Tuesday, October 18, 2011

Morning Journal 10/18/11


News on Stocks in Our Portfolios

Boeing sees more Dreamliner cancellations. One day after China Eastern scrapped 24 Dreamliner orders, Boeing (BA) warns of more cancellations. Chinese airlines often act in tandem, and the China Eastern cancellation likely reflects a belief "the recovery in the United States and Europe won't come soon." Also today, China Southern Airlines (ZNH) said the delivery of its first Dreamliner will likely be delayed by at least another seven months, but that it remains committed to its orders despite frustration over the delays.

Chevron coming soon to an Asia-Pacific drill site near you. Chevron (CVX) plans to start its first offshore southern China drill before year-end, following in the path of Husky (HUSKF.PK) and BG Group (BRGYY.PK) who have found gas reserves there recently. Chevron is betting heavily on natural gas in the Asian-Pacific - where energy demand growth is expected to out-do the U.S. and euro-zone.
General Mills (GIS -0.4%) faces a class action lawsuit in California alleging its line of popular fruit snacks advertised as nutritious are actually an "elaborate hoax" on parents consisting mostly of sugars, additives, and dye. The company says it stands behind the accuracy of its labeling on products.


Comment!
Charles Schwab (SCHW -2.7%) sells off after reporting Q3 revenue of $1.18B (+11% Y/Y) and EPS of $0.18, missing Street forecasts by $10M and $0.01. Schwab ended the quarter with 8.5M brokerage accounts (+370K Q/Q), 2.4M advisory accounts, 769K banking accounts, and client assets of 1.58T (-5% Q/Q). (.pdf) Comment

Economics
This Week’s Data


September industrial production rose 0.2%, in line with forecasts; capacity utilization was 77.4 versus expectations of 77.5.
http://mjperry.blogspot.com/2011/10/september-industrial-output-gains-are.html

September producer prices were up 0.8% versus expectations of up 0.2%; core PPI was up 0.2% versus estimates of up 0.1%.

Other

The true cost of a zero interest rate policy (medium and today’s must read):
http://advisorperspectives.com/dshort/guest/Chris-Turner-Savings-Lost.php

An update on the US economy via chart porn:
http://scottgrannis.blogspot.com/2011/10/miscellaneous-updates.html

Great (10 minute) discussion on salvaging the eurozone:
http://video.ft.com/v/1222316915001/Can-the-G20-save-the-eurozone-

Politics

Domestic


If only the ‘Occupy Wall Street’ crowd could articulate a cause like this (photo):
http://www.ritholtz.com/blog/2011/10/the-greatest-ows-protest-sign-ever/

International War Against Radical Islam

At war with Tehran (long):
http://www.nationalreview.com/articles/280184/breaking-tehran-andrew-c-mccarthy