U.S. Economy Cools
The economy grew at a modest 1.5% seasonally adjusted annual rate from July through September, the Commerce Department said Thursday. That marked a deceleration from the second quarter, when U.S. gross domestic product—the broadest measure of economic output—expanded at a 3.9% pace.
Solid consumer outlays and increased spending on business equipment and home building propelled the economy against overseas headwinds weighing on U.S. manufacturers. But from a year earlier, the growth advanced at a familiar 2% rate—showing the economy remains locked into a restrained expansion more than six years after the recession ended.
Businesses clearing shelves subtracted 1.44 percentage points from the overall advance. A measure of purchases by U.S. residents, excluding changes in inventory levels, rose at a much healthier 2.9% pace last quarter. (…)
Exports, which add to output, increased at a 1.9% rate during the quarter. Imports, which subtract from output, increased 1.8%.
In reality, what’s cool about the economy is that final sales were up 3.0% AR and domestic final sales were up 2.9% AR. Given this solid demand background, the 1.4% inventory drop is healthy going into Q4 and 2016.
BTW: Apple is forecasting a record holiday quarter; UPS expects +10% more deliveries; Fedex is hiring +10% more people, and Amazon +25% more.
BTW 2- According to Bloomberg, in the U.A.W-approved proposed G.M. contract, employees would receive $8,000 signing bonuses, double the amount received by Fiat Chrysler workers.
U.S. Pending Home Sales Index Down 2.3% The number of existing homes that went under contract across the U.S. fell last month, a sign of choppiness in a housing market that otherwise appears to be gaining momentum.
Pending sales were up 3% in September compared with a year earlier.
From housing economist Tom Lawler (via CalculatedRisk)
Several builders have released earnings and had earnings conference calls for the quarter ended September 30, 2015, and one of the key “themes” from builders was that resource “constraints,” specifically with respect to labor, slowed home closings last quarter, and in some cases contributed to weaker than expected net orders. PulteGroup, M/I Homes, Meritage Homes, and MDC Holdings all said, in one form or another, that labor “shortages” – laborers, land development, and various trades – had resulted both in accelerating labor costs and delays in land development and home construction. Most builders said that the main impact in terms of their operating results were lower-than-expected home closings last quarter, though one said that in some markets longer construction timelines appear to have led some buyers to forgo a home purchase. (…)
While only one builder – Meritage — gave specific numbers on the intra-quarterly patterrn of net home orders last quarter, the numbers were startling. According to a Meritage official, the YOY % change in the company’s net orders was +22% in July and +8% in August, but -15% in September. The official wasn’t sure what prompted the sharp slowdown in home orders in September, but he said he was pretty sure other builders say the same drop-off in sales in September. (…) He also said that based on preliminary numbers it appeared as if net home orders would be up 10 to 15% YOY in October. (…)
Don’t Look to China for Oil Rebound China’s two largest refiners provide downbeat picture of demand in the world’s marginal consumer
(…) At Sinopec, the country’s biggest refiner, officially known as China Petroleum & Chemical, total sales of refined products in the third quarter dropped 3.4% in volume from a year before. That’s a marked change from their 5.3% rise during the first half of the year. (…) Strip those out and Sinopec’s domestic sales of gasoline, diesel and more were down 4.2% in the September quarter. At PetroChina, the nation’s second-largest refiner, product sales fell about 2% last quarter.
EARNINGS WATCH
The beat goes on!
- 319 companies (70.6% of the S&P 500’s market cap) have reported. Earnings are beating by 4.6% (4.4% yesterday, 4.3% Wednesday) while revenues have missed by -0.2%.
- The beat rate is 72% on EPS, 76% ex-Financials. The revenue beat rate is 34%.
- Expectations are for a decline in revenue, earnings, and EPS of -3.9%, -2.8%, and -1.7% (-2.0% yesterday). EPS growth is on pace for -0.3% (-0.4% yesterday, –0.5% Wednesday and –0.9% Tuesday), assuming the current beat rate for the remainder of the season. This would be 7.3% excluding Energy (up from 7.2% yesterday and 4.5% last week). (RBC Capital)
Thomson Reuters’ tally is now $29.61 in Q3, up from $29.46 yesterday. TTM EPS now seen at $118.84 after Q3.
Cambridge chemists in battery breakthrough Lithium-air packs deliver five times more energy
A breakthrough in electrochemistry at Cambridge university could lead the way to rechargeable super-batteries that pack five times more energy into a given space than today’s best batteries, greatly extending the range of electric vehicles and potentially transforming the economics of electricity storage.
Chemistry professor Clare Grey and her team have overcome technical challenges in the development of lithium-air batteries — the only cells theoretically capable of giving electric cars the range of petrol and diesel vehicles without having to carry excessively bulky and heavy battery packs.
If the technology can be turned from a laboratory demonstrator into a commercial product, it will enable a car to drive from London to Edinburgh on a single charge, with batteries that cost and weigh one-fifth of the lithium-ion cells that power today’s electric cars.
“What we’ve achieved is a significant advance for this technology and suggests whole new areas for research,” said Prof Grey. “We haven’t solved all the problems inherent to this chemistry but our results do show routes forward.”
Because lithium-air has such a big theoretical advantage over lithium-ion which dominates rechargeable batteries today — its energy density is potentially 10 times greater — researchers around the world are working on lithium-air.
A research paper published in the journal Science shows that the Cambridge group has overcome some of the practical problems of the technology, particularly the chemical instability that led to a rapid fall-off in performance of the lithium-air cells demonstrated previously.
(…) at least another decade of work is likely to be required to turn it into a commercial battery for cars and for grid storage — storing the intermittent output of solar and wind generators for use when needed. (…)