1)The job cuts continue, as we are now in the heart of the recession.
a) Sony said it would cut 16,000 jobs, half full-time and half part-time. That’s about 4 percent of its full time workforce. Their music players are facing tough competition from Apple and flat-screen TV sales have been declining.
Separately, Korean electronics rival Samsung said profit markets have also "vaporized" on its liquid crystal display business, and they were not sure how long the business downturn would last. They anticipate personal computer shipments slowing to single digit growth, with slower growth for handset sales as well.
b) Manufacturing is having a tough time: Danaher is cutting 1,700 jobs, about 3 percent of its workforce, and lowering earnings guidance for the quarter (to $1.03-$1.10 from $1.17$1.25)--Danaher is famous for its Craftsman line of tools.
This follows announcements of lower earnings from Illinois Tool Worksand 3M .
2) Elsewhere, lower guidance is weighing on several stocks:
a) FedEx down 10 percent pre-open, lowered guidance for the current (second) quarter, and guided lower for the full year (to $3.50-4.75 vs. prior $4.75-5.25). What would their guidance have been had oil been at $100 a barrel?
b) Trucker Con-Way guided full year earnings lower as well, to $2.20-$2.35 vs. $2.60-$2.80. They have reduced their workforce by 8 percent.
c) Texas Instruments guided revenue for the current quarter lower ($2.30-$2.50 billion vs. prior $2.83 to $3.07 billion)
d) National Semi said revenue would be down 30 percent in the following quarter (hurt by lower handset demand)
3) Super-contango: traders have noted to me that the December crude futures contract, at $43.85, is way below the cost of the December 2009 contract, at $57.63. Even accounting for carrying costs, one could make a tidy profit on this trade, which just involves buying the December 2008 contract and selling the December 2009 contract.
4) It sounds like a lot, but it isn't:
a) A Reuters poll of analysts expect the Hong Kong Hang Seng index to rise 22 percent from where it is now. (The Hang Seng is down 47 percent this year!)
b) A poll of analysts and fund managers in Japan predict the Nikkei will end 2009 up 13 percent from current levels (Thanks: the Nikkei is down 45 percent this year!)
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