Micron shares surge amid sharply higher revenue forecasts on AI-led memory demand
The Dow Jones rose 1.4% to 11808, while the S&P 500 tacked on 1.1%. But Nasdaq lost 1.1%.
As noted above, earnings were generally positive, with some winners being Citigroup, Morgan Stanley, American Express, Intel, Coke, McDonald’s and Honeywell.
But IBM and Apple disappointed in one form or another, as did Wells Fargo, EBay, Goldman Sachs, and General Electric.
As for my favorite company McDonald’s (not that I eat there that much but just admire the hell out of them), shares rose on Friday as earnings and revenue exceeded expectations. U.S. comp store sales rose 5.0%, and they even rose 4.4% in Europe. Net income rose 9% though the company is dealing with rapidly rising beef prices and higher labor costs. McDonald’s could be raising menu prices a third time this year soon, but the first two increases had no impact.
--U.S. Treasury Yields
6-mo. 0.05% 2-yr. 0.27% 10-yr. 2.22% 30-yr. 3.26%
Bonds were basically unchanged on the week. Inflation data for the month of September revealed that the producer price index rose 0.8%, but only 0.2% on the core, ex-food and energy. For the last 12 months, the PPI is up a whopping 6.9%, but 2.5% on core. The CPI rose 0.3%, 0.1% core, and its 12-month figures are 3.9% and 2.0%, respectively.
I have refused to cry wolf on inflation and for those screaming about it, obviously the bond market isn’t concerned, yet, plus the Fed has played a role in keeping rates down and uncertainty over the Euro crisis has led to a flight to quality.
But, having said that, where inflation comes in is obviously in the ability, or inability, of consumers to make ends meet and have money left over for discretionary spending when their wages are stagnant, or falling. And that means lower growth than should otherwise be expected. So that’s why the raw PPI and CPI data matters, Charlie Brown, not in their impact on interest rates, the traditional cause for concern.
--In the latest data released by the U.S. Treasury Department, China reduced its holdings of U.S. debt to the lowest level in a year, selling $36.5 billion in Treasuries or bonds, but its overall “official” holdings are still at the $1,137 billion level (China’s holdings purchased through London do not show up immediately in the preceding data). It was in August that S&P cut the U.S.’s credit rating to AA+ from AAA. However, the overall demand for U.S. Treasuries increased in August, and net buying of long-term equities, notes and bonds totaled $57.9 billion, the highest since December 2010, so the U.S. remains the global safe haven of choice.
--As noted by Bloomberg’s Michael J. Moore, “JP Morgan Chase, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley posted $13.5 billion in trading revenue minus accounting gains for the third quarter, down 35% from a year earlier. Investment-banking revenue plunged 41% from the second quarter to $4.47 billion.
“Bank of America posted a roughly 90% drop in fixed-income trading revenue and Goldman Sachs had its lowest debt underwriting quarter since 2003.”
--Citigroup agreed to pay $285 million to resolve SEC claims it misled investors on financial products involving collateralized debt obligations tied to subprime mortgages that imploded during the housing bubble. Earlier, Goldman Sachs agreed to pay $550 million to resolve similar claims, while JPMorgan Chase paid $154 million for its role in peddling crappola to unsuspecting investors. This is what the Occupy Wall Street folks should be protesting about, demanding justice, not the class warfare / commie propaganda.
--Goldman Sachs is on pace to pay its workers an average of $293,000 this year, less than half the amount workers were paid in 2007 ($661,490). This year’s payout is also lower than the $363,655 paid in 2008, the depths of the financial crisis. Goldman’s revenue in the July-September quarter was just $3.59 billion, down 60% from $8.9 billion a year ago as the investment bank lost $393 million. OWS can complain about this, too, but they fail to then connect the dots and realize that fewer dollars translate into fewer tax dollars and fewer tax dollars lead to layoffs of teachers and firemen, the very people they purport to protest for (when they aren’t smoking pot and keeping the neighborhood up with incessant pounding of drums like some ancient tribe in New Guinea that is trying to keep evil spirits away).
--Bank of America, on the other hand, reported a third quarter profit of $6.2 billion, but owing to a one-time gain of $10.5 billion. At least revenue was up 6%.
--Apple recorded its second best earnings ever but for the first time in 27 quarters, it failed to beat expectations and the stock was hammered, closing the week at $393 after finishing at a record high of $422 before the release. Revenue, $28.3 billion, fell short of analysts’ $29.7 forecast, so it was a shaky start for CEO Tim Cook, the first quarter he was in control after Steve Jobs resigned in August. The sales drop, however, was attributable to consumers shying away from the iPhone 4 prior to the release of the next-generation phone. That model, the iPhone 4S, is flying off the shelves (4 million units the first three days!) after its introduction this week and the company is forecasting overall sales of $37 billion in the current quarter, better than the Street is anticipating.
[Apple did sell 17 million iPhones last quarter, up 21%; 11.12 million iPads, up 166%; and Mac sales hit a record 4.89 million units. By the way, since I mentioned long, long ago I was doing an iPad app for StocksandNews, oh, the stories I could tell…for now let’s just say what was submitted by my tech staff, and approved by Apple, was not run by me first…as in some people don’t know how to spell!!! To be continued…it’s not available yet.]
--Intel reported record quarterly revenues and profits, both ahead of expectations. CFO Stacy Smith said, “We are seeing emerging markets driving significant unit growth and…in the data centers, as we see this explosion of devices that are connecting to the internet driving the build out of the internet cloud, we think we are uniquely positioned to benefit from that trend.”
--Census data for 2010 shows that the Washington, D.C., area is the nation’s highest-income metro region, owing in no small part to the size of government and the resulting armies of consultants, lobbyists and government contractors.
--Some surprisingly good data from Russia, as September retail sales rose a stronger than expected 9.2%, with real wages advancing 6.2% from year earlier levels, this as inflation will not exceed 7% in 2011, the lowest rate since 1991. Interesting. A leader of televisions and computers, M. Video, said its sales for the third quarter were up 24%.
--Foreign direct investment into China jumped 17% in the first nine months of 2011 vs. a year earlier, though September’s pace was up ‘only’ 8% from last year
--Container lines have been struggling with declining volumes of goods going from China to the United States, but traffic going the other way is surging as Chinese consumers are demanding higher quality food…meats, fruits and vegetables. One carrier, Copenhagen-based Maersk, is investing $1 billion in refrigerated containers over two years. It’s all about China’s rising middle class and increased wages.
--Struggling Dutch lighting and consumer electronics group Philips is cutting 4,500 jobs, Philips being the world’s leader in lighting equipment, and Europe’s biggest consumer electronics producer.
--Lowe’s Cos., the world’s second-largest home-improvement chain, is closing 20 stores and laying off about 1,950 workers. Lowe’s will still have 1,700 locations in North America, but it has not been able to grow profits vs. competitor Home Depot, which reported a 14% jump in its most recent quarterly report.
--Ford and the UAW came to agreement on a four-year labor agreement after it looked iffy just a week earlier when several plants rejected it. In the end, workers came to their senses, recognizing, for one, they would be jeopardizing some nice bonuses, such as a $6,000 signing bonus on Nov. 4, along with profit-sharing checks averaging $3,750. As Gary Chaison, a professor of labor relations, told the New York Times, “It’s pretty hard nowadays for a worker to risk not getting a signing bonus and have to explain that to a spouse.”
--California home sales were up 6.7% in September, though the median price, $249,000, was down for a 12th consecutive year-over-year monthly decline. 33.8% of sales were foreclosures, however, and another 18.7% were short sales, in which the bank allows an underwater property to be sold just to get it off the books; both methods necessary if we are to ever clear the inventory and reach a true bottom.
--According to the federal Climate Prediction Center, the drought across the southern Plains is expected to continue through the winter, owing to La Nina, which returned in August and will gradually strengthen. During a typical La Nina (a warming of the water in the Pacific), precipitation is below average in the southern tier of the U.S.
Texas, the epicenter of the drought, experienced its driest 12 months on record from October 2010 through September 2011. It has cost $6.5 billion in economic losses in both Texas and Oklahoma.
--New York City’s unemployment rate remained at 8.7% in September, unchanged from the month before.
--The Global Business Travel Assn. estimates spending in this category will rise 6.9% this year over 2010, but just 4.3% in 2012.
--Social Security recipients will get their first raise in January since 2009, 3.5%. Monthly Social Security payments currently average $1,082, or $13,000 a year, so you’re talking an increase of about $38 a month. Whatever you do, don’t take this and then bet on the Jets.
--The world’s largest gold mine is in eastern Indonesia and the other day gunmen shot and killed three miners in yet another attack on the installation operated by Freeport-McMoran. A labor strike at the mine is complicating things. Strikers are demanding that their pay, which ranges from $2.10 to $3.50 per hour, be increased to $17.50 and higher.
--Kinder Morgan is purchasing El Paso Corp. for $21.1 billion, giving Kinder a pipeline network long enough to circle the Earth more than three times (80,000 miles worth), with the El Paso deal adding pipelines from California to New England that carry about one-fourth of U.S. gas supplies.
[El Paso Corp. CEO Douglas Foshee, who does not plan to stay at the new company, is eligible to receive an exit package of $95 million, $69 million of which comes from stock options granted over his eight-year tenure.]
--A good friend from Wake Forest is one of the top preemie baby doctors in the land and he is currently on his annual teaching trip in Vietnam. So I received a note from him from there and he observed, “Boy, the prices have really gone up here in the last ten years,” Dr. W. then confirming the still mostly anecdotal evidence that U.S. manufacturers who located in Southeast Asia and China will soon be bringing manufacturing back to the States due to skyrocketing labor costs.
--Steve Jobs told his biographer, Walter Isaacson, that he regretted the decision to try alternative therapies for his pancreatic cancer rather than have surgery. Asked why he didn’t agree with his doctors’ suggestion he undergo an operation, Jobs told Isaacson, “I didn’t want my body to be opened…I didn’t want to be violated in that way.”
His wife and friends urged him to get the operation but Jobs waited nine months to do so.
Jobs’ biography is being published Monday and is already a mammoth best-seller.
--This Saturday at Jos. A. Bank, buy one suit at the regular price and get two suits and three silk ties for free; plus six cars, two planes, and the nation of Benin!
--The U.S. Postal Service is looking to add non-traditional revenue sources, which would require congressional approval. I’ll tell you what would really help me out personally, seeing as how I check out two boxes at my local center almost every day. Sell beer. Keep it simple… just domestic, which would fly through Congress far more easily than if foreign, premium brands were offered. And just have a six-pack limit. If this worked, as it inevitably would, then broaden the product mix to include peanuts.
As noted above, earnings were generally positive, with some winners being Citigroup, Morgan Stanley, American Express, Intel, Coke, McDonald’s and Honeywell.
But IBM and Apple disappointed in one form or another, as did Wells Fargo, EBay, Goldman Sachs, and General Electric.
As for my favorite company McDonald’s (not that I eat there that much but just admire the hell out of them), shares rose on Friday as earnings and revenue exceeded expectations. U.S. comp store sales rose 5.0%, and they even rose 4.4% in Europe. Net income rose 9% though the company is dealing with rapidly rising beef prices and higher labor costs. McDonald’s could be raising menu prices a third time this year soon, but the first two increases had no impact.
--U.S. Treasury Yields
6-mo. 0.05% 2-yr. 0.27% 10-yr. 2.22% 30-yr. 3.26%
Bonds were basically unchanged on the week. Inflation data for the month of September revealed that the producer price index rose 0.8%, but only 0.2% on the core, ex-food and energy. For the last 12 months, the PPI is up a whopping 6.9%, but 2.5% on core. The CPI rose 0.3%, 0.1% core, and its 12-month figures are 3.9% and 2.0%, respectively.
I have refused to cry wolf on inflation and for those screaming about it, obviously the bond market isn’t concerned, yet, plus the Fed has played a role in keeping rates down and uncertainty over the Euro crisis has led to a flight to quality.
But, having said that, where inflation comes in is obviously in the ability, or inability, of consumers to make ends meet and have money left over for discretionary spending when their wages are stagnant, or falling. And that means lower growth than should otherwise be expected. So that’s why the raw PPI and CPI data matters, Charlie Brown, not in their impact on interest rates, the traditional cause for concern.
--In the latest data released by the U.S. Treasury Department, China reduced its holdings of U.S. debt to the lowest level in a year, selling $36.5 billion in Treasuries or bonds, but its overall “official” holdings are still at the $1,137 billion level (China’s holdings purchased through London do not show up immediately in the preceding data). It was in August that S&P cut the U.S.’s credit rating to AA+ from AAA. However, the overall demand for U.S. Treasuries increased in August, and net buying of long-term equities, notes and bonds totaled $57.9 billion, the highest since December 2010, so the U.S. remains the global safe haven of choice.
--As noted by Bloomberg’s Michael J. Moore, “JP Morgan Chase, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley posted $13.5 billion in trading revenue minus accounting gains for the third quarter, down 35% from a year earlier. Investment-banking revenue plunged 41% from the second quarter to $4.47 billion.
“Bank of America posted a roughly 90% drop in fixed-income trading revenue and Goldman Sachs had its lowest debt underwriting quarter since 2003.”
--Citigroup agreed to pay $285 million to resolve SEC claims it misled investors on financial products involving collateralized debt obligations tied to subprime mortgages that imploded during the housing bubble. Earlier, Goldman Sachs agreed to pay $550 million to resolve similar claims, while JPMorgan Chase paid $154 million for its role in peddling crappola to unsuspecting investors. This is what the Occupy Wall Street folks should be protesting about, demanding justice, not the class warfare / commie propaganda.
--Goldman Sachs is on pace to pay its workers an average of $293,000 this year, less than half the amount workers were paid in 2007 ($661,490). This year’s payout is also lower than the $363,655 paid in 2008, the depths of the financial crisis. Goldman’s revenue in the July-September quarter was just $3.59 billion, down 60% from $8.9 billion a year ago as the investment bank lost $393 million. OWS can complain about this, too, but they fail to then connect the dots and realize that fewer dollars translate into fewer tax dollars and fewer tax dollars lead to layoffs of teachers and firemen, the very people they purport to protest for (when they aren’t smoking pot and keeping the neighborhood up with incessant pounding of drums like some ancient tribe in New Guinea that is trying to keep evil spirits away).
--Bank of America, on the other hand, reported a third quarter profit of $6.2 billion, but owing to a one-time gain of $10.5 billion. At least revenue was up 6%.
--Apple recorded its second best earnings ever but for the first time in 27 quarters, it failed to beat expectations and the stock was hammered, closing the week at $393 after finishing at a record high of $422 before the release. Revenue, $28.3 billion, fell short of analysts’ $29.7 forecast, so it was a shaky start for CEO Tim Cook, the first quarter he was in control after Steve Jobs resigned in August. The sales drop, however, was attributable to consumers shying away from the iPhone 4 prior to the release of the next-generation phone. That model, the iPhone 4S, is flying off the shelves (4 million units the first three days!) after its introduction this week and the company is forecasting overall sales of $37 billion in the current quarter, better than the Street is anticipating.
[Apple did sell 17 million iPhones last quarter, up 21%; 11.12 million iPads, up 166%; and Mac sales hit a record 4.89 million units. By the way, since I mentioned long, long ago I was doing an iPad app for StocksandNews, oh, the stories I could tell…for now let’s just say what was submitted by my tech staff, and approved by Apple, was not run by me first…as in some people don’t know how to spell!!! To be continued…it’s not available yet.]
--Intel reported record quarterly revenues and profits, both ahead of expectations. CFO Stacy Smith said, “We are seeing emerging markets driving significant unit growth and…in the data centers, as we see this explosion of devices that are connecting to the internet driving the build out of the internet cloud, we think we are uniquely positioned to benefit from that trend.”
--Census data for 2010 shows that the Washington, D.C., area is the nation’s highest-income metro region, owing in no small part to the size of government and the resulting armies of consultants, lobbyists and government contractors.
--Some surprisingly good data from Russia, as September retail sales rose a stronger than expected 9.2%, with real wages advancing 6.2% from year earlier levels, this as inflation will not exceed 7% in 2011, the lowest rate since 1991. Interesting. A leader of televisions and computers, M. Video, said its sales for the third quarter were up 24%.
--Foreign direct investment into China jumped 17% in the first nine months of 2011 vs. a year earlier, though September’s pace was up ‘only’ 8% from last year
--Container lines have been struggling with declining volumes of goods going from China to the United States, but traffic going the other way is surging as Chinese consumers are demanding higher quality food…meats, fruits and vegetables. One carrier, Copenhagen-based Maersk, is investing $1 billion in refrigerated containers over two years. It’s all about China’s rising middle class and increased wages.
--Struggling Dutch lighting and consumer electronics group Philips is cutting 4,500 jobs, Philips being the world’s leader in lighting equipment, and Europe’s biggest consumer electronics producer.
--Lowe’s Cos., the world’s second-largest home-improvement chain, is closing 20 stores and laying off about 1,950 workers. Lowe’s will still have 1,700 locations in North America, but it has not been able to grow profits vs. competitor Home Depot, which reported a 14% jump in its most recent quarterly report.
--Ford and the UAW came to agreement on a four-year labor agreement after it looked iffy just a week earlier when several plants rejected it. In the end, workers came to their senses, recognizing, for one, they would be jeopardizing some nice bonuses, such as a $6,000 signing bonus on Nov. 4, along with profit-sharing checks averaging $3,750. As Gary Chaison, a professor of labor relations, told the New York Times, “It’s pretty hard nowadays for a worker to risk not getting a signing bonus and have to explain that to a spouse.”
--California home sales were up 6.7% in September, though the median price, $249,000, was down for a 12th consecutive year-over-year monthly decline. 33.8% of sales were foreclosures, however, and another 18.7% were short sales, in which the bank allows an underwater property to be sold just to get it off the books; both methods necessary if we are to ever clear the inventory and reach a true bottom.
--According to the federal Climate Prediction Center, the drought across the southern Plains is expected to continue through the winter, owing to La Nina, which returned in August and will gradually strengthen. During a typical La Nina (a warming of the water in the Pacific), precipitation is below average in the southern tier of the U.S.
Texas, the epicenter of the drought, experienced its driest 12 months on record from October 2010 through September 2011. It has cost $6.5 billion in economic losses in both Texas and Oklahoma.
--New York City’s unemployment rate remained at 8.7% in September, unchanged from the month before.
--The Global Business Travel Assn. estimates spending in this category will rise 6.9% this year over 2010, but just 4.3% in 2012.
--Social Security recipients will get their first raise in January since 2009, 3.5%. Monthly Social Security payments currently average $1,082, or $13,000 a year, so you’re talking an increase of about $38 a month. Whatever you do, don’t take this and then bet on the Jets.
--The world’s largest gold mine is in eastern Indonesia and the other day gunmen shot and killed three miners in yet another attack on the installation operated by Freeport-McMoran. A labor strike at the mine is complicating things. Strikers are demanding that their pay, which ranges from $2.10 to $3.50 per hour, be increased to $17.50 and higher.
--Kinder Morgan is purchasing El Paso Corp. for $21.1 billion, giving Kinder a pipeline network long enough to circle the Earth more than three times (80,000 miles worth), with the El Paso deal adding pipelines from California to New England that carry about one-fourth of U.S. gas supplies.
[El Paso Corp. CEO Douglas Foshee, who does not plan to stay at the new company, is eligible to receive an exit package of $95 million, $69 million of which comes from stock options granted over his eight-year tenure.]
--A good friend from Wake Forest is one of the top preemie baby doctors in the land and he is currently on his annual teaching trip in Vietnam. So I received a note from him from there and he observed, “Boy, the prices have really gone up here in the last ten years,” Dr. W. then confirming the still mostly anecdotal evidence that U.S. manufacturers who located in Southeast Asia and China will soon be bringing manufacturing back to the States due to skyrocketing labor costs.
--Steve Jobs told his biographer, Walter Isaacson, that he regretted the decision to try alternative therapies for his pancreatic cancer rather than have surgery. Asked why he didn’t agree with his doctors’ suggestion he undergo an operation, Jobs told Isaacson, “I didn’t want my body to be opened…I didn’t want to be violated in that way.”
His wife and friends urged him to get the operation but Jobs waited nine months to do so.
Jobs’ biography is being published Monday and is already a mammoth best-seller.
--This Saturday at Jos. A. Bank, buy one suit at the regular price and get two suits and three silk ties for free; plus six cars, two planes, and the nation of Benin!
--The U.S. Postal Service is looking to add non-traditional revenue sources, which would require congressional approval. I’ll tell you what would really help me out personally, seeing as how I check out two boxes at my local center almost every day. Sell beer. Keep it simple… just domestic, which would fly through Congress far more easily than if foreign, premium brands were offered. And just have a six-pack limit. If this worked, as it inevitably would, then broaden the product mix to include peanuts.