When all you read is gloom, turn here for a much different perspective.
Thursday, April 30, 2009
Wednesday, April 29, 2009
"There were some obvious glimmers of hope in the report as the improvement in consumer spending (which remains the lynch-pin of U.S. economic activity) during the quarter suggests that U.S. household spending may be on the rebound."
Sung Won Sohn, Smith School of Business and Economics
"The economy was not as soft as the GDP number indicated. Businesses stopped producing goods for a while slashing inventories by a whopping $104 billion. Without the inventory runoff, the economy would have contracted by 3.4% instead of 6.1% as reported. This is good news. With lean inventories, production will be cranked up in order to restock the depleted shelves in coming months."
Guy LeBas, Janney Montgomery Scott
"Consumers came out guns a’blazin... Personal consumption expanded at a surprisingly robust 2.2%, on the combined strength of greater demand for both durable and non-durable goods."
Richard F. Moody, Forward Capital
"The details of the first-quarter report suggest a much smaller contraction, if not a modest advance, in real GDP during the second quarter."
"The declines in both final demand and nominal GDP were much less severe [than in Q4]."
Nomura Global Economics
"If consumer spending stabilizes, a stabilization in capital spending would further improve the outlook."
Tuesday, April 28, 2009
The April gains were fueled by "a significant improvement in the short-term outlook," said Lynn Franco, director at the Conference Board Consumer Research Center.
The Conference Board "Present Situation Index" was also up to 23.7 from 21.9 last month.
But the perhaps the biggest news: The Expectations Index Exploded to 49.5 from 30.2 in March. The Conference Board which rarely uses superlatives, described this move up as "substantial." The expectation index is a sub-index that measures consumer's confidence concerning:
1) Their expected business conditions in the next six months
2) Their expected employment condition in the next six months
3) Their own total family income in the next six months.
With consumers signalling more and more willingness to spend, evidence continues to mount that a return to GDP growth by summer is now not just possible, but probable. You may recall that level-headed prediction given by a professor from Kansas back in November...
Monday, April 27, 2009
1. The results are being closely guarded.
2. The banks are to keep quiet.
3. Even with guards and strict orders, the results are widely known already.
Federal officials shared the preliminary results of the stress tests with representatives of the 19 largest banks on Friday.
The thought then was that the general public would not see the results of the stress tests until May 4. But even though these financial institutions have reportedly been issued a "harsh gag order", it is quite likely that the information has already leaked.
As writer Donald Johnson wrote yesterday, "there are no secrets on Wall Street." If one assumes that the data on these tests has already leaked out over the weekend an analysis of the top 18 banks' stock performance Monday will clearly tell the story. (The 19th bank GMAC LLC is privately held)
A speculative look at this table likely reveals the three banks that failed the tests.
The good news? The other 15 or 16 passed the regulator's stress exam.
When the results are finally official we'll have one more indication that the majority of large and small banks are no longer in crisis mode.
Sunday, April 26, 2009
So how did these businesses fare in Q1? What did these technology leaders have to say about the prospects for the future?
1. Electronics and Chip Leader - Intel (INTC)
In the first-quarter, profit far exceeded analyst views. With close to $11B of cash and short term investments, Intel's CEO Paul Otellini said, "We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns."
2. Software - Oracle (ORCL)
In 2008, Oracle grew profits 29% as it passed IBM in software sales during the year to become the second-largest software maker behind Microsoft. Total 2008 profit: $5.52 Billion. Its fiscal third quarter ended February 28, 2009. Its profit was up 4% to $1.9 billion for the quarter easily beating analyst estimates. Safra Catz, Oracle’s President said, "We generated $8.0 billion in free cash flow over the last twelve months and we are running our business at record operating margins." Prior to Oracle announcing that it will purchase Sun Microsystems (JAVA), Oracle had approximately $12B of cash and short term investments available.
3. Computers - IBM (IBM)
On April 20th, IBM also reported a profit for Q1. Its earnings too were well ahead of the Street's profit expectations. Samuel J. Palmisano, IBM chairman said, "We are well-positioned to continue to move aggressively and leverage our strong cash performance to make the most of the opportunities that arise, including smarter plant initiatives and other strategic options. We remain ahead of pace for our 2010 roadmap of $10 to $11 per share." IBM has about $13B of cash on the books.
4. Technology Services - Accenture (ACN)
Accenture's quarter also ended on Feb. 28, 2009. They too reported a healthy growing income of $677 million. William D. Green, Accenture’s chairman said, "We continued to grow market share, and our results in the [this] quarter reflect our intense focus on the disciplined management of our business. We believe we are well-positioned to continue to deliver significant value to our clients and shareholders." Accenture has $3B in cash.
5. Defense Technologies - Northrop Grumman Corp (NOC)
Northrup reported first-quarter earnings of $389 million up from $264 million a year ago. Northrop also raised its 2009 continuing operations forecast to a range of $4.65 to $4.90 a share, from $4.50 to $4.75 a share. "We're pleased with our first quarter financial results, and we're confident that our products and capabilities continue to be extremely well aligned with current and emerging national security priorities," said Ronald D. Sugar, chairman. Northrup has $1.5B of cash.
So not only does economic life roll on for technological innovation, it appears as though these leaders are well positioned to thrive in 2009. When it comes to prognostications of future economic activity, let's place our bets with these leading business teams, not gloomy perma-bear economists.
Saturday, April 25, 2009
"Today we present some of the main conclusions of the recently released update to the RGE 2009 Global Economic Outlook: The global economy is in the middle of a synchronized contraction that will push global growth into negative territory in 2009 for the first time in decades. This will be the worst financial crisis since the Great Depression and the worst global economic downturn in decades. Global trade volumes face their sharpest contractions of the postwar era – trade is expected to contract 12% in 2009 due to the severe and prolonged global demand slump, excess capacity across supply chains and the continued crunch in trade finance."
Mr Roubini, please have a seat. The data simply does not support your old, tired, gloomy claims.
1. US. Exports are rebounding sharply. You may have been able to claim that trade was collapsing in the final months of last year as consumers everywhere shut their pocketbooks, but the international wheels of commerce now seem to be spinning well again. The US economy is not collapsing. Export data point to stabilization.
2. The is no "continued crunch in trade finance." Whether you look at the TED spread, or the Libor/OIS spread they are well below the peak of late October '08.
3. There is now a significantly growing list of tangibles that have bounced from their year-end lows. What is probably most notable is that capital goods orders are now up. We are not caught up in your "negative-feedback loop" that will eventually turn into a depression.
4. What is most notable from the past two weeks are bank earnings. Although many like Roubini choose to focus on small increases in allowances for bad debt over the next 1-2 years, what many failed to note was the incredible earnings based on extension of credit by banks in Q1. For instance Wells Fargo took advantage of the drop in interest rates to issue more than $100 billion of mortgages in Q1 alone. Revenues almost doubled to $21 billion, including Wachovia’s contribution, and helped the company overcome $3.3 billion of charges from unpaid loans. The allowance for credit losses totaled $23 billion. If those new loan origination rates continue for Wells, that's $400B in new loans for 2009 against the $23B reserved for potential losses in 2009 and 2010. Looks pretty bullish to me. In fact, not all banks increased loss allowances.
So Roubini, please sit down. Things may not be completely back to normal. But there is no doubt that conditions aren't as dire as you continue to claim.
Friday, April 24, 2009
In the past two weeks, the majority of large and small banks have now reported earnings sharply higher than most analysts had expected.
The surprises had experts questioning how banks could have cooked the books to pump up earnings. Many pointed to 'mark to market' valuation rule changes. Others observed increases in allocations to cover bad debts.
But on Friday, one bank demonstrated an ability to overcome all objections to positive earnings. Not only did Wilmington Trust Corporation (WL) handily beat all earnings estimates, but it sharply reduced the amount of money set aside to cover bad loans, and in Q1 2009 wrote off many fewer loans as unpaid.
Not only that, the latest quarter's results were further boosted by a net gain of $7.6 million in Wilmington Trust's investment portfolio. Not counting that gain and write-downs, Wilmington Trust's first-quarter profit was $17.4 million, or 19 cents per common share.
Including the write downs and one-time gain the bank was able to pay up handsome preferred dividends in addition to posting profit. Wilmington Trust's stock surged 32% on Friday.
Thursday, April 23, 2009
You may know that if California was it's own separate country, it would represent the 10th largest stand alone economy in the world. (Right after Italy).
So it was extremely positive news when the Golden state sold $6.85 billion in bonds Wednesday, including $5.23 billion in federally subsidized "Build America Bonds."
California officials reported that the debt sale was expanded from original plans of about $3 billion. The proceeds will be used immediately to restart projects, including highway upgrades, levee repairs, hospitals, libraries, natural habitat restoration and parks. All these projects were halted in December with the state treasury facing a $42 billion budget deficit.
Build America Bonds were designed to help state and local governments finance capital projects at lower interest rates. As you can see from the list of projects above, the bond sales will immediately and significantly benefit job opportunity creation in the state.
Other states have also quickly followed suit. The New Jersey Turnpike Authority just sold $1.38 billion of bonds for turnpike projects. The University of Virginia raised $250 million. And New York’s Metropolitan Transit Authority today raised $750 million for transportation improvements.
Credit is flowing again. It is no longer debatable. As cash infusions jump-start these and other shovel ready projects, the result will be more job options nationwide.
Wednesday, April 22, 2009
So if you are feeling blue about the job market right now, take a deep breath and read on. Here are 28 top US firms that are hiring aggressively right now...
1. Wal-Mart Stores - Retail
Headquarters: Bentonville, AR
Number of job openings: 6,000+
What they're looking for: Skills as store managers, human resource managers, pharmacists, customer service associates and cashiers.
2. Hewlett-Packard - Computers
Headquarters: Palo Alto, CA
Number of job openings: 150+
What they're looking for: Skills in information technology, human resources, research and development, marketing, finance and administration.
3. Bank of America Corp. - Banking
Headquarters: Charlotte, NC
Number of job openings: 1,860
What they're looking for: Skills in consumer banking, small business banking, credit cards, home loans, global banking, wealth management, technology, human resources, finance, communications, marketing and administration.
4. State Farm Insurance Cos. - Insurance
Headquarters: Bloomington, IL
Number of job openings: 800+
What they're looking for: Skills in sales, claims and underwriting, finance, accounting and legal.
5. WellPoint - Healthcare
Headquarters: Indianapolis, IN
Number of job openings: 1,225
What they're looking for: WellPoint is hiring health outreach specialists, nurse case managers, accountants, actuaries, claims representatives, customer care representatives, enrollment and billing representatives, account managers, marketing managers, business analysts and sales assistants.
6. Boeing - Aviation
Headquarters: Chicago, IL
Number of job openings: 2,400
What they're looking for: Positions are available in areas such as engineering, finance, communications, contracts, intellectual property, information systems, program and project management, operations, quality, marketing, supplier management and supplier quality, legal, business development and some administrative and support positions.
7. Microsoft - Software
Headquarters: Redmond, WA
Number of job openings: 630+
What they're looking for: Positions are available in marketing, software development, customer service, information technology, operations, program management, small and medium business sales, software testing, administrative services, operations, user assistance and education, game design, content publishing, marketing communications, legal and finance.
8. MetLife - Insurance
Headquarters: New York, NY
Number of job openings: 1,000+
What they're looking for: MetLife is hiring in the areas of information technology, human resources, finance, operations, call center, administration and sales (including individual policies, group, home loans - mortgage and reverse mortgages).
9. United Parcel Service - Shipping
Headquarters: Atlanta, GA
Number of job openings: 3,070
What they're looking for: UPS is hiring part-time package handlers, mechanics, warehouse personnel, sales representatives and information technology professionals.
10. Medco Health Solutions - Healthcare
Headquarters: Franklin Lakes, NJ
Number of job openings: 300+
What they're looking for: One division in particular, Liberty Medical, which serves the needs of patients with diabetes, is hiring for a number of customer service positions.
11. Lowe's - Building
Number of job openings: 7,900
What they're looking for: A variety of jobs are available in corporate, stores and distribution centers. Positions range from seasonal employees in Lowe's stores, to team members in regional distribution centers, to miscellaneous positions in the corporate office.
12. Time Warner - Media
Headquarters: New York, NY
Number of job openings: 480
What they're looking for: Openings posted online include positions in creative, editorial, marketing, media, finance, accounting, graphics design, animation, new media, ad sales, film/television production and programming, administrative, information technology services and online.
13. Supervalu - Retail
Headquarters: Eden Prairie, MN
Number of job openings: 180+
What they're looking for: Corporate positions are available in various departments including advertising, marketing, retail operations, merchandising and finance. In addition, there are open positions in retail stores and supply chain services.
14. Johnson Controls - Industrial
Headquarters: Milwaukee, WI
Number of job openings: 750
What they're looking for: Most oirf the openings are positions related to energy efficiency.
15. GMAC - Finance
Headquarters: Detroit, MI
Number of job openings: 750
What they're looking for: Positions include project managers, mortgage loan officers, underwriters, servicing call center representatives and loan loss mitigators. Additional openings are available in information technology, finance, compliance, risk and treasury.
16. Comcast - Communications Services
Headquarters: Philadelphia, PA
Number of job openings: 1,000
What they're looking for: Comcast is hiring primarily in call center operations, field operations, warehousing and sales.
17. Northrop Grumman - Technology Integration
Headquarters: Los Angeles, CA
Number of job openings: 3,700
What they're looking for: Openings include positions in information technology, engineering, production/manufacturing, supply chain management, program management, product development and administration (including human resources and finance).
18. Coca-Cola - Food/Beverage
Headquarters: Atlanta, GA
Number of job openings: 160
What they're looking for: Coca-Cola is hiring for a variety of different functions on many levels including finance, bottling, retail operations, production and customer service, delivery and food chemistry.
19. New York Life - Insurance
Headquarters: New York, NY
Number of job openings: 3,640
What they're looking for: Positions are available in accounting, actuarial, auditing, customer support, information technology, investment management, legal, life insurance and annuity products, product development and strategy, sales and underwriting.
20. Aetna - Insurance
Headquarters: Hartford, CT
Number of job openings: 550
What they're looking for: The majority of openings are in customer service, claims and health care, including nurses.
21. Motorola - Communcations Technology
Number of job openings: 520
What they're looking for: Openings are in engineering, sales, finance, marketing and project management.
22. Abbott Laboratories - Healthcare
Headquarters: Abbott Park, IL
Number of job openings: 260+
What they're looking for: Abbott is hiring in sales, legal, information technology, administrative, engineering, clinical research, manufacturing, quality assurance and accounting.
23. General Dynamics - Technology Integration
Headquarters: Falls Church, VA
Number of job openings: 2,365
What they're looking for: General Dynamics is hiring in many areas, but most job opportunities are in technology and manufacturing fields, and include administrative, engineering, design and development and production and installation positions.
24. Prudential Financial - Insurance
Headquarters: Newark, NJ
Number of job openings: 235
What they're looking for: Most openings are in financial, actuarial, market research and analysis, operations and administrative.
25. Humana - Healthcare
Headquarters: Louisville, KY
Number of job openings: 265+
What they're looking for: Humana has openings in sales, nursing, actuarial, finance, project management, information technology, pharmacy, medical, health, insurance, administrative, compliance, communications and legal.
26. Liberty Mutual Insurance Group - Insurance
Headquarters: Boston, MA
Number of job openings: 500+
What they're looking for: Positions are available in finance, nursing, legal, claims and sales.
27. HCA - Healthcare
Headquarters: Nashville, TN
Number of job openings: 9,000
What they're looking for: HCA is hiring registered nurses, licensed practical nurses, clinical technicians and patient care support workers.
28. Sears Holdings - Retail
Number of job openings: 500+
What they're looking for: Sears is hiring in information technology, eCommerce, finance, audit, marketing, brand management, merchandising and distribution. Positions are also available for associates, store managers and in-home technicians.
And the list really does not stop there. You may remember our help wanted details at an additional 20 firms. That research and those positions totalled close to 19,000 employment opportunities. The list goes on.
Tuesday, April 21, 2009
To date $467,310,000 has been paid back. In addition those seven banks have paid the accrued dividends associated with the TARP program terms.
Treasury Secretary Geithner's underscored the government program success on Tuesday stating that "the vast majority" of banks now have enough capital. Geithner also told a congressional committee that additional banks would be allowed to repay financial bailout funds once bank regulators give the nod.
And continuing the string of better-than-expected financial sector earnings, the following banking and financial firms beat First Call income estimates on Tuesday:
- First Cash Financial Services (FCFS)
- Huntington Bancshares Inc. (HBAN)
- Jefferies Group Inc. (JEF)
- Regions Financial Corp. (RF)
- State Street Corp. (STT)
- US Bancorp (USB)
- Western Union (WU)
More evidence that the stock market rally will continue to be fueled by earnings news that is clearly not as bad as expected - particularly in the financial sector that was decimated last year.
Monday, April 20, 2009
With all eyes on bank health, many of you have asked "Even though my local bank has not failed, do you truly believe there are strong banks out there?" The answer of course is yes. You may remember this list of banks that rejected TARP.
So Monday, while many were busy over-analyzing Bank of America's (BAC) announcement, several smaller banks of note handily beat Wall Street expectations:
1) With a market capitalization of close to $1.7B, BancorpSouth, Inc. (BXS) beat the Street by $0.06 per share. They continued to demonstrate solid profitability with net income of $29.5 million. Aubrey Patterson, Chairman and CEO said, "For the first quarter of 2009, BancorpSouth produced another strong performance in an unusually challenging environment for both the financial services industry and the national economy. This performance was highlighted by solid profitability for the quarter, which contributed to a further improvement in our already strong capital structure. We are encouraged by the steady loan growth we have experienced in a time of increased competition for high quality loans. We also continue to believe that our financial strength and stability, which differentiates us from many industry peers, have contributed to the growth in our loans and deposits."
2) Next Capital City Bank Group, Inc, (CCBG) beat the Street estimate by $0.07 per share turning a profit when the Street expected a loss. The CEO William G Smith reported that, "We grew our loan portfolio by $24 million or 1.2% and maintained our focus on prudently managing the net interest margin, despite historically low interest rates. Our margin at 5.16% was 43 basis points higher than a year ago, and better than the linked fourth quarter. Our execution of the fundamentals of profitable community banking -- basic lending, rational deposit gathering and good expense management -- continues to be both prudent and consistent."
3) And finally, First Defiance Financial Corp. (FDEF) announced a profit of $0.36 per share. Their Chairman William J. Small said, "We're encouraged by the results of our 2009 first quarter, particularly the lower provision for loan losses in this very difficult credit environment. We had very strong mortgage banking activity in the quarter, originating $160 million of residential mortgage loans, which contributed to our improved profitability from the fourth quarter of 2008."
IBM also beat estimates on Monday and more banks will announce earnings throughout the week - perhaps most notable the largely commercial BNY Mellon(BK). When we round up the week, we'll likely note that we still are finding it difficult to substantiate general Q1 earnings bedlam.
Sunday, April 19, 2009
Saturday, April 18, 2009
You've read here consistently that even when the big banks seemed insolvent, there was no credit crisis at most banks. In fact the data now shows that according to the Federal Reserve, overall business lending by all US banks was up 12 percent in 2008. That actually reverses a trend where lending institutions scaled back loans during the last six economic downturns. Surprisingly a new report by the National Federation of Independent Businesses reveals that only 8 percent of small businesses reported problems in obtaining the financing they needed during this current downturn.
On Saturday Arianna Huffington described the peak of the "crisis" well: "When we castigate 'bankers' for the banquet of greed and corruption, we need to keep in mind that we are really talking about the high-flying financial gluttons of Wall Street who have come to dominate the global credit market, and not the vast majority of much smaller, and much more local 'traditional' banks."
Further Edward Yingling, president and CEO of the American Bankers Association, asserts: "Wall Street and Main Street banking are very different. Of the over 8,000 banks in this country, very few ever made a single subprime loan, and they did not engage in the highly leveraged activities that brought down Wall Street firms." You'll remember all those banks that said, "TARP? No Thanks!"
But now enter data from the last three weeks. Are those top banking entities struggling any longer? No. Are they racing each other to pay back their TARP obligations? Yes. Will the majority pass stress tests. No doubt.
The stress test regulators will likely find there is no need to fix what now is not broken. Top bank liquidity has returned. Ironically what the bank giants are revealing during this earnings season is that the low cost of money from the government combined with a surging demand for new mortgages was all the medicine that was required.
And for all those who love to hate the government programs of the past 6 months: Paulson, Geithner, and Bernanke got it just right.
Thursday, April 16, 2009
Toshiba posted a smaller operating loss than the company had forecast after production cuts helped ease a glut and drive up prices of the semiconductors.
Chip-related shares are on the Rise as Samsung Electronics Co., the world’s largest producer has climbed as much as 4.8 percent, while Hynix Semiconductor Inc. has been up as much as 11 percent in Seoul trading today. Japan’s Elpida Memory Inc. has risen as much 9.9 percent in Tokyo and all of Taiwan’s five listed memory chipmakers, including Nanya are advancing ... Stock Symbols: TOSBF.PK, SSNLF.PK, ELPDF.PK
"An easing commodity environment and our productivity initiatives have generated substantial margin improvement..." -Tempur-Pedic CEO, Mark SarvaryStock Symbols: TPX
"Google had a good quarter given the depth of the recession -- while revenues were down quarter over quarter, they grew six percent year over year thanks to continued strong query growth" - Eric Schmidt, CEOStock Symbol: GOOG
Following in the footsteps of the major banks this earnings season, Regions Financial announced it will handily beat expectations and like its big brothers will repay it's $3.5 billion infusion from the Treasury ASAP. Estimates had forecast a loss.Stock Symbols: RF
The US Home builder sentiment index posted it's best one month gain in almost 6 years.
IPOs are here again. Rosetta Stone's issue will likely be seen as the strongest placement in over a year. No doubt observers will begin to contemplate their own shelf registrations...
So far this has not been a gloomy earnings season.
JPMorgan beat estimates handily. Bears are struggling to come up with excuses for why these big banks are instantly profitable. This recession started with the banks, it need to end with them.Stock Symbols: JPM
Now that initial claims have fallen substantially for two weeks in a row, panic in the employment arena is subsiding.
The two week fall supports our data showing that corporations are laying off significantly less workers in Feb and then again in March, than they had earlier in the year...
Wednesday, April 15, 2009
The Fed districts further reported that economic deterioration had moderated in several zones and may be finally bottoming out.
The stock markets of course welcomed the news and rallied higher.
The markets historically figure out rebounding economic activity months before other measurements figure it out.
Earlier this week, Fed Chair Bernanke reported that, "Recently we have seen tentative signs that the sharp decline in economic activity may be slowing in data on home sales, home-building, and consumer spending. A leveling out of economic activity is the first step toward recovery."
The Beige book report continues, "Home prices and construction were still falling in most areas, but better-than-expected buyer traffic led to a scattered pickup in sales in a number of districts."
Tuesday, April 14, 2009
Monday, April 13, 2009
The season kicked off last week with Alcoa(AA) missing forecasts, but painting a quite rosy picture for 2009. AA stock has never looked back.
Then came the Wells Fargo boom-shell and a string of other positive news on Thursday.
And now just days after the Wells Fargo (WFC) surprise we have Goldman Sachs (GS) also crushing the street's expectations. GS also joins a significantly growing list of banks that are now planning to quickly pay back their treasury bailout monies. GS will issue $5 billion in new stock to assist in paying back the US taxpayer swiftly.
And surprises to the upside did not halt with bank cheer Monday night.
Dress Barn (DBRN) also proclaimed a positive 2009 outlook. It raised its forward looking guidance pointing to improving retail trends across all its business units.
Federal Signal (FSS) followed with cheery news also raising its 2009 guidance. The global firm manufactures products and delivers integrated solutions for municipal, governmental, industrial, and airport customers worldwide.
And on Tuesday the insurance sector is likely to applaud loudly for MetLife (MET). The insurance giant asserted that it won't need bailout funds that US Treasury programs are extending to insurance institutions.
And to round out the night of No Fear, J.B. Hunt (JBHT) beat the Street by 2 cents. For them, trucking demand seems to be building again. Their 24c/share earnings were down only 4 cents from the 28 cents a share in the period a year-ago.
Aluminum started producing silver linings last week. Earning season continues this week with the only suckers appearing as red-faced bears on a stick.
Sunday, April 12, 2009
Saturday, April 11, 2009
"The Rasmussen Consumer Index, which measures consumer confidence on a daily basis, jumped five points on Saturday to its highest level of 2009. At 74.1, consumer confidence is up 12 points from a week ago, 18 points from a month ago, and at the highest level since the day after Barack Obama was elected President. The Consumer Index is up seven points from a year ago, the first time it has been up year-over-year since 2007."
"The Rasmussen Investor Index gained six points on Saturday to 83.5, its highest level since shortly after Lehman Brothers collapsed last September. Investor confidence is up 6 points from a week ago and 27 points from a month ago. While improving, confidence is still down nine points from a year ago and down 50 points from two years ago."
"Thirty-four percent (34%) of Investors now say the economy is getting better while 44% say the opposite. Those numbers represent a very dramatic turnaround over the past month. One month ago today, just 8% said the economy was getting better while 72% said it was getting worse."
The steady upward trend comes on the heels of a significant jump several weeks ago when in five days the consumer index gained back all the ground it had lost in the previous five months.
It also comes a day after president Obama said he sees "glimmers of hope" for the economy.
Friday, April 10, 2009
From the Washington Post, "President Obama said today that the nation's economy is showing signs of progress as a series of his policies begin to come on line."
"In brief remarks to reporters after a meeting with his economic advisers at the White House, Obama said there are signs of hope appearing amid the gloomy economic landscape. 'What you're starting to see is glimmers of hope across the economy,' Obama said."
He reported that the effort to increase small business loans is working. The largest Small Business Administration loan program has increased by 20% in the last month.
"We're starting to see progress," Obama said. "And if we stick with it, if we don't flinch in the face of some difficulties, then I feel absolutely convinced that we are going to get this economy back on track."
Obama's comments come one day after a string of positive economic reports drove the stock market indexes up by 3-4% on Thursday.
Thursday, April 9, 2009
The headlines that followed included a Wells Fargo report that this top-19 bank beat earnings numbers by posting more than $3B in profits in Q1. Net income was more than double the average estimate of analysts. Profitable business in housing investments contributed significantly to the jump.
Shortly thereafter, the government reported that initial claims for unemployment fell significantly. New filings fell by 20,000 applicants last week. The four week moving average for initial claims also began to fall.
Improving March retail sales reports came next. Retailers including J.C. Penney Co (JCP)
and TJX Companies [Marshalls, TJMaxx, HomeGoods, etc] (TJX) increased their Q1 forecasts reporting that March sales performed better than expected. Many other retailers also reported that their declining trend of the last several months now shows signs of brightening.
And as markets continued to move sharply higher, reports came in that Larry Summers, Barack Obama's economic policy leader said, "I think the sense of a ball falling off the table -- which is what the economy has felt like since the middle of last fall -- I think we can be reasonably confident that that's going to end within the next few months."
And the stock markets finished up strongly heading into the long Easter weekend.
Wednesday, April 8, 2009
1. Sales of new homes were up 4.7 percent in Feb from Jan.
2. Sales of previously occupied homes went up 5.1 percent in the same period.
3. On Wednesday the Mortgage Bankers Association's latest weekly measure of loan applications climbed 4.7% -- their purchase index jumping 11.1%.
The rise in the purchase index indicates buyers are back taking advantage historically low mortgage rates and the first-time home buyer tax credit.
"Sales rose 0.6 percent, the first increase since June, the Commerce Department said today in Washington. The 1.5 percent decrease in the value of stockpiles was the biggest since records started in 1992."
“Excess supply conditions don’t look as bad as they were,” said Jonathan Basile, an economist at Credit Suisse Holdings Inc. in New York. “This is encouraging because it’s not just happening in wholesaling, it’s happening in the factory sector, too.”
Again the majority of economists were wrong, forecasting only a 0.7 drop at best.
Some bears had actually forecast inventories to rise.
"Today’s report showed stockpiles of durable goods, or those meant to last at least three years, fell 2.4 percent in February, the biggest decline on record. Durable sales climbed 2 percent, the most since April 2008."
Michael Englund, chief economist at Action Economics in Boulder, Colorado, wrote “By mid-year, we should be seeing a sizable pace of contraction in inventories relative to sales, which should pave the way for positive production figures by the second half of the year.”
The big story from the aluminum company's release is management's upbeat assessment of their business moving foreword:
"Alcoa responded swiftly to the declines in our end markets and the historic drop in aluminum prices with a holistic program that dramatically re-positions our balance sheet and operational cost structure," said Klaus Kleinfeld, President and CEO of Alcoa. "The result has been a rapid increase in liquidity during the quarter and significant operational cost savings. Besides putting us in a strong position to manage through this downturn, we now have the strategic and operational fundamentals in place for Alcoa to emerge even stronger when the economy recovers."
"Our operational measures are already beginning to bear fruit in all our businesses," said Kleinfeld. "In our Primary Products segments, for example, since the third quarter of 2008 we have reduced the cost of producing alumina and aluminum by 33 and 30 percent, respectively. Pacing well ahead of our 25 percent reduction target, we expect our efforts to have a significant impact on Primary’s profitability and cash flow in 2009."
“We launched operational and financial measures that will significantly improve our profitability and cash flow in 2009 and beyond. In fact, they have already begun to have an impact in the first quarter,” said Kleinfeld.
“We also see both near-term and long-term catalysts that should improve the prospects for the aluminum industry,” said Kleinfeld. “Current stimulus programs that target infrastructure and energy efficiency will create a demand for the unique characteristics of aluminum – lightweight, strong, durable, recyclable, and conductive. Longer term, the global megatrends of population growth, urbanization, and environmental stewardship will all drive demand for aluminum as the economy improves.”
Monday, April 6, 2009
Earnings from these ten companies are likely to give a glimpse into the health of their segments. If their individual earnings are reported in line or better than lowered consensus estimates, their good fortune is likely to sustain the market's upward momentum -- particularly in their respective groups.
Retail - Walmart (WMT)
As we've seen, Walmart is leading the retail sector to recovery. Their sales have given no sign of slowing. As the largest retailer in the world, their should be no gloom and doom on the street if Walmart exceeds expectations again for the quarter. Walmart will announce their preliminary March sales this Thursday and their Q1 earnings on May 14th.
Banking - Citigroup (C)
Many believe that Citigroup is still a shakey firm -- that they still have not revealed all the toxicity on their books. But Citi’s CEO said last month that business was profitable in Jan and Feb. It is unlikely that March business was any different. If Citi releases a profitable first quarter it will provide a signficant boost to the financial group and the market in general.
Auto - Ford (F)
Despite the declines from a year ago, GM, Ford, Chrysler and Toyota all posted double-digit improvements from February. In Jan industrywide U.S. sales hit their lowest point in more than 27 years. But if conditions improve by another double digit bump in April, that could bode well for earnings prospects (less loss than thought) in the whole sector. Ford in particular is the only major U.S. carmaker that is coping without U.S. taxpayer money. Jim Farley, Ford's group vice president for marketing said last week, "We're getting more traffic. We don't have to close everyone with incentives." Ford execs say that the company has been restructuring over last three years and they are in a different position than others. If Ford, posts better than expected results, confidence that positive business restructuring is indeed possible in this troubled segment just may lift investor spirits.
Software - Microsoft (MSFT)
Microsoft is exposed to the tech industry probably more than any other single company. Since Microsoft has already given negative guidance for the year, an increase in any lines of its business -- PCs, servers, handsets, or applications may finally prove that this industry is not dead after-all.
Chips and Computers - Intel (INTC)
It is likely that the industry will look closely at what Intel sees as results for later in the year. Although profits were down during Q4, the street was more enamored by Intel statements of a firm second half. Should those management sentiments persist, look for computer stocks to continue to move higher.
Advertising - Google (GOOG)
Google's results are likely a perfect indicator of whether companies have decided to continue to advertise. If Google’s revenues and earnings are up, it likely means that companies aren't as bad off as the perma-bears would have us believe.
Internet Hardware - Cisco (CSCO)
Again Cisco's earnings will not be as important as its management's discussions on its views of the future. By earnings call time at Cisco, they will likely have a fairly decent view on how the broadband stimulus provisions will effect their ongoing business in the next 2-3 years. The discussions on massive new Internet build-outs will likely be quite positive and boost the internet hardware group.
Basic Materials - Dow Chemical (DOW)
Dow Chemical (DOW) because of its tremendous use of a wide variety of commodities, Dow will likely be a great barameter of general industry activity. If Dow’s revenues are above expectations, industrial activity is probably not as dire as many had predicted for Q1.
Telecom - Verizon (VZ)
Although the Q4 climate was obviously tough, "Verizon has shown that it is able to compete effectively in this economic environment," said Chairman and CEO Ivan Seidenberg. "We grew profits and maintained strong cash flows throughout 2008. In the fourth quarter, we continued to produce top-line growth, fueled by strong sales volumes for broadband, wireless and strategic business services." If Verizon continues this type of execution it Q1 2009, it will no doubt lead the telecom sector higher.
Online Sales - Amazon (AMZN)