For Immediate Release
Chicago, IL – January 4, 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: Bank of America (BAC), Kroger (KR), Wal-Mart (WMT), U.S. Steel Corp. (X) and POSCO (PKX).
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Here are highlights from Thursday’s Analyst Blog:
Initial Claims Still Falling
I would not be surprised to see extended benefits exceed regular claims within a few weeks. Thus it seems that the people leaving the continuing claims rolls are doing so simply because their benefits have run out, not because they found themselves a new job.
The caveat about having to look at extended claims as well as continuing claims should not obscure the fact that we have seen very significant progress on the unemployment claims front. Initial claims are now well below where they started 2009 (488,000) and down 242,000 from the 674,000 peak at the end of March. That is a 36% decline from the peak.
The 4-week average is now well below its peaks of the last two recessions as well, and so far has shown no signs of forming a high plateau the way they did following the 1991 and 2001 recessions.
Regular continuing claims, however, remain well above where they started the year (4.487 million), but they too are well below their peak level of 6.904 million at the end of June. Extended claims on the other hand are still rising, and were just 1.570 million a year ago. Extended claims have played a vital role in cushioning the effects of last year’s financial meltdown on the overall economy. I know for many it does not feel like there has been much of a cushion, but things could have easily been FAR worse.
Obviously, those extended claims have cushioned the effect of the downturn on the individuals (and their families) who are getting the benefits. Without the extended benefit program, millions of people would have been left with no income whatsoever. In that case, they would probably defaulted on all of their debts, including their mortgages.
So it obviously has helped banks like Bank of America (BAC). The Federal Reserve is now a major player in the mortgage market as well, due to its ongoing program to buy $1.25 trillion in mortgage-backed paper (the buying program should be completed by the end of the first quarter and is almost 90% done).
The income from extended claims has also allowed people to continue to go to stores to buy at least the basics for life. They are still customers of places like Kroger (KR) and Wal-Mart (WMT). Without the program, they would only be customers of the local food bank (where is the food bank bailout, by the way?).
Anyone who says that the ARRA has not helped really needs to go have a conversation with some of those millions of Americans who would be left absolutely destitute without it. They should also consider the number of people who would have been laid off by the likes of Kroger’s and Wal-Mart if they had lost millions of customers.
The level of initial claims is getting close to the level that would be consistent with the economy on-balance adding jobs, but is probably not there yet (below 400,000 would probably indicate net job creation). Still, it is very clear that the economy is no longer hemorrhaging jobs the way it was earlier this year.
The damage has been done, and we still have a very long road ahead of us to bring unemployment back down to acceptable levels, but at least it does not look like the situation is getting any worse.
Steel Output Rises Again
According to the data released by World Steel Association (Worldsteel), global crude steel production for the 66 countries reporting to Worldsteel improved 24.2% year over year to 107.5 million tons in November 2009. Crude steel production has been showing a positive growth rate since September 2008. Total crude steel production in the 66 reporting countries for the first 11 months of 2009 was 1,090 million tons, a decrease of 10.8% from the same period of 2008.
Steel production had peaked in July this year on the back of a moderate rise in demand and the resumption of idled facilities by producers. Crude steel production in China, the largest producer and consumer of crude steel, was 47.3 million tons in November 2009, up 37.4% from November 2008. Russia’s crude steel production for the month expanded 42.6% to 5.3 million tons. Ukraine produced 2.7 million tons in November 2009, 67.1% higher than in the same month last year. Turkey produced 2.1 million tons of crude steel in November 2009, a 67.1% increase year over year.
However, steel production in Japan increased below 1% year over year to 8.9 million tons in November 2009. South Korea showed an increase of 7.5% from November 2008, producing 4.3 million tons of crude steel in November 2009. In the European Union, Germany’s crude steel production was 3.5 million tons in November 2009, an increase of 8% from November 2008. Italy produced 1.9 million tons in November 2009, down 17.2% from the year ago period. The U.S. produced 6 million tons of crude steel in October 2009, an increase of 26.9% compared to the same month last year.
Key steel consuming industries such as auto, shipbuilding and construction have been experiencing weak demand in the last quarters, forcing global steelmakers to lower production levels. U.S. Steel Corp. (X) had slashed production by almost 62% during the second quarter of 2009, while Korean steelmaker POSCO (PKX) was forced to reduce production for the first time in its history. POSCO curtailed production by about 15% during the period.
World crude steel capacity utilization has been steadily improving since bottoming in December 2008. In November 2009, the world total capacity utilization ratio was 75.0%, a slight decline from 76.9% in the previous month. However, capacity utilization improved 10.4% year over year.
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