Page Perry's Market Monitor - June 12, 2009
There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:
• The Dow Jones Industrial Average opened the week at 8763 and, on Monday, rose 1 point.
• On Tuesday, the Dow Jones Industrial Average dropped 1 point.
• On Wednesday, the Dow Jones Industrial Average fell 24 points.
• On Thursday, the Dow Jones Industrial Average jumped 32 points.
• On Friday, the Dow Jones Industrial Average rose another 28 points and closed the week at 8799.
• American households lost $1.33 trillion of wealth in the first quarter of 2009.
• Unemployment has hit the Sun Belt hard. Unemployment rates in Southeastern states range from 9% to 11.5%.
• The employment situation is actually much worse than suggested by published unemployment rates. According to CNN Money, the percentage of people who are either unemployed (do not have a job) or underemployed (people who aren’t working full-time but wish that they were) is 16.4% of the available workforce. A USA Today analysis found that, on average, people who are employed worked only 33.1 hours a week, the lowest level since the Bureau of Labor Statistics began tracking these numbers in 1964.
• Even workers who have full time jobs are being hit hard by the recession. More and more companies are cutting workers pay across the board in an effort to cut costs without firing employees. USA Today’s analysis of labor statistics concluded that businesses cut total wages at an annual rate of 6.2% in the first three months of 2009.
• The International Air Transport Association reported that the airline industry is experiencing an unprecedented financial crisis and airlines are expected to lose $9 billion this year.
• US Airways is asking 400 flight attendants to volunteer to take leaves of up to 16 months. The airline may impose involuntary furloughs on workers if it doesn’t have enough volunteers.
• Cessna Aircraft has announced that it is eliminating 1,300 more jobs as the recession has reduced the demand for private jets.
• The amusement park company Six Flags has filed for bankruptcy. The company operates twenty theme parks in North America.
• McDonald’s reported a 5.1% increase in same-store sales in May as the company continues to perform well in a difficult economy.
• The delinquency rate on credit cards was 11% higher in the first three months of 2009 than it was in the first three months of 2008.
• On Friday night, television stations across the country turned off their analog service and switched to digital service exclusively. Early reports suggest that thousands of people were unprepared for the switch despite months of heavily publicized warnings.
• Congress was extremely critical of former Bank of America CEO Ken Lewis and regulators in the Bush Administration regarding “behind-the-scenes” dealings regarding the bank’s acquisition of Merrill Lynch and the lack of public disclosure of significant facts regarding the acquisition.
• Billionaire investor George Soros described credit default swaps as “instruments of destruction” and urged that they be outlawed.
• Real estate investors have criticized S&P’s announcement that it may downgrade hundreds of bonds backed by commercial mortgage-backed securities.
• Comptroller of the Currency John Dugan issued risk warnings about so-called “reverse mortgages” suggesting that they may involve the same risks as subprime loans.
• Advertising expenditures in the U.S. were 12% lower in the first quarter of 2009 than they were in the first quarter of 2008.
Page Perry’s Market Monitor is published periodically to give investors an overview of certain recent developments impacting the economy and/or the investment markets.
