US GDP Disappoints Market

Fourth Quarter GDP numbers in the United States disappointed the market – though from our perspective 2.8% growth is a far better place than where the US was not so long ago!

It was the fastest rate of growth in a year and up from the 1.8% recorded in the third quarter. Yet the market (which had got ahead of itself) was grumpy with the outcome.

The president of the New York Fed thought the US economy would slow through 2012.  All this set the tone for a weaker day on Wall Street, where the Dow Jones Industrial Average has dropped 45.50 points to 12,689.20 (-0.36%). London’s market was down 1.07% at 57733 and the STOXX 50 down 0.97% at 2436.

Ford Motor shares reflected the mood. Having posted a fourth quarter of $13.6 bn net income (US$3.40 a share), including abnormals, but compared with $190m a year ago (5cps), Ford found the market analysts dissatisfied with the rate of growth. The share price closed 3% off at US$12.59 having been almost 8% down at one stage. Ford shares are up around 19% in 2012, after a stuttering 2011. In context this company lost $30 bn over 2006-08 at the start of the Global Financial Crisis and the US recession.

The S&P 500 is at 1319.90, up 0.71%, and NASDAQ was a perky 14.84 points higher at 2819.77.

US Treasury bonds dropped to a record low on the 5 year stock at 0.74%.

On the sunnier side the January Michigan consumer confidence survey jumped to 75.0 from 69.9.

Rumours are running hard and fast that Facebook is headed for a 1 February filing of an Initial Public Offer.  This is the Internet platform for personal profiles, videos and pictures exchanged between ‘friends’ and now used by businesses, politicians and protestors to reach mass audiences.

The Wall Street Journal reports chatter that FB is considering a valuation of $75bn to $100bn. An IPO target of US$10bn is thought possible.

This is the business launched in 2004 by Daniel Zuckerberg.  Somewhere along the way an equally dislikeable lad called Sean Parker had a stint as FB’s president, after attracting some notoriety as co-founder of Napster.

By sheer coincidence Mr Parker has popped up on a business show at Davos during the World Economic Forum on which he reportedly said a share float by FB is inevitable.

The movie on the story of Facebook, which recently screened in New Zealand, portrays Zuckerberg and Parker as ruthless dot.com entrepreneurs not above sneaky share dilutions of other shareholders and hardly endeared them to theatre audiences.  

Without hesitation, we can assume the 800 million users of FB do not give a second thought to such dated morality issues – nor will investors when the IPO proceeds

Share this article