http://bls.gov/news.release/empsit.t14.htm
This chart, A-14, show unemployed by industry sectors. Most sectors do not have a substantial shift from each year, but construction does. Unemployment in this sector dropped from 17.3 to 13.7, an increase in 316,000 jobs over the year. A 21% decrease in unemployment in the sector as well.
The first step would be to interview the top management at the largest construction firms. Ask why the increased hiring, and how long they expect it to continue. Is this a short peak in hiring, or do they expect the trend to continue? Where is the increased demand coming from? The next step would be to interview government agencies who watch this industry. People at the BLS might have some knowledge. Other departments such as HUD (Housing and Urban Development) may have insight as well. An obvious hypothesis is that the stimulus bill signed in 2009 is having some effect on this number. This would be worth investigating.
Wednesday, November 30, 2011
Monday, November 28, 2011
Southwest Second Story
Southwest Airlines reported a third quarter net loss of income of $140 million or $.18 per share despite posting an all-time quarterly record of $4.3 billion. Southwest blames the shortfall on its use of fuel hedging.
Fuel hedging is a form of risk-management that allows the company to buy future fuel at a pre-established price, thus protecting itself against fluctuations in the price of fuel. That policy seems to have backfired in this quarter.
“In accordance with fuel hedge accounting rules,” Gary C Kelly, Chairman of the Board, President and CEO said, “Our third quarter GAAP net results included $227 million of unrealized, noncash mark-downs relating to future periods’ fuel hedges. These special items resulted in a GAAP net loss for the quarter; however since September 30th, market prices have rebounded, and our future fuel hedge portfolio has gained back over $300 million in fair value.”
According to David Koenig of Businessweek, Southwest would have earned $122 million ($.15 per share) without the fuel hedging and mark-down expenses.
On Southwest’s quarterly report, it reported fuel costs at $1.6 billion, as opposed to $926 million for last year’s third quarter. This is a sharp rise of 71 percent. For the year Southwest reported $4.1 billion in fuel costs, also a steep jump over the same point last year of $2.7 billion.
Southwest reported a net profit of $205 million last year. The difference in fuel costs from each year’s quarter more than explains the $345 swing in profitability. The company’s recent acquisition of AirTran seems to have boosted profit for the quarter, helping to insulate some of the damages caused by fuel hedging. “[W]e have produced $60 million (before taxes and profitsharing) in annualized cost synergies, primarily attributable to renegotiation of certain AirTran contracts.”
Fuel hedging is a form of risk-management that allows the company to buy future fuel at a pre-established price, thus protecting itself against fluctuations in the price of fuel. That policy seems to have backfired in this quarter.
“In accordance with fuel hedge accounting rules,” Gary C Kelly, Chairman of the Board, President and CEO said, “Our third quarter GAAP net results included $227 million of unrealized, noncash mark-downs relating to future periods’ fuel hedges. These special items resulted in a GAAP net loss for the quarter; however since September 30th, market prices have rebounded, and our future fuel hedge portfolio has gained back over $300 million in fair value.”
According to David Koenig of Businessweek, Southwest would have earned $122 million ($.15 per share) without the fuel hedging and mark-down expenses.
On Southwest’s quarterly report, it reported fuel costs at $1.6 billion, as opposed to $926 million for last year’s third quarter. This is a sharp rise of 71 percent. For the year Southwest reported $4.1 billion in fuel costs, also a steep jump over the same point last year of $2.7 billion.
Southwest reported a net profit of $205 million last year. The difference in fuel costs from each year’s quarter more than explains the $345 swing in profitability. The company’s recent acquisition of AirTran seems to have boosted profit for the quarter, helping to insulate some of the damages caused by fuel hedging. “[W]e have produced $60 million (before taxes and profitsharing) in annualized cost synergies, primarily attributable to renegotiation of certain AirTran contracts.”
Beige Book assignment
The most interesting story from the Saint Louis Beige Book report would concern the
automobile industry. There appears to be an enormous degree of vertical integration in the Saint Louis region on this one industry, with lots of changes happening right now. The report says manufacturing for automobiles, automobile parts, and even railroad rolling stock all plan to expand operations and therefore increase hiring. This runs contrary to a decades long trend of layoffs and outsourcing in these industries. It is possible the railroad industry would not be germane.
Additionally the “primary metals” is one of many industries going in the opposite direction.
Thecensus defines primary metal process: Industries in the Primary Metal Manufacturing subsectorsmelt and/or refine ferrous and nonferrous metals from ore, pig or scrap, using electrometallurgical and other process metallurgical techniques. Establishments in this subsector also manufacture metal alloys and superalloys by introducing other chemical elements to pure metals. The output of smelting and refining, usually in ingot form, is used in rolling, drawing, and extruding operations to make sheet, strip, bar, rod, or wire, and in molten form to make castings and other basic metal products.”
This does not clarify the definition much for me, but it seems those products listed at the end of the definition are used in auto and auto-part manufacturing. The easiest way to know would be to ask the auto-manufacturers.
Lastly, the report says that auto dealerships have seen a high level of sales this year, but do not expect strong sales in the final quarter of the year.
A story in this region could begin with the primary metal manufacturers (if their products are the right ones) continue to the auto parts manufacturers, then to the auto manufacturers and finish in the dealership offices.
automobile industry. There appears to be an enormous degree of vertical integration in the Saint Louis region on this one industry, with lots of changes happening right now. The report says manufacturing for automobiles, automobile parts, and even railroad rolling stock all plan to expand operations and therefore increase hiring. This runs contrary to a decades long trend of layoffs and outsourcing in these industries. It is possible the railroad industry would not be germane.
Additionally the “primary metals” is one of many industries going in the opposite direction.
Thecensus defines primary metal process: Industries in the Primary Metal Manufacturing subsectorsmelt and/or refine ferrous and nonferrous metals from ore, pig or scrap, using electrometallurgical and other process metallurgical techniques. Establishments in this subsector also manufacture metal alloys and superalloys by introducing other chemical elements to pure metals. The output of smelting and refining, usually in ingot form, is used in rolling, drawing, and extruding operations to make sheet, strip, bar, rod, or wire, and in molten form to make castings and other basic metal products.”
This does not clarify the definition much for me, but it seems those products listed at the end of the definition are used in auto and auto-part manufacturing. The easiest way to know would be to ask the auto-manufacturers.
Lastly, the report says that auto dealerships have seen a high level of sales this year, but do not expect strong sales in the final quarter of the year.
A story in this region could begin with the primary metal manufacturers (if their products are the right ones) continue to the auto parts manufacturers, then to the auto manufacturers and finish in the dealership offices.
Monday, November 21, 2011
Recessions since 1947
Seems to be two ways they measured GDP. Percent changed based on current dollars and percent changed based on chained 2005 dollars.
Recessions based on current dollars:
1949 q1-q2
1953 q3-1954 q1
1957 q4-1958 q1
2008 q3-2009 q2
4 periods of recession
Recessions based on 2005 chained dollars:
1947 q2-q3
1949 q1-q2
1953 q3-1954 q1
1957 q4-1958 q1
1974 q3-1975 q1
1980 q2-q3
1981 q4-1982 q1
1990 q4-1991 q1
2001 q3-q4
2008 q3-2009 q2
10 periods of recession
Recessions based on current dollars:
1949 q1-q2
1953 q3-1954 q1
1957 q4-1958 q1
2008 q3-2009 q2
4 periods of recession
Recessions based on 2005 chained dollars:
1947 q2-q3
1949 q1-q2
1953 q3-1954 q1
1957 q4-1958 q1
1974 q3-1975 q1
1980 q2-q3
1981 q4-1982 q1
1990 q4-1991 q1
2001 q3-q4
2008 q3-2009 q2
10 periods of recession
Tuesday, November 1, 2011
Southwest Airlines Story
Southwest Airlines Co. (LUV) reported a loss of $140 million in earnings for the third quarter of 2011, down from a profit of $205 million last year.
"Our economic fuel costs per gallon," Gary C. Kelly, Southwest CEO and Chairman of the Board said, "increased approximately 34 percent compared with the third quarter last year. This surge in fuel costs caused our quarterly profits to decline despite record revenue results."
Southwest's expenses ballooned from about $2860 million last year to $4537 million, when all expenses were accounted for. As Kelly reported, Southwest revenue rose, reporting $4311 million in revenue, compared with the $3192 million reported last year.
Earnings per share declined 18 cents, while last year's quarter reported a gain of 27 cents.
Kelly was optimistic about the company's future. "While it is disappointing to report a decline earnings excluding special items, I was pleased with our strong third quarter revenue performance," he said.
Southwest purchased AirTran in May of this year. The company was also optimistic about this acquisition. "I am pleased with the overall progress we are making on our AirTran integration," Kelly said. He expects to have both flight networks connected by the first half of next year.
"Our economic fuel costs per gallon," Gary C. Kelly, Southwest CEO and Chairman of the Board said, "increased approximately 34 percent compared with the third quarter last year. This surge in fuel costs caused our quarterly profits to decline despite record revenue results."
Southwest's expenses ballooned from about $2860 million last year to $4537 million, when all expenses were accounted for. As Kelly reported, Southwest revenue rose, reporting $4311 million in revenue, compared with the $3192 million reported last year.
Earnings per share declined 18 cents, while last year's quarter reported a gain of 27 cents.
Kelly was optimistic about the company's future. "While it is disappointing to report a decline earnings excluding special items, I was pleased with our strong third quarter revenue performance," he said.
Southwest purchased AirTran in May of this year. The company was also optimistic about this acquisition. "I am pleased with the overall progress we are making on our AirTran integration," Kelly said. He expects to have both flight networks connected by the first half of next year.
Friday, October 28, 2011
Fifth Third Bank 1 year stories
Fifth Third's stock shot up at the end of 2010. News articles from that period indicate they had just settled an overdraft lawsuit at $10 million and their 3rd quarter earnings reported as more than doubled. This news came out right before the stock rose.
The stock steadily declined from that high, but then dropped precipitously from late June 2011 to early August. It was difficult to find any news stories that explained this behavior, but the stock does mirror the overall pattern in NASDAQ and DOW indexes.
The stock has, in recent months, steadily climbed upwards. Recent news stories report that banks overall did well in the 3rd quarter of 2011, and that Fifth Third's profits increased 2.5 times in that quarter.
http://www.bizjournals.com/
http://www.cleveland.com/
http://www.thestreet.com/
http://www.cleveland.com/
The stock steadily declined from that high, but then dropped precipitously from late June 2011 to early August. It was difficult to find any news stories that explained this behavior, but the stock does mirror the overall pattern in NASDAQ and DOW indexes.
The stock has, in recent months, steadily climbed upwards. Recent news stories report that banks overall did well in the 3rd quarter of 2011, and that Fifth Third's profits increased 2.5 times in that quarter.
http://www.bizjournals.com/
http://www.cleveland.com/
http://www.thestreet.com/
http://www.cleveland.com/
Monday, October 24, 2011
Story Ideas about SWOT analysis
One of the major threats listed on the SWOT analysis for Fifth Third Bank is forthcoming regulations in the Dodd-Frank bill. A reporter could try to interview people at the bank and ask what specifically they are concerned about. They could then follow up by trying to interview people in the government involved in financial regulation, and ask about the changes in the industry because of this bill. This threat is especially interesting for Fifth Third which has listed as one of its strengths that it had "nil exposure to exotic securities." I don't know much about financial regulation, but it seems like Fifth Third might actually fair better than other banks under new regulations since those exotic securities were a major problem in the 2008 stock market crash and ostensibly will be major targets in Dodd-Frank.
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