Wednesday, October 14, 2009

Quick Notes for the Day - October 14

JP Morgan Chase Profit Substantially Higher Than Estimates - J.P. Morgan Chase said Wednesday that its third-quarter profit jumped sharply on strong investment banking results to $3.6 billion (82 cents a share) versus $527 million (9 cents) a share a year ago. On the downside, the company said credit costs remain high, so the firm added $2 billion of reserves to cover possible soured consumer loans. Consensus estimates had been for 52 cents a share with the estimates polled by Thomson Reuters ranging from 41 cents to 65 cents a share.

Retail Sales Drop Less Than Expected Following Cash for Clunkers - The "Cash for Clunkers" program helped retail sales in past months, but analysts had been worried about the affect it would have when the program ran out. The Commerce Department reported that overall retail sales dropped 1.5% in September, but sales excluding autos rose at a very nice 0.5% pace. In September, sales of motor vehicles dropped 10.4% which reversed the 7.3% gain in August. The results beat economists estimates of a 2.3% decline and 0.3% gain ex-autos.

September Import Prices Rise 0.1% - The Labor Department reported that nonfuel prices drove import prices up by 0.1% in September. Import prices have risen 7.3% so far in 2009 but are down 12% year over year. Prices of nonfuel imports rose 0.6% in September based primarily on the weaker dollar. Imported fuel prices fell 1.8% in September but have declined 34.4% year over year. Import prices in August were revised to a 1.6% gain, down from the initial estimate of a 2.0% increase. Prices of exports from the United States fell 0.3%.

Inventories Drop at a Record Pace - The Commerce Department reported that business inventories dropped at a 1.5% pace in August (which matched the record drop from December 2008 and October 2001) - even with sales increasing 1%. It was the 12th consecutive month of falling inventories.

The inventory-to-sales ratio fell to 1.33 in August from 1.36 in July which is an indication that businesses are making significant progress in reducing their inventory which has slowed growth over the past year. The inventory-to-sales ratio averaged about 1.28 before the recession. As inventory levels get to "normal" levels, an increase in sales will spur on new production which would promote job growth and imports.

No comments: