WASHINGTON (AP) — American consumers barely increased their spending in October but their incomes rose by the most in seven months. The rise in take-home pay could boost spending during the upcoming holiday shopping season.
The Commerce Department said Wednesday that spending increased 0.1 percent last month, the poorest gain in four months. But incomes increased 0.4 percent, the best showing since March.
Private wages and salaries drove the income gain.
The slight October gain in consumer spending represented a big slowdown from a 0.7 percent September increase. Spending on durable goods such as autos showed a solid increase but spending on nondurable goods such as food and clothing fell.
Some economists predicted spending would slow because consumers spent more over the summer while earning less. Consumer spending is important because it makes up 70 percent of economic activity.
After-tax, inflation-adjusted incomes fell at a 2.1 percent rate over the summer, the biggest drop since the third quarter of 2009, just as the recession was ending.
Monthly Archives: November 2011
Germany warns on Greek aid traunche
BERLIN (Reuters) – German Chancellor Angela Merkel rejected on Wednesday criticism of the ECB for not taking bolder steps to stem the euro zone debt crisis and made clear the next tranche of aid for Greece could not be paid out unless big parties in the country committed in writing to back austerity.
“The European currency union is based, and this was a precondition for the creation of the union, on a central bank that has sole responsibility for monetary policy. This is its mandate. It is pursuing this. And we all need to be very careful about criticizing the European Central Bank,” Merkel said in a speech to parliament.
On Greece, she added: “The Greek question hasn’t been cleared up yet, because the conditions are not in place for the payment of the next tranche.
“For that to happen … we need not only the signature of the Greek premier but also those of the parties that have agreed to support the government. Otherwise there can be no payout of the sixth tranche.”
Upgrades and Downgrades This Morning
SNH – Senior Housing upgraded to Buy at Stifel Nicolaus
CHKM – Chesapeake Midstream Partners initiated with a Buy at Janney Montgomery scott
AXL – American Axle initiated with a Buy at Citigroup
UBNT – Ubiquiti Networks initiated with a Buy at UBS
CSE – CapitalSource initiated with a Buy at Jefferies
VE – Veolia Environnement upgraded to Overweight from Neutral at HSBC
WYN – Wyndham Worldwide initiated with a Buy at Jefferies
GLPW – Global Power Equipment assumed with a Neutral from Buy at boutique firm
JASO – JA Solar upgraded to Market Perform from Underperform at Wells Fargo
SPR – Spirit Aerosystems remains a Stifel top pick
GS – Goldman Sachs initiated with a Neutral at Macquarie
BOOM – Dynamic Materials initiated with a Hold at Auriga
MDT – Medtronic upgraded to Buy from Neutral at BofA/Merrill
BIG – Big Lots downgraded to Equal Weight from Overweight at Barclays
ECT – ECA Marcellus Trust downgraded to Neutral from Buy at Citigroup
WGL – WGL Holdings downgraded to Underperform from Neutral at BofA/Merrill
LDK – LDK Solar downgraded to Sell from Hold at ThinkEquity
CUB – Cubic downgraded to Neutral from Overweight at JP Morgan
CMLP – Crestwood Midstream Partners upgraded to Buy from Neutral at UBS
CIT – CIT Group initiated with a Hold at Jefferies
VAL – Valspar downgraded to Neutral from Overweight at JP Morgan
CENX – Century Aluminum initiated with a Hold at Stifel Nicolaus
ABH – Resolute Forest Products downgraded to Sector Perform from Outperform at RBC Capital
GILD – Gilead Sciences downgraded to Hold at Argus
DCIX – Diana Containerships downgraded to Neutral from Buy at BofA/Merrill
LUFK – Lufkin Industries downgraded to Neutral from Buy at Suntrust
MDT – Medtronic target lowered to $42 at Brean Murray
JNY – The Jones Group downgraded to Neutral from Buy at Lazard
CUB – Cubic target lowered to $52 at The Benchmark CompanyComments »
Gapping Up and Down This Morning
SINO +37.7%, TIVO +6.2%, AEZS+4.9%, BSX +3.6%, NOK +2%, DE +6.8%, FDML +0.8%, VIVO +0.7%, JASO +1.9%
HBC -1%, NUAN -1%, NLST -5.5%, BP -2.1%, ING -2.1%, P -2%, ALU -6.3%, STV -5.7%, CVX -1.7%,
SLV -3.7%, MT -3%, FNV -2.8%, CCL -2.7%, RIO -2.6%, BHP -2.2%,
In Play and On the Wires
Initial Claims: Prior 388k, Market Expects 391k, Actual 393k…Durable Goods Orders: Prior -0.6%, Market Expects -0.9%, Actual -0.7%
Personal income +0.4% vs estimates of +0.3%
PCE up 0.1%
Personal spending up0.1% vs estimates of 0.3%Comments »
The Federal Reserve Plans a New Round of Stress Tests
The fed will immediately test the six largest banks for a European shock. In all they will test around 31 banks.Comments »
Mortgage Applications Rebound Over the Past Week
Perhaps rebound is not the right word as we go back and forth from positive to negative. The overall trend is tepid at best.Comments »
Deere and Co. Profits Beat Estimates
Joy Global’s Value Expected to Jump as Renewed Takeover Considerations are Fleshed Out
“Joy Global Inc. which generated the biggest shareholder returns of any industrial company in America over the past three years, would now be worth about 50 percent more as a takeover target for Komatsu Ltd. or Volvo AB.
Joy Global, subject of renewed takeover speculation in the past month,more than quadrupled (JOYG) in value since 2008 and closed at $81.21 yesterday. With Caterpillar Inc., the world’s largest maker of construction and mining equipment, buying Joy Global’s biggest competitor in July, the Milwaukee-based company may command a record $120 a share in an acquisition, Northcoast Research Holdings LLC and William Blair & Co. said.”Comments »
Citigroup May Get Squeezed for More Settlement Money in Order to Not Admit Guilt
People should just go to jail. Or the money from settlements should go to the tax payer. Fuck the SEC.Comments »
DANGER: European Banks Use Financing as a Deleveraging Accounting Gimmick
Banks are loaning money as quickly as possible to make it appear as if they are reducing leverage on the books.Comments »
The Euro Falls on Concerns Over Growth
Europe’s debt crisis is taking it toll on growth; as a result the Euro is falling.
European manufacturing services fallComments »
Flash: German Yields Spike on Failed Auction
35% of German bonds failed to sell in today’s auction, causing yields to spike by more than 6% to 2.05%.Comments »
Inflation Set to Accelerate in Emerging Markets
French and Belgium Yields Rise
Germany’s bond auction had a bad showing. 35% of the paper intended to be sold was not.Comments »
Nokia Siemens Network to Cut 17k Jobs
The Global Blood Letting Continues; Europe and U.S. Futures Down, But Not as Bad as Asia in Full Retard Mode
Global markets sold off again and U.S. futures are down a full percentage point. Yields are going down slightly in Europe with the exception of France and Belgium. Germany had a weak bond auction. Asian markets are getting crushed due to China’s PMI hitting a 32 month low.Comments »
CBO: Stimulus Hurts Economy in the Long Run
The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.
CBO said that while the Recovery Act boosted the economy in the short run, the extra debt that the stimulus piled up “crowds out” private investment and “will reduce output slightly in the long run – by between 0 and 0.2 percent after 2016.”
The analysis confirms what CBO predicted before the stimulus passed in February 2009, though the top-end decline of two-tenths of a percent is actually deeper than the agency predicted back then.
Read the rest here.Comments »
China November Factory Activity Slumps to 32-month Low
(Reuters) – Chinese factories battled with their weakest activity in 32 months in November, a preliminary purchasing managers’ survey showed, reviving worries that China may be skidding toward an economic hard landing and compounding global recession fears.
The HSBC flash manufacturing purchasing managers’ index (PMI), the earliest indicator of China’s industrial activity, slumped in November to 48, a low not seen since March 2009.
The data showed the world’s growth engine is not immune to economic troubles abroad, and could further unnerve financial markets already roiled by Europe’s deteriorating debt crisis.
November’s flash reading is a sharp three-point fall from October’s final figure of 51 and indicated Chinese factory output shrank on the month in November. A PMI reading of 50 demarcates expansion from contraction.
The last time the PMI slipped below 50 was in September, when the index hit 49.9.
“Industrial production growth is likely to slow further to 11-12 percent year-on-year in coming months as domestic demand cools and external demand is set to weaken,” said Qu Hongbin, a HSBC economist.
In line with the dismal headline number, the flash output sub-index tumbled to a 32-month low of 46.7, a steep drop from October’s final reading of 51.4.
Read the rest here.Comments »