Financial News and Notes 10-23-11 – 10-29-11

Economy

-The purchasing managers’ index for October has shown a heavy slowdown in business activity in Europe and raising alarm bells that the continent is on the verge of another recession.  10/25

-Consumer confidence fell in October to reach its lowest point since mid 2009.  10/26

-The Dept of Agriculture expects food prices to rise 3.5%-4.5% for 2011 compared to just a 0.8% increase in 2010.  10/26

-Home prices climbed slightly higher in August up 0.2%, but dropped 3.8% on an annual basis.  10/26

-Nondefense capital spending by businesses increased to $68.9 billion in August to a record high level.  10/27

-GDP surged in the third quarter to 2.5% returning to its pre-recessionary level seen in late 2007.  However GDP per capita has not returned to those prior levels and remains 2.9% below the pre-recession high.  10/28

-Economic activity contracted in October in the Euro-zone for the first time since the recession in 2009. 10/29

Corporate 

-Profits at S&P 500 firms are up 14.7% to date with 135 firms reporting.  10/24

-Fedex is projecting record holiday shipping. 10/25

-Caterpillar’s profits jumped 44% in the third quarter and said its market share was improving in China. 10/25

-Netflix dropped 26% in after hours trading after the firms brutal 3Q.  The company lost 800K subscribers in the quarter and announced it will lose money over the coming quarters due top foreign expansion.  10/25

-Deutsche Bank had positive earnings in the third quarter on strong performance from their retail and commercial banking units.  10/26

-UBS saw third quarter profit fall 39% on the trading scandal and slowing of activity with its investment bank.  10/26

-UPS saw earnings rise 5.1% over the third quarter although its shipping volume was flat.  10/26

-Amazon’s profit sank 73% in the third quarter due to heavy expenditures on growing its business through warehouse, data centers and rolling out its new tablet computer.  10/26

-IBM appointed its first ever female CEO Virginia Rometty.  10/26

-Sprint had a 3Q loss and reveled that its deal with Apple for the iPhone will likely result in a loss until 2015.  10.27

-Boeing saw earnings rise 31% in the third quarter.  10/27

-Profit for Ford fell 2% to $1.65 Billion despite rising revenue.  Operating margins are expected to fall for the year on weakness in Europe and rising expenses. 10/27

-In a reversal, HP announced that it would not look to spin off its personal computer unit.  10/28

-P&G gave a weak forecast for its fiscal second quarter due to elevated commodity costs, but expected its margins to improve in future months.  10/28

-Samsung’s earnings fell 23% in the third quarter, however it was less than analysts estimated.  10/28

-Chrysler had a third quarter profit of $212 million on strong sales.  10/28

-Exxon Mobil’s profit continues to reach new heights as the firm posted a 41% gain on high oil prices. 10/28

-J.P. Morgan joined U.S. Bancorp, Citigroup, PNC, and KeyCorp and other large banks in stating they won’t be instituting monthly fees on debit cards. 10/28

-Saab was sold to two Chinese companies for $142 Million.  10/29

-Whirlpool lowered its full year earnings outlook and said it will be cutting 5,000 jobs.  10/29

Regulatory 

-The Whitehouse unveiled a plan designed to help the housing market and borrowers who cannot refinance as their home values are underwater.  The key points include opening refinancing to those who owe more than 125% of what their home is worth, reducing appraisal and underwriting requirements and loan fees, and in order to qualify borrowers must be current on their last 6 mortgage payments.  10/24

-Rajat Gupta is facing insider trading charges for his alleged role in feeding inside information from his position as a director of Goldman to Galleon hedge fund founder Raj Rajaratnam.  10/26

Market

-European leaders have admitted their last stabilization plan achieved 3 months ago has failed and they are working towards a new plan.  The plan includes a large recapitalization of banks, restructuring of Greece’s debt, a larger bailout fund.  The details are being hashed over before another meeting of European financial officials on Wednesday.  10/24

-Stocks sank on weaker corporate and economic news and on continued apprehension over Europe.  The Dow fell 1.7% the S&P lost 2%.  Gold rose to $1,699.60, its highest close since 9/22, and oil rose 2.1%.  10/26

-European officials said that they have reached a deal on Greek’s debt issues and the overall European debt crisis that has plagues the region over the past year and a half.  Details of the solution include private banks taking a voluntary reduction of 50% on their Greek debt holdings, the bailout fund was increased to $1-$1.4 trillion, and the largest banks on the continent would have a capital buffer of $106 billion.  10/27

-The world markets roared to life after the announcement of Europe’s plan to get its debt under control despite questions over how well it will work.  The Dow shot up 2.9%, Asian stocks were up 2.0%, Europe was up over 3.6%, commodities climbed and the Euro rose to its highest point since early September.  10/28

-Questions arose around the EU debt deal as the plan lacked details and investors were concerned with Italy’s turnaround effort, both Italian and Spanish bond auctions were met with tepid response and higher yields were demanded. European markets were down and U.S. markets were flat.  For the week the Dow rose 3.6%, Japan was up 4.3%, Europe up 4.2% and the 10 Year treasury yield rose to 2.305%. 10/29

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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