Financial News and Notes 1/21/12 – 1/28/12

Economy

-Rent rose 2.5% year over year in December for a primary residence. 1/24

-Japan is expected to have its first trade deficit since 1980. 1/24

-A measure of private sector activity in the Euro zone showed an unexpected expansion; the first in 5 months. The positive news driven primarily by Germany brings hope that the country bloc can weather the storm from the debt crisis. 1/25

-The IMF dropped its forecast for global growth to 3.3% in 2012 down from 3.8% achieved in 2011 and down from its projection of 4% in September of 2012. The downturn could be worse if Europe does not take strong action, they warned. 1/25

-The U.K.’s economy shrank in the 4th quarter with a preliminary estimate of GDP at a -0.2%. 1/26

-After their most recent policy meeting the Fed announced it would keep rates close to zero through 2014, a longer period of time than investors expected. They also said there is the potential to restart a bond buying program. They estimated 2012 growth will be in a range from 2.2% to 2.7%.  The Fed also formally targeted a long run inflation rate of 2%. 1/26

-Business equipment spending edged up 2.9% in December reversing two months of declines. 1/27

-A leading economic indicator index rose 0.4% in December below the estimated 0.7%. 1/27

-New home sales fell surprisingly 2.2% in December when a gain was expected. 1/27

-The U.S.’s GDP rose 2.8% in the 4th quarter for the largest growth rate in 18 months, however the rate was below estimates and little was driven by end users meaning the surge is unlikely to last. For the full year the growth rate as 1.7% far behind 2010’s 3%. 1/28

Corporate

-RIM’s co chief executives stepped down over the weekend and a company insider will assume the post as part of a board and management redesign. 1/24

-Johnson and Johnson’s 4th quarter earnings dropped 89% primarily because of legal settlements and product liability costs and it issued a dour 2012 earnings outlook. The firms did stem the tide on of falling sales showing the first increase in 3 years. 1/25

-Yahoo’s 4th quarter earnings dropped 5% driven by weaker ad sales its primary revenue driver. 1/25

-Apple’s quarterly profit blew the doors of the estimates earning $13.1 billion on sales that rose 73%. It was one of the best quarters ever for a U.S. Corporation. 1/25

-Boeing issued a negative outlook due to cuts in the defense sector. 1/26

-US Air and Delta both posted a profit and saw revenue climb. 1/26

-Netflix showed improvement with its subscriber base in the 4th quarter to reverse the exodus seen in the summer over Netflix’s plan changes. The firm saw revenue growth but profits sink on expansion. 1/26

-Samsung earnings gained 17% with its chip business line beating estimates. 1/27

-Caterpillar had a 60% jump in profit and expects more gains over 2012. Other industrial companies are echoing their bullish projections. 1/27

-Ford had its best fourth quarter profit ever, but projected 2012 earnings would be flat amid troubles in Europe and expansion pains in Asia. 1/28

Market

-The ECB’s program of three year low interest rate loans to banks has helped reduce the short term yields troubled nations like Italy and Spain have needed to pay in order to borrow from the capital markets. 1/23

-Continued talks to restructure Greece‘s debt have not shown significant progress. 1/23

-As Greece debt reduction talks between the government and its creditors continued towards a standoff, EU finance ministers ratcheted up the pressure on the groups to reach an agreement. 1/25

-Global markets cheered the news that the Fed will keep rates low for an extended period of time. Stocks, bonds and commodities gained while the dollar fell. The Dow rose 0.6%, the S&P 500 gained 0.9%, and Europe and Asia rose on the news. Yields for 5 and 10 year treasury notes fell and their prices jumped. The 10 year yield is down to 2.009%. 1/26

-On weaker than estimated US growth the Dow had its first down week of the year, however the S&P 500 was able to eke out a gain. The Dow fell 0.5% for the week and the S&P rose 0.1%. Japan rose 0.9%, but Europe was down 0.2% for the week. Gold continued its resurgence finishing at $1,731.80 a troy ounce and the yield for the 10 year treasury moved back below 2% to 1.896%. 1/28

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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