Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to the Friday Five. This is our look at the week's most encouraging, discouraging, and need-to-know news items. Here with me with the Five is Morningstar markets editor Jeremy Glaser. Thanks for joining me, Jeremy.
Jeremy Glaser: You're welcome, Jason.
Stipp: So what have you got for the Five this week?
Glaser: Well, we saw China resume its incredible growth trajectory, we saw the dollar continue to decline, Caterpillar gave us a great outlook, Apple had another outstanding quarter, and we got some not-so-great housing news.
Stipp: All right. Well, let's start in China.
Glaser: China reported an 8.9% third-quarter GDP growth, which is just astonishing considering that it was only maybe six months ago that we were fretting that the Chinese growth engine had completely died.
Now, granted, a lot of this is coming from government infrastructure spending and coming from other government-supported lending programs, but it's clear that the Chinese consumer wants to spend. It's clear that all of China and its 1.3 billion people are going to continue to produce meaningful growth going forward, and I think that probably speaks well to a global recovery.Read Full Transcript
Stipp: So any talk about the globe, obviously, talk about the dollar as well, and that's been in the news a lot. What do you have on the dollar?
Glaser: Yeah, the dollar had a 14-month low against the euro this week. And a lot of people were fretting and getting kind of worried that this means that people have lost confidence in the United States. And I think it actually has more to do with that people are gaining confidence in Europe and are gaining confidence in the rest of the world.
I think that people fled to the dollar when it was really seen as a safe haven, and now people feel free to diversify among different currencies.
And it's not all bad for the United States. Having a weaker dollar helps export-driven companies. Say Procter & Gamble, which is 5 stars right now, is certainly a company that sells a lot of products overseas and could benefit from a lower dollar.
Stipp: So, speaking of companies that are doing a lot of sales overseas, Caterpillar also reported results, and they were pretty good.
Glaser: Yeah, Caterpillar had a quarter that certainly showed weakness but was a lot better than people expected. But I think what most surprised me, at least, was that their outlook for 2010 was pretty aggressive, and they're expecting a rapid recovery.
And a lot of that's probably driven by infrastructure spending and stimulus spending that we're going to be seeing throughout 2010 throughout the world. But I have a feeling that some of it is management's belief that the entire economy is going to get better. And I think that, again, bodes well for a global recovery.
Stipp: Another company that was firing on all cylinders this week, Apple, reported some pretty "wow" results. What do you have on Apple?
Glaser: Yeah, Apple had another record quarter: record number of iPhone sales, record number of Mac sales. They just can't seem to find a product that doesn't really do well for them at the moment. 50% of the iPods are still going to people who didn't own one before. I mean, they're really just firing on all cylinders.
Is the stock price maybe a reflection of that? It did hit an all-time high. Could we possible see pullback from there? I'm not sure, but it's going to be interesting to watch, to see if they can keep this winning streak going.
Stipp: I know not all of Apple's products have been hits, though the ones that they've put out recently have been hits. Those are the ones that are in investors' minds. It'll be interesting to see if they can keep up that mystique of those products that just seem to really hit with consumers.
So, for number five, a little bit of less-encouraging news on the housing front. What are you seeing on housing?
Glaser: Yeah, housing starts this week were slightly positive. But I think that economists and other observers were really expecting a more robust recovery in housing starts, indicating that the entire housing market was feeling a little bit healthier.
Everyone believes that we need to see a stabilization in housing before we're going to see a real recovery in the broader economy. Hopefully this is just a single data point that doesn't show that we're going into a double-dip, but it's definitely something to be keeping a close eye on.
Stipp: At the Value Investing Congress this week, there was a lot of concern about inventory overhang, about the unemployment rate still being high, and seasonality making some results look maybe a little bit better over the last few months than we might be seeing in the next few months. That'll be one to keep an eye on, and there may be still some concern out there.
Thanks for joining me, Jeremy.
Glaser: You're welcome.
Stipp: For Morningstar, I'm Jason Stipp. Thanks for watching.