Thursday, March 11, 2010

Thursday Morning

US stocks are down a bit this morning, with the DJIA off 26 points.  IBM is the lone bit of strength for the index, +1.1%.  Weekly job claims fell less that expected, and foreclosure rates increased by the smallest amount in 4 years.

Devon Energy (DVN) shares are up slightly after they agreed to sell $7 billion worth of assets to BP.  
"These sales, combined with our previously announced divestitures of $1.3 billion of deepwater Gulf of Mexico assets, put Devon well on the way to completing its strategic repositioning," said Larry NicholsDevon's chairman and chief executive officer. "Given any reasonable sales price for Devon's remaining divestiture assets, the transactions to date suggest that our total after-tax proceeds for the entire divestiture program will exceed our previously announced range of $4.5 to $7.5 billion."

Violent Greek protests have ground the country to a halt, as their Prime Minister continues his "blame derivatives" world tour...

Japan revised Q4 2009's GDP to the downside, saying it was now a +.9% compared to earlier estimates of +1.1%.  More worrisome is the news on capital spending, much worse than in the USA:
"The combined capital investment by Japanese non-financial companies fell 17.3% in the fourth quarter of 2009 from a year earlier, the 11th straight quarterly decline and the better than the 24.8% drop in Q3, the survey showed."

An airline trade group upgraded the industry's expected profit outlook in 2010.  As a rule of thumb, the worse your airline "customer service" experience, the better these companies will do.  That you now pay simply to bring luggage is but one reason these firms might be on the path to sustainable profitability, which will be good for service over the longer run.
“Passengers are returning to flying,” Giovanni Bisignani, the I.A.T.A secretary general, said in a briefing with journalists. “While it is still too early to celebrate, this is a good signal for the economy.”

The Financial Times discusses Citigroup CEO Vikram Pandit's plans for the next few years.  They expect Pandit to raise his estimate of near term (2-3years) profit potential to $20billion from it's "core businesses."
Mr Pandit will estimate that Citicorp could earn a yearly return of 1.25 per cent or more on its assets. The unit had assets of more than $1,300bn at the end of 2009, but Citi executives estimate the assets will increase by about 5 per cent a year. On that basis, Citicorp could earn about $20bn by the end of 2012.

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