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ISM-Chicago: business activity up

On the US economic front, there’s more good news with the Institute for Supply Management-Chicago reporting its Business Barometer rose to 56.1 in November from 54.2 in October. This measures regional business activity and the result is the healthiest result since August 2008. 

New US home sales rise

Sales of new homes rose 6.2 per cent to a seasonally adjusted annual rate of 430,000 in October compared with a revised rate of 405,000 in September. The October result was 5.1 per cent higher than the October 2008 estimate of 409,000. Remember, home prices have also been rising and anything that shows a stronger housing sector helps US banks and this underpins an improving US economy.


US jobless claims lower

Claims for unemployment insurance fell 35,000 to a seasonally adjusted 466,000 in the week ending 21 November from a revised 501,000 in the previous week. According to CNBC, this result is the lowest since the collapse of Lehman Brothers. The four-week moving average dropped 16,500 to 496,500 from the previous weeks average of 513,00 

US consumer confidence up

Consumer confidence was up slightly during November. The Conference Board Consumer Confidence Index rose to 49.5 after declining to 48.7 in October. 

October US existing home sales higher

Existing home sales jumped 10.1 per cent to an annual rate of 6.1 million units, seasonally adjusted, in October from a revised 5.54 million in September. The October result is 23.5 per cent above the same month in 2008 and is at its highest level in more than two and a half years. 



US retail sales higher in October

The Commerce Department said US retail trade sales rose 1.4 per cent in October following a revised fall of 2.3 per cent the previous month. Analysts had expected a rise of one per cent, according to Reuters. Retail and food services sales rose 1.4 per cent from the previous month.

Let the good news roll

Here's a recap of the good news we have seen recently:
  • Deutsche Bank’s chief economist in the USA, Joe La Vorgna, thinks the US unemployment rate could be close to peaking.
  • US economic growth is now at 3.5 per cent.
  • Initial and continuing jobless claims are now falling faster than expected.
  • The IMF managing director Dominique Strauss-Kahn said he doesn't see a double-dip recession.
  • Many key retail stocks continue to trade near 52-week highs because gross margins are improving, which suggests the US consumer is still alive and shopping.
  • Ten out of ten key S&P sectors finished higher last week, which says the market is not suffering buyer weariness yet.
  • Most US companies that have reported have beat expectations on the revenue as well as the earnings side and outlook statements were largely positive.
  • Over the full year so far, the Dow is up 17 per cent, the S&P 500, 21 per cent, and the Nasdaq, 37.5 per cent.
  • And the VIX or fear index is at 23.4, which is down 41.55 per cent over the year!
  • American Express said card spending improved in October, to the highest level since last December.
  • China’s latest readings on retail spending and industrial production were up over 16 per cent, which is important not only for China but the global economy.

Initial jobless claims and continuing claims lower for the week

Initial claims for unemployment insurance in the US fell 12,000 over the week ending 7 November to a seasonally adjusted 502,000 from a revised 514,000 the previous week. The four-week moving average dropped 4,500 to 519,750 from a revised 524,250 the previous week. 

US company comeback

Morgan Stanley recently showed that two-thirds of the 200 US companies in the S&P 500 that weren’t exporters had shown revenue growth in the last earnings period.

Lots of US critics have said the only companies doing well in the USA were those that have a big exposure to exports. A company such as IBM fits the bill here. However, to find out that non-exporting US companies have done well on the revenue side means that Americans are coming back faster than most of the analysts have been predicting. 

Rise in rate of US productivity

Nonfarm business sector labor productivity in the US rose at an annual rate of 9.5 per cent in the third quarter, according to the Department of Labor. This was the biggest gain in productivity since the third quarter of 2003 when productivity increased at a 9.7 per cent annual rate. Analysts had expected productivity to rise at a 6.4 per cent rate, according to Reuters.

Also from the Labor Department, initial claims for unemployment insurance fell 20,000 to a seasonally adjusted 512,000 over the week ending 31 October from a revised 532,000 in the week prior. The four-week moving average fell 3,000 to 523,700 from a revised 526, 

Job losses lower in US private-sector - ADP report

An employment report from ADP said nonfarm private employment fell by 203,000, seasonally adjusted, from September to October after a revised decline of 227,000 in August to Setember. The report said this was the seventh month in a row where the decline was less than the previous month, but as employment trails overall economic activity, will decline for a few months to come.

The US government’s jobs report will be released this Friday and according to CNBC, economists forecast 175,000 jobs were lost last month. This is less than previous months. 

US economy expands in third quarter

The US economy grew in the third quarter of 2009 for the first time since the second quarter of 2008. The increase reflected strong consumer spending, increased housing and as well as increases in inventory investment, exports and government spending, the US Department of Commerce reported overnight. GDP increased 3.5 per cent following a decrease of 0.7 per cent in the second quarter. The result was above expectations; according to Reuters, analysts had expected a rise of 3.3 per cent. 

US consumer makes a comeback

Companies such as Verizon, Radio Shack and Corning all beat earnings expectations and these are companies that are close to US consumers. This comes as more and more experts see a comeback of the American shopper and that’s something many weren’t prepared to predict six months ago.

August rise for leading index

The Westpac-Melbourne Institute Leading Index, a forward-looking indicator estimating the likely pace of activity over the next three to nine months, was at 1.7 per cent in August, an increase of 8.6 points since May when it was at -6.9 per cent.

Following the two recessions Australia experienced in the early 1980s and 1990s, the rate of recovery in the Index was not as steep,” says Bill Evans, Westpac’s chief economist. 

Caterpillar reports better than expected

Overnight, construction and mining equipment company Caterpillar reported a profit of US$404 million or US$0.64 per share compared with US$868 million in the third quarter last year. The company said the decline was mainly due to a significantly lower sales volume. Sales and revenues were down 44 per cent from the same quarter last year to US$7.298 billion. But the result was above expectations with analysts predicting a profit of US$0.06 per share and sales of US$7.47 billion, according to Reuters. Shares in the company rose US$1.74 or 3.04 per cent to US$59.61. 

Apple, Texas Instruments results better than expected

Apple blew the expert's forecasts out of the water beating expectations on sales, earnings and forecasts. Texas Instruments also completed the trifecta, but not quite as brilliantly as the maker of iPhones and iPods.  

Reporting season - so far, so good

Goldman Sachs, IBM and Google all reported company earnings better than expected. Goldman was a dollar better than tipped, despite some negative reactions from those who wanted the investment banks to shoots the lights out big time. Meanwhile, Google was nearly 50 cents better than what analysts tipped, and their shares shot up in after hours trading. So far so good on the all-important earnings front in the USA.


JPMorgan beats expectations, pushes Dow Jones above 10,000

JPMorgan smashed earnings expectations coming in with 82 cents a share compared to the analysts’ consensus tip of 52 cents a share. This is huge and helped pushed the Dow Jones Index over 10,000, which is a psychologically important milestone for investors.

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