Money Watch: Weekly Wrap

Last Updated Jan 22, 2011 9:49 AM EST

Although Apple smashed earnings estimates, the news of Steve Jobs medical leave of absence garnered more attention. It was also a big week for bank earnings (see factoids below).

Last week, there was more evidence of stabilization in Europe, though international investors soon anointed China as the problem child of the world. The world's second largest economy said that growth continues to be strong, which raised the probability that the Chinese central bank would have to raise interest rates to fight inflation.

President Obama named GE CEO Jeffrey Immelt to head his outside panel of economic advisers, replacing Paul Volcker.
The S&P 500's seven week winning streak came to an end, though bulls took comfort in the Dow's eighth straight week of gains, as it closed at a 30-month high.

  • DJIA: 11,871, up 0.7% on week, up 2.5% YTD (up 7% over last 8 weeks)
  • S&P 500: 1283, down 0.7% on week, up 2% YTD
  • NASDAQ: 2689, down 2.4% on week, up 1.4% YTD
  • March Crude Oil: $89.11, down 3.7% on week
  • February Gold: $1341.90, down 1.4% on week
Total bank failures for 2011 = 7 (4 new bank failures over weekend)

FACTOIDS OF THE WEEK: Bank earnings edition

There were mixed results from the nation's largest financial firms. Goldman Sachs' net fell 52%, the third straight quarterly decline; Citigroup was (barely) profitable, but missed expectations, as did Wells Fargo. Bank of America reported a larger loss from the previous year and missed analysts' estimates, while Morgan Stanley surprised on the upside, with a 35% increase in earnings.

Here's what we've learned about compensation levels so far:

  • Goldman Sachs - staff comp = $15.3B; average payout of $430,700 (down 14% on 2009)
  • Goldman Partners charitable contribution: $1.8M per GS partner over last 2 years, via Goldman Sachs Gives, a public charity established by the firm in 2007
  • JPMorgan - staff comp = $9.73B; average payout $369,651 (2.4% down on 2009)
  • Morgan Stanley - staff comp = $16B ($7.08B to investment bank, balance to brokers); average payout = $256,596 (up from $236,602 in 2009, though dramatically skewed due to payout to Smith Barney brokers. MS purchased SB brokerage from Citigroup after the financial crisis.)
  • Bonus GOSSIP: Tales of slamming doors and threats of "I quit" were rampant throughout the week, as bonus numbers plunged for many bank employees.
IN THE WEEK AHEAD: Earnings season will kick into high gear next week with, more than 120 S&P 500 members reporting. It will also be busy on the economic calendar, with two measures of consumer confidence; the S&P/Case-Shiller home price index, new home sales and ending sales; durable goods orders and the first estimate of fourth-quarter GDP.

The Federal Open Market Committee will hold a two-day meeting starting on Tuesday, with a statement published on Wednesday afternoon. No change in policy is expected.

Mon 1/24:
American Express, McDonald's

Tues 1/25:
3M, DuPont, Johnson & Johnson, Travelers, Verizon
FOMC Meeting Begins

9:00 S&P Case-Shiller Home Price Index

10:00 FHFA House Price Index

President delivers SOTU

10:00 Consumer Confidence

Weds 1/26:
Boeing, United Technologies
10:00 New Home Sales

2:15 FOMC Announcement

Treasury Secretary Geithner testifies on TARP before the House Oversight committee
CBO releases annual budget and outlook

Thurs 1/27:
Caterpillar, Microsoft, Procter & Gamble
8:30 Weekly Claims

8:30 Durable Goods Orders

10:00 Pending Home Sales Index

The Financial Crisis Inquiry Commission delivers its report

Fri 1/28:
8:30 GDP-Q4 Advance (+3.5% expected)

9:55 Consumer Sentiment

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    Jill Schlesinger, CFP®, is the Emmy-nominated, Business Analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and Chief Investment Officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.