Daily Market Commentary for October 17, 2011
As tighter standards due to take effect in just over two months from housing giants Fannie Mae and Freddie Mac, big banks struggling with stalled mortgage modifications face a new hurdle. (read more at Millennium-Traders.Com)
During September, the Federal Reserve reported the nation’s industrial production rose 0.2%, capping a Q3 rebound in activity for the manufacturing sector. The reading in August for tracking output by factories, mines and utilities was downwardly revised to zero from an initially reported 0.2% growth. September’s gain was led by business equipment production which rose 1% on the month and is up 10.3% from September 2010 levels, while the big drag came from utilities where production dropped 1.8%. Helped by a need for companies to retool after the recession, prior dollar weakness as well as tax rules that are set to expire at the end of the year, business equipment has been a strong point. Industrial production as a whole, rose at a 5.1% annual pace in Q3 which is far better than the 0.5% advance in Q2 when the Japanese earthquake affected domestic availability of key components. Motor vehicle and parts production surged at an annualized 21.4% rate in Q3 after a 15.8% nosedive during Q2 helping to cap a 4.7% advancement for manufacturing as a whole. Data from the Fed showed motor vehicle assemblies in September hit a six-month high. Non-durable production, rose a scant 1% in Q3 after having eased 1% during the April-through-June period. Capacity utilization edged up to 77.4% in September from a downwardly revised 77.3% during the month of August.
The Federal Reserve Bank of New York reported Empire State manufacturing index in negative territory for the fifth consecutive month - October reading came in at -8.5 which showed only a slight improvement from September reading of -8.8. Manufacturing activity remained weak in the New York region, raising concerns that the slowdown seen in the factory sector that began in June could be more than a temporary soft patch. More executives at manufacturing firms reported that conditions had worsened during the month of October. The Empire State index is the first reading of the health of the national manufacturing sector in October. The Institute for Supply Management reported that its key reading of the health of the manufacturing sector rose to 51.6 during the month of September compared to reading of 50.6 in August. In October, the index for the number of employees increased to 3.4 from negative 5.4 in September. The new orders index rose to 0.2 from negative 8.0 in the prior month. Shipments indexes rose to 5.3 in October from negative 12.9 in September. A sign that inflation moderated came with the price indexes drop in October. The prices paid index dropped 10 points to 22.5, its lowest level since November 2010. The future general business conditions index fell six points to 6.7 to its lowest level seen since February 2009.
The 88-year-old heiress to the L'Oreal S.A. cosmetics fortune, Liliane Bettencourt, has been determined mentally unfit by a French court. She has been placed under the legal guardianship of her eldest grandson after her family argued that she was no longer capable of running her fortune which is estimated at nearly $21B, due to complications from Alzheimer's disease. Bettencourt's estranged daughter Françoise Bettencourt-Meyers and two grandsons will oversee her business dealings. Bettencourt is the daughter of L'Oreal's founder and currently sits on the company's board, along with her daughter and son-in-law. The Bettencourt family still holds a 31% stake in the company.
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