SKY News Summary 02-23-10
Consumers used last week’s respite in the weather to shop. If the Consumer Confidence numbers are any indication, the small surge in retail which occurred last week, may retract if the consumers’ outlook and unemployment concerns weigh on consumer spending. The Consumer Confidence report may be our best indicator for reliable unemployment numbers, and bodes ill for the February jobs report. The Administrations’ resurrection of Healthcare reform and focus on passing a new Jobs Bill added more uncertainty to the business climate as seen in Paul Otellini’s (President and CEO of Intel) prepared remarks before the Brookings Institute today. Perhaps this is showing up in Consumer Confidence. Later in the week, we will hear from Fed Chairman Ben Bernanke with his semiannual testimony before Congress, and may also see Greece conduct a debt auction. New and existing home sales come out on Wednesday and Friday.
“The ICSC-Goldman Sachs (ICSC-GS) chain store sales index for the week ending February 20 rebounded by 2.3% from the prior week (for the week that included Valentine’s Day and Presidents’ Day) and rose by 0.9% on a year-over-year basis.”
http://www.icsc.org/homepage/research_article.php?id=106
The Conference Board’s Consumer Confidence Index which had risen last month, dropped dramatically this month from 77.3 in January to 63.8 this month. Of the 5,000 households surveyed, a miniscule 3.6 percent thought the jobs market was good while 47.7 percent thought jobs were “hard to get”. “The percentage of consumers expecting fewer jobs increased to 24.6 percent from 18.9 percent. Those anticipating more jobs will become available in the months ahead declined to 13.4 percent from 15.8 percent. The proportion of consumers anticipating an increase in their incomes declined to 9.5 percent from 11.0 percent.” The Present Situation Index decreased from 25.2 to 19.4 which is the lowest it has been since February 1983. (A level of 80 usually indicates economic expansion).
http://www.conference-board.org/economics/ConsumerConfidence.cfm
Remarks by Paul Otellini, President and Chief Executive Officer of Intel at the Brookings Institute on February 23, 2010
http://www.intel.com/pressroom/kits/investinamerica/Brookings_PaulOtellini_022310.pdf
In his remarks, Mr. Otellini mentions an article by Stephen Ezell which talks about the U.S. deficiency in information technology and its causes. Here is that article:
“Explaining International Mobile Payments Leadership”, by Stephen Ezell, November 17, 2009
http://www.itif.org/files/2009-mobile-payments.pdf
Industrial production showed real improvement last month increasing 0.9 percent following a gain of 0.7 percent in December. Manufacturing production made a turnaround, increasing 1.0 percent in January, with increases for most of its major components. Progress was especially notable in consumer durables, which increased 2.7 percent mainly on automotive products, which were up 5.1 percent. The largest gains in production among the major categories of non-energy nondurable goods were for clothing, foods and tobacco.
http://www.federalreserve.gov/Releases/g17/Current/
January’s spike in energy costs was responsible for a jump in January’s headline PPI which rose 1.4 percent. The index for finished energy goods rose 5.1 percent in January, its fourth consecutive monthly increase. About two-thirds of the advance can be attributed to an 11.5-percent jump in gasoline prices. Higher prices for pharmaceutical preparations also contributed to the increase in the finished core index.
http://www.bls.gov/news.release/ppi.nr0.htm
The January Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent, also due to a rise in the energy index. The core CPI fell 0.1 percent in January, due to decreases in the indexes for shelter, new vehicles, and airline fares. The medical care index posted its largest increase since January 2008, and the index for used cars and trucks increased significantly for the sixth month in a row.
http://www.bls.gov/news.release/cpi.nr0.htm
Sources: Bureau of Labor Statistics, Federal Reserve, The Information Technology & Innovation Foundation, Intel, NASDAQ calendar, Conference Board, ICSC-Goldman Sachs websites.
SKY News Summary 02-11-10
The snow storm has delayed the release of some important economic data this week and, once again, has skewed weekly unemployment claims data. The Treasury budget statement was postponed to next week. Retail Sales data and the Business Inventories data will be released on Friday, instead of Thursday. International Trade data was released on schedule.
The Department of Commerce’s International Trade data showed total December exports of $142.7 billion and imports of $182.9 billion resulting in a goods and services deficit of $40.2 billion, up from $36.4 billion in November, revised. The November to December increase in exports of goods reflected primarily an increase in capital goods ($1.8 billion). The increase in imports of goods reflected primarily an increase in industrial supplies and materials ($4.4 billion). The goods and services deficit was $380.7 billion in 2009, down from $695.9 billion in 2008. As a percentage of U.S. gross domestic product, the goods and services deficit was 2.7 percent in 2009, down from 4.8 percent in 2008.
http://www.bea.gov/newsreleases/international/trade/2010/trad1209.htm
The Mortgage Bankers Association‘s weekly index of purchase applications (for the week ending February 5th) decreased 1.2 percent on a seasonally adjusted basis from one week earlier. The Refinance Index, however, increased 1.4 percent from the previous week. The four week moving average for the seasonally adjusted Market Index is up 3.8 percent.
http://www.mbaa.org/NewsandMedia/PressCenter/71815.htm
The Department of Labor showed a dramatic decrease of 43,000 initial unemployment claims for the week ending Feb. 6, but acknowledges that this is due to finally eliminating the backlog of claims processed. This means that prior reported claims must have been significantly misstated. The 4-week moving average may be a better indicator of actual claims filed. This week’s 4-week moving average was 468,500, a decrease of 1,000 from the previous week’s revised average of 469,500.
http://www.dol.gov/opa/media/press/eta/ui/current.htm
Earnings:
Pepsi
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjYzMjY3N3xDaGlsZElEPTM2ODYyNnxUeXBlPTI=&t=1
UPS
http://www.investors.ups.com/phoenix.zhtml?c=62900&p=irol-newsArticleEarnings&ID=1381678&highlight=
Emerson Electric
http://emerson.com/en-US/news_center/news_releases/Pages/Emerson-First-Quarter-2010-Earnings-Results.aspx
Coke
http://www.thecoca-colacompany.com/presscenter/nr_20100209_corporate_fourth_qtr_earnings.html
Philip Morris International
http://media.corporate-ir.net/media_files/irol/14/146476/Q409PMIEarningsRelease.pdf
Proctor and Gamble
http://www.pginvestor.com/phoenix.zhtml?c=104574&p=irol-newsArticle&ID=1380094
Halliburton
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjgwNDl8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
BHP Billiton
http://www.bhpbilliton.com/bbContentRepository/docs/100210InterimResultsFy10Presentation.pdf
Becton Dickinson
http://phx.corporate-ir.net/phoenix.zhtml?c=64106&p=irol-newsEarningsArticle&ID=1380030&highlight=
Abbott Labs
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzY0MDY5fENoaWxkSUQ9MzU4NDk4fFR5cGU9MQ==&t=1
Southern Company
http://files.shareholder.com/downloads/SO/843106311×0x346835/0b5392d7-0cc1-4a3e-8297-629f4210f4a3/SO_Q4_2009_Earnings_Conf_Call_27JAN2010.pdf
Texas Instruments
http://investor.ti.com/releasedetail.cfm?ReleaseID=439997
Sources: TI, Southern Co., Merck, Abbott Labs, Becton Dickinson, BHP Billiton, Chevron, Halliburton, P&G, PMI, Walgreen, Diageo, Coke, Boeing, Emerson, UPS, Pepsi, DOL, MBAA, and BEA websites.
SKY News Summary 02-09-10
The most important economic news this week may actually come from Brussels. European Union leaders will hold a special economic summit, announced by EU President Herman Van Rompuy yesterday (his first day on the job), as the bloc hopes to deal with Greece’s debt crisis and its spread. Non-euro-zone countries, especially the UK and Sweden, argue that they should have a voice in the matter, since the crisis will influence their economies, and that the International Monetary Fund should be involved. The 16 euro-zone members see IMF involvement as a setback to European economic power and wish to support Greece in its efforts to curb spending.
Government spending is entrenched in Greece, with government workers accounting for about 40% of the country’s GDP. Per capita GDP is about two-thirds of the leading euro-zone economies. EU aid accounts for 3.3% of the country’s annual GDP. Greece’s budget deficit of 12.7% of GDP which violates the EU’s Growth and Stability Pact budget deficit criteria of no more than 3% of GDP. (The U.S. deficit is 11.2% of GDP). For these reasons, Fitch Ratings cut Greece’s debt rating to BBB+ from A- and Standard & Poor’s cut Greece’s sovereign credit ratings to A-/A-2.
Thursday’s summit brings together the EU heads of government and Jean-Claude Trichet, the European Central Bank president, in an effort to convince the Greek government to cut government spending, reduce the size of the public sector and reform labor and pension systems. Unfortunately, there has already been a backlash to announced austerity measures with farmers parking plows across the country’s major highway, tax collectors closing the tax office, and more public service workers striking tomorrow. It is feared that riots could break out over these reform efforts.
Meanwhile, the Financial Times reports that “traders and hedge funds have bet nearly $8bn (€5.9bn) against the euro, amassing the biggest ever short position in the single currency on fears of a eurozone debt crisis. Figures from the Chicago Mercantile Exchange, which are often used as a proxy of hedge fund activity, showed investors had increased their positions against the euro to record levels in the week to February 2. The build-up in net short positions represents more than 40,000 contracts traded against the euro, equivalent to $7.6bn. It suggests investors are losing confidence in the single currency’s ability to withstand any contagion from Greece’s budget problems to other European countries.”
http://www.reuters.com/article/idUSLDE6182B020100209
http://www.ft.com/cms/s/0/83de2cae-15a9-11df-ad7e-00144feab49a.html?catid=2&SID=google
http://www.ft.com/cms/s/0/0330ba78-149f-11df-9ea1-00144feab49a.html
https://www.cia.gov/library/publications/the-world-factbook/geos/gr.html
http://www.cbo.gov/ftpdocs/105xx/doc10521/2009BudgetUpdate_Summary.pdf
ICSC- Goldman’s index showed chain store sales up 1.4% in the week ending February 6 as people stocked up on grocery items before the winter storm (61% of the nation was covered in snow this week). Year-over-year numbers are skewed by the change in the date of the Super Bowl which was on February 1 last year (its effects would be recorded in numbers for this week last year). The Commerce Department comes out with retail sales for January on Thursday.
http://www.icsc.org/homepage/research_article.php?id=103
http://www.nasdaq.com/asp/econodayframe.asp?page=http://anasdaq.econoday.com/byweek.asp?cust=nasdaq
Earnings:
UBS 4Q 2009
http://www.ubs.com/1/e/investors/releases.html?newsId=174737
Sources: ICSC, NASDAQ, UBS, CBO, CIA, Financial Times, Reuters websites
SKY News Summary 02-04-10
The usual post-recession cycle begins with increased productivity, indicated by increased output and hours worked. Companies hold back as long as possible before they add employees, the next part of the cycle, and finally they raise wages. Today’s productivity numbers show a steep increase, but it looks like we have not entered the second phase of the cycle, as employment continues to decrease. The Department of Labor’s important Employment Situation report for the month of January will be out tomorrow: But today, the DOL’s weekly report, ADP, and Monster all reported decreased employment. The government’s initial jobless claims figure for the week ending January 30 increased by 8,000, while the continuing claims for the week ending January 23 increased 2,000 decreasing the 4-week moving average by 51,250 to 4,617,500. ADP showed unemployment increasing 22,000 for the full month of January which was its smallest increase in unemployment since February 2008. The service-producing sector actually increased jobs by 38,000, although the goods-producing sector dropped 61,000 jobs. Monster’s online jobs data showed recruitment activity down 3 percent from January of last year. It also showed reduction in construction and wholesale trade recruitment, but an increase in job offerings in education, arts, entertainment and recreation.
http://www.dol.gov/opa/media/press/eta/ui/current.htm
http://www.adpemploymentreport.com/
http://about-monster.com/sites/default/files/employment-index/MonsterLEI_NY_Jan10.pdf
Presentations:
ConocoPhillips at the Credit Suisse 2010 Energy Summit
Exelon at the Credit Suisse 2010 Energy Summit
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjcxNzc5NnxDaGlsZElEPTM2NzE4MnxUeXBlPTI=&t=1
ExxonMobil 4Q 2009
http://www.exxonmobil.com/Corporate/Files/news_release_supp4q09.pdf
Fifth Third at the Morgan Stanley U.S. Financials 2010 Conference
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzY2OTk4fENoaWxkSUQ9MzYyMTg2fFR5cGU9MQ==&t=1
HP 2009 Annual Report
http://media.corporate-ir.net/media_files/irol/71/71087/AR2009/HTML2/default.htm
Roche
http://www.roche.com/media/media_releases/med-cor-2010-02-03.htm
Royal Dutch Shell 4Q and full year 2009
Spectra Energy 4Q and full year
http://www.spectraenergy.com/news/releases/2010/feb/20100204_01.pdf
The Air Force has awarded IBM a contract to design and demonstrate a secure cloud computing infrastructure capable of supporting defense and intelligence networks. The ten-month project will introduce advanced cyber security and analytics technologies developed by IBM Research into the cloud architecture.
http://www-03.ibm.com/press/us/en/pressrelease/29326.wss
Sources: IBM, Spectra Energy, Royal Dutch Shell, Roche, HP, Fifth Third, Exxon Mobil, Exelon, ConocoPhillips, BP, Cisco, Monster, ADP, DOL websites.
SKY News Summary 02-02-10
The University of Michigan/Reuters Consumer Sentiment survey showed that consumers were more optimistic than they have been for two years. The consumer sentiment index rose 2.6% from 72.5 in December to 74.4 in January.(The Consumer Sentiment report was more positive than last Tuesday’s Consumer Confidence report which is generated by the Conference Board and does not include the last week in January.) The January reading was 21.6% better than the year before. The report notes that, “…consumers feel quite vulnerable given the still fragile condition of their investments and reserve funds, the burden of their debts, especially those underwater on their mortgages, the negative impact of foreclosures and bankruptcies on their communities, and the impact of continued credit constraints that limit their flexibility. Although recent gains have extended to buying plans, it is still true that job and income uncertainty dominates purchase plans to a significant extent.” Diving deeper into the facts behind consumer sentiment, we find that consumer debt has, in fact, been paid down to 2007 levels and, according to RealtyTrac’s Year-End 2009 Foreclosure Market Report, foreclosure filings were up 21 percent year-over-year and 120 percent from 2007. Although it is difficult to ascertain the extent to which credit constraints limit the consumer, it is clear that credit issues are guiding their spending decisions.
https://customers.reuters.com/community/university/default.aspx
http://www.federalreserve.gov/releases/g19/hist/cc_hist_sa.txt
http://www.realtytrac.com/contentmanagement/pressrelease.aspx?itemid=8333
Personal income increased $44.5 billion, or 0.4 percent, and disposable personal income (DPI) increased $45.9 billion, or 0.4 percent, in December, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $22.6 billion, or 0.2 percent. In November, personal income increased $61.1 billion, or 0.5 percent, DPI increased $60.7 billion, or 0.5 percent, and PCE increased $69.1 billion, or 0.7 percent, based on revised estimates. Wages increased $6.3 billion in December, due mostly to services-producing industries’ payrolls, which increased $11.5 billion, compared
with an increase of $22.3 billion in November. Government wage and salary disbursements increased $2.9 billion, compared with an increase of $1.8 billion. Personal saving — DPI less personal outlays — was $534.2 billion in December, compared with $506.3 billion in November. Personal saving as a percentage of disposable personal income was 4.8 percent in December, compared with 4.5 percent in November.
http://www.bea.gov/national/nipaweb/Nipa-Frb.asp.
The ISM Report on Business showed the manufacturing sector expanding in January for the sixth consecutive month with 13 of 18 industries reporting growth, up from nine industries last month. January ISM’s New Orders Index registered 65.9 percent in January, a 1.1 percent increase from December. This is the seventh consecutive month of growth in the New Orders Index. “The 14 industries reporting growth in new orders in January — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Machinery; Wood Products; Paper Products; Food, Beverage & Tobacco Products; Primary Metals; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Transportation Equipment; Fabricated Metal Products; Computer & Electronic Products; and Chemical Products. The four industries reporting decreases in new orders in January are: Furniture & Related Products; Petroleum & Coal Products; Plastics & Rubber Products; and Printing & Related Support Activities.”
http://www.ism.ws/ISMReport/MfgROB.cfm
The Washington Post ran an article today about the solvency of the Federal Housing Administration, a government agency that insures a third of the home-purchase mortgage market with 80 percent of its purchase loans from first-time homebuyers. According to the article, “about 9.1 percent of FHA borrowers had missed at least three payments as of December, up from 6.5 percent a year ago…” “The agency had to pay out on 47 percent more loans in October and November than in the corresponding period a year earlier, according to an FHA report. The number of loans in foreclosure, including those that have not yet been billed to the agency, has also increased. They were up 26 percent in the last quarter from a year earlier.” The article continues, “If the trend continues and the FHA’s cash reserves are exhausted, the federal government would automatically use taxpayer money to cover the losses — a first for the agency, which has always used the fees it charges borrowers to pay for its losses.” Two testimonies of FHA employees, one by David H. Stevens Assistant Secretary for Housing/FHA Commissioner U.S. Department of Housing and Urban Development in a hearing before the Subcommittee on Housing and Community Opportunity, U.S. House Committee on Financial Services on October 8, 2009, and the other by Kenneth M. Donohue Inspector General Department of Housing and Urban Development, before the Committee on Financial Services Subcommittee on Oversight and Investigations, United States House of Representative give good insight into the problem. Mr. Stevens looks at the agency and how it got into its troubles, while Mr. Donohue discusses the complexities of managing fraud with the agency’s limited number of employees responsible for its “$45+ billion annual budget and… mortgage insurance premiums. Recently, the Department also received over $13 billion in the American Recovery and Reinvestment Act funding for various programs to stimulate the economy. This is in addition to the almost $4 billion received for the Neighborhood Stabilization Program in July 2008.”
http://portal.hud.gov/portal/page/portal/HUD/press/testimonies/2009-06-18
http://www.house.gov/apps/list/hearing/financialsvcs_dem/stevens_testimony_-_hud.pdf
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/01/AR2010020103527.html?hpid=topnews
Pending home sales increased 1.0 percent to 96.6 from 95.6 in November, and remains 10.9 percent above December 2008 when it was 87.1, but is still low due to the expected expiration of the first-time home buyer tax credit. It is important to note that buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30, 2010, to finalize the transaction to qualify for a tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.
http://www.realtor.org/press_room/news_releases/2010/02/stabilize_remain
Sources: NAR, Washington Post, HUD, House of Rep, ISM, BEA, RealtyTrac, University of Michigan/Reuters, Federal Reserve Websites.