Saturday, October 26, 2002

10/26/02 The Consumer

When will someone tell Alan Greenspan that he is on the injured reserve list? He rants on about productivity while consumer confidence is crumbling to its lowest level in 9 years. Consumers are throwing in the towel. They've shouldered the economy long enough. It gets tiring being Atlas.

Business investment is dropping like a rock. There's a lack of confidence dropping new orders for durable goods in September at their fastest pace in a year. Demand for non-military capital goods sank by 12.6%.

If the stock market elects to ignore the consumer, a great deal of money will be washed down the drain. There is no excuse for being a sloppy investor. Additionally, over the years the majority of money managers have proven they are ill equipped to provide outstanding performances. To pay for mediocrity makes little sense.

Friday, October 25, 2002

10/25/02 $2 Trillion

For the fiscal year ended 9/30/02 the U.S. budget deficit amounted to $159 billion. The government pointed a finger to the stock market as the main factor for recording this negative number-- there was a decline in receipts from capital gains taxes. A more appropriate culprit might have been that the government spent just over $2 trillion in the latest fiscal year. That's difficult to comprehend.

With the present economy it's no wonder that a deficit is forecast for this year and next. I guess the OMB is not planning on a pick-up in capital gains receipts. That might imply they figure the stock market will not be robust. The latter opinion might force me into becoming a bull. I said might and not necessarily.

Thursday, October 24, 2002

10/24/02 David Bell Has Great Baseball Genes

Gus Bell. Buddy Bell. Now David Bell. The Bell rang in the 8th inning. We have ourselves a series!

Morgan Stanley's chief economist said there is a real rising risk of deflation. You can say that again.

Did you all happen to notice? Since October 1 car sales have hit a brick wall. We should recall that the car industry represents 4% of our GDP. There is little question but that the big three auto companies will begin to spill some serious red ink. Incentives no longer will do the trick.

Eastman Kodak to have more layoffs.

Wednesday, October 23, 2002

10/23/02 Blaming Wall Street

New York City is facing a $1 billion budget shortfall. The main culprit appears to be lower than expected revenues from Wall Street.

Cooper Industries has 30,000 employees. They plan on closing 10 factories. Schlumberger and Dynegy announce layoffs. IBM cuts another 2800.

Bill Ford is the former governor of the Atlanta Fed. Yesterday he stated that a rising deficit+ slower economic growth = a terrible prescription for the economy.

The Anaheim Angels made winning look easy in game 3.

Tuesday, October 22, 2002

10/22/02 The Economic Stumble And The Market Rally

In September the index of leading economic indicators fell for the fourth consecutive month. This last took place in November 1990. The Dow has rallied for 7 out of the last 8 days. The last time it rose 16% in this consecutive period of time was in 1939 or 63 years ago. That's longer than the world series drought for the Giants.

Texas Instruments, AT&T, and Sega all had disappointing results and UAL will layoff more workers. If you buy into this rally, then you must project a profit turnaround. Do you see more than a handful of CEOs upbeat about future results? I read about the lack of visibility. I hear talk of asset allocation- more stock buying and the reduction in bond positions. How many money managers are buying stocks with their own money and not your money? How many CEOs are buying stock in their own companies? Follow the money and not just yours.

Monday, October 21, 2002

10/21/02 Menlo Park

This town is at the core of both the Silicon Valley and the venture capital industry. It is next door, so to speak, to Stanford University and many renown companies. As such, I was shocked to learn that Menlo Park's latest quarterly tax revenue receipts dropped 41% from the like period one year ago. This is not a town comprised of mainly new wealth, and this news should be a wake-up call to anyone believing the valley is going to make a quick turnaround.

Hitachi cut its operating profit forecast by about 30%. Samsung had lower than expected profits.

Bank of Japan's Governor Hayami said Japan's financial system is in its most severe status ever.

Sunday, October 20, 2002

10/20/02 Alderwoods And UAL

Alderwoods is the second largest funeral services company in North America with 10,000 employees, 920 funeral homes, and 275 cemeteries. On Monday funeral directors are set to strike a dozen Alderwoods funeral homes in Chicago, and it would be the first such strike in Chicago. Don't you think there's enough trouble in Chicago? UAL is losing $7 million in cash per day. It would be too much for the hearts of Chicagoans if Alderwoods and UAL both shut their doors in the windy city. On the other hand, let's look on the bright side. U-Haul could really use the business.

The holiday season looks mediocre at best. Will Kmart make it? How many store closings will occur at other companies in the retail industry? Maybe we should run a contest to see who can come closest to the actual downsizing number.