Saturday, February 08, 2003

2/8/03 You Can't Fire Who You Don't Hire

The employment report for January said retail employment rose by 101,000. The fact is the hiring was not real. The employees weren't hired in December and therefore weren't fired in January. This is how ridiculous government reporting has become. They call this adjusting data for seasonal variations. I'm a simple guy. I call it bullshit. Aside from retail employment, supposedly the economy added 42,000 other jobs in January. We know this isn't true because over 100,000 net job losses were announced. The December payroll number was adjusted ownward today to show a much larger job loss of 156,000 or 55,000 more than originally stated. It would be so much easier to provide the correct number in the first place and indicate unemployment is rising.

Eurostocks near 6 year lows.

Volvo downbeat on future earnings.

In January the U.S. imported 67% of the oil Iraq exported a day. You still believe there will be a war?

Crude oil is over $35 a barrel, and gas will rise again at the pump.

Stocks declined for the fourth straight week, and have broken the chart support levels.

AIG hits 4 year low and closes at $46.70 or down $23 billion in value for the week. 38-40 looks like an interesting chart support level.

Credit card borrowing fell to a 27-year low in December. As I have been saying, the new trend is to save and not to consume.

Friday, February 07, 2003

2/7/03 Happy Birthday Edward

The Federal government announced they would be cutting 400 jobs. That's like a pimple on an elephant's ass. I was hoping for a number closer to 400,000.

In the journal, Human Production, researchers found progressive motility declined 3.1% each year. In other words, "the data suggest men may become progressively less fertile as they age." In less scientific terms, the sperm swims in circles(like the Wazoo bird) rather than making a mad dash for the female egg. The moral of the story is keep your eye on the ball.

Sears had its 17th straight monthly decline in same-store sales, and that's not easy to deliver! Their first quarter will come in below projections. Federated Dept Stores and J.C. Penney also had lower same-store sales. On the other hand, the leader of the pack, WalMart, had a sales gain of 2.3%. As always, ride the winner.

Bank of England cuts interest rates to the lowest level since 1955. They are trying to spur growth. I give them credit for trying. Hope springs eternal.

The NY Times ran an article stating the U.S. economy is in its worst hiring slump in 20 years. Tell that to Greenspan. He thinks we've hit a soft patch. I know a proctologist who thought that too.

Agilent lowers guidance. This Hewlett Packard spin-off has been a problem from the start.

Chicago topped the nation in job losses in 2002.

Circuit City cut 2000 jobs.

Hispanic births account for more than 50% of the births in California.

In the past couple of weeks gas prices have risen about 20 cents per gallon, and with that, crude oil is selling near a two year high.

Worker productivity in the fourth quarter fell far short of expectations. At some point there are diminishing returns, and we should remember that you can't get blood from a stone.

El Paso, the largest U.S. pipeline company, cut its dividend by 82%.

Dillingham Construction filed for chapter 11.

Too often individuals and/or groups don't appreciate what they have. This can be true in all walks of life. Take the 49ers and Steve Mariucci. Sometimes it takes place in relationships/marriages. Sometimes it happens with stocks. When you have a winner, don't look to see whether the grass is greener across the street. Appreciate what you have. Don't sell WalMart to buy the stock of another competitor. WalMart is probably the best run company in America. Stick with the winner, and don't overtrade. Overtrading can only bring with it losses and disappointments.

Thursday, February 06, 2003

2/6/03 The Trend

A month does not go by that I don't remind my readers to make the trend your friend. That's true of the market and also in business. We can learn from companies that do the opposite.

Let's look at Cisco. One money manager recently stated that "Cisco owns the market and they can still afford to charge the premium for the nameplate." How wrong he is. First, the customer cannot afford the premium for the nameplate. Second, Cisco only owns the high end of their market, and that sector is not growing. In fact, it is contracting. Another money manager said "Cisco still believes that price is still not the key issue in the marketplace." Maybe not three years ago, but price is very much a factor today, and the trend is towards saving money on less expensive equipment. For example, Conneticut's Naugatuck Valley Community College replaced Cisco equipment with 28 data switches from Hewlett-Packard and saved $80,000 or 40% over what Cisco would have charged. The savings get greater when we discuss the wins the Chinese manufacturers have provided to their customers. Cisco will pay dearly for ignoring the growing trend to price as a determining factor. The stockholders continue to pay. Cisco stock has dropped over 30% in the past year alone.

It is expected that the U.S. debt limit, currently $6.4 trillion, will be hit Feb. 20. I touched on this subject some weeks back. Now we are two weeks away from the government running out of money. The Congress should not provide a near-term fix to this problem without a plan carved in stone which reduces government expenditures by at least 5%, and that includes providing for funds for Iraq, N. Korea, and all points on the globe! They can start by rescinding the pay raise for all government workers, and then deep cuts in staff members should be included for all members of Congress as well as White House staff. Maybe then the right hand will know what the left hand is doing.

Since the slowdown started in the Silicon Valley, 130,000 jobs have been lost. To put it in perspective, that's the population of Berkeley, Ca.

Last week economic conditions took its toll on the law firm, Brobeck, Phleger and Harrison. This week San Jose-based Skjerven Morrill fell victim. The latter had been in the Silicon Valley for 26 years and specialized in intellectual property disputes. Maybe with less money for R&D, there's less intellectual property. Or maybe the intellectuals have left California and moved to a more tax friendly state- like Ted Turner.

Not all technology companies are in the soup. There's a small, privately-owned company in Bellevue, Wa called AskMe. Last year they doubled revenue, became profitable, and tripled its number of customers( Proctor & Gamble, Ford, Honeywell, Boeing, Network Appliance). The company builds Employee Knowledge Networks and collates information from HR databases, manuals, and case studies written by employees and provides the mechanism by which employees find answers to questions and thus reduce the time employees expend in spinning their wheels in utter frustration. Unlike most other software companies, AskMe is hiring.

Wednesday, February 05, 2003

2/5/03 Forest Fires

I read an article recently about the Silicon Valley, and an analogy was brought out with respect to forest fires. It was suggested that periodic fires burning underbrush and weaker trees renew the entire forest region, and thus it was explained, allow it to grow and spread again. There wasn't any mention of greed, lack of managerial skills, and China. I suggest they burn the newspaper that printed this article which insults the intelligence of those feeling pain in the Silicon Valley. There are huge amounts of talented individuals without jobs and with little hope of getting a job. I have previously mentioned that one sixth of the area's space is comprised of vacant office buildings etc. There is real hurt there, and re-growth is not around the corner. Retrenchment will be the call for a long long time.

Take Cisco. Please! No one cares that their earnings improved for the past quarter. Their sales were down and Chambers said customers are even more cautious than they were at the beginning of the second quarter, and forecast another possible dip for this period. He sees no quick upturn for tech spending. He's not alone in this view.

Ted Turner will be making a move to Florida near Tallahassee for tax reasons. Florida hasn't any personal state income tax. When and if he sells his AOL stock, that will save him a wad of cash. Good for him.

AIG raises their liability reserves by $2.8 billion.

Germany's unemployment rate rose to a 5 year high.

Once again the dollar is nearing a new 4 year low vs the euro.

Senator Kent Conrad, D-N.D. "the president is taking us into an absolute swamp of deficit and debt...unparalleled in our nation's history." What would someone from ND know from swamps?

There were 132,000 job cuts in January. That's one soft patch.

Blix warns Iraq "it is five minutes to midnight." Does he really think Saddam gives a crap about the time? A little insight into Blix came when he stated "we do not have the same determination on substance as we have on process." I wonder whether he is thinking of dual citizenship and tossing his hat in the ring as a democratic candidate for president. They'll love this guy in NH. There they might be keen on processing rather than the process itself.

Tuesday, February 04, 2003

2/4/03 20 Inches

Come on now. Let's not go there. This is not an x-rated blog! I'm talking the Columbia. A 20 inch piece of insulation weighing 2.67 pounds peeled off a spot where the orbiter is coupled to the external tank. It was this insulating foam which struck Columbia's left wing during takeoff. Tile damage from insulation had never been a prior a problem, and hence, not considered by NASA engineers.

After 64 days the Venezuelan oil strike is sort of over. Let's say it's fading.

With the consumer's weekend focus on the Columbia tragedy, retail sales at U.S. chain stores were down for the latest week.

American Airlines is burning thru $5 million per day. How long can that continue? The company has $2 billion in unrestricted cash on the balance sheet.

Georgia is set to lose 9000 jobs in 2003. During the past two years the state has lost 123,000 jobs.

Organizers of the Comdex computer trade show filed for chapter 11.

Gold is trading at a 7 year high.

Ericcson's losses widened in the quarter.

Germany's three largest banks will post their first yearly losses since WW II.

U.S. auto sales dropped in January.

The January ISM index dropped from the December level.

For all of you romantics with France on your mind, France's consumer sentiment is at a 5 year low and their unemployment rate is above 9%. France's pension system is shortly to be in a deficit position as the number of retirees swells.

Jean-Pascal Beaufret, Alcatel Sa CFO, "2003 will be a difficult year." Alcatel is eliminating 40% of their workforce!

Does anyone consider how little print coverage there is of the Fed? Greenspan had been on every front page of every newspaper and magazine. He's still very much alive. As I have said so often, the Fed is not the marketplace. The latter is king and not the Fed. Maybe Greenspan will retire to France and wow their economic system.

Monday, February 03, 2003

2/3/03 Economic Debris Sheds Over The U.S.

I had planned to write on this subject yesterday; however, the Columbia tragedy took center stage, and rightly so. Just to set the record straight, I have been up all night, but that doesn't mean I'm cranky. I'm not a moody guy. I don't like it when others insult our intelligence and think it's business as usual.

I'm referring to the $2.23 trillion budget which the President plans to present to Congress. Think about this. Who has a budget of that size for a $10 trillion GDP? Remember please the consumer- that's us- is responsible for at least two-thirds of the GDP. Then healthcare represents another 15%. Those two numbers amount to about $8.2 trillion, and the latter subtracted from $10 trillion leaves only $1.8 trillion. Of the $1.8 trillion a good deal is comprised of services. As you can see, the government essentially generates no GDP. So what are we getting for that $2.23 trillion? Essentially protection via our military. The rest goes to support government agencies and/or appendages. We could eliminate two-thirds of the latter, and not miss a thing. Maybe then we wouldn't expect to see budget deficits for the next ten years. At least that's what the budget office is projecting. Their projections are so pathetic that they are an embarrassment. In fact, this budget is an embarrassment. It is worthless debris scattered over the American public's checkbooks. Wake up and smell the spending. It's rancid. This excessive spending is undermining our sovereignty and our homeland security. Unleashed government spending is a weapon of mass destruction!

Sunday, February 02, 2003

2/2/03 Someone Always Has It Worse Than You

The same Ames, Iowa couple who lost their son in the 911 terrorist attack on the World Trade Center mourn the death of their niece, Astronaut Laurel Clark, one of seven astronauts on board Columbia. Whether it was a heat problem, a tile problem, or a wing problem that is the cause, I would like to believe that this country does not require a tragedy to reflect on the value of life. To put matters in perspective, Ilan Ramon's Torah scroll survived the Auschwitz concentration camp, but it was destroyed in the Columbia explosion.

Don Nelson, a longtime NASA supervisor and mission planner going back to the first lunar missions, left NASA four years ago because of grave concerns about its safety program. In August he wrote to President Bush saying it was his "duty to inform you that our space shuttle astronauts are in eminent danger. Your intervention is required to prevent another catastrophic shuttle accident." He received a December 4 reply from the director of the Office of Science and Technology which stated that "NASA places a high priority on safety and has instituted a program of developing and implementing safety upgrades to reduce the risk to space shuttle crews." On December 21 Nelson replied with another letter to the White House and said "I assume that you are aware there never has been a launch vehicle that has not had multiple catastrophic failures."
As we learned yesterday, it only takes one overwhelming failure to produce a national mourning for our space heroes.