Economic and Earnings Roundup

First the bad news:

• Intel, in its second pre-announcement related to the miserable fourth-quarter, reported a 23% drop in fourth-quarter sales.  Revenue was $8.2 billion in the period, down from $10.7 billion in the same quarter a year earlier.  Two months ago, the world's largest chipmaker warned that revenue would be around $9 billion, down from an earlier estimate of $10.1 billion.
  
• Time Warner will take a non-cash impairment charge of about $25 billion before taxes in the fourth quarter.  Somehow it only took Time Warner nine years to figure out that it may have overpaid just a tad for AOL.
  
• Alcoa announced it would cut more than 15,000 jobs, halve capital spending and sell four businesses as it reduces aluminum production.
  
• The ADP Employer Services gauge estimated that 693,000 jobs were eliminated in December, the most since records began in 2001.  Also, Challenger reported that job cuts announced by US employers almost quadrupled in December from a year earlier, paced by declines at financial firms, chemical makers and retailers.  Neither of these reports bodes well for the employment report set to be released on Friday.  Economists are expecting a loss of 500,000 jobs.
  

In the good news department:

• Monsanto, the world's largest seed company reported that quarterly profit more than doubled to $1 a share from 46 cents in the year ago period.  The company also raised guidance for the fiscal year 2009.   
  
• Family Dollar Stores' first-quarter net income increased 14% amid sales and margin gains.  The company raised its earnings estimates for the first quarter and guidance for the second-quarter.  
  

Unfortunately, if you're not in the seed or discount retail business, you're probably not having a good quarter.  The economic and earnings news continues to be bleak, indicating that the recent rally in equities can be attributed only to significant improvement in the credit markets.  While it is certainly positive news that credit is moving again, it is extremely difficult to ignore how hard the real economy is crashing.  The Fed, Treasury and the new administration are working around the clock to instigate new measures to blunt the impact of the dreary economy.  But until we have a clearer picture on just how bad things are going to get, it seems hard to justify jumping in to this market with reckless abandon.