Financial News 10/14/12 – 10/20/12

Economy

-China’s inflation rate has continued to stay at a low level.  The CPI is up only 1.9% in September over the previous year which is down from the 4.5% rate at the beginning of the year.  This provides additional breathing room for policy makers to boost the economy without fear of soaring prices.  10/16

-Retail sales in September rose 1.1% and have no risen for three consecutive months providing a boost for the economy.  10/16

-Manufacturing activity is easing as it grew at a rate of 3.2% in September, the slowest pace since July of 2011. 10/17

-The CPI rose by 0.6% in September, but core prices which exclude food and energy rose only 0.1%.  Over the past year both measures are up 2.0%.  As a result, social security and government pension benefits will increase by 1.7% in 2013.   10/17

-New residential home construction starts rose to an annual rate 872,000 last month which is up almost 35% from a year ago and 15% since August.  It’s the highest level since July 2008.  10/18

-China’s GDP growth continued to ease as the world’s second largest economy saw third quarter GDP fall to 7.4% from 7.6% in the second quarter, its slowest pace since the first quarter of 2009.  10/18

-Initial jobless claims edged up slightly over the past week, but the four week moving average is significantly below levels reached in the summer potentially pointing to an improving job market.  10/19

Corporate

-Softbank has formally agreed to purchase a controlling interest in Sprint Nextel for $20 billion.  10/16

-Citigroup’s earnings fell 88% in the third quarter driven largely by one time charges related to the rise in value of the firms debt and write downs in its stake of the Morgan Stanley Smith Barney brokerage joint venture.  Removing those two items revenue and profit beat analysts’ expectation.  10/16

-Coca-Cola’s third quarter earnings grew but at a meager pace gaining 3.9%.  Weakness in China and Europe slowed growth.  10/17

-IBM’s 3rd quarter profit fell slightly dropping 0.5% on revenue that fell in every major business line and 2.0% overall.  10/17

-Goldman Sachs third quarter earnings rose $1.51 billion from a loss in the third quarter of 2011 on a jump in revenue from mark ups in private equity investments and its investment stake in a Chinese lender.  There typical engine of earnings, trading and investment banking, slowed over the third quarter.  10/17

-Vikram Pandit, CEO of Citigroup, announced he was stepping down from the organization effective immediately shocking observers.  The move was due to clashes with the Board over strategy and performance.  Michael Corbat, head of the Europe, Middle East and Africa division was named as his successor.  10/17

-Intel’s earnings fell by 14% in the third quarter emphasizing the sagging personal computer sector.  The firm said it would also cut back production in the 4th quarter.  10/17

-To date about two thirds of the 52 companies in the S&P 500 have topped earnings estimates, in line with recent quarters.  10/17

-Pepsi Co saw its third quarter earnings fall by 4.9% on higher expenses, however its soda brands have gained market share in North America.  10/18

-EBay had a third quarter profit gain of 22% driven by growing revenue from its PayPal unit.  10/17

-BofA’s profit tumbled 95% in the third quarter and revenue slumped 28% as the firm continues to deal with problems stemming from the financial crisis.  The firm agreed over the quarter to settle a $1.6 billion class action lawsuit over the 09 purchase of Merrill Lynch.  10/18

-Newsweek will publish its last print issue in December as the magazine moves to an all digital format after 79 years.  10/19

-Morgan Stanley posted a loss in the third quarter as a result of an accounting charge.  The firm’s revenue fell 46% from a year earlier, however excluding the onetime charge it was up 18%.  However, investors were dissatisfied with the news and are seeing little progress in the firm’s turnaround efforts.  10/19

-Google earnings were inadvertently released 3 hours early and the news was bad for investors as the firm posted a 20% drop in earnings and revenue, excluding the new Motorola unit, fell for the 4th straight quarter.  Shares plunged 8% on the news and trading was halted for 2 and a half hours.  10/19

-Microsoft reported fiscal first quarter earnings that fell 22% on a decrease in sales of the firm’s windows operating system and falling PC sales.  Consumers were seen as holding off until the new Windows 8 comes out next week.  10/19

-GE’s earnings rose 8% on better margins but forecast 2012 revenue will grow by only 3% after estimating 3 weeks ago that it would hit 5%.  10/20

-McDonald’s third quarter earnings fell 3.5% from the previous year and sales were sluggish as the world economy has weakened.  10/20

-Companies are on pace to report their first quarter of falling sales in three years.   10/20

Market

-Global stock markets had a down week on increasing worries over the state of the global economy.  The Dow had it worst week since the end of May falling 2.1%, while the S&P500 sank 2.2%.  International markets were down as well with Japan falling 3.7% and Europe sinking 1.7%.  Oil advanced after its recent declines rising back about $90 a barrel to $91.86.  10/15

-World markets rose on positive economic reports and earnings that beat expectations.  The S&P 500 gained 0.8% and the Dow had its best day in a month up 0.7%.  Internationally, Europe rose 0.5% and Japan gained 0.5%.  10/16

-In two days U.S markets have rebounded from the hit they took last week.  The S&P 500 and Dow rose 1.0% on earnings that have not been as bad as feared, positive economic news, and progress with Spain and Greece working with European officials.  Europe and Japan were up 1.3% and 1.4% respectively as well.  10/17

-U.S stocks sank as slowing corporate sales raised concerns of the health of corporations.  The S&P 500 dropped 1.7% and the Dow sank 1.5% the largest drops since mid June.  For the week however the S&P 500 and Dow eked out a 0.3% and 0.1% gain, respectively.  Japan and Europe both ended higher over the week gaining 5.5% and 1.7%.  10/20

There is no guarantee that any investment strategy, including those described here, will be successful. Any investment or investment strategy can lose money. Past performance does not guarantee or predict future results. You should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Raffa Wealth Management, LLC. This information was gathered from reliable sources but we cannot guarantee accuracy. Indexes do not reflect the fees associated with actual investments and such fees would reduce the performance illustrated.
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