Stock Preacher

The signs of an improving economy are on your kitchen or bathroom shelves, as US consumers are showing a willingness to pay a little more to get big-name brands, including Colgate toothpaste, Kellogg’s Frosted Flakes and Gillette Fusion shavers. That is good news for the economy and the multibillion-dollar companies that make those products and have been battling to keep shoppers from trading down to store brands to save money. Procter & Gamble Co., Colgate-Palmolive Co. Estee’ Lauder and Kellogg Co. all gave upbeat earnings reports last week and even stronger outlooks for Y 2010. “The strongest brands are the most resilient to economic stress and the first to bounce back as soon as consumers can pay for it because they don’t want to trade down,” said Allen Adamson, managing director of San Francisco-based branding firm Landor Associates. P&G said sales were rebounding faster than expected after a year of declines — and following price cuts to narrow gaps with cheaper competitors biting into its market share. P&G is an economic bellwether as the world’s largest consumer products maker and seller of a broad range that includes cleaners, baby, grooming and beauty products. Read more

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The USA’s federal deficit for 2009 fiscal year reached a record high of US$1.42T, the Treasury Department announced last Friday.
The US government imbalance for the fiscal year ending Sept. 30, 2009, more than tripled last year’s record. As a portion of the economy, the deficit accounted for about 10%, the highest since World War II. For fiscal year 2009, the government collected US$2.1T in revenues, a 16.6 % drop from Y 2008, while government spending jumped to US$3.52T up 18.2% over Y 2008. The Treasury Department projected that the deficits would total US$9.1T over the next decade unless corrective action is taken. Treasury Secretary Tim Geithner pointed to the rising federal debt as a result of the government’s actions to tackle the worst economic recession since the Great Depression of the 1930s. Read more

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Tool maker Black & Decker Corp doubled its profit estimate for Q-3, citing better-than-expected shipments buoyed by a rebound in the US housing market, sending its shares up 10%. The company, known for its Dewalt power tools, expects to gain as new residential construction picks up in the United States. In a sign of thawing housing markets, applications to buy a home, a tentative early indicator of sales, climbed to the highest last week since early January in the United States. “We believe that Black & Decker presents a good combination of exposure to residential new construction, which should become a tailwind again in 2010,” Barclays Capital analyst Megan McGrath said in a research note to clients. For the quarter ending Sept 30, the company, which also makes home improvement products, now expects earnings of 91 cents a share, up from its prior forecast of 35 cents to 45 cents a share. A lower tax rate, due to favorable adjustments, is expected to add 14 cents a share to quarterly profit, the company said in a statement.

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AT&T, one of the leading worldwide providers of IP-based communications services to businesses, Friday announced an unlimited talk and text plan for the company’s prepaid phone service. “We recognize GoPhone customers have a need for unlimited calling or texting without the commitment of an annual contract,” said Judy Cavalieri, vice president of Prepaid Products for AT&T Mobility and Consumer Markets. “The new unlimited talk and text package enhances our prepaid options to give customers the flexibility of a national network with no contract requirement.” The unlimited talk and text plan also allows customers to talk and text friends and family not only in the United States, but also in Mexico, Canada and more than 100 countries worldwide, the company said, adding that, with this new package option, customers can also send unlimited IM, picture and video messages. Read more

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JPMorgan Chase & Co. and Delta Air Lines Inc. forecast that the economic rebound will boost travel spending. The AMEX Airline Index jumped 3.8% to 28.63 in New York, bringing its climb since Sept. 2 to 26%. The measure, which includes companies from Alaska Air Group Inc. to AMR Corp., has soared 125% since reaching a low on March 9. JPMorgan analysts upgraded UAL Corp. and US Airways Group Inc. in a Sept. 10 report that said the industry’s revenue in the last two months has beaten estimates. Delta, the world’s largest carrier, increased its profit margin estimate yesterday as customers scooped up lowered fares for summer vacations. Economic reports from USretail sales to manufacturing in China have signaled that the global recession is easing. The Dow Jones Transportation Average climbed 0.3% on Tuesday, extending an 8 day advance that has lifted the measure by 11%, according to data compiled by Bloomberg. Read more

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In China the Government owns the Banks; the bankers do not own the Government. China’s stimulus plan is working better than in the US and the UK because the government is using the banks for public ends, rather than allowing the banks to use the government for private ends. In the USA, the banks are the most powerful lobby on Capitol Hill; they own the Government.

The USA is spending trillions of greenbacks to bail out its banking system, leaving its economy to languish, as China, now called a “miracle economy,” decoupled from the rest of the world, is maintaining a phenomenal 8% annual growth rate. That, by the way, is being questioned by lots of Pols, commentators, economists and other talking heads, as they ask how that growth is possible, when other countries relying heavily on exports have suffered major downturns and remain in the doldrums. Read more

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