A Little News Roundup

Here's a quick roundup of some of the bigger stories today, some links and a few thoughts.

The employment numbers were expected to be bad and they didn't disappoint. The unemployment rate jumped up to 6.5% and the number of newly unemployed rose by 240,000 in October. These numbers were a bit less than expected. It's doubtful that increased hiring for the holiday season will do anything to change the trend in these numbers given the outlook for retail spending. Estimates for where unemployment tops out are anywhere from 7% to 9%. I think the higher number is unfortunately closer to the mark.

Pending home sales for September fell 4.6% from the prior month but were up 1.6% over September 2007, The index for September was 89.2. The base year for the index is 2001. As we move farther into the year and into early next year, year over year changes are likely to be misleading as September 2007 marked the beginning of the implosion in home prices. Put another way anything is going to look good when put up against the numbers last year and into early 2008. In a sense, we'll just be looking at numbers and comparing ugly and uglier.

The auto companies, specifically Ford and GM, showed everyone just how bad off they are with the release of their third quarter numbers. Ford lost $3 billion and GM lost $2.5 billion. Now forget that as the net income numbers are skewed by all sorts of accounting issues. Concentrate on how much cash their burning through. In Ford's case they went through $7.7 billion and GM burned through an hold onto your hats $14.6 billion.

Ford said they were cutting jobs, reducing benefits, spending less on CAPEX etc. and expected to have things thereby under control. Not so GM. They said they may not have enough cash to fund operations through the end of the year. GM is rapidly losing its status as a going concern if it hasn't already.

Naturally, a good dose of skepticism is required when it comes to these numbers. The companies are after all lobbying for substantial government support and unlikely to post good numbers that might gainsay their pleadings. Still and all it's not a pretty picture.

Tom Lindmark