Aspire Misery Index for the Week Ended February 6, 2009 (as of Wed. a.m. 2/4/09)

Feb 04, 2009
Author: SCP Editor

Aspire Misery Index for the Week Ended, February 6, 2009 (as of Wed. a.m. 2/4/09)

February 4, 2009 – As of Wednesday morning our Misery Index has been accumulating a stream of data points that reflect, in our opinion, further erosion in the U.S. economy. The biggest concern we have, near term, is the labor market which is the key metric for the U.S. economy. After all, consumers represent more than 70% of GDP. The common theme right now is that businesses are reigning in their costs, cutting budgets and jobs and lowering expectations as much as possible right now with hopes that the bars have been set sufficiently low going forward. There is little confidence in the near term that credit markets are going to free up for businesses so they will have to get by on operating cash flow:

Profit Warnings – ADC Telecom, Rockwell Automation, Hologic, CEDC, Perrigo, MDU Resources, Rockwell Collins, Public Service Enterprise, Cameron, Panasonic, Costco, Sarah Lee, Kraft, Thermo Fisher

Job Cuts – Macy’s (7,000 jobs), Steelcase (300 jobs), Hollis-Eden (20 jobs), TMD Friction Group (140 jobs), Keystone RV Company (350 jobs), Jayco, Inc. (more than 250 jobs), Deere expanded layoffs at its Iowa plant (10 more jobs), Lincoln Electric (10% of work force, or about 900 jobs), Liz Claiborne (about 725 jobs), Capital Group (170 jobs), Pier 1 (10% of employees), Rogers Corp (about 90 jobs), Borders (6 VP jobs and 10 director positions), Windalco (laying off 250), Rockwell Collins (600 jobs), Panasonic (15,000 jobs worldwide)

Unemployment - The ADP National Employment Report showed that employment decreased by 522,000 in January. The number came in better than the expected 659,000 number.

Ratings Cuts – Fitch cut Nova Chemicals, Fitch cut Allstate, Moody’s cut Gannett, S&P cut American Capital, S&P cut Fairchild Semiconductor, Moody’s cut MGM Mirage, Moody’s cut Mohegan Sun, Fitch downgraded Russia,

The Semiconductor Industry Association said total sales for 2008 were $248.6 billion, compared with $255.6 billion in 2007, down 2.8%. In December, sales were down 22% Y/Y to $17.4 billion.

Closing Doors – TMD Friction closing Virginia plant, Pier 1 is closing a distribution center, Qimonda AG closing U.S. plant, Panasonic is shutting down 27 plants,

Chapter 11 – Spectrum Brands, Maerklin,

Home Prices – Single family home sales fell 23.7% in 2008 on a Y/Y basis while the median price declined by 9.2%. Bloomberg reported that the U.S. housing market lost $3.3 trillion in value in 2008 with the media home price declining 11.6% to $192,119. In the Q4, homeowners lost $1.4 trillion in value.

Homeownership – The Census Bureau said homeownership fell to 67.5% in Q4, down from 67.8% in the same period last year – at 7-year low. The pending U.S. home sales index rose 6.3% in December to 87.7.  

Construction Spending – Fell for third straight month in December, by 1.4%. Expectations were for a 1.2% decline. For the year, construction spending fell 5.1%. Home construction fell by 27.2% last year.

Auto Industry – Autodata reported that the auto industry’s sales for January were down 37% on a Y/Y basis to 656,976 – the worst performance since June 1982. On an annually adjusted basis that translates to a rate of 9.57 million. For January (all U.S. sales): Chrysler sales fell 55%; sales at GM fell 48.9%; sales at Suzuki fell 49%; sales at Ford fell 40%; Porsche sales fell 36%;  Mitsubishi sales fell 34.5%; sales at Toyota fell 31.8% and Nissan fell 29.7%; Honda sales fell 27.9%; Mazda sales fell 27.3%; Audi sales fell 26%;  BMW sales fell 15.5%; Volkswagen sales fell 11.6%; KIA SALES ROSE 3.5%; SUBARU SALES ROSE 8%; HYUNDAI SALES ROSE 14.3%;

Auto Industry – China’s auto sales are expected to surpass the U.S. auto sales in January.

Banking Industry – the FDIC estimated that losses amongst U.S. banks will likely exceed $40 billion through 2013. 25 banks failed in 2008. 3 banks failed last week alone. Of the 8,500 federally insured banks and thrifts, the FDIC had 171 on its confidential list of troubled institutions as of September 30.

Manufacturing – The Institute for Supply Management said that its U.S. manufacturing index rose to 35.6 in January, up from 32.9 in December. Expectations were for the number to come in at 32. Readings above 50 signal growth.

U.S. Treasury – The Treasury Department said it will need to borrow $493 billion in the first three months of this year – a record amount for the period. This is on top of the $569 billion borrowed in the first fiscal quarter (Oct-Dec). Setting aside Obama’s $819 billion stimulus package, the Congressional Budget Office projects that this year’s deficit will hit $1.19 trillion.