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.
SKY News Summary 01-19-10
Unemployment and its ripple effects on consumer spending, housing and manufacturing are seen in today’s industrial production and consumer sentiment reports. The good news is that inflation is in check, according to the latest CPI reading, and that there are foreign purchasers for our growing debt.
The Treasury announced that in November 2009, net foreign purchases of long-term securities were $126.8 billion compared to $36.4 billion in August, $41.2 billion in September and $19.3 billion in October. But for twelve months ended November 2009, net foreign purchases were down slightly to $414.4 billion compared to November 2008 twelve month purchases of $511.0. Private foreign investors accounted for much ($96 billion) of November 2009 foreign purchases.
http://www.ustreas.gov/press/releases/reports/11InternationalCapitalDataforNov.pdf
The National Association of Home Builders/Wells Fargo Housing Market Index indicates that home builder confidence declined slightly in January due to the “poor job market and large number of foreclosed homes for sale…. The January HMI fell one point to 15, its lowest point since June of 2009. Two of its three component indexes registered one-point declines, with the index gauging current sales conditions and the index gauging traffic of prospective buyers falling to 15 and 12, respectively. The index gauging sales expectations in the next six months held even, at 26.”
http://www.nahb.org/news_details.aspx?sectionID=148&newsID=10260
The Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent. Food and energy prices both rose 0.2 percent while indexes for new vehicles declined. For the 12 month period ending December 2009, the CPI-U rose 2.7 percent, compared to 0.1 percent for 2008. The larger increase was primarily due to the energy index, which rose 18.2 percent during 2009 after falling 21.3 percent in 2008. The food index, which rose 5.9 percent in 2008, fell 0.5 percent for the 12 months ending December 2009, the first December-to- December decline since 1961.
http://www.bls.gov/news.release/cpi.nr0.htm
Industrial production increased 0.6 percent in December due mainly to an increase of 5.9 percent in electric and gas utilities resulting from unseasonably cold weather. Manufacturing production decreased 0.1 percent. The output of consumer durables fell 0.9 percent, but the index for business equipment rose 0.9 percent in December. Both transit equipment and information processing equipment increased more than 1.0 percent. The production of construction supplies decreased 2.0 percent in December and more than reversed its gain a month earlier. For the fourth quarter as a whole, construction supplies fell at an annual rate of 7.6 percent after having risen 1.6 percent in the third quarter.
http://www.federalreserve.gov/releases/g17/Current/
Consumer Confidence improved slightly in December with just one-in-five of those surveyed expecting the economy to further worsen during the year ahead. “Consumers were evenly split between the expectation of continued improvement and unchanged conditions in the economy. Consumers can be accurately described as much less pessimistic as a year ago—54% expected unfavorable economic conditions, down from 76% last December—largely due to the impact of the stimulus on overall economic conditions.”
https://customers.reuters.com/community/university/default.aspx
Company News:
Procter & Gamble announced that Lynn M. Martin, in accordance with the company’s customary retirement age for directors, will retire effective immediately.
http://phoenix.corporate-ir.net/phoenix.zhtml?c=104574&p=irol-newsArticle&ID=1375830&highlight=
Intel
http://www.intc.com/releasedetail.cfm?ReleaseID=437807
Citigroup
http://www.citigroup.com/citi/press/2010/100119a.htm
IBM
http://www.ibm.com/investor/4q09/press.phtml
Sources: IBM, Citigroup, Intel, P&G, Reuters, Federal Reserve, Bureau of Labor Statistics, National Association of Home Builders, and U.S. Treasury websites.
SKY News Summary 01-12-10
It seems like the market is holding its breath pending corporate earnings reports coming out later this month, and CPI, Industrial Production and Consumer Sentiment out later this week.
The ICSC-Goldman Sachs chain store sales index for the week ending January 9 dropped 3.0% from the prior week given there were fewer bargains available to consumers due to improved inventory systems. The government’s retail sales report for December comes out on Thursday.
http://www.icsc.org/homepage/research_article.php?id=89
Patents issued could be interesting measure of future corporate success. IFI lists IBM as receiving the highest number of patents, 4,914 patents, up 17 percent from last year. According to IFI, “As a whole, U.S. companies received approximately 7 percent more utility patents in 2009 than in 2008, compared to 6.5 percent by foreign companies. The U.S. also received more than twice as many corporate patents than Japan (23%), the country with the second most U.S. patents issued in 2009. South Korea (5.6%) moved into third place displacing Germany (5.2%) for the first time. Collectively, U.S. firms may be slightly behind foreign firms as a group, but individually, they showed significant improvement over 2008. The top U.S. companies receiving patents are:
• Boeing, up 26%
• Broadcom, up 11%
• Cisco, up 30%
• General Electric, up 7%
• GM Global, up 68%
• Honeywell, up nearly 6%
• Sun, up 10%
• Xerox, up 18%
The top 50 companies receiving patents are:
Rank, Company Name, 2009 Patents
1 INTERNATIONAL BUSINESS MACHINES CORP 4914
2 SAMSUNG ELECTRONICS CO LTD KR 3611
3 MICROSOFT CORP 2906
4 CANON K K JP 2206
5 PANASONIC CORP JP (1) 1829
6 TOSHIBA CORP JP 1696
7 SONY CORP JP 1680
8 INTEL CORP 1537
9 SEIKO EPSON CORP JP 1330
10 HEWLETT-PACKARD DEVELOPMENT CO L P (2) 1273
11 FUJITSU LTD JP 1220
12 LG ELECTRONICS INC KR 1065
13 HITACHI LTD JP 1058
14 HON HAI PRECISION INDUSTRY CO LTD TW 995
15 RICOH CO LTD JP 988
16 GENERAL ELECTRIC CO 979
17 MICRON TECHNOLOGY INC 966
18 CISCO TECHNOLOGY INC 913
19 FUJIFILM CORP JP 880
20 HONDA MOTOR CO LTD JP 774
21 HDENSO CORP JP 745
22 SIEMENS AG DE 716
23 BROADCOM CORP 714
24 SHARP K K JP 657
25 HONEYWELL INTERNATIONAL INC 655
26 TEXAS INSTRUMENTS INC 652
27 NOKIA AB OY FI 648
28 XEROX CORP 624
29 INFINEON TECHNOLOGIES AG DE 605
30 LG DISPLAY CO LTD KR (3) 597
31 HYNIX SEMICONDUCTOR INC KR 587
32 SUN MICROSYSTEMS INC 561
33 SEMICONDUCTOR ENERGY LABORATORY CO LTD JP 545
34 BOEING CO THE 534
35 BROTHER KOGYO K K JP 532
35 MITSUBISHI DENKI K K JP 532
35 TOYOTA JIDOSHA K K JP 532
38 GM GLOBAL TECHNOLOGY OPERATIONS INC 531
39 NEC CORP JP 526
40 KONINKLIJKE PHILIPS ELECTRONICS N V NL 515
41 SILVERBROOK RESEARCH PTY LTD AU 474
42 BOSCH, ROBERT GMBH DE 467
43 AT&T INTELLECTUAL PROPERTY I L P 444
44 SANYO ELECTRIC CO LTD JP 443
45 FUJI XEROX CO LTD JP 425
46 SAMSUNG SDI CO LTD KR 423
47 ALCATEL-LUCENT USA INC 413
48 INDUSTRIAL TECHNOLOGY RESEARCH INSTITUTE TW 397
49 NEC ELECTRONICS CORP JP 391
50 HITACHI GLOBAL STORAGE TECHNOLOGIES NETHERLANDS B V 385″
http://www.ificlaims.com/IFI%202009%20patents%20011210%20final.htm
The Department of Commerce, announced today that “total November exports of $138.2 billion and imports of $174.6 billion resulted in a goods and services deficit of $36.4 billion, up from $33.2 billion in October, revised. November exports were $1.2 billion more than October exports of $137.0 billion. November imports were $4.4 billion more than October imports of $170.2 billion. The November figures show surpluses, in billions of dollars, with Hong Kong $1.4 ($1.6 for October), Australia $1.0 ($1.3), Singapore $0.7 ($0.9), and Egypt $0.2 ($0.4). Deficits were recorded, in billions of dollars, with China $20.2 ($22.7), European Union $6.4 ($4.9), OPEC $6.1 ($5.8), Japan $5.4 ($4.4), Mexico $5.1 ($4.6), Nigeria $2.1 ($1.4), Venezuela $1.6 ($1.7), Canada $1.4 ($2.1), Taiwan $0.9 ($0.7), and Korea $0.7 ($0.5).”
http://www.bea.gov/newsreleases/international/trade/2010/pdf/trad1109.pdf
Company News:
AT&T’s presentation at the 20th Annual Global Entertainment, Media & Telecommunications Conference is available at:
http://www.veracast.com/citigroup/emt2010/player.cfm?eventName=1021_attinc
Merck’s presentation at the J.P. Morgan HealthCare Conference is available at:
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjY2Mjk5N3xDaGlsZElEPTM2NDM4MHxUeXBlPTI=&t=1
Target announced it has acquired the Smith & Hawken brand from The Scotts Company.
http://investors.target.com/phoenix.zhtml?c=65828&p=irol-newsArticle&ID=1373086&highlight=
Sources: AT&T, Merck, Target, BEA, IFI, and ICSC websites
SKY News Summary 1-11-2010
Nonfarm payroll employment dropped 85,000 in December, according to the Bureau of Labor Statistics. Employment fell in construction, manufacturing, and wholesale trade, while temporary help services and health care added jobs. However, this figure may be misleading. Construction employment fell by a significant 53,000 jobs, but much of this may have been short-term layoffs due to the weather. The National Oceanic and Atmospheric Administration’s weekly temperature anomaly map for the weeks in December shows the country between 9 and 15 degrees colder than normal, conditions not conducive for construction work.
GE Transportation announced that it received an award under the $25.5 million 2009 American Recovery and Reinvestment Act to refurbish a manufacturing facility in Schenectady for assembly of a new energy storage product line.
http://www.genewscenter.com/Press-Releases/GE-Battery-Plant-Receives-Extra-Jolt-24b2.aspx
Roche announced that the FDA approved ACTEMRA for the treatment of moderately to severely active rheumatoid arthritis. ACTEMRA has been studied in five multi-national Phase III studies, involving more than 4,000 patients, making it the largest clinical development program for an indication in RA to date. ACTEMRA will be available in the US the week of January 18 2010.
http://www.roche.com/media/media_releases/med-cor-2010-01-11.htm
UPS announced that it expects to exceed its earnings estimate for 4th quarter 2009 earnings, now anticipating a range of $0.73 to $0.75 per diluted share. The company previously projected earnings of $0.58 to $0.65 per diluted share for this period.
“The stronger earnings stem from better-than-expected results in both domestic and international operations and savings through cost management,” said Kurt Kuehn, UPS’s chief financial officer. “However, we still anticipate a gradual economic recovery with improvement more evident as 2010 progresses.” The company plans to restructure, eliminating 1,800 management and administrative positions.
http://www.bls.gov/news.release/empsit.nr0.htm
Sources: UPS, GE ,Roche, NOAA, Department of Labor websites.
SKY News Summary 01-07-10
Jobs data continues to take center stage as the Department of Labor reported advance seasonally adjusted initial claims for the week ended January 2 was basically unchanged. In fact, the advance number of actual initial claims under state programs increased 88,000 from the previous week. Tomorrow’s employment numbers out of the DOL will be closely watched. The fourth-quarter earnings season opens Monday with news from Alcoa.
In the week ending Jan. 2, seasonally adjusted initial jobless claims were up 1,000 to 434,000. The four-week average decreased 10,250 to 450,250. Continuing claims were down 179,000 in the Dec. 26 week to 4,802,000. The advance number of actual initial claims under state programs, unadjusted, totaled 645,571 in the week ending Jan. 2, an increase of 88,000 from the previous week. There were 731,958 initial claims in the comparable week in 2009.
http://www.dol.gov/opa/media/press/eta/ui/current.htm
The Federal Open Market Committee meeting held December 15-16 (the minutes were released yesterday) showed few surprises. Although the committee voted unanimously to leave interest rates alone, there was some diversity of opinion. The committee generally sees the economic recovery gaining momentum. The minutes mention that, “Inflation compensation based on 5-year Treasury inflation-protected securities (TIPS) increased, apparently owing in part to an announcement by the Treasury of a smaller-than-expected amount of issuance of TIPS next year.”
http://www.federalreserve.gov/newsevents/press/monetary/fomcminutes20091216.pdf
The full announcement from the Treasury regarding TIPS is:
“The Treasury is announcing the following changes to the issuance calendar:
- Reintroduction of 30-year Treasury Inflation-Protected Securities (TIPS), with the first auction to occur in February 2010.
- Discontinuation of 20-year TIPS auctions, effective immediately.
To potentially improve liquidity in the TIPS program, extend the average maturity of the portfolio, and better capture the premium associated with inflation protection, Treasury will replace its 20-year TIPS offering with 30-year TIPS.
The 30-year TIPS will be issued on a semi-annual basis, with an initial offering in February, followed by a reopening of the original issue in August 2010. Similar to the 5-year TIPS offering, the security will mature mid-month, but will settle at the end of the month. The first 30-year TIPS auction will be on Monday, February 22, 2010, for settlement on Friday, February 26, 2010.
Additionally, market participants have communicated to Treasury that more frequent auctions would help improve liquidity in the TIPS market. Given Treasury’s commitment to this program, and our plan to gradually increase TIPS issuance, we are considering making further changes to the TIPS auction calendar.”
http://www.treas.gov/press/releases/tg346.htm
Standard and Poors offers an interesting economic commentary at:
http://www.standardandpoors.com/products-services/articles/en/us/?assetID=1245201021569
According to ICSC, year-over-year retail sales were up 2.8% in December. “The two-month (November-December) traditional holiday season posted a gain of 1.8% compared with a hefty record 5.6% drop in 2008. The 2009 holiday season pace was the strongest since 2006 (the last non-recession holiday season) when sales grew by a hefty 4.4%.”
http://www.icsc.org/homepage/research_article.php?id=87
The Mortgage Bankers Association strongly disagrees with a November 2008 study done by the Center for Responsible Lending regarding subprime mortgages. Reading the information given by the two organizations provides insight into the actual depth of the subprime mortgage situation and problems involved with defining the problem. The CRL report states that, “We now project that almost 2.2 million subprime foreclosures will occur primarily in late 2008 through the end of 2009, up from our original 1.1 million estimate made in 2006. Additionally we estimate that 40.6 million homes in neighborhoods surrounding those foreclosures will suffer price declines averaging over $8,667 per home and resulting in a $352 billion total decline in property values.”
The MBA report concludes that, “The CRL ‘Spillover’ report adds to current public misconceptions about the subprime mortgage market by overestimating the number of properties affected and then overstating the economic impact on those properties.
More accurate information on subprime foreclosures, including subprime
foreclosures by region, is available from MBA.”
http://www.mbaa.org/files/Research/SubprimePolicyNote.pdf
http://www.responsiblelending.org/mortgage-lending/tools-resources/updated-foreclosure-and-spillover-brief-8-18.pdf
Sources: MBA, CRL, ICSC, S&P, Treasury, Federal Reserve, and Department of Labor websites.
SKY News Summary 01-05-010
Pending home sales and new construction spending weighed down good economic news on consumer spending and manufacturing. Congressional waivering on the extension of the popular homebuyer’s tax credit caused prospective homebuyers to postpone purchases pending further clarity on the issue.
According to NASDAQ, December’s ISM manufacturing report showed the headline composite index at 55.9, well over the 53.6 reading in November. (A score of 50 would mean no growth). New orders increased more than 5 points, reaching 65.5. Ongoing production continues to be strong, at 61.8. The employment index rose more than 1 point to 52.0.
http://www.nasdaq.com/asp/econodayframe.asp?page=http://anasdaq.econoday.com/byweek.asp?cust=nasdaq
Construction spending during November was not strong. The Department of Commerce’s estimate showed a 0.6 percent drop in spending which was exacerbated by a significant downward revision in October’s estimate of $905.6 billion. The November figure is 13.2 percent below the November 2008 estimate of $1,037.3 billion. This year’s decline was mainly due to a drop in private residential construction which was 1.6 percent below the revised October estimate of $254.9 billion.
http://www.census.gov/const/C30/release.pdf
ICSC-Goldman reports stronger sales in the week ending January 2, 2010. Weekly sales were up 1.5 percent with year-over-year sales at 2.5 percent.
The NRA’s Pending Home Sales Index fell a substantial 16.0 percent to 96.0 in November as purchasers expected the first-time buyer tax credit to expire. Of course the credit was extended, but not until too late. ‘Lawrence Yun, NAR chief economist, said “It will be at least early spring before we see notable gains in sales activity as home buyers respond to the recently extended and expanded tax credit,” he said. “The fact that pending home sales are comfortably above year-ago levels shows the market has gained sufficient momentum on its own. We expect another surge in the spring as more home buyers take advantage of affordable housing conditions before the tax credit expires.”
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 the 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/2010/01/pending_surge
In company news, Louis Chênevert succeeded George David as the eighth Chairman of United Technologies.
http://www.utc.com/utc/News/News_Details/2010/2010-01-04.html?page=1&year=0
Sources: NRA, ICSC, Census, UTC, and NASDAQ websites.