Global economic news
U.S. retail sales rise againRetail sales rose in December for the sixth consecutive month. Sales rose by 0.6% from November after climbing 0.8% from October, the U.S. Department of Commerce reported. Online sales were particularly strong, with U.S. Internet sales up 15.4% in December, according to MasterCard SpendingPulse.
Core inflation remains tame in the United States
The latest Consumer Price Index (CPI) and Producer Price Index (PPI) both indicated that U.S. core inflation remains benign. However, both indices reflected rising energy costs. The seasonally adjusted CPI rose 0.5% in December from November, the U.S. Department of Labor reported. However, the monthly core CPI - excluding food and energy costs - was up just 0.1%. For all of 2010, the overall CPI rose 1.5% while core inflation was up just 0.8%, well below the Fed's target of 1.7% to 2.0%. The PPI rose a seasonally adjusted 1.1% in December from November and 4.0% for 2010 overall. However, the core PPI, excluding food and energy costs, rose only 0.2% last month and 1.3% for the year.
U.S. trade deficit narrows
The U.S. trade deficit narrowed unexpectedly in November, the Department of Commerce reported. It was the third consecutive month of a narrowing gap between U.S. exports and imports. The value of U.S. imports exceeded its exports by $38.31 billion, down from a difference of $38.42 billion the previous month. However, the country's trade deficit with China grew slightly.
Agencies warn on U.S. credit rating
Two prominent credit rating agencies cautioned the United States on its credit rating. Moody's Investors Service said the United States will have to reverse an upward trend in its debt ratios to maintain its "AAA" rating. The federal debt-to-revenue ratio is projected to average four times the U.S. gross domestic product for the next decade. The ratio of interest payments to revenue is forecast to rise to 17.6% by 2020 from 8.6% in 2010. Standard & Poor's also raised concerns about the worsening U.S. fiscal situation. Both companies have issued previous warnings that have been generally ignored by the financial markets.
U.S. jobless claims rise
For the second consecutive week, more Americans filed initial unemployment claims, after the weekly number had dropped below 400,000 at the end of 2010. Initial claims for unemployment benefits rose by 35,000 to 445,000 in the week ended January 8.
Eurozone industrial output grows
Industrial production in the eurozone rose at a faster-than-expected pace in November, according to Eurostat, the European Union statistics agency. Production was up 1.2% in November from October. Annual figures showed a 7.4% increase from a year earlier, surpassing a projected rise of 5.8%. The European industrial sector is offsetting current weakness in consumer spending.
German economy hits record growth
Economic activity in Germany grew faster last year than in any year since the country's reunification in 1992, the country's Federal Statistics Office reported. In price-adjusted terms, Germany's GDP rose 3.6% in 2010 after declining 4.7% in 2009.
Global corporate news
Intel posts best-ever resultsMicroprocessor maker Intel reported its best quarterly and annual results on robust sales as strong corporate demand offset weak consumer sales. Much of Intel's 8.4% increase in fourth-quarter revenue came from sales of server systems to companies trying to keep up with the Internet's growth. Intel's quarterly profit soared 48%. Its annual revenue grew 24%.
JPMorgan Chase profit up 47%
The fourth-quarter profit picture bodes well for big banks as JPMorgan Chase, the first of the major banks to report results, posted a 47% jump in quarterly profit on rising revenue and sharply reduced loan-loss reserves.
SAP revenue rises
Germany's SAP, a leading software and related service vendor, posted a 27% increase in fourth-quarter revenue from software and software-related service. SAP did not provide an earnings number as it still is assessing the impact of a copyright infringement lawsuit it lost to rival Oracle.
Cargill profit triples
Commodity processing and trading giant Cargill more than tripled its sales in the quarter ended November 30 from a year earlier, benefiting greatly from rising commodity prices and surging global demand. Year-over-year profit rose in four of Cargill's five business units.
Homebuilders' profits down
Quarterly earnings at two large homebuilding firms fell, indicating the housing recovery has a long way to go. KB Home reported an 83% decline in its fourth-quarter profit, while Lennar Corp's profit fell 10%. The residential housing market remains affected by continued erosion of housing values and by tepid demand amid high unemployment.
Airbus lands large plane order from India
France's Airbus has signed a preliminary agreement with an Indian budget airline firm, IndiGo, for 180 A320 airliners, worth $15.6 billion. Airbus said the order is the largest ever in terms of number of planes and one of the largest by value. The contract is expected to be finalized within a few weeks.
The week ahead
- Citigroup and Goldman Sachs earnings due Tuesday, January 18
- Germany's ZEW Survey results released Tuesday, January 18
- U.S. housing starts figures released Wednesday, January 19
- UK industrial trends survey results released Thursday, January 20
- Sony Ericsson earnings report due Thursday, January 20
- U.S. initial jobless claims figures released Thursday, January 20
- General Electric earnings due Friday, January 21
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