I published a brief analysis (link) for the European Enterprise Institute, discussing a pattern of a growing income differential between the EU and America. The financial crisis diminished European growth rates and further widened the economic growth between the two continents.
Given a weak economic outlook for EU countries, the gap between European Union and the United States is likely to widen in the next decade although the US economy will be restrained by high tax burden and a growing federal debt. In 2010, I estimated the gap between the US and EU15 at 35-40 years, depending on EU’s growth scenario.
Q1 2010 earnings season is in full swing and businesses continue their flurry of better than expected reports to start the new year.
Bank sector earnings continued strong with Morgan Stanley reporting strong profits. The New York-based investment firm posted a first-quarter profit of $1.78 billion compared with a loss of $177 million a year ago. Sales more than tripled to $9.08 billion.
Coffee profits were steaming in Q1 for Starbucks. The firm reported on Wednesday that quarterly profit rose more than eight-fold, as more customers visited its U.S. locations — and on average spent more on each visit. “I think the trends we’re seeing in the business are real and sustainable,” CFO Troy Alstead told The Associated Press.
Netflix continued its winning ways Wednesday, reporting first-quarter financial results that handily beat expectations. The company’s net income grew 44% to $32.3 million on revenue that rose 25% to $493.7 million. Netflix ended the quarter with nearly 14 million subscribers — up 35% compared with a year ago — and said it expects to end the year with as many as 17.3 million, up from its previous estimate of 16.3 million.
And it is not just Intel, that is enjoying a surge in semiconductor chip demand. Hynix, the world’s second-largest producer of computer memory chips posted a net profit of 822 billion won ($742 million) in the three months ended March 31, sharply reversing from a net loss of 1.18 trillion won a year earlier.
The the montra in this earnings season is clear. Companies are consistently demonstrating that the economic conditions driving their businesses are improving, and that their forecast data points to an ongoing theme of accelerated growth in 2010.
At 8:30 AM EDT, the U.S. government will release its weekly Jobless Claims report. The consensus is that there were 440,000 new jobless claims last week, which would be slightly less than the higher than expected number reported last week.
Also at 8:30 AM EDT, the Producer Price Index for March will be released. The consensus is that the index increased 0.4% over last month, and 0.1% when food and energy are excluded.
At 10:00 AM EDT, the Existing Home Sales report for March will be released. The consensus is that 5.25 million existing homes were sold last month, which would be a small increase over February.
At 4:30 PM EDT, the Federal Reserve will release its Money Supply report, showing the amount of liquidity available in the U.S. economy.
Also at 4:30 PM EDT, the Federal Reserve will release its Balance Sheet report, showing the amount of liquidity the Fed has injected into the economy by adding or removing reserves.
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