January 15, 2004
Dollar edges higher.
The dollar edged slightly higher today,
reports the
Financial Times.
The euro dipped to $1.2591 - its lowest level in a week - after the data in New York trade, from $1.264 ahead of the data.
Weekly jobless claims numbers were accorded extra importance on Thursday following last week's release of a unexpectedly weak December employment report. New benefit claims fell 11,000 to 343,000 last week, while the steadier four-week moving average edged down to 347,000 - its lowest level in nearly three years.
Retail sales were however weaker than expected, although the disappointment was offset by an upwards revision to the previous month's data.. Total sales rose 0.5 per cent in December, less than the 0.8 per cent jump expected by economists. Excluding cars, sales rose 0.1 per cent.
I think the focus on the decline in unemployment claims is a bit misguided. People only claim unemployment if they've been working during the past year or so. Since there are many people who have now been out of work for a year, or two or three, then they can't claim unemployment. And the Congress last December refused to further extend benefits, as they have been doing the past two years. This doesn't mean more people are working, it means they've given up looking for work, and have exhausted their benefits. Classic spin going on here.
And it's the weaker dollar that is primarily responsible for the slightly slower American trade deficit, as well as the increase in the stock markets. Along with the war profiteering, of course. See this other
Financial Times article which notes that IBM reports higher sales due primarily to the weaker dollar.
International Business Machines beat expectations on Thursday with strong growth in fourth-quarter profits, as the weak dollar boosted sales.
The giant computer company said net income in the three-month period rose to $2.7bn, or $1.55 per share, up from $1bn, or 59 cents per share, last time. Last year's figures were lowered by $1bn in charges and costs related to the $3.5bn acquisition of the technology consulting group of PriceWaterhouseCoopers at the end of 2002.
But even stripping out these effects, profits grew as the weak dollar lifted sales, IBM said.
Revenues rose 9 per cent to $25.9bn, up from $23.7bn last year. Growth was most notable in Europe and Asia, where sales grew 17 and 13 per cent respectively. Of the six industry sectors IBM focuses on, the largest, financial services, saw the strongest growth, with revenues up 17 per cent year-on-year.
I didn't realize that financial services is now IBM's biggest business, not computers. That follows the trend in American business. Ford, for instance, is losing money selling cars, but staying alive by profits from its financial services. And notice that what growth IBM has is in Europe and Asia, not the US.
Note that they are reporting that revenues grew from $23.7bn last year to $25.9bn this year. But that's not taking into account the lower value of the dollar. After calculating that, they've actually declined. I think. They manipulate the figures so much, taking "charges" and such so that you really don't know what's going on.
I wonder if PriceWaterhouseCoopers's accounting practices are any more honest than the now-defunct Arthur Anderson's were. Given the collapse of the major Italian conglomerate Parmalat, due primarily to accounting regularities, I have to seriously doubt it. I don't know who did their accounting. But given that Parmalat operated in something like 140 countries, that American firms such as MorganStanley were heavily involved, and that PWC is one of the world's big four accounting firms, it would seem that it's unlikely that IBM/PWC could have been entirely unaware of what was going on. They're all in it together.
