CMYK
The Week Ahead
Earnings season begins
Earnings scheduled for the week
Alcoa will be the first major U.S. company to report its second-quarter results on Monday, and analysts expect strong growth. They say the company’s earnings per share more than doubled on stronger global demand for aluminum. Analysts expect other big companies to report profit gains through the week. One change this reporting season could be revenue growth: Analysts expect more of it. They say total revenue for companies in the S&P 500 rose by more than 10 percent for the first time since the first quarter of 2010.
Company
Est. 2Q Report operating Year day EPS ago
ALCOA (AA) MARRIOTT INT’L (MAR) GOOGLE (GOOG) JPMORGAN CHASE (JPM)
$0.13
W
$0.37
$0.31
TH.
$7.83
$6.45
Consumer Price Index, month-over-month change
0.4% TH.
$1.22
0.5
0.5
F
M
0.4
0.2
A
M
est. -0.1
$1.09
J
J Source: FactSet
BUSINESS
S&P 1,343.80 - 9.42
SECTION
B R I E F
Job report slams stocks
Stock indexes fell sharply Friday, erasing most of the week’s gains, after the government reported that U.S. employers created the fewest number of jobs in nine months. “There’s just a lot more evidence than before that we’re in an extended weak patch,” said Brian Gendreau, market strategist for Cetera Financial Group. He said private economists will likely reduce their projections for overall economic growth this year. Companies whose business would be most affected by a weakening economy were hit hardest. Bank of America Corp., General Electric Co. and Boeing Co. were among the biggest decliners in the Dow average. Oil prices fell 2.5 percent. The slowdown in hiring suggested that demand for fuel will increase less than traders had expected. Lower fuel prices could eventually help the economy by leaving consumers with more money to spend on things other than gas.
SATURDAY, JULY 9, 2011
WASHINGTON — Hiring slowed to a near-standstill last month, raising doubts that the economy will rebound in the second half of the year. The report baffled economists who had predicted much stronger job creation. And it escalated a debate in Washington over how to spur hiring and energize the economy while also cutting federal spending. Just 18,000 net jobs were created in June, the fewest in nine months. The unemployment
“Our economy as a whole just isn’t producing nearly enough jobs for everybody who is looking.”
President Barack Obama in a speech in the White House Rose Garden
rate rose to 9.2 percent, the highest rate of the year, the Labor Department said Friday. For President Barack Obama, the sputtering job market represents a threat 16 months before his re-election bid. “Our economy as a whole just isn’t producing nearly
enough jobs for everybody who is looking,” Obama acknowledged in a speech in the White House Rose Garden. Friday’s report suggested that a slowdown that struck the economy in the spring and curtailed job creation may be more than brief.
“June’s employment report doesn’t have a single redeeming feature,” said Paul Ashworth, an economist at Capital Economics. Two years after the recession officially ended, companies are adding fewer workers despite record cash stockpiles and healthy profit margins. A result is that more people are giving up looking for work. More than a quarter-million people stopped their job searches in June. Including discouraged workers and those working part
Coal shipments way up
The United States is poised to export the most coal since 1992 this year, filling a gap created when flooding interrupted Australian supplies and buoying shipments for railroads such as Union Pacific and CSX. Union Pacific, the nation’s largest railroad, may double coal exports this year to more than 4 million tons, said Doug Glass, the company’s vice president and general manager for energy. CSX predicts shipments may rise 33 percent to a record in 2011 after firstquarter volumes climbed 45 percent. Coal shipments from the U.S. are poised to rise to about 98 million tons in 2011, the Energy Information Administration said.
Drill rig count steady
The number of rigs actively exploring for oil and natural gas in the U.S. rose by one this week to 1,887. Houston-based drilling product provider Baker Hughes Inc. reported Friday that 1,007 rigs were exploring for oil and 873 for natural gas. Seven were listed as miscellaneous. A year ago, the rig count stood at 1,567. Of the major oil- and gas-producing states, Louisiana gained four rigs, Oklahoma three and Alaska and New Mexico one each. Pennsylvania was down by one.
$3.53 $4.06 07/17/08
$3.66
$2.67
time, but who would prefer full-time work, the “under-employment” rate jumped from 15.8 percent to 16.2 percent. Businesses added just 57,000 jobs last month. Governments cut 39,000 jobs. Over the past eight months, federal, state and local governments have cut a combined 238,000 positions. June was the second straight month of feeble job growth. And the government on Friday revised down the number of jobs the economy added in May, from 54,000 to 25,000.
Costs to be focus for UAW
Consumers up borrowing
Americans borrowed more in May for the eighth straight month and used their credit cards more for only the second time in nearly three years. The Federal Reserve says consumer borrowing rose $5.1 billion following a revised gain of $5.7 billion in April. Borrowing in the category that covers credit cards increased, as did borrowing in the category for auto and student loans. The increase in credit card borrowing marked only the second monthly gain since August 2008. Since the financial crisis, consumers have been cutting back on the use of credit cards, which has depressed economic growth because it has held back consumer spending.
B
Weak hiring casts shadow over recovery By CHRISTOPHER S. RUGABER AP Economics Writer
I N
Investors will get several insights into the Federal Reserve’s thinking over the week. On Tuesday, the central bank will release the minutes of its June policy meeting. After that meeting, the Fed said it expects the economic slowdown to be only temporary. But that was before Friday’s dismal jobs report, which showed the weakest growth in nine months. On Wednesday and Thursday, Federal Reserve Chairman Ben Bernanke will update Congress on where he sees the economy heading.
timesleader.com
WALL STREET NASDAQ 2,859.81 - 12.85
$0.34
Bernanke’s testimony
Shoppers got some relief at the register in June. Economists expect a Friday report to show the Consumer Price Index fell in June from May. It would be the first drop in prices over the last 12 months. Give credit to lower oil prices. The price of a barrel of crude fell 7 percent in June. Lower inflation would give the Federal Reserve more leeway to keep interest rates at their record low. Many economists expect the Fed to keep rates at nearly zero into next year to help the economy.
Source: FactSet
THE TIMES LEADER
DOW 12,657.20 - 62.29
M
Inflation
By BRENT SNAVELY Detroit Free Press
MCT PHOTO
Todd Hilde, president of Satellite Industries, stands on the assembly line of portable toilets in Plymouth, Minn. These units are going to be shipped to Minot, N.D., to aid in the flood relief.
Potty maker is flush with success By SUSAN FEYDER Star Tribune (Minneapolis)
M
INNEAPOLIS — This year’s torrent of natural disasters is providing a mini-windfall for Satellite Industries, a Plymouth, Minn., company that claims to be the world’s largest supplier of portable toilets. Satellite recently sold about 1,000 toilets for use in earthquake-ravaged Japan. Another 1,000 have been sent off this summer to several areas in the U.S. destroyed by tornadoes, fires and floods.
“We don’t wish this on communities, but these disasters have certainly helped us this year. They’ve given us a sense of purpose,” said CEO Todd Hilde. The surge in demand from areas in crisis has helped offset a sharp decline in demand because its major source of business, the construction industry, has tanked. “It’s been traumatic,” Hilde said of
the drop-off in business from construction-related customers, which traditionally have accounted for about three-fourths of Satellite’s sales. The downturn has been so sharp, Hilde said, that the recent spate of sales to disaster-struck areas would have been even bigger except his customers in those areas already had plenty of units they weren’t renting to con-
struction businesses. In contrast, Satellite sold about 10,000 portable restrooms to customers in the Gulf Region after Hurricane Katrina in 2005, before the economic and construction industry meltdown. A recent trip to Satellite’s warehouse found little assembly work going, with portable toilets that were ready to go lined up like wallflowers at a school dance. The High Tech Deluxe Flush, an upscale model made for outdoor private parties and weddings, has a subtle taupe exterior and features a stainless steel toilet bowl. Some units are wheelchair-accessible with handrails, and others have casters so they can be wheeled in and out of elevators on multilevel building sites.
DETROIT — As the UAW prepares to kick off national labor talks later this month, the hourly wage and benefits costs of the Detroit Three and their rivals once again will take center stage, just as they did during the 2009 bankruptcy restructurings of General Motors Co. and Chrysler LLC. But the massive, $20-plus hourly labor cost gap that existed between the Detroit automakers and some foreign rivals during 2007 negotiations has nearly vanished, and Chrysler’s low labor costs now are drawing attention. “Never have labor costs diverged so much between the Detroit Three,” said Sean McAlinden, chief economist for the Center for Automotive Research. Chrysler’s average hourly labor cost per worker was $49 per hour in 2010 — making it highly competitive with Asian automakers, who pay between $44 and $55 for U.S. workers’ wages and benefits, according to the research center. But GM and Ford Motor Co. aren’t there. Ford says its hourly labor cost per worker was $58 in 2010. GM’s is about $56 per hour, the center estimates. Given the small gap that exists between GM and Ford and the top-paying Asian automakers, “the companies will not have a very strong case if they ask for concessions,” said Gary Chaison, a professor of industrial relations at Clark University in Worcester, Mass. General Motors, Ford and Chrysler will argue that this is not the time to revert to old ways.
British Sky Broadcasting stocks take plunge By ROBERT BARR Associated Press
LONDON — Satellite broadcaster British Sky Broadcasting PLC saw its share price plunge by nearly 8 percent Friday after British Prime Minister David Cameron indicated the government was not going to wave through News Corp.’s bid for the company any time soon. In a hastily arranged press conference, Cameron said the government was doing everything by the book, but that a final decision on News Corp.’s bid would take “some time” given recent events.
His comments were later echoed by Culture Secretary Jeremy Hunt, who is assessing News Corp.’s attempt to bid for the 61 percent of shares in BSkyB that it doesn’t already own. Hunt remains under pressure from opposition politicians to refer the bid to the Competition Commission for a fullscale monopoly review which could delay a decision even further. With the decision pushed further out into the future, investors extended a slide in BSkyB’s share price that began on Tues-
day as public fury mounted over phone hacking by the Sunday tabloid News of the World, which is part of Rupert Murdoch’s British press holdings. The declines suggest that Thursday’s gambit by James Murdoch, his father’s heir-apparent, to close down the News of the World after this Sunday’s edition has failed to assuage investor concerns about the future of the BSkyB bid. Many obAP PHOTO servers saw the dramatic announcement to close the scan- James Murdoch, chairman and chief executive of News Corp., dal-ridden tabloid as a ruse to Europe and Asia, is driven away from the offices of News International in London on Thursday. save the BSkyB bid.