Thursday, October 29, 2009

Thursday Morning


Stocks opened higher by about 1% as GDP figures indicate the economy grew at 3.5% in the third quarter. The indexes are all up about two thirds of a percent.

As the AP reports:

WASHINGTON (AP) -- The economy grew at a 3.5 percent pace in the third quarter, the best showing in two years, fueled by government-supported spending on cars and homes. The Commerce Department's report Thursday delivered the strongest signal yet that the economy entered a new, though fragile, phase of recovery and that the worst recession since the 1930s has ended. Many analysts expect the pace of the budding recovery to be plodding due to rising unemployment and continuing difficulties by both consumers and businesses to secure loans."

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Dow components Procter & Gamble (PG) and Exxon Mobil (XOM) reported earnings this morning.

-->> PG beat estimates by 7cents per share, and revenue also came in slightly ahead of estimates. 2010 earnings guidance is in line with expectations, while revenue guidance is higher. Shares +4.5%

-->> XOM missed by 5cents, reporting earnings per share of 98cents versus the 1.03 expected. Weaker commodity prices and weak refining margins drove earnings below the previous year's quarter. Shares down 1.8%.
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The weak dollar should help US multinationals with large foreign operations.
“A cheaper dollar is unquestionably positive for U.S. corporate earnings,”Bankim Chadha, the New York-based chief U.S. equity strategist for Deutsche Bank AG. “The share of earnings coming from the rest of the world for the S&P 500 has been increasing steadily since the 1960s.”

McDonald's as an economic indicator, and not a positive one in Iceland's case.
"As cultural calamities go, there are worse fates than that of Iceland, which is losing all three of its McDonald's franchises, effective next weekend. But the Big Mac's departure from Iceland, a victim of the financial crisis that sent the currency into a tailspin, is nonetheless a suggestive economic indicator. McDonald's Icelandic franchisee noted, in explaining his decision to throw in the patty, that unlike his local competitors, McDonald's imports most of its raw ingredients, from beef to special sauce, lettuce, cheese, pickles, onions and, we assume, sesame seed buns. This reliance on imports has undercut McDonald's margins in the island nation, which saw the krona plummet by more than 80% after the financial panic took down the country's major banks."

Google's Android phones will offer a free GPS navigation system.
"Verizon Wireless is already on board and boasted that its new Motorola-made "Droid" will be the first phone to use Google's navigation system when it goes on sale Nov. 6.
Google isn't charging for the service but said it could become ad-supported down the line. The free application receives live traffic feeds and automatically updates maps to keep them current, among other features."

CIT rejects Icahn's offer, and accepts a $4.5billion loan from some of its larger creditors. Icahn's colorful response will be forthcoming I'm sure...
"CIT said in a statement that the bondholder loan, which was arranged by Bank of America Merrill Lynch, would supplement a $3 billion loan it received from several large investors in late August. The announcement was made one day before the expiration of a large debt exchange meant to keep the company out of bankruptcy."

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