This is the ratio of the companies that best the estimates to the ones that missed. Historically the ratio averaged 2.3.. and currently it stands at a mere 1.2, back to the 2002-03 levels.. Another reason why it is time to turn bullish.
China’s PMI release follows the fall in Japanese manufacturing activity in November for the ninth straight month in yet another sign that the Japanese economy, Australia’s biggest export market, is taking yet another blow from the global downturn. Economists expect US and European PMIs to point to very weak industrial production – probably weaker than China’s.Together, these PMIs paint a bleak picture for commodities and resource equities over the coming six months at least, and over this time frame the indicies might as well get oushed to 2001 levels.
Two important sources of liquidity or comsumer spending are 1. Jobs 2. credit cards. The data on both of them is gloomy. Today morning, the Department of Labor released its report on metropolitan area employment in the month of October. The report showed that 361 of the 369 metropolitan areas reported unemployment rates in October that were higher year-over-year. 13 metropolitan areas reported unemployment rates of at least 10.0 percent, while 98 metropolitan areas reported jobless rates of at least 7.0 percent. This friday, the much awaited Job data will be out.. and it would not be a shock/surpirse to the market if the unemployment rate is reported at 6.5-7%.. And the renowned Marideth Whitney, yday on CNBC predicted that the U.S. credit-card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending. In addition, incresing Unemplyment and credit unavailability is a deadly combination!!!
The Federal Reserve extended the term of three emergency-loan programs (The Primary Dealer Credit Facility and Term Securities Lending Facility, created in March, and the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility) to April 30 from January 30. The three loan facilities, part of the central bank’s efforts to cushion financial markets from the worst crisis in seven decades, had about $304 billion in loans outstanding as of last week. The Fed already authorized other programs through April for supporting the commercial paper market and money-market funds and for swapping dollars with 14 central banks. Yet, there are few signs that the credit markets are improving.. Quoting Ben “Obviously, they have not yet returned private credit markets to normal functioning. But I am confident that market functioning would have been more seriously impaired in the absence of our actions.”
Todays GE action was, well, a bit surprising.. Yday a GOOD citi bank analyst downgraded GE with a target price of $16, as he predicted that the management would lower the guidance in the management's todays meeting. Before the markets opened, GE did lower the guidance, and obvously I thought that the stock would trade low.. But to my surprise the stock was up 2.11 (14%).. Speaking on the conf call, Neal laid out plans to delevarge the GE Capital's enormous balance sheet. GE Capital expects to lower its leverage ratio from a current eight to one to a more conservative six to one in the coming year. In addition, GE Capital will reduce the amount of credit it extends to customers. Executives anticipate GE returning to double digit growth by 2010. GE is a perfect long term investment. a guaranteed above 50% return in an year..
an article in Bloomberg on property/realestate prices..
The Detroit big three are back at the door step of the congress seeking a bail out. Today all the three companies presented their 'restructuring plan' to the congress. Among the stood out - Ford CEO took a pay cut to $1 PA, Ford planning to sell its corporate jets and the common being, their operations will be focussed on more 'less gas guzzling' vechicles.. As bad as fate can be, today the auto sales data was out. U.S. auto sales plunged 37 percent in November to the lowest annual rate in 26 years as the recession and Detroit automakers’ aid pleas kept buyers away from showrooms.
Ford’s November sales down 30.6%;
Toyota sales down 33.9%.
Honda sales down 31.6%
Volvo sales tumbled 46.5%
Chrysler U.S. sales fell 47%
GM falls 41%
and made to the list is Tata Motors, posted a 30% sales decline. (a consecutive second month drop)..
However, a positve note.. The most optimistic people/place .. India.. :) New chart from McKinsey global economic entiment survey showing that India is actually the least gloomy place on the globe with respect to thinking that the economy will weaken further from here.
GS, the financial institution to supposedly have dodged the turmoil, is no longer immune to the 'losses'. Today Bllomberg reported that GS might report a $5.00 loss per share.. Though GS traded down for the day, Citi was up!! Similar story with MOS.. they cut down the sales estimates and pulled back their guidance, reason being the uncertainity of commodity markets (and the fertilizer prices). This material sector is one of my hot favourites. It is yet another long term play..
Song: "Good People" - Jack Johnson.
Mood: 'I wish life had a rewind button'
GS, the financial institution to supposedly have dodged the turmoil, is no longer immune to the 'losses'. Today Bllomberg reported that GS might report a $5.00 loss per share.. Though GS traded down for the day, Citi was up!! Similar story with MOS.. they cut down the sales estimates and pulled back their guidance, reason being the uncertainity of commodity markets (and the fertilizer prices). This material sector is one of my hot favourites. It is yet another long term play..
Song: "Good People" - Jack Johnson.
Mood: 'I wish life had a rewind button'
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