Ford Is Back on Track

Ford (F) released a surprisingly good earnings report yesterday and announced its first profitable quarter in North America since 2005. The automaker earned a profit of nearly $1 billion for the third quarter, says the Detroit Free Press. The paper says, “A much smaller Ford Motor Co.—with 45% fewer workers and more than a dozen fewer factories than in 2005—is heading into the last stretch of 2009 with more money, optimism and fuel-efficient passenger cars than it has had for years.” Ford beat analyst expectations thanks to a combination of cost-cutting and improving sales. Still, the paper says, “Ford owes more debt than its domestic competitors,” and it “has a labor agreement with the UAW that the Dearborn automaker says isn't competitive.” The New York Times agrees that the automaker may still hit some rough spots down the road. The paper says the automaker may not be able to maintain its lead over competitors for long, noting, “Both General Motors and Chrysler, with the stigma of their bankruptcies receding, are moving ahead with their own comeback plans.”

The most recent recession left many economists scratching their heads and revising the trusty models they’d been relying on. But the Wall Street Journal leads today with one economist, John Geanakoplos of Yale University, who got it right. According to the article, he watched his “previously obscure theory about collateral's role in the credit bubble gain currency after it burst.” It’s possible that theories like his could be part of a bigger shift in the way economists think about the markets. The past two big swings in mainstream economic theory occurred after the Depression and following high rates of inflation in the 1970s. The paper says, “Now that the financial crisis has exposed flaws in the models central banks use, economists have launched into a flurry of activity that is likely to reshape the field.”

Two tool makers, Stanley Works (SWK), which is known for its hand tools, and Black & Decker (BDK), which is known for its power tools, have finally decided to merge after nearly 30 years of discussing the possibility. The New York Times reports that “Stanley agreed to buy Black & Decker for about $3.5 billion in an all-stock transaction, creating a global tool maker worth about $8.4 billion.” The new business will be called Stanley Black & Decker. The Times sees the deal as yet another glimmer of hope that the recession has indeed subsided. The article says, “Together with a slate of other deals announced in recent days, the Stanley-Black & Decker combination may represent continuing confidence that the worst of the economic problems have passed.”

Despite sinking company share prices, executive pensions swelled last year, says the Wall Street Journal. The paper’s analysis has revealed that in 2008, executive pensions grew 19 percent on average. “The executive-pension growth stemmed partly from generous pension formulas, which are based on executive pay, according to the filings. Also adding to the pension jumps are arcane techniques that have received little scrutiny, including increases triggered when an executive reaches a certain age or when companies change interest rates used to calculate the pensions,” the paper says.

Finally, the Federal Trade Commission is taking action against the company behind the credit monitoring service freecreditreport.com for its misleading commercials, the New York Times reports. The paper says that the FTC believes the company is “deliberately diverting people from a government-mandated site where consumers can get free credit reports by law, and using the reports as a lure for a $14.95 monthly service that alerts subscribers to important changes in their credit status.” The government has, in what the Times calls an “unusual salvo,” created its own commercials mocking the service and prescribing caution. Here’s an excerpted verse: “Other sites may turn your head; they say they’re free; don’t be misled. Once you’re in their tangled web, they’ll sell you something else instead.”