James Dicks Daily Digest - January 15, 2009
European Central Bank President Jean-Claude Trichet said the rate-setting Governing Council has no intention of getting stuck in a "liquidity trap." Economists define a liquidity trap as a situation in which short-term interest rates are close to zero but fail to boost the economy. The council voted unanimously to cut the ECB's key rate from 2.5% to 2%, marking a 225 basis point, or 2.25 percentage points, cut in the lending rate since October.
The Labor Department reported that first-time requests for unemployment insurance jumped to a seasonally adjusted 524,000 in the week ending Jan. 10th, from an upwardly revised figure of 470,000 the previous week. Analysts had expected 500,000 new claims. The increase is partly due to a flood of requests from newly-laid off people who delayed filing claims over the holidays.
The Labor Department also said that wholesale prices fell by 1.9 percent in December. That was just below the 2 percent decline that economists expected. For the year, the government said wholesale prices fell by 0.9 percent, the first annual decline since prices dropped by 1.6 percent in 2001. That also was a year in which the country was in a recession.
Manufacturing activity in the New York area contracted for the ninth straight month in January. The bank's Empire State Manufacturing index rose slightly to a minus 22.2 in January from a record low reading of negative 27.9 in December.
The Philly Fed index improved to negative 24.3 from a downwardly revised negative 36.1 in December. The new orders index improved to negative 22.3 from negative 28.2, while the employment index fell to negative 39.0 from negative 28.6.
OPEC said that they expect global oil consumption is expected to fall 200,000 barrels a day this year. Consumption declined 100,000 last year, the first year of negative growth since 1983.
House Democrats are circulating an $825 billion economic stimulus measure that emphasizes health care, education and highway construction as well as tax cuts for individuals and businesses. A summary of the measure shows spending totaling roughly $550 billion and tax cuts of $275 billion.
The federal government is considering a fresh multibillion-dollar aid package for Bank of America Corp. (BAC) to help it absorb losses at Merrill Lynch. Bank of America has received a total of $25 billion in capital injections from the Treasury Department's $700 billion bailout pot. That includes $10 billion for Merrill Lynch, which Bank of America bought in a deal that closed Jan. 1st.
The Senate Finance Committee delayed a confirmation hearing for President-elect Obama's choice to head the Treasury Department, as controversy continued to surround secretary-designate Timothy Geithner but Obama said he expected Geithner to be confirmed by the Senate. The hearing has been rescheduled for Jan. 21st.
More than 2.3 million American homeowners faced foreclosure proceedings last year, an 81 percent increase from 2007, with the worst yet to come as consumers grapple with layoffs, shrinking investment portfolios and falling home prices.
General Electric Co. (GE), the world’s biggest jet-engine maker, plans to cut more than 1,000 salaried jobs at its GE Aviation division as orders slow and it integrates the acquisition of Smiths Group Plc’s aerospace unit.
Chrysler LLC President Tom LaSorda said he plans to cut back the lineup to save money, and said the company will stop building the PT Cruiser this year and is seeking buyers for the equipment used to make the model. He told reporters that production will “end this summer.” The PT Cruiser would be the seventh model to be canceled since Cerberus Capital Management LP bought Chrysler in August 2007.
USA Today publisher Gannett Co. (GCI) imposed one-week unpaid furloughs for most of its U.S. employees, saying the move could help minimize the need for further layoffs amid a severe advertising downturn. USA Today also declared a one-year freeze on wages effective Feb. 1st.
A top Lehman Brothers (LEHMQ) executive said that the company's bankruptcy case could be wrapped up within two years. Lehman -- once the nation's fourth-biggest investment bank -- filed the biggest bankruptcy in U.S. history on Sept. 15. Many key assets have since been sold.
The U.S. Department of Transportation announced that it wants airlines flying in and out of New York's LaGuardia Airport to voluntarily give up some their flights to reduce congestion. The agency said the airlines have until Feb. 2nd to choose which time slots to give up.
Scheduled U.S. Economic Reports (Friday)
Consumer Price Index (Dec), Industrial Production/Capacity Utilization (Dec), Consumer Sentiment (Jan)
In Earnings News
J.P. Morgan Chase (JPM) announced that its fourth-quarter profit fell 77.6% amid continuing write-downs and a deteriorating consumer environment. A $1.1 billion benefit from merger-related items helped the firm post a $702 million, or 7 cents a share, fourth-quarter profit, compared to a profit of $3 billion, or 86 cents a share, in the year-ago period.
Clarcor Inc. (CLC) posted strong fourth-quarter revenue and profit gains, helped by demand in oil and natural gas exploration. For the quarter, net earnings rose to $29.1 million, or 56 cents a share, up 8.7 percent from $26.7 million, or 53 cents a share, a year ago. Analyst, on average, had expected a profit of 53 cents per share.
Briggs & Stratton (BGG) earned $3.2 million, or 6 cents per share for the period ended in December, compared with $4.1 million, or 8 cents per share, a year ago. Analysts, on average, expected a profit of 3 cents per share.
ConAgra (CAG) expects earnings per share from continuing operations, excluding items, to be slightly above $1.50, it said in a filing with the Securities and Exchange Commission before an analysts' meeting.
Scheduled Earnings Reports (Friday)
Citigroup, First Horizon National Corp, Johnson Controls, Advanced Materials
Stocks in the News
Motorola (MOT) said it will cut an additional 4,000 jobs and report a fourth-quarter loss amid shrinking demand for its wireless phones.
Nestle (NSRGY) was upgraded to conviction buy from neutral by Goldman Sachs after underperformance since Oct. 31st.
VeriSign Inc (VRSN) named Mark McLaughlin president and chief operating officer.
Monsanto Co. (MON) said that its board raised the agricultural products company's quarterly dividend by 10% to 26.5 cents from 24 cents.
Xilinx Inc (XLNX) reported fiscal third-quarter net income of $139.4 million, or 51 cents a share, compared with $103.6 million, or 35 cents a share, for the year-earlier period.
Apple Inc (AAPL) announced that Chief Executive Steve Jobs will take a medical leave of absence through June. Chief Operating Officer Tim Cook will be responsible for daily operations.
Eli Lilly & Co. (LLY) is paying nearly $800 million to settle lawsuits brought by the U.S. Attorney for the Eastern District of Pennsylvania and the Department of Justice over past marketing and promotions of the antipsychotic medication Zyprexa.
The Labor Department reported that first-time requests for unemployment insurance jumped to a seasonally adjusted 524,000 in the week ending Jan. 10th, from an upwardly revised figure of 470,000 the previous week. Analysts had expected 500,000 new claims. The increase is partly due to a flood of requests from newly-laid off people who delayed filing claims over the holidays.
The Labor Department also said that wholesale prices fell by 1.9 percent in December. That was just below the 2 percent decline that economists expected. For the year, the government said wholesale prices fell by 0.9 percent, the first annual decline since prices dropped by 1.6 percent in 2001. That also was a year in which the country was in a recession.
Manufacturing activity in the New York area contracted for the ninth straight month in January. The bank's Empire State Manufacturing index rose slightly to a minus 22.2 in January from a record low reading of negative 27.9 in December.
The Philly Fed index improved to negative 24.3 from a downwardly revised negative 36.1 in December. The new orders index improved to negative 22.3 from negative 28.2, while the employment index fell to negative 39.0 from negative 28.6.
OPEC said that they expect global oil consumption is expected to fall 200,000 barrels a day this year. Consumption declined 100,000 last year, the first year of negative growth since 1983.
House Democrats are circulating an $825 billion economic stimulus measure that emphasizes health care, education and highway construction as well as tax cuts for individuals and businesses. A summary of the measure shows spending totaling roughly $550 billion and tax cuts of $275 billion.
The federal government is considering a fresh multibillion-dollar aid package for Bank of America Corp. (BAC) to help it absorb losses at Merrill Lynch. Bank of America has received a total of $25 billion in capital injections from the Treasury Department's $700 billion bailout pot. That includes $10 billion for Merrill Lynch, which Bank of America bought in a deal that closed Jan. 1st.
The Senate Finance Committee delayed a confirmation hearing for President-elect Obama's choice to head the Treasury Department, as controversy continued to surround secretary-designate Timothy Geithner but Obama said he expected Geithner to be confirmed by the Senate. The hearing has been rescheduled for Jan. 21st.
More than 2.3 million American homeowners faced foreclosure proceedings last year, an 81 percent increase from 2007, with the worst yet to come as consumers grapple with layoffs, shrinking investment portfolios and falling home prices.
General Electric Co. (GE), the world’s biggest jet-engine maker, plans to cut more than 1,000 salaried jobs at its GE Aviation division as orders slow and it integrates the acquisition of Smiths Group Plc’s aerospace unit.
Chrysler LLC President Tom LaSorda said he plans to cut back the lineup to save money, and said the company will stop building the PT Cruiser this year and is seeking buyers for the equipment used to make the model. He told reporters that production will “end this summer.” The PT Cruiser would be the seventh model to be canceled since Cerberus Capital Management LP bought Chrysler in August 2007.
USA Today publisher Gannett Co. (GCI) imposed one-week unpaid furloughs for most of its U.S. employees, saying the move could help minimize the need for further layoffs amid a severe advertising downturn. USA Today also declared a one-year freeze on wages effective Feb. 1st.
A top Lehman Brothers (LEHMQ) executive said that the company's bankruptcy case could be wrapped up within two years. Lehman -- once the nation's fourth-biggest investment bank -- filed the biggest bankruptcy in U.S. history on Sept. 15. Many key assets have since been sold.
The U.S. Department of Transportation announced that it wants airlines flying in and out of New York's LaGuardia Airport to voluntarily give up some their flights to reduce congestion. The agency said the airlines have until Feb. 2nd to choose which time slots to give up.
Scheduled U.S. Economic Reports (Friday)
Consumer Price Index (Dec), Industrial Production/Capacity Utilization (Dec), Consumer Sentiment (Jan)
In Earnings News
J.P. Morgan Chase (JPM) announced that its fourth-quarter profit fell 77.6% amid continuing write-downs and a deteriorating consumer environment. A $1.1 billion benefit from merger-related items helped the firm post a $702 million, or 7 cents a share, fourth-quarter profit, compared to a profit of $3 billion, or 86 cents a share, in the year-ago period.
Clarcor Inc. (CLC) posted strong fourth-quarter revenue and profit gains, helped by demand in oil and natural gas exploration. For the quarter, net earnings rose to $29.1 million, or 56 cents a share, up 8.7 percent from $26.7 million, or 53 cents a share, a year ago. Analyst, on average, had expected a profit of 53 cents per share.
Briggs & Stratton (BGG) earned $3.2 million, or 6 cents per share for the period ended in December, compared with $4.1 million, or 8 cents per share, a year ago. Analysts, on average, expected a profit of 3 cents per share.
ConAgra (CAG) expects earnings per share from continuing operations, excluding items, to be slightly above $1.50, it said in a filing with the Securities and Exchange Commission before an analysts' meeting.
Scheduled Earnings Reports (Friday)
Citigroup, First Horizon National Corp, Johnson Controls, Advanced Materials
Stocks in the News
Motorola (MOT) said it will cut an additional 4,000 jobs and report a fourth-quarter loss amid shrinking demand for its wireless phones.
Nestle (NSRGY) was upgraded to conviction buy from neutral by Goldman Sachs after underperformance since Oct. 31st.
VeriSign Inc (VRSN) named Mark McLaughlin president and chief operating officer.
Monsanto Co. (MON) said that its board raised the agricultural products company's quarterly dividend by 10% to 26.5 cents from 24 cents.
Xilinx Inc (XLNX) reported fiscal third-quarter net income of $139.4 million, or 51 cents a share, compared with $103.6 million, or 35 cents a share, for the year-earlier period.
Apple Inc (AAPL) announced that Chief Executive Steve Jobs will take a medical leave of absence through June. Chief Operating Officer Tim Cook will be responsible for daily operations.
Eli Lilly & Co. (LLY) is paying nearly $800 million to settle lawsuits brought by the U.S. Attorney for the Eastern District of Pennsylvania and the Department of Justice over past marketing and promotions of the antipsychotic medication Zyprexa.
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