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THE NORTHWEST ECONOMIC MAINLINE 04·20·2009
What to Watch This Week
And you all thought that the onslaught of earnings announcements made things dizzying last week… This week is even more jam-packed with crucial pieces of information to pay attention to. With financials' such as JP Morgan Chase, Wells Fargo, Goldman Sachs, and even Citigroup surprising all but the most bullish of analysts/investors last week, look for announcements from Bank of America and Morgan Stanley to shape the financial sector.
Bank of America, given its seemingly never ending Merrill Lynch debacle and the fact that the company posted a $1.79 billion loss last quarter, is a wild card at the moment.
- It was this time last quarter that proved to be devastating to the regional economy in regard to mass layoff announcements from prominent regional employers. Let's hope this week is a different story altogether. Boeing makes their announcement Wednesday as does AT&T and on Thursday its Alaska Airlines, Amazon.com, and Microsoft. Personally, I have a slight case of optimism when thinking about Amazon and Microsoft, but can't help but continue to feel rather pessimistic about Boeing and Alaska Airlines; we shall see though.
- Economic indicators this week are sparse, but focus on 'initial' unemployment claims and new and existing home sales. Wrapped between news stories that continue to emphasize total unemployment claims and low national homes sales on a year-over-year comparative basis, there are some trends starting to emerge that suggest improvements over the past few weeks. As always, I remain cautiously optimistic.
- Earnings announcements are scheduled from Eli Lilly, Halliburton, IBM, ConocoPhillips, American Express, Blackrock, Inc., Coca-Cola, Delta Airlines, Merck, Lockheed Martin, McDonald's, Altria, CoStar, eBay, and an exhausting number of others. As touched on prior, get ready, this is going to be a busy week for news...
What I Saw Last Week
- Announcements that surfaced last week were a mixed bag overall. Goldman Sachs early earnings announcement surpassed Wall Street estimates, Intel shattered estimates and noted a bottoming out in PC sales, the NAHB homebuilder sentiment index soared 5 points in April; yet, retail sales dropped unexpectedly in March and the Treasury Department indicated that lending activities at the nation's largest banks had declined in February.
- The Commerce Department reported the sixth straight decline in business inventories while the Federal Reserve announced Wednesday that their latest survey of business conditions nationwide, or Beige Book, showed some positive signs that economic deterioration has slowed with five of its 12 regional banks reporting a moderation in the pace of declination.
- There were a few less than favorable announcements that also surfaced last week which included the unexpected dip in consumer prices in March (deflation? I am not a believer), Washington Alliance for a Competitive Economy Report on 'What if Boeing Left Washington' (Friday the company issued 120 layoff notices locally), and news from the Employment Security Department that the unemployment rate in Washington now stands at 9.2 percent.
- Even more shocking was that Seattle's unemployment rate increased by a full 100 basis points in March to 8.8 percent. The unemployment rate is now higher than the rate reached during the dot com bust... I believe that our unemployment situation is peaking and we are going to see a slowdown in layoffs.. However, as I have said repeatedly, the employment situation is a lagging, not leading indicator. Expect it to come down only after we have started to see new growth.
- The 'ouch' story of the week; however, emerged Thursday with General Growth Properties, Inc., the nation's second largest mall operator filing for Chapter 11 Bankruptcy. It had long been known that General Growth Properties had a massive amount of debt coming due in late 2008, and to many who watch the retail sector, this unfortunate event can be strictly attributed to poor timing and the company's inability to restructure financing given current conditions. General Growth owns seven malls in Washington State, most notably Westlake Center and Alderwood Mall.
Quote/Link of the Week
WLast week's 'Link of the Week' slideshow produced some positive feedback because the information was 'fun' yet informative. This week, given such a response, I have included another slideshow to puts things into perspective.... |
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