Tuesday, June 04, 2002

What If Investors Won't Join the Party? "By many measures, the United States economy is rebounding smartly from its desultory performance in late 2001. But even as economic output surges and corporate profits appear once more to be rising, one closely watched indicator of economic oomph remains depressed: the broad stock market indexes. All of the big-company indexes, the ones that reflect what investors are most likely to own through mutual funds, are still down for the year." 11:06:20 AM  Google It!  comment  []

U.S. layoff plans fell 25 pct in May "Layoff announcements at U.S. firms fell to the lowest level in a year during May as companies boosted production and the economic recovery gathered speed, Challenger, Gray & Christmas said on Tuesday." "Job cuts announced in May totaled 84,978, a 25 percent decline from April's 112,649, the outplacement firm said in a monthly report." 10:33:12 AM  Google It!  comment  []

Vehicle Sales Fell in May Even as Big Rebates Continued "Weak sales in May at General Motors helped drag car sales to their lowest monthly pace in nearly four years." "Auto sales industrywide fell 6 percent in May from the month a year earlier, according to Ward's AutoInfoBank, a data tracking service in Southfield, Mich." "The one-month slump came even as Detroit continued to spend money to provide big rebates and to subsidize interest rates, and it suggested that incentive spending, which surged after Sept. 11, could go even higher in the coming months." 10:24:46 AM  Google It!  comment  []

Hewlett-Packard to Cut 15,000 Jobs in Wake of Compaq Merger "HP expects to cut 10,000 jobs by November 1 and another 5,000 jobs next year, a total of about 10 percent, Chief Executive Carly Fiorina said on Tuesday in the company's first meeting with analysts since purchasing Compaq last month." 9:25:20 AM  Google It!  comment  []

Investors are intriguingly wary of America's recovery "The obvious explanation is that the economic outlook remains uncertain. Certainly first-quarter GDP growth—5.6% at an annual rate, according to revised figures released on May 24th by the Commerce Department—was unexpectedly strong. But much of that surge was driven by temporary factors, particularly a reduction in the pace at which firms slashed their inventories. Between January and March, this inventory adjustment added a hefty 3.5 percentage points to annualised GDP growth. Although the inventory cycle still has some way to go, and may add 1.5 percentage points to second-quarter GDP growth, inventory adjustment is incapable of being a sustained source of growth." "The broader outlook for corporate investment is still murky. The good news is that firms' profits appear to be on the mend, boosted by radical cost-cutting coupled with strong productivity growth. Higher profits should bode well for future investments. The bad news is that profits are paltry compared with their pre-recession peaks, and that by most measures America's firms still have plenty of spare capacity. In the short term, few expect investment spending to offer much of a boost to the overall economy." "That leaves the onus where it has long been—on the American consumer. Contrary to the fears of many pessimists, consumer spending has yet to peter out. Consumption rose by a monthly 0.5% in April, less than many predicted, but perfectly consistent with a moderate recovery. There is little sign that Americans have, as yet, lost their appetite for ever more big-ticket purchases. Motor vehicles (which almost single-handedly sustained consumption at the end of last year) sold even faster than their first-quarter average in April. And according to one dealer survey, they are running 7% higher in the first two weeks of May than in the same period last year." 8:19:57 AM    comment  []