Aspire Misery Index for the Week Ended January 23, 2009 (updated through Wednesday a.m. 1/21)

Jan 21, 2009
Author: SCP Editor

Misery Index for the Week Ended January 23, 2009 (updated through Wednesday a.m. , January 21) January 21, 2009 – We are midway through the week and the news this week has been largely more of the same, profit warnings, job and credit rating cuts and economic headwinds. The only silver lining we can see at this point is that it has been a light week in terms of economic data, which leaves less deterioration to report: 

 ·         Profit warnings – BASF, ECB, Varian, Estee Lauder, Elizabeth Arden, Belden, AZZ, Inc., TD Ameritrade, Ultralife Batteries, Parker Hannifin, United Rentals, Cash America, Air Products,  

·         Job Cuts – Time Warner (almost 800 jobs), Rio Tinto (1,100 jobs worldwide), Bose (1,000 jobs or 10% of staff),  Rohm & Hahs (900 jobs), Tandy Brands (about 17% of workforce),  Burberry (more than 500 jobs), BHP Billiton (6,000 jobs), Eaton (5,200 jobs), Alexander and Baldwin (60 jobs),  

·         Warren Buffet told the press over the weekend that the U.S. is engaged in an “economic Pearl Harbor”  

·         A forecast released this weekend by the U.S. Conference of Mayors said that only five metropolitan areas in the U.S. will escape job losses this year. Unemployment is expected to top 10% in 70 areas.  

·         Ratings – Moody’s lowered Bank of America ratings; Moody’s lowered Merrill Lynch ratings; S&P affirmed negative outlook on Bank of America; Fitch revised HSBC Holdings outlook to negative; Fitch placed Deutsche Bank on rating watch negative; S&P cut ratings on Transatlantic,  

·         Labor Market – Hertz Global (more than 4,000 jobs cut); WellPoint (about 1,500 jobs cut);  

·         Real Estate – Moody’s Investors Service said commercial real estate rates declined 3.4% in November compared to October, and 14.3% Y/Y.  

·         Auto Industry – Volkswagen is reducing work hours for about 60,000 employees while BMW is reducing hours for about 26,000 employees. Mitsubishi is halting production at its biggest plant in Japan for three weeks in February.  

·         Auto Industry (domestic) – GM said cash may run out by March 31. 

·         Wall Street - Louis Yamada of LY Advisors said the DJIA could be headed to 6,000 this year. While Mort Zuckerman of Boston Properties said the financial system still faces close to a trillion in losses. He said stock investors should brace for the worst in 2009, with multiple compression. He thinks the downside risk at current levels outweighs the upside opportunity.