance and pensions (5.0 percent), and entertainment (5.1 percent).”

http://www.bls.gov/news.release/cesan.nr0.htm

The Securities and Exchange Commission approved new exchange rules for breaking stock trades that are considered “clearly erroneous.” The new rules provide a consistent standard across stock exchanges. The problems with inconsistent exchange rules were evident last fall when the extraordinary market volatility led to a substantial increase in the number of erroneous trades. “In general, the new rules allow an exchange to consider breaking a trade only if the price exceeds the consolidated last sale price by more than a specified percentage amount: 10% for stocks priced under $25; 5% for stocks priced between $25 and $50; and 3% for stocks priced over $50. In addition, the erroneous trade review process generally must commence within 30 minutes of the trade, and be resolved within 30 minutes.”

http://www.sec.gov/news/press/2009/2009-215.htm

American Express announced that the “company’s global consumer, small business and network businesses will report to Edward P. Gilligan, vice chairman. Mr. Gilligan had previously led the global Business to Business Group. A new Global Services organization that includes company-wide customer service, technologies, operations, business processing and information management will report to Stephen J. Squeri, who has been promoted to group president. Mr. Squeri has been in charge of Technologies and Corporate Development. A new Enterprise Growth organization is being created to leverage existing assets, generate incremental fee revenue and drive the company’s entry into new payment areas and related businesses. A senior level executive from outside American Express is being recruited to head this organization.”

http://home3.americanexpress.com/corp/pc/2009/orgch.asp

CBS Corporation announced that it has completed the previously announced sale of four radio stations in Portland, Oregon, to Alpha Broadcasting for $40 million in cash.

http://www.cbscorporation.com/news/prdetails.php?id=4543

There is a good article on Roche Holdings in the September 23^rd issue of Barron’s.

http://webreprints.djreprints.com/2282940918573.html

PepsiCo announced it would form a new entity comprising the bottling businesses, called PepsiCo Bottling North America. Eric J. Foss, current chairman and CEO of PBG, the world’s largest bottler of PepsiCo beverages, will become CEO of the new bottling unit, reporting to PepsiCo Chairman and CEO Indra Nooyi.

http://www.pepsico.com/PressRelease/PepsiCo-Says-it-will-Form-New-Bottling-Unit-Eric-Foss-27-Year-Industry-Veteran-w10052009.html

IBM announced that its mortgage servicing subsidiary has signed an agreement with Bank of America to acquire the core operating assets of Wilshire Credit Corporation, including the Wilshire mortgage servicing platform, and hire Wilshire’s approximately 900 employees. Terms of the transaction were not disclosed.

http://www-03.ibm.com/press/us/en/pressrelease/28556.wss

Mary J. Miller, who currently serves as director of T. Rowe Price’s Fixed Income Division, was asked by President Obama to be assistant secretary of the Treasury for financial markets in the United States Department of the Treasury:

http://corporate.troweprice.com/ccw/home/ourCompany/pressReleases/pressRelease.do

Sources:  T.Rowe, IBM, Pepsi, Roche, CBS, American Express, SEC, BLS, ICSC 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.