Equity Futures Unfazed By Lousy Employment Report, Ford Losses

Nonfarm payrolls dropped by 240,000 and the unemployment rate rose to 6.5%.  To add insult to injury, September payrolls were revised sharply lower to a loss of 284,000, bringing total job losses for the year to 1.2 million.  The pullback spanned manufacturing, construction and most service industries and was offset only slightly by an increase in government jobs.  Although economists were expecting a decline of 200,000 in payrolls and a jobless rate of 6.3%, the "whisper numbers" were higher.  This explains, to a certain extent, why equity futures this morning are strangely positive on such disheartening news.  I suspect that two back-to-back days of roughly 5% declines have fatigued even the most fearful investors.

Ford Motor reported a $3 billion operating loss, and announced efforts to cut employment costs by 10%.  The automaker is looking to shed assets and, more importantly, campaigning furiously in Washington for more government loans.  The good news in all of this is that Ford had $18.9 billion in cash on hand at the end of the quarter.  The bad news is that it burned through $6.3 billion in the quarter as vehicle sales plunged 25% and overall revenue fell by $9 billion to $32.1 billion.  What I find amazing about these numbers is just how large they are.  How is it that a company that pulls in $32.1 billion in revenue in a really really bad quarter can't figure out how to trim $3 billion in costs to break even?  I know, I know, union contracts etc.  But still, there's got to be a better way to run these companies.  GM will be reporting earnings later today.  I suspect the only thing about GM's earnings that will be positive is that it may make Ford's earnings look pretty good in comparison.