The End of Recession or Another False Dawn?

At long last, growth! For one day at least, there were cheers for the resilient U.S economy, which the Commerce Department on Thursday declared grew at an annualized rate of 3.5 percent, or, as the New York Times points out, "matching its average growth rate of the last 80 years." Pulling out of the worst recession since World War II lifted the markets Thursday to their best trading day in the past three months as investors cheered a quicker- and stronger-than-expected recovery, the Associated Press reports. Ah, but nobody expects the good times to last very long. The Wall Street Journal is calling the recovery a false dawn, noting that third-quarter growth came from consumer spending aided by temporary stimulus programs that enabled Americans to buy cars and houses that they otherwise might not have been able to afford. "The problem: With much of consumers' spending driven by temporary government stimulus programs, and with more people losing their jobs, it is unlikely they can keep driving robust growth," the WSJ writes. What, then, can sustain growth and provide jobs? Perhaps a weak dollar may prop up exports for a while, the newspaper suggests, but "the signals are mixed."

There are few cheers these days coming from the executive suites of Big Oil. Cheap, or at least relatively cheap, oil is fouling up the profitability of the world's biggest oil companies, The Washington Post reports. The problem is "the recession"—or what's left of the recession—as it "continues to weigh on consumer demand, driving down energy prices," the newspaper writes. The latest oil producers to feel the pain were Exxon Mobil and Royal Dutch Shell, which both reported big profit declines on Thursday. As the Times puts it, "After posting record profits last year, major oil companies have struggled to adapt to a world of lower prices and slower economic growth. They have slashed costs, shed employees and pared high-cost investments made when prices were rising." There could be some good news for investors today, however, as Spain's Repsol is expected to announce a major a new oil discovery in the Gulf of Mexico in U.S. waters, the WSJ reports, adding to the company's recent lucky streak. As the WSJ writes, "For years, Repsol YPF SA was derided as the oil company with no oil, but its gamble on boosting exploration has paid off handsomely, with the Spanish company hitting the jackpot in Brazil, West Africa—and now the U.S."

There's a new twist in the Galleon hedge-fund insider trading case, the NYT reports. To bring everyone up to speed: Federal investigators allege that very wealthy investor Raj Rajaratnam, along with five other accomplices, ran a massive insider-trading operation targeting some of the biggest tech companies that, thanks to the information passed to them by a vast network of informants, brought in $20 million in profit from 2006 to 2009. Now it transpires that the government's main source in the current case, Rhoomy Khan, passed Rajaratnam information about her employer Intel as early as 1998. Khan was prosecuted in federal court in 2000, but the authorities did not pursue Rajaratnam or his firm, Galleon, at the time, leading the NYT to ruminate that, "It would seem to be another example of a missed opportunity by authorities to break up a nascent insider trading ring."

Sony announced this morning its third straight quarter of losses in the July to September period, "hamstrung by the strong yen and still-soft demand for its electronics products," the WSJ reports. But echoing a general tech sentiment of cautious optimism, the giant Japanese electronics maker said that it had returned to operating profit in its core consumer-products business. "With a brighter global economic outlook in place for the second half, Sony said it now expects to lose less in the 12 months through March than it had originally expected," writes the WSJ.

And finally, score a victory for environmental activists against Big Oil. The Washington Post reports that activists at Amazon Watch have unmasked Chevron's prize mole who helped the oil company in August produce embarrassing video footage "that cast doubt on the integrity of a court in Ecuador, where the company is fighting demands that it pay billions of dollars to fix damage done years ago by oil exploration in the Ecuadoran Amazon." Turns out the undercover video producer is Wayne Hansen of Bakersfield, Calif., who went to jail in the 1980s "for  conspiring to import 275,000 pounds of marijuana," the Washington Post writes. More recently, Hansen lost a local civil case after his put bull attacked a neighbor. Chevron on Thursday stood behind Hansen's video reportage.