Thursday, January 20, 2011


1/20/11 Google

Google Inc said Thursday its fourth-quarter net income rose to $2.54 billion, or $7.81 a share, from $1.97 billion, or $6.13 a share in the same period a year earlier. The Mountain View, Calif.-based Internet search giant said net revenue for the period ended in December came in at $6.37 billion. Excluding one-time items, Google said earnings for the period were $8.75 a share. Analysts polled by FactSet Research had expected Google to report earnings excluding items of $8.06 a share, and $6.05 billion in net revenue.

Gold for February delivery retreated $23.70, or 1.7%, to $1,346.50 an ounce on the Comex division of the New York Mercantile Exchange.

(Bloomberg) -- Builders began work on fewer homes than projected in December, a sign the industry that triggered the recession continued to struggle more than a year into the U.S. economic recovery.
Housing starts fell 4.3 percent to a 529,000 annual rate, the lowest level since October 2009, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg News survey called for a 550,000 rate. A jump in building permits, a proxy for future construction, may reflect attempts to get approval before changes in building codes took effect at the beginning of this year.
BUILDING PERMITS Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 635,000. This is 16.7 percent (±2.1%) above the revised November rate of 544,000, but is 6.8 percent (±2.8%) below the December 2009 estimate of 681,000. Single-family authorizations in December were at a rate of 440,000; this is 5.5 percent (±2.3%) above the revised November figure of 417,000. Authorizations of units in buildings with five units or more were at a rate of 172,000 in December.

The number of Americans filing first-time claims for unemployment insurance payments fell more than forecast last week, adding to evidence the labor market is healing.
Applications for jobless benefits decreased 37,000 in the week ended Jan. 15, the biggest decline since February 2010, to 404,000, Labor Department figures showed today. Economists forecast 420,000 claims, according to the median estimate in a Bloomberg News survey. The number of people on unemployment benefit rolls fell, while those getting extended payments rose.

The index of manufacturing activity in the Philadelphia region dipped slightly in January, the Federal Reserve Bank of Philadelphia reported Thursday. The Philly Fed business condition index fell to 19.3 in January from 20.8 in December. The decline was a bit weaker than expected. Below the headline, the report had some strong signals. The index for new orders jumped to 23.6 in January from 10.6 in December. The index for employment also jumped to 17.6 from 4.3 in the prior month.

The economy's expansion is expected to continue, though there are "some strong headwinds" in the medium-term, the Conference Board said Thursday as it reported that its leading economic index rose 1% in December. "Overall, economic activity is likely to continue to gain momentum in 2011," said Ken Goldstein, economist at the Conference Board, in a statement. Six of the 10 indicators included in the LEI made positive contributions in December, led by building permits, the interest rate spread, and average weekly initial claims for unemployment-insurance benefits. In November, the LEI gained 1.1%. The LEI is a weighted gauge of 10 indicators that are designed to signal business cycle peaks and troughs. There have been widespread strengths among the indicators in recent months, according to the Conference Board. For the six months through December, the LEI gained 3.3%, up from 2.4% in the prior six months.

The amount of U.S. debt subject to the country's legal maximum has topped $14 trillion for the first time.

China’s economic growth accelerated to 9.8 percent as industrial production and retail sales picked up, sending stocks lower from Asia to Europe on concern Chinese policy makers will raise interest rates and stem the expansion.
The fourth-quarter expansion exceeded the 9.4 percent median estimate in a Bloomberg News survey of 22 economists and the 9.6 percent annual gain in the previous three months, a statistics bureau report showed. Consumer-price inflation eased to 4.6 percent in December. Citigroup Inc. and Credit Suisse Group AG say inflation may peak at as much as 6 percent in the first half.

Brazil has raised rates to 11¼%

The Bond Buyer reports that the new "Vallejo Plan Would Give Unsecured Creditors 5 to 20 Cents on the Dollar."

Sales of existing homes jumped 12.3% in December, an encouraging end to the worst year since 1997, as the collapse in house prices and a wave of foreclosures depressed activity over the 12-month period. The National Association of Realtors on Thursday said existing-home sales rose from November's upwardly revised 4.7 million rate to a seasonally-adjusted annualized rate of 5.28 million, considerably beating the MarketWatch-compiled economist estimate of 4.88 million. The jump in the mortgage rate to 4.8%, a rise of roughly a half percentage point from depths, has helped induce on-the-fence buyers back into the market, said Lawrence Yun, chief economist of the NAR. The improving economy also helped confidence, Yun said. The annual tally of sales was 4.91 million, a drop of 4.8%, based on preliminary data. The median price of existing homes in December decreased 1.0% to $168,800, the lowest since February, and November prices were marginally revised lower to $170,200. Over the year, prices edged up 0.3% to $173,000, which was well below the $198,100 of 2008 and the $219,000 price in 2007.

ZeroHedge: "The US Dollar devaluation will come in the form of an increase in the prices of all products. In reality it will represent the uniform cost push effects of inflation. The US can expect it on all Chinese based products of one form or another. The timing of the change is set to arrive with the products on the US shores in the summer of 2011."

In the week ended January 12, domestic equity funds per ICI saw an inflow of $3,765 million following last week's outflow of $4,229.

Natural-gas futures added to gains Thursday after a government report showed a larger-than-expected decline in the nation's supplies of the product for the week ended Jan. 14. Natural gas for February delivery was up 11 cents, or 2.4%, to $4.67 per million British thermal units. The Energy Information Agency reported a decline of 243 billion cubic feet. Analysts polled by Platts had expected a decline between 231 and 235 billion cubic feet.

Tuesday, January 18, 2011


1/18/11 Apple

Bloomberg: "China told banks to set aside more deposits as reserves for the fourth time in two months, stepping up efforts to rein in liquidity after foreign-exchange reserves rose by a record and lending exceeded targets."

Bloomberg (Madelene Pearson and Jay Shankar): "Record imports of gold by India show the central bank may be losing the battle to tame inflation, spurring investors to sell government bonds. Shipments into Asia's third-biggest economy may have increased to 800 metric tons from 557 tons in 2009 and exceeding the previous all-time high of 769 in 2007, according to Ajay Mitra, managing director for... the World Gold Council... 'Gold is being used as a store of value to protect against never-ending inflation,' Ritesh Jain, the... head of fixed income at Canara Robeco Asset Management...said 'Inflation is the biggest concern in the minds of investors and savers.'"

Doug Noland: "It is a major Issue 2011 that U.S. federal government debt will for the third straight year account for all - or at least the vast majority - of total system Credit creation. I would argue (confidently) that this dynamic is dysfunctional. U.S. government debt is being mispriced, over-issued, and misdirected - ensuring only deeper economic maladjustment and financial vulnerability. Tough decisions and tough economic adjustments are only being postponed.
It is a fundamental issue that total system Credit creation is originating from chiefly non-productive marketable debt of the - not especially efficient or productive - governmental sector. It is an Issue 2011 that our recovery is entirely dependent upon a favorable global macro and market backdrop necessary to ensure the ongoing massive issuance of increasingly Credit-challenged U.S. government debt obligations....The possibility for a surprising jump in Treasury bond yields is a major Issue 2011. On the one hand, Treasury is not interest rate sensitive; the marketplace doesn't have to fear much of an issuance impact from a moderate jump in borrowing costs. On the other hand, this dynamic would imply that yields are poised to surprise on the upside when the markets eventually force borrowing restraint. It doesn't take a wild imagination to envisage a market problem leading to an economic problem, to additional "TARP," more bailouts and a jump in borrowing costs - all combining for a dramatic deterioration in our nation's debt position.
That borrowing restraint is being imposed upon U.S. muni finance is a major Issue 2011. The year has commenced with municipal bond yields adding to Q4's surprising jump. Today, state and local finance is our Credit system's weak link. What began in ("subprime") Greece has made its way to Illinois, California, New York, New Jersey, Florida and elsewhere. Throughout the country, governments will now be forced into the messy proposition of getting their books in order. After ignoring this issue for too long, a global marketplace keen to structural debt issues has commenced the disciplining process."

(Dow Jones)--Foreign financial firms have sold $36.4 billion of investment-grade bonds in the U.S. so far in 2011, the most ever recorded in the first two weeks of any year since at least 1995, according to data provider Dealogic.
The so-called Yankee bonds--dollar-denominated debt sold in the U.S. by firms based outside the country--have come in 53 separate offerings, a 112% jump on last year's 25 deals up to this point, Dealogic added.
Including issuers other than banks, Yankee high-grade debt issuance in the U.S. totals $45.3 billion so far this year, accounting for more than 70% of the U.S. investment-grade bonds marketed overall. Financial institutions accounted for 81% of all Yankee high-grade bonds in the year to date.
One explanation for the surge of overseas issuers is the attractiveness of selling debt in dollars and swapping the cash flows back into euros, instead of selling debt directly in Europe, according to credit strategists at Barclays Capital.
In a market commentary Friday, the strategists said it was costlier for European firms to issue debt in their own markets because of the "relatively higher risk aversion" among investors stemming from the region's sovereign debt crisis.
The euro/dollar cross-currency basis swap spread--a measure of how much it costs to exchange cash flows in the two currencies--is now minus-26 basis points for a five-year swap. That means a European bank needing five-year funding in euros would save 0.26% on every dollar sold and swapped back in order to create the synthetic funding in euros, compared with what it would cost to issue in euros.

Zero Hedge reports: "Initial Claims Surge To 445K, Not Seasonally Adjusted Claims Surge By 191,686 To 770,413 In One Week".

John Hussman: "It will come as no surprise that we continue to anticipate poor 10-year total returns for the S&P 500 over the coming decade. Our present estimate is about 3.3% annually, which includes dividends. That is about 1% less than the 10-year total return that we estimated just a few months ago, but this should make sense: historically, to the extent that the S&P 500 appreciates at an annualized rate of more than about 6% (which is about the long-term growth rate of revenues, nominal GDP and other smooth fundamentals), the expected future total return for the index declines as the market advances. Just like bonds. It is easily understood, but often ignored, that a short-term market advance of 10% - leaving fundamentals relatively unchanged in the interim - cuts about 1% annually off of subsequent 10-year market returns. This can be demonstrated both algebraically and in historical data."

Sales for the most recent quarter jumped to $26.74 billion, from $15.683 billion a year ago.
Both the earnings and topline beat expectations. Analysts who follow Apple forecast the company reporting a profit of $5.40 a share on sales of $24.433 billion, according to a consensus estimate compiled by Thomson Reuters.
Apple reported a profit of $6.43 a share in its fiscal first quarter, up from $3.67 a share last year.
All of the company's key product lines exceeded expectations. In the most recent quarter Apple sold 7.33 million iPads, 19.45 million iPods and 4.13 million Macs. Sales of the iPhone jumped 86 percent to 16.24 million units.
Gross margin for the quarter came in 38.5 percent.

IBM released strong fourth quarter earnings today, posting record revenue of $29 billion, up 7 percent from the fourth quarter in 2009, and surpassing analyst expectations. EPS were $4.18, up 16 percent; an increase of 16 percent from the same quarter in 2009.
Big Blue also posted record net income in the fourth quarter, $5.3 billion, compared with $4.8 billion in the fourth quarter of 2009, up 9 percent. Net income for the year came in at $14.8 billion compared with $13.4 billion in 2009, an increase of 10 percent. Diluted earnings were $11.52 per share compared with $10.01 per diluted share in 2009, an increase of 15 percent. Revenues for 2010 totaled $99.9 billion, an increase of 4 percent (3 percent, adjusting for currency), compared with $95.8 billion in 2009.
IBM’s CEO Samuel J. Palmisano said in a statement: “We completed an outstanding year, with record profit and free cash flow, and exceeded the high end of our 2010 earnings per share roadmap objective…We also capped a decade in which our shift to high-value businesses, our global integration of IBM, our investment in research and development of almost $60 billion and our acquisition of 116 companies have helped us to nearly triple our EPS and return more than $100 billion to shareholders.”
IBM ended the fourth-quarter of 2010 with $11.7 billion of cash on hand, which is a little bit more than the $11.1 billion leftover in third-quarter earnings. IBM’s acquisition spree tapered off in the fourth quarter but Big Blue bought a number of companies earlier in the year, including Initiate Systems, Cast Iron Systems, Sterling Commerce, Coremetrics, BigFix, Datacap, Unica, OpenPages, Netezza and most recently, Blade Network Technology for $400 million.

The euro has lost an average of 22% of its purchasing power since the introduction of European Monetary Union in 1999, citing a poll that Allianz SE conducted. The purchasing power of one euro fell to about 82 cents in Germany, slightly below 81 cents in France, 76 cents in Italy and 71 cents in Spain.

The Boeing Company on Tuesday pushed back the first delivery of its 787 Dreamliner to the third quarter, hoping that the delay will give it enough time to finish a jetliner that is more than three years behind schedule.

Chinese President Hu Jintao arrived in the United States on Tuesday for a four-day state visit peppered by U.S. complaints about Beijing's currency policies but sweetened by a series of business deals.

Agribusiness giant Cargill Inc plans to spin off its majority stake in Mosaic Co (MOS.N), a move that could eventually lead to takeover offers for the world's second largest fertilizer producer.
The distribution of the 64 percent stake in Mosaic, worth about $24 billion, will allow Cargill to maintain its private company status while enabling Cargill family trusts to diversify their assets, Cargill said on Tuesday.