Toyota Gives Favorable Report Despite Recall

Toyota Gives Favorable Report Despite Recall

Despite all of the negative press of Toyota's recent vehicle recall, stemming from a problem with accelerator pedals, the company posted rising third-quarter profits this week. Toyota's profits rose by 10.2%, compared to the same period last year due Toyota said to increased sales volume and cost reduction efforts.

Commenting on the results, TMC Senior Managing Director Takahiko Ijichi said, "As a result of customer appreciation of our strength in offering a wide range of environmentally friendly vehicles, especially gasoline-electric hybrids such as the 'Prius', the Lexus 'HS250' and the 'Sai', our consolidated vehicle sales for the third-quarter reached 2 million 65 thousand units, up 227 thousand vehicles from the same period last year."

Toyota caused concern among vehicle owners when it recalled millions of vehicles on January 21. The company has faced further backlash following the discovery that in addition to gas pedal repairs, Toyota Prius models have a brake problem that was not covered in the initial recall.

Marketwatch.com reported Akio Toyoda, President of Toyota and grandson of the company's founder, as saying, "The fact that we have caused such concern is a cause of regret for us." Toyota says that the accelerator pedal repair can be carried out in 30-minutes at Toyota dealerships. As of the writing of this article, Toyota has not issued a recall for additional brake repairs on Toyota Prius models.

Toyota (TM) ended the week down at $73.65.

AOL Issues First Report After Spin-off

Shares of AOL rose by more than 2% this week after the tech giant reported a better-than-expected fourth-quarter. Analysts say that AOL's much-awaited first report following the company's spin-off from Time Warner, Inc. is a key to AOL's future as an Internet service provider.

While the company reported a slight profit, it also reported revenue declines that it said reflect continued attrition in its subscriber base. AOL's subscriber base declined by 27% in the fourth-quarter. With Internet service subscribers moving over to other companies, analysts say that AOL faces challenges ahead as an independent company. Still, AOL said that it was incredibly happy with the results.

"We have made significant progress in support of the long-term vision we see in the future of AOL, but today's results continue to reflect the need for our focus and execution on the work required in the turnaround of the company," said Tim Armstrong, Chairman and Chief Executive Officer. "2009 marked the closing of an important chapter in AOL's history and the opening of a new chapter that we are passionately pursuing."

AOL will continue efforts to restructure the company to reduce operational expenses, and anticipates cutting outlays by approximately $150 million in 2010. The company eliminated jobs following the December 10, 2009 spin-off in an effort to cut costs. Armstrong said that AOL has a clearly defined strategy as it enters 2010 and is focused on the "day-to-day execution" necessary to move forward.

AOL (AOL) ended the week down at $23.65.

Aetna's Profits Fall on Rising Costs

Aetna announced fourth-quarter profits of $165.9 million or 38 cents per share, compared with $194.7 million or 42 cents per share last year. The healthcare provider said that the decrease from the prior-year quarter reflects a lower commercial underwriting profit, lower earnings in its group insurance business and an increase in pension expenses.

Aetna said that its lower profits were due to a significant increase in commercial medical costs which were partially offset by an increase in health care premiums. The company's full-year 2009 profit was at $2.84 per share, which Aetna said was generally in line with its profits for 2008.

"As we worked through a very challenging 2009, we took significant actions to improve our operational performance and we are moving in the right direction," said Ronald A. Williams, Aetna Chairman and CEO. "Entering 2010, a weak economy and high unemployment levels remain challenging, but we continue to implement strategic initiatives and actions that will help build positive momentum and give us confidence for the long-term future."

Aetna believes that it is entering 2010 in a strong financial position buoyed by a solid capital structure and cash reserves. Given the ongoing challenges Aetna faces, it views 2010 as a repositioning year that will not fully reflect the earnings potential of its business. Aetna projects its 2010 operating earnings per share to be in the range of $2.55 to $2.65.

Aetna (AET) ended the week down at $29.52.

The Dow started the week at 10,067 and ended at 10,012. The S&P 500 started the week at 1,074 and ended at 1,066. The NASDAQ started the week at 2,147 and finished at 2,141.

Treasuries Rise on Unemployment Report

Treasuries Rise on Unemployment Report

Treasuries rose Friday on reports of a decline in U.S. unemployment, although the economy lost 20,000 jobs in January. The unemployment rate fell from 10% to 9.7% in January according to the Labor Department report.

Job losses continued in construction, transportation and warehousing, while employment increased in temporary help services and retail trade. Since the start of the recession in December 2007, payroll employment has fallen by 8.4 million. Over the last three months, however, the Labor Department said that employment has shown little change.

In a separate release, the Labor Department reported an increase of 8,000 in initial claims for unemployment benefits. The number of claims for the week ending January 30 rose to 480,000 from the previous week's revised figure of 472,000. The 4-week moving average for claims was 468,750 an increase of 11,750 from the previous week's revised average of 457,000.

Economists were surprised by the decline in unemployment, anticipating that it would remain at 10% for January. Some analysts pointed out that while unemployment fell, the labor force rose by 11,000. Still, most economists believe that the recession has ended and that recovery in the unemployment market is the key to continued recovery in the overall economy.

The 10-year Treasury note yield began at 3.58% and ended at 3.55%. The 30-year Treasury note yield began at 4.49% and finished at 4.49%.

Mortgage Rates Remain Stable and Low

Mortgage Rates Remain Stable and Low

Freddie Mac reported long-term mortgage rates remaining stable and low this week. The 30-year fixed-rate mortgage (FRM) averaged 5.01%, up from last week when it averaged 4.98%. Last year at this time, the 30-year FRM averaged 5.25%. The 15-year FRM this week averaged 4.40%, up slightly from last week when it averaged 4.39%. One year ago at this time, the 15-year FRM averaged 4.92%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.27% this week, up from last week when it averaged 4.25%. One year ago, the 5-year ARM averaged 5.26%. The 1-year Treasury-indexed ARM averaged 4.22%, down from last week when it averaged 4.29%. At this time last year, the 1-year ARM averaged 4.92%

"Mortgage rates remained relatively stable for a second week amid news of a strengthening housing market," said Frank Nothaft, Freddie Mac Vice President and Chief Economist. "Residential fixed investment rose for two consecutive quarters over the last half of 2009 following a steady quarterly decline since the beginning of 2006."

Nothaft went on to say that data suggests that the housing market is turning around. The National Association of Realtors reported home sales rebounded by 1% in December after a dramatic decline in November. Also, the Mortgage Bankers Association reported a 10% jump in applications for home purchases in January.

The money market fund finished this week at 0.86%. The 1-year CD finished at 1.30%.

Stocks - Apple Unveils Much Awaited iPad
Bonds - Treasury Yields Rise on Signs of Recovery
Interest Rates - Mortgage Rates Remain Flat

Stocks - eBay Reports Rising Revenues
Bonds - Treasuries Fall on Economic Data Reports
Interest Rates - Long-term Rates Down for Third Week

Stocks - Intel Posts Huge Profits
Bonds - Treasuries Up on Low Inflation
Interest Rates - Fixed Rates Down Slightly; ARMs Mixed

Stocks - Best Buy Reports Record Revenue Growth
Bonds - Shorter Maturity Notes Rise on Job Losses
Interest Rates - Rates Slightly Lower in the New Year

Stocks - Oil and Natural Gas up at Year's End
Bonds - Treasuries to End Worst Year in Three Decades
Interest Rates - Slightly Higher Rates Remain Affordable