Tons of updates

In an attempt to make the blog more readable, more often I have decided to provide brief updates on business news in a consolidated format. Interspersed will be the big opinion pieces. Hopefully everyone digs it. It should reduce folks having to slog through.

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Yes, the financial markets have been up 7 days in a row. Yes, numerous earnings reports have been positive. For example…

• Apple’s profit was up 15% and demand for iPhones and Mac computers was so high that they could not keep up manufacturing-wise.

Apple is a huge tech bellwether. These are very good results and are evidence that consumers will spend money for products where there is a perceived value-add.

• Wells Fargo’s earnings were up 81%, mostly due to its acquisition of Wachovia, which contributed to profits. However, many are likely to focus on the continued high rate of losses on loans and credit delinquencies. Wells has set aside an additional $5.1 billion to cover potential credit losses. Nonetheless, Wells’ results were better than expected. Earnings per share were $0.57 vs. analysts’ expected $0.34.

The fact that Wells Fargo continues to earn money in the midst of the recession is positive. Those earnings are coming at a time of high unemployment and many personal bankruptcies and belt tightening on the part of consumers. In general, the banking sector seems to be doing well given the givens.

• Pfizer’s net income dropped 19% in the 2nd quarter. However, they raised their full year earnings guidance for analysts.
• Lilly, another drug company, saw its quarterly profits up 21%. Lilly also raised its full year earnings forecast.

Not surprisingly, drug companies continue to earn money even in the midst of the recession.

• General Electric is doing well enough that it has submitted a plan for approval to exit the FDIC’s Temporary Liquidity Guarantee Program.

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In general, as I predicted last month, are doing better than expected. This has driven the stock markets higher. However, we are not out of the woods yet. I am closely watching numbers like Wells Fargo’s credit loss provision numbers. When those numbers begin to stabilize it will be an indication that consumers are not recoiling any longer. Another important number to watch will be automobile sales. Why? Because next to houses the biggest purchase made by consumers using credit is cars. When auto sales rebound then you know that consumers will be back on track.

I hope each of you has an excellent day!

Jason