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.

Quick Notes & Articles for the Day - August 3

ISM Rises - The Institute for Supply Management's manufacturing index (ISM) rose more than expected to 48.9 for July versus estimates of 46.2. The ISM in June was 44.6. The ISM is a gauge of manufacturing activity with readings below 50 meaning a contraction and readings above 50 meaning an expansion. The move back to 50 has meant the dramatic decline in manufacturing has ceased.

Oil, Natural Gas, Gold Higher on Optimism and Lower Dollar - Crude oil rose more than 3% to about $71.50 per barrel, and natural gas jumped more than 7% to almost $4 as manufacturing data in the US and around the world had better than expected numbers.

Gold rose Monday as high as $964 an ounce for the first time since early June as the dollar fell to the lowest level this year. The global optimism, falling dollar, and threat of eventual inflation sparked the metal higher.

Ford Sales Rise 2.3% - Ford Motor Co. said Monday that U.S. July sales rose 2.3% to 165,279 vehicles, reversing nearly two years of monthly year-over-year losses. The automaker said that it benefited from the federal "Cash for Clunkers" new-car incentive program. Sales of cars in July rose 8.7% to 62,176 units, and sales of sport utility vehicles fell 36.1% to 6,526 units. Total truck sales dropped 2.6% to 96,662 vehicles. Ford has not had a monthly increase in year-to-year sales since November 2007.

British & Euro-Zone Manufacturing Rises - The U.K. CIPS/Markit manufacturing purchasing manufacturing index (PMI) rose to 50.8 in July, up from a revised high reading of 47.4 in June and the first leap above the 50 unchanged mark since March 2008. The rise came as manufacturing production rose to the greatest extent since December 2007. New orders rose for the first time since March 2008.

The Markit euro-zone PMI rose to 46.3 in July, up from 42.6 in June, the second strongest rise in point terms in the history of the survey and the highest reading in 11 months.

Articles

Leave Swiss Banks Alone - By Pierre Bessard - The New York Times - "Last week, an American client of the Swiss bank UBS admitted to filing a false tax return and concealing millions in Swiss bank accounts. For some people, his plea will just confirm their impression of Switzerland as a haven for criminals or dictators who want to protect their funds from taxes or oversight."