Company Analysis

COMPANY ANALYSIS 1

CompanyAnalysis

The consumer confidence and the DJIA from the 4th quarterof 2013 bear certain differences in comparison to the data from 2008.For example, the latter year was recognized as one of the worstperiods in the year. Stock investments showed a slow and steadydecline during the first three quarters. However, the scatter plotmanifested a sharp drop in October. The first few days of the monthlost almost 20% (Contessi &amp Francis, 2013). Subsequently,volatile gains in consumer confidence characterized the remainder ofthe fourth quarter. On the other hand, the 4th quarter of2013 was boosted by the availability of relatively cheaper creditfrom the Federal Reserve. Hence, consumers were encouraged to acquirebig-ticket items. Furthermore, the 4th quarter of 2013comprised of low interest rates (Contessi &amp Francis, 2013).Therefore, many investors were forced into the securities market inpursuit of conservative returns.

Notably, the beliefs and assumptions formed when looking at 2008could not apply to the 4th quarter of 2013. This factoccurred due to several reasons. Firstly, the consumer markets causeda high level of profit growth. Earnings also increased beyondexpected levels. In 2013, investors showed more willingness to paycompared to 2008 (Contessi &amp Francis, 2013). Such confidence wasdue to the fact that major European and Asian markets had relativelylow debts. Besides, many consumers were encouraged to increase theirexpenditure due to the reduced interest rates. In this regard, over70% of the economy experienced a boost (Contessi &amp Francis,2013). The steady growth also allowed many companies to fulfill theirobligations to bondholders. Moreover, the energy sector developed tosuch an extent that overseas demand could be adequately satisfied(Contessi &amp Francis, 2013). Contrary to 2008, buybacks in the 4thquarter of 2013 had higher per-share profits since equities were themost attractive investments.

Reference

Contessi, S., &amp Francis, J. L. (2013). US commercial bank lendingthrough 2008: Q4: new evidence from gross credit flows. EconomicInquiry, 51(1), 428-444.