Readings for the Day

From Mish: Wells Fargo's Balance Sheet: Scaring the Horses
From Mish: Case Shiller and CAR Analysis January 2009 Release

Worst January Ever

As goes January so goes the year. Or so they say.

It was the worst January ever for the Dow industrial and S&P 500, according to Stock Trader's Almanac data.

The Dow lost 8.8% and the S&P 500 lost 8.6% in the month.

The Nasdaq's loss of 6.4% was eclipsed by last January's loss of 9.9%. That 2008 loss was the worst in the tech average's history, going back to its inception in 1971.

Great January Economic Summary

From Calculated Risk: January Economic Summary in Graphs
1. New Home Sales in December
2. Housing Starts in December
3. Construction Spending in November
4. Strip Mall Vacancy Rate
5. December Employment Report
6. December Retail Sales
7. LA Port Traffic in December
8. December Capacity Utilization
9.Vehicle Sales
10. NAHB Builder Confidence in January
11. Architecture Billings Index for December
12. Vehicle Miles Driven in November
13. Existing Home Sales in December
14. Existing Home Inventory
15. Case Shiller House Prices for November
16. California Notices of Default
17. ATA Truck Tonnage Index
18. Unemployment Claims
19. Restaurant Performance Index for December
20. New Home Sales

Weekend Picture Post

Existing Home Sales Increase in December

From Calculated Risk: Existing Home Sales Increase in December
From Calculated Risk: Existing Home Sales (NSA)
From Calculated Risk: Annual Existing Home Sales
From Big Picture: Existing Home Sales Fell 13.1% for 2008

Readings for the Day

From Big Picture: Worst Dow Drop Since Election Meant Rally in '33
From Big Picture: Fed Balance Sheet Decaying
From Big Picture: 2008 U.S. Foreclosure Heat Map
From Big Picture: Paul Volcker / Group of 30 Report on Reform

Should We Nationalize Our Banks Now?

From Big Picture: Nationalize Now!

Leading Economic Indicator Up

From Big Picture: Fed Activity Boosts Leading Economic Indicators:

Leading economic indicators (LEI) index rose 0.3% month over month in December. However:

Stock Prices, Jobless Claims, Pace of Deliveries, Average Work Week, and Building Permits were all negative. Consumer Goods Orders, Non-defense Cap Goods Orders, and Consumer Expectations were all essentially flat.

Coincident-to-lagging index fell; The coincident to lagging index, which tends to have a stronger correlation with GDP growth, conversely fell 0.1% over the month to stand 4.7% lower year-over year.

The surge in real money supply growth added a full percentage point to the headline number. From September till today, this has added between 0.4ppts and 1.0ppts to each month’s gain. The artificial boost to the LEIs has not translated into increased lending from the banks.

How bad are tech earnings?

From the Big Picture: How Bad Are Tech Earnings?

1. PC DEMAND IS SUFFERING big time. Microsoft and Intel are both cutting jobs; Advanced Micro Devices (AMD) posted a 33% drop in profits; Disk-drive maker Seagate ’s (STX) revenues were down 34%; Logitech (LOGI), reported a March-quarter miss.

2. MOBILE-PHONE SALES are in trouble. Nokia (NOK) reported a 19.5% Q4 revenue decline; Warnings were already out from Motorola (MOT) and Sony Ericsson;

3. CONSUMER-ELECTRONICS demand is non-existent. Sony (SNE) expects a loss for its March 2009 fiscal year. GPS device maker TomTom (TOM2.AE) issued an earnings warning; and Foxconn International (2038.HK)

4. THE CHIP BUSINESS CONTINUES to erode. Taiwan Semiconductor (TSM) reported a 31% Q4 earnings decline. MEMC Electronic Materials(WFR) sees March-quarter revenues down 50%; Marvell (MRVL) sharply reduced its Q4 guidance.

5. EVEN THE GOOD EARNINGS REPORTS aren’t so good. IBM’s Q4 revenues actually missed by more than $1 billion, dropping 6%, and their full-year profits reflect cost cutting, not top-line growth. Apple (AAPL) exceeded both top line and perofit expectations, but iPhone sales disappointed, falling 36% from Q3; desktop Mac sales were weak, and Apple same-store sales were down from last year. Google (GOOG) beat estimates, but concerns as the ad market continues to soften.

Layoff Today

1. Texas Instrument: 12% = 3,400 jobs
2. IBM: 2,800 jobs
3. Caterpillar: 20,000
4. Sprint: 8,000
5. Pfizer: 19,000 = 10%, does not include merge with Wyeth
6. Home Depot: 7,000
7. Phillips: 6,000

Bloomberg reports 74,000 job cuts today alone. Before today, at least 15 companies announced they planned to eliminate 93,000 positions so far in January.

Banking Fears

From Calculated Risk: MPs Urge Nationalize of RBS
From Calculated Risk: State Street and Regions Financial
From Calculated Risk: Roubini: U.S. Credit Losses May Reach 3.6 Trillions
From Calculated Risk: Bank of England to Start Buying Assets, Germany Bails Out Hypo - Again
From Calculated Risk: Big Bank Cliff Diving
From Calculated Risk: Bad CRE Loans Threaten Regional Banks
From Calculated Risk: More on New UK Bank Bailout
From Calculated Risk: The Next Step for the U.S. Bank Bailout
From Calculated Risk: Assistance to BAC
From Calculated Risk: JPM Earnings Call Notes

Housing Data Wrap Up

From Calculated Risk: Housing Starts at All-time low
From Calculated Risk: Architecture Billings Index Near Record Low
From Calculated Risk: NAHB Housing Market Index Falls to New Record Low
From Calculated Risk: National Association of Home Builders: Prices to Fall 29% in 2009
From Calculated Risk: Apartment market Weakens Further

U.S. Vehicle Miles Driven Falls Sharply

From Calculated Risk: DOT: U.S. Vehicle Miles Driven Falls Sharply

Travel on all roads and streets changed by -5.3% (-12.9 billion vehicle miles) for November 2008 as compared with November 2007. Travel for the month is estimated to be 230.4 billion vehicle miles. Cumulative Travel for 2008 changed by -3.7% (-102.1 billion vehicle miles). The Cumulative estimate for the year is 2,656.2 billion vehicle miles of travel.

So far the slowing economy is more than offsetting the sharp decline in gasoline prices last year. As the demand falls, oil price might fall more also the oil companies.

From CNBC: Take your positions: Energy Earnings

Next week calendar

Earnings:

Monday: American Express, Caterpillar, McDonald's, Netflix, Texas Instrument
Tuesday: Altera, DuPont, Etrade, Sun Micro, Yahoo
Wednesday: AT&T, Conoco Phillips, Intersil, Lam Research, LeCroy, LSI, Canon, Pfizer, Starbucks, Symantec, Wells Fargo
Thursday: 3M, Altria, Broadcom, Fairchild, Ford, JetBlue, KLA-Tencor, Maxim, Microchip, National Instruments, Sony, T.Rowe Price, US Airways
Friday: Chevron, ExxonMobil, Honda, Honeywell, P&G,

Economic Calendar:

Monday: Existing Home Sales, Leading Indicators
Tuesday: S&P Case-Shiller, Consumer Confidence
Wednesday: FOMC Meeting Announcement
Thursday: Durable Goods Order, Jobless Claims, New Home Sales
Friday: GDP, Employment Cost Index, NAPM-Chicago, Consumer Sentiment

Readings for the Day

From Calculated Risk:
LA Area Port Traffic Collapses in December
Office Vacancies Rate Rises in Q4
Capacity Utilization and Industrial Production Cliff Diving
Vehicle Sales
Obama's Preliminary Plan: American Recovery and Reinvestment

Coming Back

I have not posted anything for a week. And there are a lot of actions during this week, corporate earnings, banking/financial sector crisis. Now I am back to blog again and I will try to catch up some of the big headlines happened in last week.

Weekend Picture Post

U.S. Foreclosure Filings in 2008 rose 81% from 2007

From MarketWatch: U.S. Foreclosure Filings in 2008 rose 81% from 2007
U.S. foreclosure filings in 2008 rose 81% from 2007 and tripled from 2006. A total of nearly 3.16 million foreclosure filings -- measured by default notices, auction-sale notices, and bank repossessions -- were reported in 2008. 1.84% of all U.S. housing units --1 of every 54 -- received at least one foreclosure filing during the year, up from 1.03% in 2007. In December, foreclosure filings were reported on more than 303,000 U.S. properties. That's up 17% from November and 41% from the year-earlier month. In the fourth quarter, foreclosure activity rose 40% from the year-earlier quarter.

Today's Earnings

From Yahoo! Finance: Intel 4Q profit plunges 90%, meets forecasts
Intel Corp. says its fourth-quarter profit plunged 90 percent. But the chip maker still met Wall Street's subdued expectations. Intel was hurt by a huge writedown and wheezing PC sales that have crimped demand for microprocessors.

Net income was $234 million, or 4 cents per share, compared with $2.3 billion, or 38 cents per share, in the year-ago period. Sales were $8.2 billion, a 23 percent shortfall from last year. Intel blunted the shock of the big declines by lowering its guidance twice.

From Yahoo! Finance: Genentech 4Q profit rises, but just short of views

Biotechnology company Genentech Inc.'s fourth-quarter profit fell short of Wall Street expectations, despite a 47 percent boost from higher sales of the blockbuster cancer drug Avastin. The company also set a weaker-than-expected profit outlook for 2009.

During the quarter, profit reached $931 million, or 87 cents per share, up from $632 million, or 59 cents per share, a year earlier. Revenue rose 25 percent to $3.71 billion from $2.97 billion.

Banking Fear - Citi, BAC, JPM

From Yahoo! Finance: US mulls Fresh aid Package for Bank of America
The federal government is considering a fresh multibillion-dollar aid package for Bank of America Corp. to help it absorb losses at Merrill Lynch.

Shares of both Bank of America plummeted more than 20 percent. Bank of America could get another capital infusion from the government, and possibly secure government guarantees against losses on problem loans. A fresh capital injection could come from the Treasury Department's $700 billion bailout pot, while any money that might be put up for loan guarantees could come from a mix of government sources.

Bank of America has received a total of $25 billion in capital injections from the Treasury bailout fund, called the Troubled Asset Relief Program, or TARP. That includes $10 billion for Merrill Lynch & Co., which Bank of America bought in a deal that closed Jan. 1.

Bank of America, which reports its fourth-quarter and annual results Tuesday, declined comment about a new aid package Thursday. The Wall Street Journal late Wednesday reported that the government was nearing a new deal with Bank of America, and said details of the aid are expected to be announced with earnings next week. Some analysts are predicting the nation's biggest bank by assets to report a loss or lower-than-expected earnings for the fourth quarter. Its board has already halved the company's dividend and could slash the payout again.

From Yahoo! Finance: JPMorgan posts profit, but "disappointing" one
JPMorgan Chase narrowly avoided a loss in the fourth quarter, indicating that it is weathering the financial crisis better than some of the other big banks. But the meager profit was driven by its acquisition of Washington Mutual Inc., and the bank added $4.1 billion to loan loss reserves -- proving that it is not immune to the deepening global recession.

Chief Executive Jamie Dimon called the quarter "very disappointing." Results were hurt by $2.9 billion in markdowns in JPMorgan's investment bank, and losses in various types of loans -- from mortgages to home equity loans to credit cards to commercial real estate loans.

"If the economic environment deteriorates further, which is a distinct possibility, it is reasonable to expect additional negative impact on our market-related businesses, continued higher loan losses and increases to our credit reserves," Dimon said in a statement. The New York-based bank on Thursday reported a profit of $702 million, or 7 cents per share, down 76 percent from $2.97 billion, or 86 cents per share, a year ago.

During the fourth quarter, JPMorgan's investment bank posted a loss of $2.4 billion, after a profit of $124 million a year ago. Card services also reported a loss of $371 million, after a profit of $609 million a year ago, as more cardholders failed to make their payments. Losses in cards are expected to rise as unemployment increases. Dimon said that in his opinion, unemployment will rise to between 7.5 percent and 8 percent, at minimum.

The retail financial services segment reported a 15 percent drop in profit to $624 million, due to losses in consumer lending. Income from asset management fell to $255 million from $527 million, while income from the corporate and private equity business rose to $1.5 billion from $270 million. The commercial banking unit reported a record profit of $480 million, up from $288 million a year ago. Treasury and securities services also posted a record profit, of $533 million, up from $422 million. For all of 2008, JPMorgan Chase posted a profit of $5.6 billion, or $1.37 a share. That was down from a record annual profit in 2007 of $15.4 billion, or $4.38 a share.

From MarketWatch: Financials Fall as Citi Shares Drop (1/14/2009)

Investors focused their attention on Citigroup Inc. shares of which fell below $5 for the first time since Nov. 21. They touched an intraday low of $4.44.

The fall came following reports that Citi will soon unveil a plan to unload several businesses and reduce its size by one-third. The moves will effectively dismantle the old, super-sized Citi model pioneered in part by former chief Sandy Weill.

Fears about Citi also rose after its announcement Wednesday that it will report fourth-quarter financial results before the open on Friday, nearly a week earlier than its previously scheduled Jan. 22 release date. Citi did not give a reason for the change in its timetable.

Royal Bank of Scotland Group said it sold a 4.26% equity stake in Bank of China for about $2.3 billion. The decision is part of the ongoing review of the company's businesses announced in October.

Barclays PLC saw its shares fall more than 14%. Barclays said it will cut about 2,100 jobs in investment banking and investment management, and further headcount reductions may be in the offing.

Deutsche Bank traded down 9%. The German bank said it will report a loss of about $6.4 billion for the fourth quarter, citing weak markets and the impact of further write-downs. Germany's largest listed bank said "exceptional market conditions" severely hurt its sales and trading operations. It also faces losses from its efforts to slash exposure to risky assets an impairment charge at fund unit DWS Scudder and "substantial" injections into money market funds.

HSBC Holdings shares at one point fell to their lowest level since March 4, 1999. A Morgan Stanley report published Wednesday said the bank, which had so far avoided the worst of the financial crisis, may need to raise $30 billion in equity and halve its dividend.