Aspire’s Misery Index for the Week Ended January 23, 2009

Jan 24, 2009
Author: SCP Editor

Misery Index for the Week Ended January 23, 2009

January 23, 2009 – The DJIA lost 202 points this last week, or 2.4%, as the drip of negative economic data and downbeat corporate earnings reports continued. All things being equal, it could have been worse, as the 8,000 level was breached each trading session of the shortened week. Here is this week’s past Misery Index:  

·         Profit warnings – BASF, ECB, Varian, Estee Lauder, Elizabeth Arden, Belden, AZZ, Inc., TD Ameritrade, Ultralife Batteries, Parker Hannifin, United Rentals, Cash America, Air Products, WSP Holdings, Wonder Auto, Electro, Lockheed Martin, Sony, Northrop Grumman, Molina Healthcare, Schlumberger,  Genuine Parts, MEMC, Interline Brands.  

·         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), Maryland’s government budget is calling for 700 layoffs; JELD-WEN (94 jobs), GM (300 jobs at NY engine plant), Intel (6,000 jobs), Huntsman (1,175 jobs), Microsoft (up to 5,000 jobs), CC Media Holdings (1,850 jobs), Arctic Cat (100 jobs, or 7% of work force), Harley (1,100 jobs), Compass Bank (1,200 jobs, or 10% of workforce), Hutchinson Technology (300 jobs), American Greetings (200 jobs), Employer’s Holdings (154 jobs, or 14% of workforce), Interline Brands (85 jobs), Vermont’s governor is cutting 600 jobs in staff, Polaris (460 jobs).  

·         Closing the Doors – JELD-WEN closing central Pa. plant; Huntsman is closing a Grimsby UK plant; Hutchinson Technology is closing its Sioux Falls plant; Griffin Land & Nurseries closing a Florida farm.  

·         State Jobless Rates – Michigan’s rate hit to 10.6% in December; New Jersey’s jobless rate hit 7.1%, the highest level in 15 years; Washington’s rate hit 7.1% in December, up from 6.4% in November – the largest sequential increase since 1976; West Virginia claims in the first weeks of January are up 36% over the same period last year; Florida’s unemployment rate climbed to 8.1% in December; California reported an unemployment rate of 9.3%; Mississippi’s unemployment rose to 7.3%, the highest level in 25 years; Connecticut’s unemployment rate in December hit 7.1%; Ohio’s unemployment rose to 7.8% in December the highest rate in more than 20 years; North Carolina unemployment rose to 8.7%; Texas’ unemployment rate rose to 6% in December; Alabama’s unemployment rate rose to 6.7% in December; Rhode Island hit 10%, a 30-year high.  

·         Weekly jobless claims rose to 589,000. Expectations were 543,000.  

·         The national unemployment rate is 7.2%.  

·         State Pension Funds – Montana’s state pension funds fell by $1.7 billion in the past six months.  

·         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, Moody’s cuts United Rentals ratings; Moody’s cut State Street ratings; S&P cut Overseas Shipholding, Fitch cut KLA Tencor, Moody’s cut Johnson Controls, Moody’s cut Dillards, Moody’s cut NY Times to ‘junk’, Moody’s downgraded Rite Aid, Fitch cut FairPoint Communications.  

·         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.  

·         Housing starts fell to 550,000. Expectations were for 625,000.  

·         Building permits fell to 549,000. Expectations were for 600,000.  

·         Handset Market – Nokia forecast global handset sales to decline 10% this year over last.  

·         Auto Industry (global) – 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. Vehicle production in the declined by 48% in December on a Y/Y basis.  

·         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.  

·         Oil & Exploration – the number of active rigs dropped by 53 this week to 1,515.