One - Jobs
Company - Job Cut for January 26
Caterpillar Inc. - 20,000 jobs,
Sprint Nextel Corp.- 8,000 jobs
Home Depot Inc. - 7,000 jobs
Texas Instruments - 3,400
Pfizer - 8000 jobs (total will be 20,000)
Total: 207,120 jobs lost in the U.S.
2008 Unemployment total: ~ 2.6 Million (7.2% unemployment rate)
U.S. Unemployment projection is 10% by late-2009 or 2010.
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Two - Home Prices
Case-Shiller Housing Prices for November 2008 (U.S.):
The most important figures to review are the Composite-10 and the Composite-20. The Composite-10 illustrates the price change for 10 Metropolitan areas in the U.S. Likewise for the Composite-20, but for 20 areas.
Significance?
The -10 and -20 are down the most year-over-year since the housing bubble burst. Both are down about 25% from the peak.
November November/October October/September 1-Year
Metropolitan 2008 Change Change Change
Area Level (%) (%) (%)
------------ --------- ---------------- ----------------- -------
Atlanta 116.57 -2.7% -2.4% -11.2%
Boston 155.03 -2.6% -1.1% -7.4%
Charlotte 125.61 -1.9% -1.8% -5.3%
Chicago 141.44 -2.8% -1.6% -12.5%
Cleveland 107.43 -1.2% -1.0% -5.2%
Dallas 118.34 -1.9% -1.2% -3.3%
Denver 127.65 -1.1% -1.5% -4.3%
Detroit 83.42 -3.1% -4.5% -20.7%
Las Vegas 138.04 -3.3% -2.8% -31.6%
Los Angeles 175.85 -2.2% -2.6% -26.9%
Miami 169.62 -2.2% -3.0% -28.7%
Minneapolis 133.22 -2.1% -3.3% -16.3%
New York 186.81 -1.6% -1.0% -8.6%
Phoenix 130.54 -3.4% -3.3% -32.9%
Portland 162.62 -2.3% -1.9% -11.5%
San Diego 155.47 -2.3% -3.0% -25.8%
San Francisco 135.28 -3.0% -4.2% -30.8%
Seattle 166.23 -2.5% -1.4% -11.2%
Tampa 160.86 -2.8% -3.4% -20.9%
Washington 180.50 -2.4% -2.7% -19.4%
Composite-10 166.05 -2.2% -2.1% -19.1%
Composite-20 154.59 -2.2% -2.2% -18.2%
Source: Standard & Poor's and Fiserv
Data through November 2008
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Three - Consumer Confidence
- 37.7 in December 2008 (versus a revised 38.6)
These figures obviously add to the doom and the gloom. It is for this reason that the governments are acting on creating aggressive stimulus packages (see the two previous blog entries). Investors need to be cautious on the consumer discretionary sector. There has been speculation that many malls will close, and many retail companies will be bankrupt this year.
Still, I am optimistic on the companies that thrive in this environment. This includes Family Department Stores (dollar stores) and McDonalds ($1 burgers, value menu).
The other sector to therefore avoid is the commercial real estate sector, and especially the companies that rent out retail space.
