President Barack Obama is implementing his executive pay cap order, aimed at companies receiving Federal bail out money, and the decision should keep capital in the markets, to repair stocks and exchange traded funds (ETFs).
The president is setting a $500,000 pay cap on certain senior executives, those who are heading companies that received TARP funding. Jim Kuhnhenn for Associated Press reports that the move is timed amid a national movement against extravagant bonuses for heavyweights in charge of large companies that are aiming at keeping taxpayers dollars solvent.
Job losses within the private sector are showing their mettle, as unemployment rates are at 98% in metropolitan areas across the United States for December. The Labor Department reported that the unemployment rates in 363 of 369 metropolitan areas rose in December 2008, reports David Goldman for CNN Money. El Centro, Calif., continued to hold the highest rate of unemployment at 22.6%, compared to Morgantown, W.Va., with a rate of just 2.7%, the lowest in the country.
Marshall Eckblad for The Wall Street Journal reports that the ailing conditions of the small business loan is going to have an impact for banks taking a rise in losses this year, as well as dampening the recovery for the U.S. economy. The U.S. government’s Small Business Administration took permanent losses against the $504 million in loans in 2007, and $1.3 billion was lent through the program in 2008.
Many economists estimate small businesses provide half of all jobs nationwide, so in numbers, small businesses will impact the economy in big ways.
Earnings reports are in for the following companies:
- Time Warner (TWX) reported fourth quarter losses by a $24.2 billion writedown for their cable, publishing and AOL assets. Associated Press says the company posted a loss of $16.03 billion compared with profit of $1.03 billion a year ago.
- Costco Wholesales Corp. (COST) says profit for the quarter ending February will miss the mark on analysts expectations. Margins and poor sales are the culprit, and January sales in stores open over a year have declined 2%, reports Associated Press.
- Kraft Foods (KFT) posted a quarterly loss despite their massive marketing campaign for a sales rally last year. Profit was $702 million in the first quarter, compared with $1.01 billion a year earlier, according to Reuters on CNBC.
- Disney (DIS) reported a drop in net income for the fiscal quarter of $845 million; for the quarter ended Dec. 27. Revenue is down 8%, or $9.6 billion, with a decline in DVD sales hit the hardest, reports Chron.com forThe Houston Chronicle. Parks and resorts took a hit as well.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.