This is the heart of earnings season so I cannot go through in detail most of the pertinent reports but some of the names of interest yesterday were Caterpillar (CAT), Danaher (DHR), Eaton (ETN) on the industrial side.... SL Green (SLG) on the REIT side (surprisingly strong), VMWare (VMW) & Texas Instruments (TXN) in technology (nothing special), and Tyson Foods (TSN), Netflix (NFLX), Kimberly Clark (KMB, Financial) on the consumer side.
Most of these I am reading as economic tells, not as potential investments - we can find so much more information by listening to the companies rather than listening to faulty government reports or pundits telling us to "look ahead to the bright future, just around the corner."
I'd like to reiterate that other than for commodity traders or daytraders, any increase in commodity prices will be destructive for just about every company ex-commodity types since the economy and global consumer is so weak. Lack of pricing power combined with higher input costs (commodities) would be a soul crusher. Hence, I find it amusing the cheerleading for higher oil prices as a "signal" of impending recovery. I'd see it as a signal of an even weaker future as market speculators serve to crush the global consumer. But that's just me as I view pictures of tankers full of oil sitting loaded in Signapore ports - yep, that rally in oil surely is telling us ... nothing - other than how poorly regulated our markets are. [60 Minutes: Speculators and Oil] Sort of amusing to watch the punditry so excited as institutional money trades in and out of oil at rapid fire pace, ready to pronounce every $2 uptick as a "sign" we're coming out of the recession.
One interesting note on KMB (Kleenex, Huggies, Depends etc) are more deflationary signs...
The company may cut prices on certain items, he said in a statement. "We are fine-tuning our pricing and promotional plans to ensure we remain competitive, particularly in diapers and training pants in North America," Falk said in a statement.
Further, he is repeating what was happening to the Walmart (WMT) customer about 6 months ago... it is now spreading in more widespread fashion. In a troubling sign, sales of toilet paper are down 7% - ahem. First goes women's makeup, now toilet paper? [Jan 16: Makeup is Not Recession Proof]
He said sales have suffered as consumers "de-stock" their pantries at home and buy only what they need right away in order to stretch every last dollar. "They're conserving cash and don't want to build household inventory," he said. "If you're out of paycheck, it may wait until the next paycheck cycle."
Its leading bathroom paper brands saw a 7 per cent fall in volumes, while Kleenex sales fell 3 per cent.
But I want to focus on two names we follow more closely in the blog - McDonald's (MCD, Financial) and American Express (AXP, Financial); the latter of which is now backed by the full faith of the U.S. government ("bank holding company") Obviously, the American economy could not exist without AMEX. This is a critical business... unlike say... autos.
AmEx received a $3.4 billion investment through the Troubled Asset Relief Program, or TARP, in the fourth quarter. AmEx received a $3.4 billion investment through the Troubled Asset Relief Program, or TARP, in the fourth quarter.
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McDonald's results
American Express results
I'd love to see a rally here in AXP to about $20 - at some point in the next 4-10 weeks we should have another 'rally of hope' as we begin to price in the very apparent '2nd half 2009 recovery'.
Trader Mark
Fund my Mutual Fund
www.fundmymutualfund.com
Most of these I am reading as economic tells, not as potential investments - we can find so much more information by listening to the companies rather than listening to faulty government reports or pundits telling us to "look ahead to the bright future, just around the corner."
I'd like to reiterate that other than for commodity traders or daytraders, any increase in commodity prices will be destructive for just about every company ex-commodity types since the economy and global consumer is so weak. Lack of pricing power combined with higher input costs (commodities) would be a soul crusher. Hence, I find it amusing the cheerleading for higher oil prices as a "signal" of impending recovery. I'd see it as a signal of an even weaker future as market speculators serve to crush the global consumer. But that's just me as I view pictures of tankers full of oil sitting loaded in Signapore ports - yep, that rally in oil surely is telling us ... nothing - other than how poorly regulated our markets are. [60 Minutes: Speculators and Oil] Sort of amusing to watch the punditry so excited as institutional money trades in and out of oil at rapid fire pace, ready to pronounce every $2 uptick as a "sign" we're coming out of the recession.
One interesting note on KMB (Kleenex, Huggies, Depends etc) are more deflationary signs...
The company may cut prices on certain items, he said in a statement. "We are fine-tuning our pricing and promotional plans to ensure we remain competitive, particularly in diapers and training pants in North America," Falk said in a statement.
Further, he is repeating what was happening to the Walmart (WMT) customer about 6 months ago... it is now spreading in more widespread fashion. In a troubling sign, sales of toilet paper are down 7% - ahem. First goes women's makeup, now toilet paper? [Jan 16: Makeup is Not Recession Proof]
He said sales have suffered as consumers "de-stock" their pantries at home and buy only what they need right away in order to stretch every last dollar. "They're conserving cash and don't want to build household inventory," he said. "If you're out of paycheck, it may wait until the next paycheck cycle."
Its leading bathroom paper brands saw a 7 per cent fall in volumes, while Kleenex sales fell 3 per cent.
But I want to focus on two names we follow more closely in the blog - McDonald's (MCD, Financial) and American Express (AXP, Financial); the latter of which is now backed by the full faith of the U.S. government ("bank holding company") Obviously, the American economy could not exist without AMEX. This is a critical business... unlike say... autos.
AmEx received a $3.4 billion investment through the Troubled Asset Relief Program, or TARP, in the fourth quarter. AmEx received a $3.4 billion investment through the Troubled Asset Relief Program, or TARP, in the fourth quarter.
***********************
McDonald's results
McDonald's Corp (MCD) reported a quarterly profit that handily topped Wall Street estimates, but said it saw growth in some overseas markets soften as a U.S.-led recession went global. McDonald's posted a 5.8 percent rise in worldwide December sales at restaurants open at least 13 months. The results are still ahead of most other restaurant operators, but mark a slowdown from the company's own November and October results, when McDonald's said same-store sales rose 7.7 percent and 8.2 percent, respectively.
Jack Russo, an analyst at Edward Jones, said the slowdown was most prominent in international markets and showed that the "rest of the world is catching up" to the U.S. recession.
McDonald's cited a "softening" in its business in Germany as diners reacted to price hikes. It also said fourth-quarter same-store sales decelerated in China, where growth was once red-hot.
Global same-store sales rose 7.2 percent in the quarter. Same-store sales rose 10 percent in the Asia/Pacific, Middle East and Africa markets, 7.6 percent in Europe and 5 percent in the United States.
In Europe, same-store sales rose 5.4 percent in December, compared with rates of 9.8 percent in October and 7.8 percent in November. The Asia segment had a December rise of 5.7 percent, versus 11.5 percent in October and 13.2 percent in November. (two very sharp decelerations in December, but already the traders are trying to anticipate the 'coming recovery' as this is backwards looking data and we have to start buying stocks in anticipation of 'the turn' - something "they" have been trying to do since spring 2008)
American Express results
American Express (AXP) posted a quarterly profit drop of nearly 80%, as the consumer credit environment, which dramatically worsened in the final three months of the year, continued to wreak havoc on the card company's business.
"Our fourth-quarter results reflect an operating environment that was among the harshest we have seen in decades," said Chairman and CEO Kenneth Chenault.
Chenault said that purchases by cardmembers declined by 10% when compared to the year-earlier period, but less so when adjusting for foreign exchange rates. On the other hand, loan delinquencies and charge-offs rose in the quarter. onsolidated revenue fell 11 percent to $6.5 billion.
American Express set aside $1.4 billion in the quarter to deal with loan losses, primarily in its U.S. card business. American Express wrote off 6.7% of its managed loans in the fourth quarter, compared to 5.9% in the third quarter and 3.4% a year earlier.
But the company cut expenses by 15 percent in its U.S. card business as part of a plan to save $1.8 billion in its biggest restructuring since 2001.
I'd love to see a rally here in AXP to about $20 - at some point in the next 4-10 weeks we should have another 'rally of hope' as we begin to price in the very apparent '2nd half 2009 recovery'.
Trader Mark
Fund my Mutual Fund
www.fundmymutualfund.com
