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May.28

9:10 AM ET

Wednesday, 28 May 2008

Dow Chemical's CEO: Where's the U.S. Energy Plan?

Posted By:Bob Pisani

Topics:Retail Sales | Investment Strategy | Stock Market

Sectors:Oil and Gas | Retail

Futures saw a nice, 5-point pop as durable goods, down 0.5 percent, was not down as much as the expected decline of 1.5 percent. Bonds dropped to the lowest levels of the year.

Scathing words from Dow Chemical [DOW Loading... () ] about the cost of energy and the failure of Washington to develop an energy plan. They are raising prices by up to 20 percent--that is a really big price increase.

Dow's CEO, Andrew Liveris, noted that first quarter feedstock and energy costs were up "a staggering 42 percent," putting strains on the company and its relations with customers. For most chemical companies, price increases have failed to keep up with raw material increases. He went on to note that:

"For years, Washington has failed to address the issue of rising energy costs and, as a result, the country now faces a true energy crisis, one that is causing serious harm to America's manufacturing sector and all consumers of energy. The government's failure to develop a comprehensive energy policy is causing U.S. industry to lose ground when it comes to global competitiveness, and our own domestic markets are now starting to see demand destruction throughout the U.S."

Elsewhere:

1) Airlines up again this morning (AMR [AMR Loading... () ] and Delta [DAL Loading... () ] both us about 5 percent pre-open) as oil drops another $4 to $126. Dollar once again well bid; gold down 1.9 percent, copper down 2 percent.

News on the retail front not bad this morning:

a) American Eagle [AEO Loading... () ] beat expectations, guidance in line, up 5 percent;

b) Ralph Lauren [RL Loading... () ] is up 7 percent pre-open, beat earnings expectations for its fourth quarter, and has reaffirmed its earnings for the fiscal 2009 year

c) Chico's [CHS Loading... () ] also came in roughly in line with expectations, though they continue to provide sober commentary, expecting negative comparable store growth and lower earnings for the first half of the year.

2) Deutsche Bank is holding an energy conference in Miami, we may hear from Anadarko, Devon and others today. ExxonMobil [XOM Loading... () ] and Chevron [CVX Loading... () ] hold their annual meeting today. Our Mary Thompson is in Dallas covering the Exxon meeting.