Aspire Misery Index for the Week Ended April 11, 2009

Apr 11, 2009
Author: SCP Editor

April 11, 2009 – The markets managed to edge higher again this week as we headed into earnings season.

·         The DJIA closed up 67.22 on the week, or about 0.08%, but it is up 25.5% since hitting intraday lows back on March 6 (still down 7.8% year-to-date).

·         The Nasdaq closed up 50.3 on the week, or about 3.1%, and it is up 30% since hitting intraday lows back on March 9 (up 4.6% year-to-date).

·         The S&P 500 closed up 16.81 on the week, or about 2%, and it is up 28.4% since hitting intraday lows back on March 6 (still down about 5.1% year-to-date).

Wells Fargo’s better-than-expected preannouncement gave bulls reason to argue that the worst is behind us and that the financial sector may be ready to begin leading the markets onward in the second half of 2009 and into 2010 as the US economy recovers. We aren’t quite ready to buy into the dream yet, since as far as we can tell, the economic data is still trending worse, led by increasing erosion in the labor markets.

Here are some of the lowlights from this week’s session that should help keep things in perspective:

·         Federal Deficit – The Treasury Department said on Friday that the budget deficit increased by $192.3 billion in March, and is near $1 trillion – and we are only halfway through the budget year. Expectations for the March budget deficit were $150 billion. The administration is projecting a deficit of $1.75 trillion this year.

·         Wholesale Inventories – Dropped by 1.5% in February, the most on records dating back to January 1992 and more than twice analysts’ expectations.

·         Trade Deficit – Fell for the seventh straight month in February (good news), to the lowest level since 1999, down 28.3% to $25.97 billion. The US deficit with China dropped 31% to $18.9 billion in February, while its deficit with Jpan fell to $2.2 billion, the lowest level since 1994. It is worth noting that China is the largest holder of US debt while Japan follows right behind them.

·         Dividend Cuts – S&P said that a record number of companies cut their dividend in Q1, with the total dividend payments down $77 billion.

·         Profit Warnings – International Speedway, Emerson Electric, Sharp, Moog, SonicWALL, MEMC, Hillenbrand, Forward Air,

·         Ratings Cuts – Fitch cut Seagate, Moody’s cut Toll Brothers, Moody’s cut Berkshire, S&P cut Chrysler, S&P cut GM,

·         Job Cuts – Headwaters (unspecified number of jobs at Alabama facilities), DMI Industries (cut another 100 jobs), Milwaukee Journal Sentinel (26 jobs), Tate & Lyle (cutting 56 workers), Deere (laying off 160 at Des Moines plant), Reno Gazzete-Journal (35 more layoffs), LyondellBasell (cutting 3,000 jobs), Viking Yacht (cutting almost 600 jobs), Amgen (100 jobs), J&J (cutting about 900 jobs), Virginian-Pilot (laying off 40), Caterpillar (planning more job cuts), GE Healthcare (laying off 179 workers),

·         Chapter 11 – Jane Cosmetics, Signature Alluminum, Aventine,

·         Consumer Borrowing – The Federal Reserve said that consumer borrowing declined at an annual rate of $7.48 billion in February, or 3.5% from January. The decline was greater than expected. Borrowing on credit cards fell by $7.8 billion, or 9.7% - the sharpest decline in dollar terms since 1968 and the sharpest percentage decline since 1978.

·         Government Spending – War Chest – Obama has asked Congress to quickly approve an $83.4 billion request for military and diplomatic operations in Iraq and Afghanistan. Since September 11, 2001, the US has spent almost $1 trillion on the efforts.

·         Banks – 2 more banks failed this week, raising the number of bank failures so far this year to 23. For all of last year, 25 banks failed.

·         FDIC Insurance Fund – As of the end of 2008, the insurance fund stood at $18.9 billion, the lowest level in almost 25 years, and down from $52.4 billion at the end of 2007.

·         Pro Baseball – Salaries have dropped by $47 million from opening day last year. 16 of the 30 clubs cut payroll.

·         Wine Consumption – World wine consumption fell for the first time in years, down 0.8% in 2008 (6.4 billion gallons), from 2007. However, the US overtook Italy in terms of total wind consumption.