For Immediate Release
Chicago, IL – January 14, 2010 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Fannie Mae (FNM), Freddie Mac (FRE), American International Group Inc. (AIG), Starwood Hotels & Resorts Worldwide Inc. (HOT) and Hartford Financial Services Group Inc. (HIG).
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Here are highlights from Wednesday’s Analyst Blog:
Fed Paid $46.1B to Treasury in 2009
The Federal Reserve paid a record $46.1 billion in profits for 2009 to the U.S. Treasury as the central bank earned a record net income of $52.1 billion, up 46.8% year-over-year by exposing taxpayer money to risk in an effort to stabilize the financial system last year.
The payment represents an increase of $14.4 billion from the Treasury’s contribution in 2008 and is the largest since the U.S. central bank was launched in 1914. The increase was largely due to higher earnings on securities that the Fed had purchased as part of its intensive intervention in the financial system last year. Previously, the largest payment to the Treasury was $34.6 billion in 2007.
According to the Fed, much of its income came from the open-market purchase of U.S. Treasury debt, debt of mortgage finance giants Fannie Mae (FNM), Freddie Mac (FRE), and mortgage bonds and other securities. Mortgage-backed securities pay a higher rate than Treasury securities. In total, it earned $46.1 billion on U.S. Treasuries and debt from government-sponsored enterprises.
The Fed earned another $5.5 billion from limited liability companies that were created during the height of the financial crisis to make loans and take over assets from financial salvages of big institutions like American International Group Inc. (AIG). Additionally, the Fed earned $2.9 billion on loans extended to banks and other financial institutions, $2.6 billion from currency swaps and $1.5 billion mostly from fees.
Though this record profit could alleviate some pressure on the U.S. budget deficit, the Fed still has significant exposure to risky assets. Also, the Fed could lose money on some of those investments if the values of the securities fall.
Starwood Plans 12,000 New Jobs
Starwood Hotels & Resorts Worldwide Inc. (HOT) plans to add over 12,000 jobs in 2010. The news comes at a time when many companies are still shedding costs through job cuts. Additionally, the U.S. Bureau of Labor Statistics reported last Friday that the unemployment rate remained high at 10% in Dec. 2009, with over 15.3 million in the U.S. population having no jobs.
Approximately half of these new jobs will be in U.S. markets, ranging from New York to California. These jobs will include positions in general management, human resources, food and beverage, engineering and maintenance, housekeeping, spa and guest services.
The addition of these 12,000 jobs to its global workforce will come from the 80−100 new hotels that Starwood and its development partners have scheduled to open this year. The hotels will include Starwood’s nine brands and will be located in both urban markets such as New York City and Los Angeles and in smaller markets such as Biloxi, Mississippi and Kalamazoo, Michigan.
Starwood anticipates a large number of applicants for these jobs. As of Dec. 31, 2008, Starwood had approximately 145,000 people employed in its corporate offices, owned and managed hotels and vacation ownership resorts, of whom approximately 36% were employed in the United States.
Hartford Doubles Earnings Outlook
The Hartford Financial Services Group Inc. (HIG) has doubled its earnings outlook for the fourth quarter of 2009, primarily based on lighter catastrophes, sturdy performances of its property and casualty operations and favorable reserve development from prior years across several lines.
Hartford announced yesterday that it expects fourth quarter core earnings per share to range between $1.45 and $1.60, compared to its previous guidance of 65 cents to 80 cents.
Hartford experienced strong current accident year underwriting profitability at its property and casualty operations, primarily due to risk management and benign catastrophes. Its life insurance operations also saw improved margins, driven by growing account values and reduced expense levels.
Hartford earnings outlook reflects positive prior-year reserve development of about $85 million, or 20 cents per share. Additionally, the earnings outlook includes an after-tax DAC unlock benefit of $110 million, or 26 cents per share, primarily resulting from strong equity market returns. These estimates are preliminary and are subject to change.
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