Morning News: August 2, 2011
Posted by Eddy Elfenbein on August 2nd, 2011 at 8:24 am

Pearls, Finer but Still Cheap, Flow From China

India’s Widening Iron Ore Scandal Hurts Stocks

Italy Under Fire in Widening Euro Debt Crisis

Global Growth, Debt Fears Grip Currency Markets

Debt Deal Puts U.S. on Austerity Path as Economy Falters

U.S. Stock Futures Down as Economic Fears Remain

Manufacturing Growth Hits Lowest Level in 2 Years

Ford to Recall 1.1 Million Pickups for Gas Tank Problem

Toyota Raises Profit Outlook on Quake Recovery as Hyundai Gains

Pfizer’s Adjusted Profit Beats Estimates

General Growth Quarterly FFO Declines After Lower Lease Termination Income

British Banking Giant Barclays Reports Profit Plunge and Job Cuts

Japanese Brewer Kirin Pays $2.5 Billion to Buy Stake in Brazil’s Schincariol

Fresenius to Buy U.S. Dialysis Chains

Brian Shannon: Stock Trading Ideas for 8/2/11

Jeff Miller: Weighing the Week Ahead: Looking Past the Debt Ceiling Issue

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The Lost Decade
Posted by Eddy Elfenbein on August 1st, 2011 at 12:58 pm

Here’s a look at the total return of the S&P 500 adjusted for inflation. We’re still below the peaks from 2000 and 2007. In fact, we’re less than 5% higher than where we were 13 years ago.

Note that the July CPI report isn’t out yet so I assumed 0% inflation for the last data point.

July ISM = 50.9
Posted by Eddy Elfenbein on August 1st, 2011 at 10:30 am

The July ISM index dropped to 50.9. The index is down nearly 10 points in the last three months.

Whenever the ISM drops to 44.4 or less, the odds of a recession jump much higher. We’re still above the danger zone. The ISM has fallen between 50.0 and 51.0 a total of 49 times. Only three of those readings come during official recessions.

Here’s a look at total months and months in a recession by different ISM readings:

During the 10-year expansion from April 1991 to March 2001, the ISM came in at today’s reading or less 46 times, yet none was a recession.

The First Day of the Month
Posted by Eddy Elfenbein on August 1st, 2011 at 10:03 am

The S&P 500 has risen on the first day of the month for 23 of the last 28 months.

Going back to November of 2009, more than half of the S&P 500’s gain has come on the first day of the month.

The market was up earlier today but we just slipped into the red.

Warren Buffett on Gold
Posted by Eddy Elfenbein on August 1st, 2011 at 9:05 am

He sums it up well:

“They take it out of the ground in South Africa, ship it to the Federal Reserve, where they put it back in the ground,” Buffett said in answer to a question about commodities on April 30 at Berkshire Hathaway’s annual meeting in Omaha, Nebraska. “If you were watching from Mars you might think it’s a little peculiar.”

S&P 500 Looks to Open Higher
Posted by Eddy Elfenbein on August 1st, 2011 at 8:57 am

Thanks to the resolution, or apparent resolution, of the debt ceiling debate, the market looks to open higher this morning. The futures market indicates that the S&P 500 will open more than 1% higher today. I would expect that financial stocks will do especially well. Of course, we’re only gaining what we recently lost.

I’ll be very curious to see what the ISM report for July has to say. The last few reports haven’t been encouraging. The report is due out at 10 am.

Interestingly, I just noticed that the joint venture between Warren Buffett’s Berkshire Hathaway and Leucadia National ($LUK) is in the market for an acquisition. As they say, buy when others are fearful.

Morning News: August 1, 2011
Posted by Eddy Elfenbein on August 1st, 2011 at 7:09 am

China Central Bank Says Inflation Fight a Policy Priority

IMF, Romania Agree on Second Installment of 480 Million Euros

Europe, Asian Factory Growth Stalls in July

Obama and Leaders Reach Debt Deal

Debt-Limit Deal to Get Congress Vote Today

US Stock Futures Higher On US Debt Deal Agreement; Gold Slides

U.S. Auto Sales Stall, Casting Doubt on Rebound

HSBC Sheds 30,000 Jobs, Posts Surprise Profit Rise

Allstate Posts $620 Million Loss, First in Two Years, on Tornado Expenses

Honda 1Q Profit Drops In Post-Quake Funk, But Lifts FY Outlook

NT Express Profit Down As Losses Outside Europe Rise

GE to Sell SeaCo Venture for $1.05 Billion

EADS to Purchase Vizada for $960 Million

Joshua Brown: The Deal

Paul Kedrosky: The Springboard of the Neolithic Demographic Transition

Man Disguised as Spongebob Squarepants Robs Florida 7-11; No One Injured

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The 7-1/2 Year TIPs Yield is Negative
Posted by Eddy Elfenbein on July 29th, 2011 at 2:03 pm

Wow! Check out the yield on the Treasury Inflation Protected security that’s due in January 2019. In February, it yielded 1%. Now the yield is slightly negative.

Moog Earns 73 Cents Per Share
Posted by Eddy Elfenbein on July 29th, 2011 at 11:38 am

Moog ($MOG-A) beat by three cents and they raised guidance. They see earnings coming in for this year (ending September 2011) at $2.85 per share, and at $3.25 per share for next year.

Moog Inc.bizWatch Moog Inc. Latest from The Business Journals M&T, Moog, Try-It juiced by NYPATripathi, Zemsky to head area economic panelMoog set to work on Boeing project Follow this company reported third-quarter earnings improved 14 percent as the space and defense manufacturer upped its guidance for 2011.

Net income climbed to $33.8 million, or 73 cents per share, compared to $29.2 million, or 64 cents per share, last year.

Third-quarter sales rose 9 percent to $583 million from last year’s $537 million.

Analysts had anticipated EPS of 70 cents on revenue of $569.4 million.

East Aurora-based Moog (NYSE: MOG.A, MOG.B), which operates segments in commercial aircraft, space and defense, industrial systems, components and medical devices, adjusted its annual sales to $2.3 billion, with net earnings of $132 million and earnings per share of $2.85, up 21 percent from last year.

Q2 GDP Growth = 1.3%
Posted by Eddy Elfenbein on July 29th, 2011 at 9:04 am

It was another bad quarter for the economy. For the second three months of the year, the economy grew by just 1.3% in real terms. On top of that, growth for the first quarter was revised down to just 0.4%.

The first estimate of the economy’s benchmark indicator for the second quarter showed growth was supported largely by business investment and exports.

But consumer spending, a big engine for the U.S. economy, made a much smaller contribution to growth. Spending edged up by an annualized rate of 0.1% in April through June, the weakest it has been in two years, after a 2.1% gain in the first quarter.

Americans have had to spend more for gasoline amid higher prices, leading them to cut purchases for other things. Sales last month by U.S. retailers excluding car and parts dealers were unchanged, with declines reported by furniture stores; electronics and appliances stores; restaurant and bars; health care stores; and sporting goods, hobby, book, and music stores.

Also restraining consumers is a high jobless rate. Big companies have been announcing job reductions. At Delta Air Lines Inc., for instance, more than 2,000 staff have accepted voluntary redundancy job cuts. The carrier, stung by fuel prices, announced a 58% drop in second-quarter earnings.

Here’s a look at real GDP growth during the first term of some recent presidents. Note that the line is extended back to include the election year preceding the presidential term.

The government also revised the quarterly GDP series. Here’s what the old and new series look like side-by-side. We still haven’t surpassed the previous GDP peak.