Ford Earns 40 Cents Per Share
Posted by Eddy Elfenbein on October 30th, 2012 at 11:38 am

Although the stock market is closed again, we still have earnings reports coming out. This morning, Ford Motor ($F) released an outstanding earnings report. For the third quarter, the automaker made 40 cents per share. That was 10 cents more than Wall Street had been expecting.

The story is very simple—North America is strong and Europe is weak. The company has done a very good job of expanding its margins.

For Q3, Ford had profits of $2.2 billion which was up from $1.9 billion, or 34 cents per share, for the same quarter last year. Total revenue dropped 4%, from $32.1 billion to $30.9 billion.

Its Asia and Africa operations posted a pre-tax profit of $45 million, compared with a loss of $43 million. Ford said the unit benefitted from the launch of its new Ranger pick up and redesigned Focus compact in the region. Ford is investing heavily in Asia and the investment, along with a sluggish Chinese market, is damping profitability.

South American operations posted a pre-tax profit $9 million, compared with $276 million pre-tax profits a year earlier. Ford said the region should post a profit for the year.

In North America, Ford made $2.3 billion; but in Europe, Ford lost $468 million. The company expects to see more losses going forward. Over the last few years, Ford has cut capacity in North America and we’re seeing the fruits of those efforts today. They need to use the same strategy in Europe.

Morning News: October 30, 2012
Posted by Eddy Elfenbein on October 30th, 2012 at 7:23 am

German October Unemployment Rose Twice as Much as Forecast

Spain Stays In Recession As Inflation Bites

Euro-Area October Economic Sentiment Falls to Three-Year Low

Bank Of Japan Boosts Stimulus For Sagging Economy, Markets Unimpressed

Turkish Banks Go for Gold to Lure $302 Billion Hoard

Hurricane Sandy Threatens $20 Billion in Economic Damage

Standard Chartered Investors Still Fear Iranian Investigation Fallout

UBS to Cut 10,000 Jobs in Major Overhaul

Hitachi Buys UK Nuclear Project From E.On And RWE

TNK-BP Profit Rises 53% on Crude Export Duty Lag, Strong Ruble

Deutsche Bank Q3 Lifted By Rebounding Markets

Fiat Reports Third-Quarter Earnings Increase

In Shake-Up, Apple’s Mobile Software and Retail Chiefs to Depart

Cullen Roche: Natural Disasters, the Broken Window Fallacy and MR….

John Hempton: My Pick For CEO Dead Pool: Omar S Ishrak At Medtronic

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Harris Earns $1.14 Per Share
Posted by Eddy Elfenbein on October 29th, 2012 at 8:11 pm

By the way, we did have one earnings report today. Harris Corp. ($HRS) said that quarterly revenue dropped from $1.34 billion to $1.26 billion. For the quarter, Harris earned $138 million or $1.14 per share. That beat Wall Street’s estimate by two cents per share.

“Harris first quarter results were solid in a challenging government spending environment,” said William M. Brown, president and chief executive officer. “We were awarded a number of large contracts in both RF Communications and in Government Communications Systems, and revenue in Government Communications Systems increased 5 percent over the prior year. First quarter operating performance was positive with operating margin flat compared to the prior year, despite lower revenue and higher R&D investment. Harris generates strong free cash flow, and in the first quarter we increased the dividend by 12 percent, the second increase this calendar year.”

The most important news is that Harris is sticking by its full-year guidance of $5.10 to $5.30 per share. If the next three quarters are like the first, Harris should have no trouble hitting that target.

The Stock Market Will Be Closed Tuesday
Posted by Eddy Elfenbein on October 29th, 2012 at 4:56 pm

It’s official: The stock exchange will be closed tomorrow.

The winds are starting to pick up here. Stay safe everyone. I’m going to freshen up my brandy.

Weather Forecast: Hurricanish
Posted by Eddy Elfenbein on October 29th, 2012 at 12:44 pm

I hope everyone is well. It’s nothing but rain, rain and more rain here. Hopefully, the markets will be up and running tomorrow. Until then, I’m relaxing and staying dry inside.

Here are the Fab Four to brighten your day:

Markets Are Closed
Posted by Eddy Elfenbein on October 29th, 2012 at 8:44 am

The NYSE changed its mind — the stock market is closed today. In fact, we may be closed tomorrow as well.

Morning News: October 29, 2012
Posted by Eddy Elfenbein on October 29th, 2012 at 5:54 am

Mario Draghi Defends ECB Against German Angst As Greek Deadlock Continues

Spain’s Pain Seen Intensifying as Slump Deepens Plight

Yen Steadies Well Above Recent Lows On Eve Of BOJ Meeting

Philippines Upgrade By Moody’s Lifts Sovereign’s Cash Curve

Junk Bonds Grow More Popular and Turn Even Riskier

Brent, Nymex Aren’t Going Away as Oil Benchmarks

Small Should Have Been Beautiful; How Toyota Misread China Market

Honda Cuts Forecasts, Hopes For China Recovery In February

Penguin and Random House Agree Merger

Deutsche Bank Beating UBS in Investment Bank Revival Sign

UBS Said to Plan 10,000 Job Cuts, Investment Bank Shrinks

Univision to Start Its First Digital Network

How Hurricanes Raise Insurance Premiums

Credit Writedowns: Australia: Manipulating By Not Intervening?

Jeff Carter: Beating the Odds

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NYSE to Close Trading Floor Tomorrow
Posted by Eddy Elfenbein on October 28th, 2012 at 4:51 pm

The New York Stock Exchange announced that it’s closing its trading floor tomorrow due to Hurricane Sandy. Electronic trading will still go on.

The WSJ:

The New York Stock Exchange said its trading floor would be closed starting Monday, the first such shutdown in 27 years, as New York City braced for Hurricane Sandy and a shutdown of the city’s transit system.

Trading in all securities listed on the Big Board will be moved to Arca, an electronic trading platform operated by New York Stock Exchange parent NYSE Euronext, according to a statement by the company. The market operator said activity will also be suspended on its NYSE MKT exchange, formerly known as the Amex.

The last time floor trading was suspended was in 1985 due to Hurricane Gloria.

The Federal Budget as a Percent of GDP
Posted by Eddy Elfenbein on October 28th, 2012 at 12:09 am

On Friday, the government released its first estimate of third-quarter GDP. This number will be updated a few more times as the government collects more data.

There’s one overlooked fact of this report and it’s that we now know what the GDP was for the government’s fiscal year (which ends on September 30th). For the 2012 fiscal year, nominal GDP was $15.54 trillion which was an increase of 4.1% over FY 2011. Again, this will be updated but we can safely assume that GDP will generally be in that vicinity.

With nominal GDP under our belt, we now know what the government’s spending, revenue and deficit was as a percent of GDP. In FY 2012, the federal government spent 22.77% of GDP while it took in 15.76% of GDP. The deficit came to 7.01% of GDP.

This is the third-straight year the deficit as a percent of GDP has fallen. In FY 2009, the deficit was a staggering 10.12% of GDP. The big change last year was that spending fell from 24.13% to 22.77%. The spending side even dropped below the peak from the 1980s.

Revenue as a percent of GDP is the highest it’s been in four years (15.76%). It’s not far from from FY 2004 when it reached 16.10%.

What I find fascinating is that revenue as a percent of GDP has averaged about 18% of GDP for the last 60 years. In fact, until the Great Recession, it didn’t deviate much from 18%.

There’s Hauser’s Law which states that government revenues “since World Was II have always been approximately equal to 19.5% of GDP.” I wouldn’t go so far as to endorse this phenomenon as a law, but I do think it’s interesting how long the relationship has held up.

Q3 GDP Growth = 2%
Posted by Eddy Elfenbein on October 26th, 2012 at 10:34 am

The government reported that third-quarter GDP growth came in at 2%.