Protestors cheered, and investors breathed an initial sigh of relief Friday when embattled Egyptian President Hosni Mubarak gave in to protestor demands and resigned from office. The departure turned the weeks of protests in Cairo's Tahrir Square into celebrations. The army will now take control of the country. The past three weeks of demonstrations caused some worried investors to seek safety in what has come to be known as the "risk off" trade. The U.S. dollar and Treasuries gained, and Brent crude prices hovered above $100 per barrel, amid speculation that the unrest may curb oil flows through Egypt's Suez Canal.
The crisis, combined with some disappointing earnings news from technology bellwether Cisco Systems, forced the Dow Jones Industrial Average lower for the first time in nine days on Thursday. That was one day after the blue chip index hit a 30-month high. The tensions in the Middle East and worries about faster inflation in the emerging world sparked the biggest losses in the MSCI Emerging Markets Index since November.
Global economic news
China raises rates again
Policymakers in emerging market countries continued to raise interest rates this week to fight accelerating inflation. China raised its lending and deposit rates for a third time in four months. The Bank of Korea, however, surprised markets and opted to keep its key lending rate on hold at 2.75%. Last week, the Bank of Indonesia increased borrowing costs for the first time in more than two years. Speculation that policymakers will take further steps to curb inflation has weighed on stocks in the region.
BOE keep stimulus in place
The Bank of England maintained its emergency stimulus measures and held its benchmark interest rate unchanged at a record low 0.5%.
U.S. jobless claims fall
The number of U.S. workers filing new claims for unemployment benefits fell more than expected last week. Claims dropped 36,000 to 383,000 in the week ended February 5. It was the lowest reading since July 2008 and points to the continued improvement in the job market as the economy picks up speed.
U.S. consumer confidence picks up
The Thomson Reuters/University of Michigan preliminary index of consumer confidence for the month showed confidence among U.S. investors increased to the highest level in eight months.
U.S. trade gap widens
The U.S. trade gap widened 5.9% in December, and the full-year gap gained the most in 10 years. Imports rose 2.6%, and exports grew 1.8%, with both categories hitting levels not seen in over two years.
U.K. manufacturing unexpectedly declined in December
Manufacturing activity fell as economic activity was hampered by the coldest weather seen in a century. Factory output declined for the first time since April, falling 0.1% from November.
Global corporate news
Takeover deals dominate corporate news
The Deutsche Börse announced this week that it is in talks to buy the New York Stock Exchange in a deal valued at almost $10 billion. Meanwhile, the London Stock Exchange made a $3.1 billion bid for TMX Group. The week began with news that AOL would buy the Huffington Post for $315 million. In a merger that would step up consolidation in the offshore oil drilling industry, Ensco agreed to buy Pride International for $7.3 billion. Looking to gain a stronger foothold in the diagnostics industry, Danaher said it would buy Beckman Coulter for $5.87 billion. Kindred Healthcare disclosed it would acquire RehabCare for about $1.3 million in the latest health care deal driven by cost cutting. Overall, analysts say the trend reflects increased corporate confidence and economic recovery.
Nokia announced a partnership with Microsoft
In what is being billed as a major strategy shift for the handset maker, Nokia said it will adopt Windows Phone as its main smartphone platform. The move is part of Nokia's broad strategic partnership with Microsoft.
Cisco disappoints
Technology bellwether Cisco Systems disappointed investors this week as it announced its profits fell 18%; the company also reported its fourth consecutive quarterly decline in margins. Both were viewed as sign of growing competitive pressures in Cisco's core network switching business.
Credit Suisse hit by tougher regulations, capital requirements
Credit Suisse Group reported that its fourth-quarter net income rose a less-than-expected 6%. The company, which is Switzerland's second-largest bank, cut its 2010 dividend as well as future profit targets, saying that tougher regulations and capital requirements will likely cut into its bottom line in years to come.
Other profit news mixed
PepsiCo reported a 5% drop in its fourth-quarter profit and cut its earnings outlook, saying it faces headwinds from high unemployment, cost inflation, and a potentially tough pricing environment. Allstate, the largest publicly traded home and auto insurer in the United States said fourth-quarter profit fell 43% because of an increase in disaster claims. Sprint Nextel's fourth-quarter loss narrowed slightly, and Whole Foods lifted its 2011 forecasts for profits and sales. Kraft Foods' net income fell 24% amid higher costs for meat, packaging and other inputs.
Friday, February 11, 2011
Friday, February 4, 2011
U.S. Economic News Week Ending Febuary 4, 2011
Implications of political developments in Egypt
The ongoing tensions in Egypt, Tunisia, and other Middle Eastern countries have led to an increased sense of uncertainty among investors and raised questions and concerns about prospects for the region and global markets.
Other than the daily transit of 1.5 million barrels of crude oil through the Suez Canal, MFS® does not see many direct implications for the global economy from the political turmoil in Egypt and the surrounding region. U.S. crude oil prices rose above $91 per barrel this week, while prices for ICE Brent crude, the benchmark grade for two-thirds of the world’s oil market, pushed above $103 per barrel amid fears that any escalation of the situation in Egypt could lead to a disruption of the movement of oil through the canal.
Despite the political developments in Egypt, lingering concerns about sovereign debt in the eurozone and fresh concerns about how rising oil prices and accelerating inflation might impact the overall health of global financial markets, the Dow Jones Industrial Average closed above 12,000 on Tuesday for the first time since June 2008. Strong U.S. corporate earnings and mostly positive economic indicators in January, including strong manufacturing activity, helped boost investor confidence that the nation’s economy may finally be moving from recovery to expansion. Still, the political turmoil in Egypt may affect global financial markets as investors assess the impact of the crisis.
Global economic news
Biggest U.S. companies report strong fourth-quarter profits
Approximately 50% of U.S. companies have reported fourth-quarter earnings, and results have been exceptionally strong. Excluding financial firms, weighted earnings for the companies in the Standard & Poor’s 500 Stock Index are up 17% on an as-reported basis for companies representing 54% of the group’s market value. S&P forecasts that when all 500 companies report their fourth-quarter earnings, they will show an increase of approximately 32% from a year earlier.
ISM’s U.S. non-manufacturing index unexpectedly jumps
The Institute for Supply Management’s index of nonmanufacturing businesses rose to 59.4 in January from 57.1 the previous month.
U.S. home prices continue to drop
Home prices in all of the 28 major U.S. metropolitan areas tracked by The Wall Street Journal’s quarterly survey fell in the fourth quarter of 2010 compared with a year earlier. Home values fell the most in cities already rocked by the housing bust, including Atlanta, Chicago, Miami, and Orlando, according to data from real estate Web site Zillow.com. Several markets that had previously escaped the housing market downturn, such as Seattle, Washington, and Portland, Oregon, also saw significant price declines over the same period.
U.S. economy adds fewer-than-expected jobs last month
The U.S. economy added just 36,000 jobs in January, falling below economists’ expectations. Still, the unemployment rate dropped to 9.0% last month. The U.S. Department of Labor also revised payroll numbers for all of 2010. Overall, there were 215,000 fewer jobs added last year than previously reported.
Americans spend at fastest pace since 2007
The U.S. Department of Commerce reported that consumer spending in the United States rose 0.7% in December, the sixth-straight monthly increase. Consumer spending increased at a 3.5% rate for all of 2010, the most since 2007.
Sales of municipal bonds fall to 10-year low
Municipal bond sales in January fell to their lowest level in more than 10 years. Through January 28, states, cities, and other municipalities issued nearly $12 billion of bonds, according to data provider Thomson Reuters. That figure is down approximately 63% from the same month a year ago and the smallest monthly total since January 2000, when $9.6 billion of debt was sold.
Eurozone inflation accelerates at fastest pace since late 2008
Despite eurozone inflation accelerating in January at its fastest rate since late 2008, the European Central Bank voted to keep its main lending rate at a record-low 1% for a 21st straight month. Saying inflation risks are “broadly balanced,” ECB President Jean-Claude Trichet allayed fears among investors that the central bank was planning to raise interest rates at least in the short term. Eurozone inflation was at 2.4% in January, moving further above the ECB’s target rate of 2.0%.
Global food price index hits record high
The United Nations said that its monthly food price index reached its highest level since the organization began keeping records in 1990. The UN’s Food and Agriculture Organization Index rose to 231 points in January. The seventh consecutive monthly increase for the index occurred partly because of higher global prices for cereal, sugar, and vegetable oils. The FAO index is a measure of the monthly change in international prices of a basket of commodities. It is closely watched by investors and analysts as a global benchmark for food price trends.
Global corporate news
Nippon Steel, Sumitomo Metal to merge
Nippon Steel and Sumitomo Metal Industries, Japan’s number-one and number-three steelmakers by output, agreed to merge by 2012. The merger would create the world’s number-two steelmaker, with combined revenue of 4.8 trillion yen ($58.5 billion USD) as of the fiscal year that ended last March. The deal, the first major consolidation in the Japanese steel industry in a decade, will result in stronger competition against rival companies in China and India.
Time Warner to purchase NaviSite
Time Warner Cable announced that it is purchasing NaviSite for approximately $230 million. NaviSite hosts applications on remote servers. The move will help Time Warner offer more Web-based services to its business customers. The purchase also gives Time Warner access to NaviSite’s 1,200-plus customers.
Exxon profit surges 53%, tops Wall Street projections
Exxon Mobil’s profit rose 53% in the fourth quarter on higher oil prices and a jump in production. The world’s largest publicly traded oil company posted earnings of $9.25 billion, up from $6.05 billion a year earlier.
Merck posts fourth-quarter loss, forecasts lower-than-expected 2011 earnings
Merck, the second-largest U.S. drugmaker, reported a fourth-quarter net loss of $531 million after taking a $1.7 billion charge to write down its experimental blood thinner. The company, which also forecast 2011 earnings that were below analysts’ estimates, said it is moving ahead with plans to cut 15,000 jobs and close facilities to save $3.5 billion annually by 2012.
New York Times sees drop in profit
New York Times’ fourth-quarter profit decreased 26% from a year ago. The publisher posted a profit of $67.1 million, down from $90.9 million a year earlier. Still, core earnings for the company increased as costs dropped at a faster rate than revenue.
Dow Chemical profit nearly triples
Dow Chemical said its profit rose to $511 million from $172 million a year ago as the chemical giant benefited from increased demand and price increases. Revenue increased 10% to $13.8 billion.
The ongoing tensions in Egypt, Tunisia, and other Middle Eastern countries have led to an increased sense of uncertainty among investors and raised questions and concerns about prospects for the region and global markets.
Other than the daily transit of 1.5 million barrels of crude oil through the Suez Canal, MFS® does not see many direct implications for the global economy from the political turmoil in Egypt and the surrounding region. U.S. crude oil prices rose above $91 per barrel this week, while prices for ICE Brent crude, the benchmark grade for two-thirds of the world’s oil market, pushed above $103 per barrel amid fears that any escalation of the situation in Egypt could lead to a disruption of the movement of oil through the canal.
Despite the political developments in Egypt, lingering concerns about sovereign debt in the eurozone and fresh concerns about how rising oil prices and accelerating inflation might impact the overall health of global financial markets, the Dow Jones Industrial Average closed above 12,000 on Tuesday for the first time since June 2008. Strong U.S. corporate earnings and mostly positive economic indicators in January, including strong manufacturing activity, helped boost investor confidence that the nation’s economy may finally be moving from recovery to expansion. Still, the political turmoil in Egypt may affect global financial markets as investors assess the impact of the crisis.
Global economic news
Biggest U.S. companies report strong fourth-quarter profits
Approximately 50% of U.S. companies have reported fourth-quarter earnings, and results have been exceptionally strong. Excluding financial firms, weighted earnings for the companies in the Standard & Poor’s 500 Stock Index are up 17% on an as-reported basis for companies representing 54% of the group’s market value. S&P forecasts that when all 500 companies report their fourth-quarter earnings, they will show an increase of approximately 32% from a year earlier.
ISM’s U.S. non-manufacturing index unexpectedly jumps
The Institute for Supply Management’s index of nonmanufacturing businesses rose to 59.4 in January from 57.1 the previous month.
U.S. home prices continue to drop
Home prices in all of the 28 major U.S. metropolitan areas tracked by The Wall Street Journal’s quarterly survey fell in the fourth quarter of 2010 compared with a year earlier. Home values fell the most in cities already rocked by the housing bust, including Atlanta, Chicago, Miami, and Orlando, according to data from real estate Web site Zillow.com. Several markets that had previously escaped the housing market downturn, such as Seattle, Washington, and Portland, Oregon, also saw significant price declines over the same period.
U.S. economy adds fewer-than-expected jobs last month
The U.S. economy added just 36,000 jobs in January, falling below economists’ expectations. Still, the unemployment rate dropped to 9.0% last month. The U.S. Department of Labor also revised payroll numbers for all of 2010. Overall, there were 215,000 fewer jobs added last year than previously reported.
Americans spend at fastest pace since 2007
The U.S. Department of Commerce reported that consumer spending in the United States rose 0.7% in December, the sixth-straight monthly increase. Consumer spending increased at a 3.5% rate for all of 2010, the most since 2007.
Sales of municipal bonds fall to 10-year low
Municipal bond sales in January fell to their lowest level in more than 10 years. Through January 28, states, cities, and other municipalities issued nearly $12 billion of bonds, according to data provider Thomson Reuters. That figure is down approximately 63% from the same month a year ago and the smallest monthly total since January 2000, when $9.6 billion of debt was sold.
Eurozone inflation accelerates at fastest pace since late 2008
Despite eurozone inflation accelerating in January at its fastest rate since late 2008, the European Central Bank voted to keep its main lending rate at a record-low 1% for a 21st straight month. Saying inflation risks are “broadly balanced,” ECB President Jean-Claude Trichet allayed fears among investors that the central bank was planning to raise interest rates at least in the short term. Eurozone inflation was at 2.4% in January, moving further above the ECB’s target rate of 2.0%.
Global food price index hits record high
The United Nations said that its monthly food price index reached its highest level since the organization began keeping records in 1990. The UN’s Food and Agriculture Organization Index rose to 231 points in January. The seventh consecutive monthly increase for the index occurred partly because of higher global prices for cereal, sugar, and vegetable oils. The FAO index is a measure of the monthly change in international prices of a basket of commodities. It is closely watched by investors and analysts as a global benchmark for food price trends.
Global corporate news
Nippon Steel, Sumitomo Metal to merge
Nippon Steel and Sumitomo Metal Industries, Japan’s number-one and number-three steelmakers by output, agreed to merge by 2012. The merger would create the world’s number-two steelmaker, with combined revenue of 4.8 trillion yen ($58.5 billion USD) as of the fiscal year that ended last March. The deal, the first major consolidation in the Japanese steel industry in a decade, will result in stronger competition against rival companies in China and India.
Time Warner to purchase NaviSite
Time Warner Cable announced that it is purchasing NaviSite for approximately $230 million. NaviSite hosts applications on remote servers. The move will help Time Warner offer more Web-based services to its business customers. The purchase also gives Time Warner access to NaviSite’s 1,200-plus customers.
Exxon profit surges 53%, tops Wall Street projections
Exxon Mobil’s profit rose 53% in the fourth quarter on higher oil prices and a jump in production. The world’s largest publicly traded oil company posted earnings of $9.25 billion, up from $6.05 billion a year earlier.
Merck posts fourth-quarter loss, forecasts lower-than-expected 2011 earnings
Merck, the second-largest U.S. drugmaker, reported a fourth-quarter net loss of $531 million after taking a $1.7 billion charge to write down its experimental blood thinner. The company, which also forecast 2011 earnings that were below analysts’ estimates, said it is moving ahead with plans to cut 15,000 jobs and close facilities to save $3.5 billion annually by 2012.
New York Times sees drop in profit
New York Times’ fourth-quarter profit decreased 26% from a year ago. The publisher posted a profit of $67.1 million, down from $90.9 million a year earlier. Still, core earnings for the company increased as costs dropped at a faster rate than revenue.
Dow Chemical profit nearly triples
Dow Chemical said its profit rose to $511 million from $172 million a year ago as the chemical giant benefited from increased demand and price increases. Revenue increased 10% to $13.8 billion.
U.S. Economic News Week Ending January 28, 2011
It was a busy week for financial markets, both in the United States and abroad. Nearly half of the companies in the Dow Jones Industrial Average were scheduled to release quarterly reports this week. The U.S. Federal Reserve Board, during its first meeting of 2011, voted to uphold its $600 billion U.S. Treasury bond-buying program, and leaders from around the world met in Davos, Switzerland, to discuss key issues affecting global financial markets. As the Dow crossed the 12,000 mark for the first time in almost three years, the U.S. dollar slid to a two-month low against the euro, and gold futures hit a three-month low on decreased demand.
Global economic news
Americans more optimistic about economy
The Conference Board Consumer Confidence Index surged to 60.6 in January from 53.3 in December. The index is based on a survey of 5,000 U.S. households. The latest figure exceeded projections of economists, surveyed by Briefing.com, who had estimated the index to increase slightly to 53.5.
New home sales in U.S. reach lowest level in 47 years
Sales of new single-family homes in the United States rose to a 329,000 unit annual pace in December, up from 280,000 in November. Despite the 17.5% increase in sales for the month, the U.S. Department of Commerce estimated that only 321,000 homes were sold for all of 2010, a 14% decrease from 2009 and the lowest number of annual home sales on record dating back to 1963. A homebuyer tax credit in California was one reason for the surge in December sales.
U.S. gas prices continue upward climb
Gasoline prices continued to rise in the United States amid strong global demand for oil and a lack of supply. Gas prices have risen $0.12 per gallon, or 4%, in just the last month, according to AAA, and prices are up 14% over the past year. The nationwide average price for gas is currently $3.12 per gallon, less than a dollar below the record high of $4.11 per gallon set in July 2008. Crude oil prices also continued to climb, currently trading at just under $90 per barrel.
Home prices decline again
U.S. home prices fell 1% in November from October, according to the latest Standard & Poor’s/Case-Shiller Home Price Indices of 20 metropolitan markets. Prices reached new lows in a number of U.S. cities, and the overall index fell for the fifth straight month. San Diego was the only market in the 20 included markets that did not drop, posting a slight increase of 0.1%.
Hiring in U.S. companies tops layoffs by most in 12 years
According to a survey released this week by the National Association for Business Economics, the percentage of businesses expecting to add to payrolls in the next six months was 42%, compared with just 7% who expect to lay off workers. The quarterly survey includes the views of 84 economists for private companies and trade groups who are NABE members.
Initial jobless claims rise last week
The U.S. Department of Labor reported that 454,000 Americans filed new jobless claims in the week ended January 22. The latest figure represents an increase of 51,000 claims over the previous week.
World leaders, bankers, and investors gather in Davos
While the mood at this year’s World Economic Forum in Davos, Switzerland, was more optimistic than at the past two, it was still mostly reserved. Leaders, bankers, and investors from around the globe met to discuss a range of topics, including mounting fears of inflation worldwide and ways to ease the sovereign debt crisis in the eurozone. For the first time, the BRIC (Brazil, Russia, India, China) nations and other emerging economies had a more significant presence at the summit with a record number of executives representing their countries in attendance.
French consumer confidence drops
French household confidence fell in January for a second month as the number of people actively looking for work increased by 27,100 in December to 2.725 million, the highest level since December 2003. Sentiment declined to 85 in January, from 86 in December, according to the Paris-based National Statistics Office Insee.
German pace of inflation picks up slightly; eurozone inflation concerns mount
The Federal Statistics Office in Wiesbaden reported that the inflation rate in Germany rose to 2% in January, from 1.9% in December, on higher food and energy costs. While the country’s inflation rate is the highest since October 2008, economists had projected an increase to 2.2%. European Central Bank President Jean-Claude Trichet cautioned that inflationary pressures in the eurozone must be monitored closely. He urged central bankers to help ensure that higher energy and food prices do not disrupt recent gains in the global economy. The ECB did raise the possibility that it may raise interest rates in the future.
S&P downgrades Japan credit rating for first time in nine years
Standard & Poor’s lowered Japan’s long-term sovereign credit rating by one notch to “AA-” from “AA.” The surprise downgrade, the first for Japan since April 2002, puts its debt on the same level as China’s. S&P cited the country’s tremendous debt burden, exacerbated by persistent deflation and demographic pressures, as reasons for the rating cut.
Hungary raises interest rate
The National Bank of Hungary’s Monetary Policy Council raised its policy rate by 0.25%, to 6.00% from 5.75%. It is expected that the central bank’s third increase in the past three months will deepen the rift between the bank, which is trying to keep inflation in check, and the government, whose primary goal is to revive the country’s economy.
Global corporate news
Earnings season in full swing
Johnson & Johnson reported a 12% drop in profit and a disappointing outlook amid decreased spending in health care markets and product recalls. For the fourth quarter, the maker of products ranging from Band-Aids to drugs and medical devices posted earnings of $1.9 billion, compared with $2.2 billion a year earlier. The latest quarter included expenses related to litigation settlements, product liability costs, and last year’s recall of hip-replacement products.
Halliburton posted a fourth-quarter profit of $605 million, up from $243 million a year earlier, as the oil field services company continued to benefit from a resurgence of drilling in North America. In addition to more than doubling its profit, the company’s revenue jumped 83% from a year earlier.
McDonald’s fourth-quarter earnings were in line with analysts’ estimates, increasing to $1.24 billion from $1.22 billion a year earlier. Revenue for the fast-food giant increased 4% to $6.21 billion as global same-store sales rose 5%.
Microsoft reported a profit of $6.63 billion for its fiscal second quarter, down slightly from $6.66 billion a year ago. The latest figures showed an increase on a per-share basis, rising from $0.74 per share to $0.77 per share. Overall, the software maker’s latest earnings topped analysts’ estimates.
AT&T recorded revenue that missed Wall Street projections as the mobile operator added fewer wireless subscribers than expected in its fiscal fourth quarter. The company also said its profit fell to $1.09 billion for the quarter from $2.7 billion a year earlier.
Other corporate news
Google is planning its biggest hiring year yet in 2011. The company expects to surpass its 2007 hiring record, when the company added more than 6,000 employees to its ranks, and last year when 4,500 people were hired. A company source cited tremendous growth in Google’s Android mobile operating system, Chrome browser, and the Google Apps platform as leading reasons for the company’s continued growth and expected hiring binge.
French drugmaker Sanofi-Aventis extended its $18.5 billion offer for Genzyme for a second time. The $69 per share offer now lasts until February 15, at midnight. The terms of the bid remained unchanged and discussions between the two companies are ongoing.
Global economic news
Americans more optimistic about economy
The Conference Board Consumer Confidence Index surged to 60.6 in January from 53.3 in December. The index is based on a survey of 5,000 U.S. households. The latest figure exceeded projections of economists, surveyed by Briefing.com, who had estimated the index to increase slightly to 53.5.
New home sales in U.S. reach lowest level in 47 years
Sales of new single-family homes in the United States rose to a 329,000 unit annual pace in December, up from 280,000 in November. Despite the 17.5% increase in sales for the month, the U.S. Department of Commerce estimated that only 321,000 homes were sold for all of 2010, a 14% decrease from 2009 and the lowest number of annual home sales on record dating back to 1963. A homebuyer tax credit in California was one reason for the surge in December sales.
U.S. gas prices continue upward climb
Gasoline prices continued to rise in the United States amid strong global demand for oil and a lack of supply. Gas prices have risen $0.12 per gallon, or 4%, in just the last month, according to AAA, and prices are up 14% over the past year. The nationwide average price for gas is currently $3.12 per gallon, less than a dollar below the record high of $4.11 per gallon set in July 2008. Crude oil prices also continued to climb, currently trading at just under $90 per barrel.
Home prices decline again
U.S. home prices fell 1% in November from October, according to the latest Standard & Poor’s/Case-Shiller Home Price Indices of 20 metropolitan markets. Prices reached new lows in a number of U.S. cities, and the overall index fell for the fifth straight month. San Diego was the only market in the 20 included markets that did not drop, posting a slight increase of 0.1%.
Hiring in U.S. companies tops layoffs by most in 12 years
According to a survey released this week by the National Association for Business Economics, the percentage of businesses expecting to add to payrolls in the next six months was 42%, compared with just 7% who expect to lay off workers. The quarterly survey includes the views of 84 economists for private companies and trade groups who are NABE members.
Initial jobless claims rise last week
The U.S. Department of Labor reported that 454,000 Americans filed new jobless claims in the week ended January 22. The latest figure represents an increase of 51,000 claims over the previous week.
World leaders, bankers, and investors gather in Davos
While the mood at this year’s World Economic Forum in Davos, Switzerland, was more optimistic than at the past two, it was still mostly reserved. Leaders, bankers, and investors from around the globe met to discuss a range of topics, including mounting fears of inflation worldwide and ways to ease the sovereign debt crisis in the eurozone. For the first time, the BRIC (Brazil, Russia, India, China) nations and other emerging economies had a more significant presence at the summit with a record number of executives representing their countries in attendance.
French consumer confidence drops
French household confidence fell in January for a second month as the number of people actively looking for work increased by 27,100 in December to 2.725 million, the highest level since December 2003. Sentiment declined to 85 in January, from 86 in December, according to the Paris-based National Statistics Office Insee.
German pace of inflation picks up slightly; eurozone inflation concerns mount
The Federal Statistics Office in Wiesbaden reported that the inflation rate in Germany rose to 2% in January, from 1.9% in December, on higher food and energy costs. While the country’s inflation rate is the highest since October 2008, economists had projected an increase to 2.2%. European Central Bank President Jean-Claude Trichet cautioned that inflationary pressures in the eurozone must be monitored closely. He urged central bankers to help ensure that higher energy and food prices do not disrupt recent gains in the global economy. The ECB did raise the possibility that it may raise interest rates in the future.
S&P downgrades Japan credit rating for first time in nine years
Standard & Poor’s lowered Japan’s long-term sovereign credit rating by one notch to “AA-” from “AA.” The surprise downgrade, the first for Japan since April 2002, puts its debt on the same level as China’s. S&P cited the country’s tremendous debt burden, exacerbated by persistent deflation and demographic pressures, as reasons for the rating cut.
Hungary raises interest rate
The National Bank of Hungary’s Monetary Policy Council raised its policy rate by 0.25%, to 6.00% from 5.75%. It is expected that the central bank’s third increase in the past three months will deepen the rift between the bank, which is trying to keep inflation in check, and the government, whose primary goal is to revive the country’s economy.
Global corporate news
Earnings season in full swing
Johnson & Johnson reported a 12% drop in profit and a disappointing outlook amid decreased spending in health care markets and product recalls. For the fourth quarter, the maker of products ranging from Band-Aids to drugs and medical devices posted earnings of $1.9 billion, compared with $2.2 billion a year earlier. The latest quarter included expenses related to litigation settlements, product liability costs, and last year’s recall of hip-replacement products.
Halliburton posted a fourth-quarter profit of $605 million, up from $243 million a year earlier, as the oil field services company continued to benefit from a resurgence of drilling in North America. In addition to more than doubling its profit, the company’s revenue jumped 83% from a year earlier.
McDonald’s fourth-quarter earnings were in line with analysts’ estimates, increasing to $1.24 billion from $1.22 billion a year earlier. Revenue for the fast-food giant increased 4% to $6.21 billion as global same-store sales rose 5%.
Microsoft reported a profit of $6.63 billion for its fiscal second quarter, down slightly from $6.66 billion a year ago. The latest figures showed an increase on a per-share basis, rising from $0.74 per share to $0.77 per share. Overall, the software maker’s latest earnings topped analysts’ estimates.
AT&T recorded revenue that missed Wall Street projections as the mobile operator added fewer wireless subscribers than expected in its fiscal fourth quarter. The company also said its profit fell to $1.09 billion for the quarter from $2.7 billion a year earlier.
Other corporate news
Google is planning its biggest hiring year yet in 2011. The company expects to surpass its 2007 hiring record, when the company added more than 6,000 employees to its ranks, and last year when 4,500 people were hired. A company source cited tremendous growth in Google’s Android mobile operating system, Chrome browser, and the Google Apps platform as leading reasons for the company’s continued growth and expected hiring binge.
French drugmaker Sanofi-Aventis extended its $18.5 billion offer for Genzyme for a second time. The $69 per share offer now lasts until February 15, at midnight. The terms of the bid remained unchanged and discussions between the two companies are ongoing.
Subscribe to:
Posts (Atom)