524,000 jobs lost in December is pretty terrible, in line with estimates, but it is well below the whisper numbers of 600-700,000 that many were expecting. However, there were notable revisions in October (from a loss of 320,000 to a loss of 423,000) and November (from a loss of 533,000 to a loss of 584,000).
Futures, after jumping around initially, are now up about 5 points from the pre-jobs report level.
Despite the poor numbers, it is doubtful this will dramatically increase the size of the stimulus package.
1) Coach lowered its guidance for the recently ended quarter, citing lower traffic. "Despite the heavily promotional environment, we maintained our retail prices, protecting our brand proposition." In other words, they didn't sell as much because they didn't cut prices. This was the "aspirational brand" strategy that Abercrombie also pursued, and their sales also suffered. Coach joined a growing list of companies that has said they will stop giving guidance.
2) Chevron said earnings would be "significantly lower than the third quarter" due to lower energy prices, which has hurt its exploration and production business. Here's the rub: third quarter earnings were $3.85, while analyst estimates for the fourth quarter are $1.78, so isn't that significantly lower? Chevron is trading up.
3) KB Home's fourth quarter loss was less than previous quarters, the number of homes in backlog decreased and there were fewer writedowns. That’s the good news. However, the cancellation rate is still high.
4) The German government is taking a 25 percent stake in Commerzbank in exchange for an injection of $13.68 billion in fresh capital. It comes at a heavy price: the bank will issue 295 million ordinary shares, so it is highly dilutive.
- US Payrolls Drop 524,000; Unemployment Rate at 7.2%
- KB Home Reports Loss, Says Market Could Worsen
5) Circuit City says they are in discussion with two parties who are considering providing financing for them to continue as a going concern. The company is optimistic that a transaction can be successfully finalized.
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