March 29, 2024

Industrial Production Lifts European Economy

Industrial production in the 17-nation currency zone rose 0.7 percent in June from May, Eurostat, the statistical agency of the European Union, reported from Luxembourg. The agency also revised down the size of the decline in May, to 0.2 percent, rather than the 0.3 percent previously reported.

The data came a day before Eurostat is scheduled to release its first estimate of second-quarter gross domestic product, and expectations of good news were supported by the results of a survey that showed growing confidence in Germany. The ZEW institute, an economic research organization based in Mannheim, said its economic sentiment indicator had risen to 42.0 points, up by 5.7 points from July, and well above its historical average of 23.7 points.

“The euro zone’s recession ended when the snow melted last Easter,” Christian Schulz, an economist at Berenberg Bank in London, wrote in a research note. Having contracted for six straight quarters, he said, the euro zone economy “probably expanded modestly” in the April-June quarter “and will gain further momentum in the second half of the year.”

Ben May, an economist in London with Capital Economics, said the data Tuesday — as well as a small rebound in construction — suggested that the G.D.P. grew 0.2 percent in the second quarter, following a 0.3 percent quarterly decline in the first three months of the year.

Mr. Schulz credited the European Central Bank’s monetary policy, as well as the fading impact of austerity measures. He projected a 0.3 percent expansion in third-quarter G.D.P., followed by 0.4 percent growth in the last quarter.

Even with second-half growth, Eurostat has estimated that the euro zone economy will contract slightly for all of 2013 before expanding 1.2 percent next year.

Still, there is little to celebrate. There are more than 26 million Europeans who cannot find work, and the jobless rate in countries like Greece and Spain is well over 20 percent. Economists do not expect hard-hit countries to bounce back fully for several years.

Growth in Europe is still likely to lag behind that of other developed nations like the United States and Japan, as well as rising giants like China.

June marked the fifth month of the last seven in which industrial production has risen, with the data released Tuesday confirming the findings of a survey last month of European purchasing managers.

Production of consumer durables rose by 4.9 percent in June, while output of capital goods rose by 2.5 percent. Eurostat did not break down the data by product, but consumer durables generally include things like appliances, furniture and cars.

Industrial output in Germany, the largest euro zone economy, rose a strong 2.5 percent in June from May, but France, the No. 2 economy, posted a 1.5 percent decline.

For the European Union as a whole, Eurostat reported a 0.9 percent increase in June production. From a year earlier, industrial production grew 0.3 percent in the euro zone, and 0.4 percent in the overall European Union.

Article source: http://www.nytimes.com/2013/08/14/business/global/industrial-production-lifts-european-economy.html?partner=rss&emc=rss

Nike’s Earnings Top Expectations

Orders for Nike-branded shoes and clothing scheduled for delivery from December 2012 through April 2013, known as futures orders, were up 14 percent in North America, Nike’s most mature market. Its volume of orders also indicated steady worldwide demand for its products.

“In North America, we created great momentum. This is somewhat counterintuitive to some, given this market size and assumed maturity. But I see tremendous growth potential in North America,” Mark Parker, Nike’s chief executive, said in a call with analysts.

Worldwide orders for Nike, based in Beaverton, Ore., were up 6 percent, the same as last quarter.

“The biggest driver of this stock is usually futures orders. Last quarter, futures orders were lower than expected. This quarter they came in line, and North America was stronger than expected,” said Brian Yarbrough, consumer discretionary analyst for Edward Jones.

For the second quarter ended Nov. 30, the company earned $384 million, or $1.14 a share, from continuing operations. Analysts, on average, were expecting the company to earn $1 a share, according to Thomson Reuters.

Revenue rose 7 percent to $6 billion.

Nike had been caught with excess inventory in important markets like China and was finding it difficult to tackle intense competition, while distributors and retailers remained wary in an uncertain economy.

“The China problem won’t go away in 12 to 18 months, but it is no worse than it was expected,” said Rahul Sharma, founder and managing director of Neev Capital, a consulting company in London. “But look at North America. It is on fire. And this is such a big business.”

Article source: http://www.nytimes.com/2012/12/21/business/nikes-earnings-top-expectations.html?partner=rss&emc=rss

DealBook: JPMorgan’s 2011 Profit Rises 9%

JPMorgan Chase kicked off bank earnings season on Friday with news that its profit rose 9 percent last year, a report diminished modestly by the recent turmoil on Wall Street and a weak fourth quarter.

The bank turned a $19 billion profit in 2011, up from $17.4 billion a year earlier, as its credit card business and commercial lending operation showed signs of improving. The results, which amounted to $4.48 a share, fell slightly short of analysts’ estimates of $4.53 a share.

In particular, the profit engine stalled in the fourth quarter, when JPMorgan earned $3.7 billion, or 90 cents a share, down from $4.8 billion, or $1.12 cents a share, in the same quarter a year earlier. The results matched analysts’ estimates for the period.

The fourth-quarter slump was owed in part to a slowdown in JPMorgan’s sprawling investment bank, which suffered from the sluggish economic recovery in the United States and concerns that the European debt crisis will sweep across the continent.

The investment bank booked a $567 million accounting loss in the fourth quarter tied to the perceived riskiness of its own debt, reversing a one-time gain from last quarter that propped up earnings across Wall Street. In all, the group’s profits sank 52 percent to $726 million in the fourth quarter.

Despite the turmoil in the fourth quarter, Jamie Dimon, JPMorgan’s chairman and chief executive, highlighted the firm’s gradual progress amid broader economic woes.

“I am proud of the work our 260,000 employees have done this past year to continue the Firm’s 200-year tradition of showing leadership and responsibility during challenging times,” Mr. Dimon said in a statement.

The bank’s earnings report comes a day after Mr. Dimon announced the second major shuffling of his management team in a year. Jay Mandelbaum, head of strategy and business development, will leave the bank. And Barry Zubrow, JPMorgan’s risk management chief who guided the bank through the financial crisis, will now head corporate regulatory affairs, among other changes.

With the steady growth in profits last year, JPMorgan has emerged from the crisis as one of Wall Street’s most dominant firms. In 2011, JPMorgan stripped Bank of America of its title as the nation’s biggest bank by assets. Bank of America is still struggling to shed the legacy of the subprime mortgage mess.

“JPMorgan is in the best position for no other reason than they don’t have the troubles that Bank of America has,” said Jim Sinegal, an analyst with the research firm Morningstar.

But the earnings improvement last year was somewhat overshadowed by the fourth quarter woes and a drop in revenue. Revenue fell to $99.8 billion, down from $104.8 billion last year, as new federal rules reined in fees tied to overdrafts and debit cards.

The revenue struggles are not unique to JPMorgan, a diversified bank seen as a good gauge for the performance of Wall Street. When the nation’s other big banks — Goldman Sachs, Morgan Stanley, Citigroup and Bank of America — report earnings next week, most are expected to detail similar slowdowns in revenue.

“It’s hard to think of a bright spot on the revenue side,” said Mr. Sinegal. “That issue is going to linger.”

Article source: http://dealbook.nytimes.com/2012/01/13/jpmorgans-2011-profit-rises-9/?partner=rss&emc=rss

Economix Blog: State Taxes Rise Across the U.S.

State tax revenues rose last quarter compared with a year earlier, according to preliminary data from the Rockefeller Institute of Government at the State University at Albany. This was the seventh straight quarter of growth, and is happy news for states struggling with budget shortfalls in the wake of the Great Recession.

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

Total state revenues were up 7.3 percent from their level during the same period last year. The biggest gains were in personal income tax revenue, which rose 9.2 percent year over year.

The Rockefeller Institute collected tax data from 48 early-reporting states, and found that all but three reported total revenue increases.

North Dakota had far and away the fastest growth in percentage terms, with tax revenue there rising 157 percent compared with a year earlier. Alaska had the second-fastest growth, at 124.4 percent. Both benefited significantly from higher oil and mineral prices, which drove up severance tax revenues.

At the other end of the spectrum was Delaware, where total tax revenues fell by 13.8 percent year over year.

Click the interactive map above to see how each state fared, and choose from the pull-down menu to see which categories of taxes fluctuated most. States that are blank either did not collect a given category of taxes (e.g., Florida doesn’t have a personal income tax) or have not yet reported their numbers. (If you have trouble getting the chart to load, you can see the full data table in the Rockefeller Institute report.)

Article source: http://feeds.nytimes.com/click.phdo?i=a2a326eb5d40676a664ff3c86a6f52b8

Stocks Flat After Earnings and Housing Data

Apple Inc. slumped 5 percent after the company’s income and revenue fell short of Wall Street’s expectations. It was a rare miss for the company, which had jumped 31 percent this year through Tuesday. Apple blamed the shortfall on a later-than-usual release of its newest iPhone.

The Dow Jones industrial average was down 25 points a half-hour after the opening bell. Other indexes also had small losses.

The disappointing results from Apple were tempered by a rebound in the housing market in September. Builders began new homes at the fastest pace in 17 months. Most of the gains came from the construction of new apartments. The pace is still about half what economists say consistent with a healthy housing market.

The Dow fell 0.2 percent, to 11,548 at 10 a.m. Eastern. The SP 500 was down 3, or 0.3 percent, to 1,222. The Nasdaq composite slid 19, or 0.7 percent, to 2,638.

Abbott Laboratories jumped 4.5 percent after announcing plans to spin off its drug business.

AMR Corp., the parent of American Airlines, dove 7.6 percent after reporting a loss that was worse than Wall Street analysts predicted. The company said that its fuel spending jumped 40 percent, wiping out revenue gains from higher fares and fees.

Morgan Stanley rose 3 percent after a jump in investment banking revenue helped it earn $1.15 a share, well above analyst expectations of 30 cents per share. Intel Corp. jumped 4.5 percent after its net income rose 17 percent last quarter, beating Wall Street’s target.

At 2 p.m. the Federal Reserve will release its survey of business conditions around the nation.

Article source: http://feeds.nytimes.com/click.phdo?i=b62b136032cf0065bcc512bac7815103

Wealth Matters: Forecasters Find the More Pessimistic View Is the Fashion

But I’ll give them this: in terms of macroeconomic events, this has not been an easy year to predict, starting with the earthquake in Japan and the revolutions in the Middle East. There has also been the continuing failure of European politicians to come up with a workable solution to Greece’s debt problem and, in August, Standard Poor’s downgrade of the United States credit rating.

Perhaps not surprisingly, the group this time around was unwilling to venture a guess on that staple of all market predictions: where the Standard Poor’s 500-stock index will end the year. The best I could muster from anyone was “higher” than it is now.

The group has been consistently off the mark on economic growth, lowering their expectations each quarter. Predictions of 3 to 4 percent growth in January have given way to predictions this time of half that, or less.

So given the year so far, it is remarkable that many of this group’s predictions have held true, for good and bad. Here is an assessment of the group’s calls to date and some tepid predictions on what the last quarter will bring.

GOOD CALLS The good calls have been the conservative ones.

Bill Stone, the chief investment strategist at PNC Wealth Management, has championed dividend-paying stocks all year and continues to do so. What has changed is his reason for recommending them.

At the beginning of the year, Mr. Stone said he backed these stocks because he believed that money would move from bonds into stocks and that dividend-paying ones would benefit first. As other people turned against stocks over the summer, he said that companies paying a dividend had the cash reserves to continue to pay or increase them — evidence that they were well-run.

Now, like other strategists, Mr. Stone sees dividend-paying stocks as unique survivors and one of the few securities that offer income. The average dividend yield on the S.. P 500, 2.22 percent, is now higher than the 2.08 percent yield on 10-year Treasuries for the first time since the 1950s.

“We’re sticking with the call, but when it won’t work is when we get a strong snapback,” Mr. Stone said. “When the market decides it’s not so concerned about the double-dip recession, it will drive the other stocks higher more quickly.”

The other stock picker who has stuck to his recommendations with good results is Niall J. Gannon, director of wealth management at the Gannon Group at Morgan Stanley Smith Barney. His big call at the beginning of the year was on stocks of companies that derive a substantial proportion of their revenue from outside the United States. One of his favorites is Nike, which is up 3.78 percent this year.

He said these were the only companies that were insulated from country-specific economic shocks. People may be buying fewer bottles of Coca-Cola in Greece, but they may be buying more in Brazil.

Of course, being right is not always something to gloat about. Richard Madigan, chief investment officer for J. P. Morgan’s Global Access Portfolios, has been right about something he wishes he had gotten wrong: unemployment in the United States. He predicted it would stay between 9 and 10 percent all year. While he was briefly wrong when the unemployment rate dipped to 8.9 percent in March, he is right again, and he does not like the implications of being correct.

“For markets, it’s going to be a much more aggressive campaign cycle into next year,” he said. “The political rhetoric will distract markets. It’ll be noise with a lot of policy uncertainty.”

With this bleak outlook, he is encouraging clients to stop thinking in calendar years. Trying to make up for the losses of the last two months could land people in worse straits.

CHANGED CALLS If there is one area that did not turn out as this group imagined, it was debt.

Richard Cookson, chief investment officer at Citi Private Bank, was the most brutally honest member of the group. A week before our call, he issued a report to the firm’s clients conceding that he had gotten one of his calls on long-duration bonds wrong. He titled it “Gross Miscalculation.”

Now, instead of those government bonds, he is recommending investors shift to long-dated corporate bonds.

Article source: http://feeds.nytimes.com/click.phdo?i=e6752bef2038ca926502d9f6037d148c

Economix: The Great Growth Disappointment

Second verse, same as the first: The quarter when the economy was supposed to stage its comeback is looking just as bad as its disappointing predecessor.

We’ve had a slew of distressing economic data come in during the last few weeks. As a result, economists have been steadily downgrading their forecasts for economic growth in the second quarter. Today’s news is no exception; after a major bummer of an inflation report, Macroeconomic Advisers, the highly respected forecasting firm, lowered its annualized second quarter G.D.P. forecast to 1.9 percent.

For reference, when the quarter began, Macroeconomic Advisers was expecting 3.5 percent growth. And way back in February, the firm was projecting 4.4 percent.

We saw similar downgrades last quarter, too. That quarter began with a forecast of 3.5 percent, which slid downward as the weeks rolled on and ugly economic indicators rolled in. The Commerce Department’s latest estimate for growth that quarter was 1.8 percent.

Economists blamed temporary factors for that sluggish growth rate and forecast that growth would rebound in the second quarter. Unfortunately, though, the slide in forecasts for this quarter has been eerily similar to the slide in forecasts last quarter. Take a look:

DESCRIPTIONSource: Macroeconomic Advisers

The blue dots refer to forecasts for G.D.P. growth in the first quarter, and the pink dots show forecast for the second quarter. Their trajectories are remarkably close.

But don’t fret, dear readers: I’ve been hearing that “next quarter” will be better.

Article source: http://feeds.nytimes.com/click.phdo?i=f112e5c62e9baf0d4e7a05075723788f

Retailers Fall Short as Shoppers Cut Back

The net loss was $170 million, or $1.58 a share, Sears said in a statement Thursday. That compared with a $16 million profit a year earlier.

Separately, Gap, the apparel chain, cut its full-year profit forecast by one-fourth as costs rose faster than expected.

Sales at Sears sank about 3 percent to $9.7 billion. Sears faces increasing competition from other department stores and discount chains. Target, which reported first-quarter results on Wednesday, said shoppers were staying cautious about spending.

“Our first quarter was adversely impacted by unfavorable weather, economic pressures facing our customers, and comparisons to last year’s government-sponsored stimulus program relating to the purchase of appliances,” Louis J. D’Ambrosio, Sears’s chief executive, said in the statement. “However, we also fell short on executing with excellence.”

Shares of Sears fell $1.99, or 2.6 percent, to $73.86.

Sears brought in Mr. D’Ambrosio in February after a three-year search for a chief. He told shareholders at the company’s annual meeting this month that Sears would expand services and technology to increase sales and understand customers better. The company also hired a new head of apparel, long a struggling unit, earlier this year.

Sales at stores open at least a year fell 5.2 percent at domestic Sears stores and 1.6 percent at its Kmart chain last quarter, with appliance, clothing and consumer electronics sales driving the decline.

Gap, meanwhile, said its fiscal 2011 profit would be $1.40 to $1.50 a share. Gap had previously forecast a maximum of $1.93 a share.

Expenses per unit will rise 20 percent in the second half, outweighing price increases, Gap said. The apparel industry is facing cost inflation for the first time in two decades because of surging cotton prices and increased pay for workers who make clothes in China and other parts of Asia. Retailers have said they plan to raise prices to counter the higher costs.

First-quarter net income fell 23 percent to $233 million, or 40 cents a share, in the period ended April 30, from $302 million, or 45 cents, a year earlier. Analysts projected 39 cents, the average of 28 estimates compiled by Bloomberg.

Same-store sales fell 3 percent in the first quarter at the chain’s Gap brand.

Gap has closed underperforming stores and shrunk other locations in the United States. The retailer is now looking overseas for sales growth by expanding into new regions in the past year, including China and Italy.

Article source: http://feeds.nytimes.com/click.phdo?i=02add28c9013032989ae9aaa3e010bb9

Germany and France Surprise With Strong Growth

PARIS — The euro area’s two largest economies, Germany and France, showed surprising strength in the first quarter of the year, helping lift the entire continent’s performance despite sharp pain along the edges.

The Federal Statistics Office in Germany reported on Friday that gross domestic product grew 1.5 percent over the previous quarter, when harsh winter weather had held growth to just 0.4 percent.

The figure was well above analyst estimates and showed that Germany’s economy had recovered fully from its worst recession since World War II. “The pre-crisis level of early 2008 has been exceeded,” the office said.

France, too, surpassed expectations with growth of 1 percent, the steepest increase since spring 2006, according to the statistics office Insee in Paris. That compared to an increase of just 0.3 percent in the last quarter of 2010, and a median forecast of economists surveyed by Reuters and Bloomberg News of 0.6 percent.

Overall, the 17-nation euro area saw G.D.P. grow 0.8 percent compared to the previous quarter, according to the European Union’s statistics office. Germany and France account for nearly half of the region’s economic output.

The strains of austerity measures to rein in gaping deficts were more evident elsewhere.

Spain’s G.D.P. grew only 0.3 percent from the previous quarter, according to the National Statistics Institute in Madrid. That was slightly better than expected, but largely due to exports amid weak domestic demand and high unemployment. Portugal saw its second quarter of contraction, dropping 0.7 percent, according to Eurostat.

Greece, however, saw its first quarter of growth since 2008. Output grew 0.8 percent in the first quarter, according to Eurostat, compared to a decline of 2.8 percent in the final quarter of last year.

European stock markets and the euro were both up slightly in early trading. Economists called the reports encouraging, especially for Germany and France. But they warned that keeping up the momentum would be difficult.

“Looking forward, we expect growth to slow down to more moderate rates, as world trade growth loses some momentum and fiscal policy tightening and higher oil prices kick in,” Aline Schuiling, senior economist at ABN AMRO Bank in Amsterdam, wrote in a note. “Nevertheless, the German economy should continue to outperform the eurozone average by a wide margin.”

Oscar Bernal, an economist at ING Bank in Brussels, said that the pickup in industrial activity in France in particular “might just be a catch-up” after the year-end lull.

“All in all, we believe that the first quarter G.D.P. growth acceleration will only be temporary,” he said, adding that the French government would still face difficulties meeting its budget-deficit reduction targets.

Strong demand for exports such as automobiles has fueled the recovery in Germany, as in past recoveries. Domestic demand has typically trailed, leading to criticism from Germany’s trading partners. However, German consumers seem to be gaining confidence this time as unemployment falls sharply.

The German statistics office noted that, compared with the last quarter of 2010, domestic consumption was up “markedly,” along with investment by businesses in machinery and equipment and construction.

“The growth of exports and imports continued, too,” it said. “However, the balance of exports and imports had a smaller share in the strong G.D.P. growth than domestic uses.”

In Paris, the statistics office noted that manufacturing production soared 3.7 percent in the first quarter, the strongest growth for at least 30 years. Household consumption was also up, but only slightly. Imports grew more rapidly than exports, weighing on the overall growth figure.

Figures for the euro zone as a whole were due out later Friday.

Article source: http://www.nytimes.com/2011/05/14/business/global/14euecon.html?partner=rss&emc=rss