JANUARY HAS STARTED WELL, THOUGH with a bit of volatility. By the numbers, for the three weeks ended Friday, January 21, 2011, the Dow Jones Industrial Average closed at 11,871, up 294 points, or 2.5%. The Standard & Poor’s 500 closed at 1283, up 26 points, or 2%, and the NASDAQ Composite closed at 2689, up 37 points, or 1.4%.
Apple is out of Jobs. At least they need to prepare for a future without him. Whatever his medical conditions, those conditions appear to be absorbing his attention, which will continue to make it challenging for him create popular new bites.
Goldman Sachs reported quarterly profits of $2.39 billion, off 53% from the fourth quarter of 2009. Apparently, this is the third consecutive quarterly decline in revenue and profits for the firm. You can find the company’s address on their website, if you want to send CEO Lloyd Blankfein a sympathy card.
Speaking of Goldman, Facebook just picked up $1.5 billion from them. It appears that Facebook has operating margins of almost 50%, and year over year revenue growth of more than 100%. According to those who say they know, these are better numbers than Google posted at the same point in its business cycle.
Wal-Mart and Michelle Obama have announced plans to re-arrange the ingredients in a variety of foods sold at Wal-Mart, in order to offer more healthy fare. We wish them well, and encourage everyone to be aware of what it takes to be healthy. My parents always kept a garden, which also seemed a good way to keep healthy foods available.
GE profits were up 51% for the fourth quarter, with robust growth coming from its technology and infrastructure businesses. GE stock, at $20, is right at its 12 month high.
On the economic front, the Conference Board’s leading indicator index was up 1% in December, the sixth consecutive monthly increase. New home construction dropped 4%, to an annualized 529,000 units. Existing home sales were up 12% in December, which is 3% below the year ago level. Initial jobless claims dropped to 404,000, with the official unemployment rate still north of 9%, and the real unemployment rate a guess, but probably in the high teens.
With ongoing concern over the economy, employment, housing and mortgages, and the state of our republic, the stock market should be in the black this year. You may want to save this commentary until year end to see if I have a clue what I’m talking about. One interesting tidbit – Travelers, Quest Diagnostics, and Coach, among others, have increased their share repurchase programs.
According to a recent report, U.S. job growth has been stagnant over the last ten years. Nonfarm payrolls, which include both government and private sector positions, were 132 million at the beginning of 2001. Nonfarm payroll grew to 138 million in 2007, and finished 2010 at 131 million.
We live in a global economy. Capital of all kinds, including financial and human capital, finds its way to environments where it is rewarded and appreciated. The U.S. doesn’t compete well in some of these areas. On the financial side, we may want to focus on rewarding capital by reducing the tax and regulatory burdens of putting capital to work. On the human side, we may want to focus a tad more on results and persistence, and a bit less on self esteem. The latter is a by-product of the former.
Quote of the week:
“A man does what he must – in spite of personal consequences, in spite of obstacles and dangers and pressures – and that is the basis of all human morality.”
Winston Churchill
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