The U.S. Postal Service has begun a cost-cutting process meant to save it $10.5 billion between now and 2015. The first tranche is a consolidation or shuttering of 223 locations. The effect of the move will trigger the loss of 35,000 jobs. However, the postal service’s most aggressive cost reduction plans call for thousands of post offices to be closed and more than 100,000 people to be cut. The problem the USPS faces is that it may be unable to reduce expenses enough as the demand for mail continues to be hurt by email and private delivery services like FedEx (NYSE: FDX).
Oil Prices Still Rising
Oil prices moved higher for the 10th straight day, a streak not matched since 2010. WTI crude has risen above $106. Brent, as calculated in euros, hit an all-time high, passing the 2008 level. In that same year, the oil crisis was considered a likely cause for a very deep recession. The recession came, but oil was not the only, or even primary, cause. Economists and politicians are left with to ponder the problem of rising oil prices triggering huge increases in the price of gasoline. Almost no one thinks that will fail to slow the economy.
VW’s Record Sales
Recent strong earnings from the world’s largest car companies continue. Volkswagen said its 2011 figures were a record. The composition of the sales shows that high-end buyers have no trouble paying large premiums for new cars. And SUVs sold well, a sign that high gas prices have not hit that segment of the market yet. VW said it sold 8.27 million cars and light trucks last year. That places it in a league with General Motors (NYSE: GM) and Toyota (NYSE: TM). But doubts remain that these firms can continue to grow as the EU vehicle market craters and sales in China slow more than expected.
Apple’s Cash Stash
The debate about why Apple (NASDAQ: AAPL) needs $100 billion in cash continued at the firm’s annual meeting. CEO Tim Cook admitted the firm has more cash than it needs, but refused to comment on the corporation’s plans. Shareholders have no leverage to get Apple to part with the money. Apple has done too well, and the return to shareholders based on stock price has been too impressive. Apple has kept a large cash balance for years. The board has decided to hold the money in low-yielding financial instruments over that time. This reveals a certain degree of stubbornness. Cook’s comments offer little assurance that the board will soon relent.
Douglas A. McIntyre
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