12/31/02 Sell The Rallies, Buy The Dips, Stay On The Sidelines?
As 2002 comes to a close, it appears that the market will have the worst December since 1931. At the present time, the S&P 500 is down over 20% this year and the Nasdaq has declined 30%. Where do we go from here?
1. Keep the trend your friend. For the past three years the trend has been down. It is still down. Do not buck the trend.
2. Fourth quarter results have not been released; however, the quarter is over today. I'm not interested in warnings for the 4th quarter. That's history. I am concerned about expectations for the March quarter and beyond. With minimal topline growth and little pricing power, what should a P/E ratio be for cost-cutting? Not very high in my view. You can't grow a company thru cost cutting.
3. The dollar is, in my opinion, still overvalued against the Yen and the Swiss franc.
4. The budget deficits at the local and state levels are a drag on the economy and will continue to be in 2003.
5. The federal government's budget deficit continues to exceed expectations by wide margins. The debt level will need to be raised in February. This indebtedness hampers economic flexibility.
6. It's not just that 41 million Americans don't have healthcare insurance. The rest of the story is the rapidly rising cost of healthcare for the rest of Americans who do have insurance. This problem is raging out of control.
7. The cold winter is creating higher heating bills, and the latter are exacerbated by the rising cost of heating oil, natural gas, and propane.
8. Despite what the Fed proclaims, this institution plays second fiddle to amrket forces. Do you really believe the Fed can print money and inflate the country out of its economic malaise? The dollar is weak and getting weaker. China will continue to export deflation into the U.S. India will continue to be an outsourcing IT force. Our country will not win an economic battle with a guns and butter arsenal. That's a losing proposition.
9. Despite what the media might indicate, the U.S. has weak economic leadership and focus. Ross Perot knew what it took to run a business. We need a chief executive who can make tough business decisions. On both sides of the aisle I don't see such a person.
10. Before you buy or sell, place yourself where the risk/reward is clearly in your favor. If you make a mistake, cut your losses short. There is no room for indecision. When not comfortable, do nothing. When unable to sleep, sell to the sleeping point. Look for potential value and concentrate on companies with repeat business. Such a stock could be Coca Cola. It's on the new low list. I don't make recommendations. I suggest investigating individual situations. Other examples might be Starbucks, McDonald's, Home Depot, and Micron Technology. Maybe one of these companies will merit your attention. At this writing, I don't own any of these stocks.
11. When it comes to a war or a potential war, I worry about Americans being injured and the possible loss of life. I don't concern myself with the impact of war on the stock market. Wars, thank goodness, end. The need for positive cash flow is on-going.
12. Investing is a long-term proposition. To be successful one must think like an owner. As a shareowner, you are a owner of the business. Ask yourself. Do you want to own a stake in that business?
13. The New Year begins tomorrow. It's a fresh slate. The fact that I have been right on the market for the last three years means nothing. That's history. We're in the present and looking out on the horizon. Maybe the economy will grow at 1 or 2% in 2003. Maybe there will be no growth. Maybe there will be a recession. Maybe, bite my tongue, a depression. Maybe deflation. Maybe inflation. Maybe stagflation. Take your pick. It matters but not entirely. In every economy and in every market opportunities are there for the picking. Remain alert. Please remember. You cannot buy at the low and sell at the high. Unlike your spouse, you are not married to an individual stock. It's only business.
I wish all of my readers a happy and healthy New Year.
Monday, December 30, 2002
12/30/02 Michael's
As a youngster, I always got my haircuts at Michael's Barbershop on N.Y.C.'s upper eastside. It was a few blocks walk from where I lived. After 92 years, Michael's has closed its doors.
The yield on stocks is higher than that of short-term treasury bills. Both are slim pickens.
Israel is battling its worst recession in 50 years.
The Nikkei is down 19% in 2002, and at its lowest level in 20 years.
Crude oil is trading at a 2 year high of $33 per barrel.
The dollar is at 6 week lows vs the yen.
Since 9/11, loayoffs in the financial services sector have exceeded 6%. Expect more in 2003.
In the past year TV political ads amounted to $1 billion. In my view, there isn't much to show for it.
The Energy Information Agency( we have agencies for agencies) recently forecast that U.S. households will spend 31% more for natural gas compared with last year, 41% more for heating oil, 17% more for propane, and 13% more for electricity. That amouints to a tax increase. When added to the rising cost of healthcare, it's no wonder you are seeing grimmer faces.
Now for the good news. For the first time since 1986, the Giants and the Jets are in the NFL playoffs at the same time.
A question for 2003- do you buy the dips, sell the rallies, or stand on the sidelines? Let's visit that subject tomorrow and possibly the day after.
Happy birthday wishes to Brittany and Maggie's mother.
As a youngster, I always got my haircuts at Michael's Barbershop on N.Y.C.'s upper eastside. It was a few blocks walk from where I lived. After 92 years, Michael's has closed its doors.
The yield on stocks is higher than that of short-term treasury bills. Both are slim pickens.
Israel is battling its worst recession in 50 years.
The Nikkei is down 19% in 2002, and at its lowest level in 20 years.
Crude oil is trading at a 2 year high of $33 per barrel.
The dollar is at 6 week lows vs the yen.
Since 9/11, loayoffs in the financial services sector have exceeded 6%. Expect more in 2003.
In the past year TV political ads amounted to $1 billion. In my view, there isn't much to show for it.
The Energy Information Agency( we have agencies for agencies) recently forecast that U.S. households will spend 31% more for natural gas compared with last year, 41% more for heating oil, 17% more for propane, and 13% more for electricity. That amouints to a tax increase. When added to the rising cost of healthcare, it's no wonder you are seeing grimmer faces.
Now for the good news. For the first time since 1986, the Giants and the Jets are in the NFL playoffs at the same time.
A question for 2003- do you buy the dips, sell the rallies, or stand on the sidelines? Let's visit that subject tomorrow and possibly the day after.
Happy birthday wishes to Brittany and Maggie's mother.
Sunday, December 29, 2002
12/29/02 The Commodity Research Bureau Index
The 17-commodity CRB last week reached a 5 year high. Natural gas, wheat, cocoa, and coffee are all on the rise and higher consumer prices could be the result.
Venezuela is now importing gasoline.
The dollar is at its lowest level against the Swiss franc in nearly 4 years.
For the month of December, the Dow is down 6.7%, the S&P 500 6.5%, and the Nasdaq 8.8%. As I stated at the end of November, the year-end rally had already taken place.
According to a N.Y. Daily News poll, 50% of the respondents gave Mayor Bllomberg an F.
Robert Menendez is now the number 3 Democrat in the House. As a possible VP running mate, he could help ensure the Hispanic vote in 2004.
In a letter to JP Morgan Chase employees the CEO wrote "give yourself an attitude check." At the same time, the rank and file employees had their stock bonuses slashed by more than 50%. Maybe the CEO should be cut.
Japan's economic minister said Japan's top priority in 2003 will be to end deflation.
The 17-commodity CRB last week reached a 5 year high. Natural gas, wheat, cocoa, and coffee are all on the rise and higher consumer prices could be the result.
Venezuela is now importing gasoline.
The dollar is at its lowest level against the Swiss franc in nearly 4 years.
For the month of December, the Dow is down 6.7%, the S&P 500 6.5%, and the Nasdaq 8.8%. As I stated at the end of November, the year-end rally had already taken place.
According to a N.Y. Daily News poll, 50% of the respondents gave Mayor Bllomberg an F.
Robert Menendez is now the number 3 Democrat in the House. As a possible VP running mate, he could help ensure the Hispanic vote in 2004.
In a letter to JP Morgan Chase employees the CEO wrote "give yourself an attitude check." At the same time, the rank and file employees had their stock bonuses slashed by more than 50%. Maybe the CEO should be cut.
Japan's economic minister said Japan's top priority in 2003 will be to end deflation.
Saturday, December 28, 2002
12/28/02 No Santa Claus Rally
For the second day in a row the Dow and the Nasdaq closed near their session lows. The S&P 500 index closed at its lowest level in more than 2 months.
800,000 jobless lose their unemployment benefits today.
According to a recent poll, the vast majority of Americans believe the U.S. is very likely or somewhat likely to go to war with Iraq. There is a new moon around Feb 1, and that could be a possible date for the war to begin.
McDonald's is planning to introduce a new beef patty this Spring. Maybe I should ask for the recipe.
Ethan Allen opened its first store in China. Does that mean China will now be making their furnitiure?
Applied Biosystems to cut 9% of their workforce.
For the second day in a row the Dow and the Nasdaq closed near their session lows. The S&P 500 index closed at its lowest level in more than 2 months.
800,000 jobless lose their unemployment benefits today.
According to a recent poll, the vast majority of Americans believe the U.S. is very likely or somewhat likely to go to war with Iraq. There is a new moon around Feb 1, and that could be a possible date for the war to begin.
McDonald's is planning to introduce a new beef patty this Spring. Maybe I should ask for the recipe.
Ethan Allen opened its first store in China. Does that mean China will now be making their furnitiure?
Applied Biosystems to cut 9% of their workforce.
Friday, December 27, 2002
Thursday, December 26, 2002
12/26/02 Too Little Too Late
That's how WalMart described their holiday season business. Despite a couple of strong days just before Christmas, the company lowered its December same-store sales outlook to be up 2 to 3% rather than the previous 3 to 5% guidance. At this point, it is realistic to expect reduced expectations from other retailers.
There are still 3 1/2 million Americans receiving jobless benefits. A significant portion of those will have those benefits end in the next few days. This fact had to impact holiday sales.
That's how WalMart described their holiday season business. Despite a couple of strong days just before Christmas, the company lowered its December same-store sales outlook to be up 2 to 3% rather than the previous 3 to 5% guidance. At this point, it is realistic to expect reduced expectations from other retailers.
There are still 3 1/2 million Americans receiving jobless benefits. A significant portion of those will have those benefits end in the next few days. This fact had to impact holiday sales.
Wednesday, December 25, 2002
12/25/02 Merry Christmas
According to the Stock Trader's Almanac, going back most of this century, about 45% of all stock market gains come in the year preceding an election year. In fact, the third year of a term produces about 3 times as many up years as down years.
The stock market seems headed for its third down December in six years. 2002 will be the first time since 1942 that the market has been down in 3 consecutive years. At the same time, so far this quarter the Dow is up 11%, the Nasdaq 17%, and the S&P 9%.
Crude oil prices have gained 17% since the start of the strike in Venezuela.
Gold is at a 5 1/2 year high at $347 per ounce.
We know that companies are looking for ways to cut costs. The daily layoffs are a daily reminder. What would Jack Welch say about this? In 2001 only 434 civilian federal government workers, out of a 3 million plus workforce, were fired. I guess the rest were great job performers and are a significant reason that this country's productivity is on the rise. Hello! Anyone home?
The treasury department asked Congress to increase the government's borrowing authority, and warned the current $6.4 trillion debt limit may be reached within 60 days. How is that possible? Only a month or so ago the budget deficit for the year ending next September was estimated at $146 billion. To exceed the debt limit the deficit would need to be $100 billion more than just estimated. When will Americans elect officials who actually will reduce the net outflow of government funds? The government produces absolutely nothing, and should be viewed as the employer and spender of last resort. Unlike the vast majority of Americans, do you think civilian federal government workers are worried this holiday season about losing a job or having their hours cut? Do they plan for the worst case scenario? I think not.
According to the Stock Trader's Almanac, going back most of this century, about 45% of all stock market gains come in the year preceding an election year. In fact, the third year of a term produces about 3 times as many up years as down years.
The stock market seems headed for its third down December in six years. 2002 will be the first time since 1942 that the market has been down in 3 consecutive years. At the same time, so far this quarter the Dow is up 11%, the Nasdaq 17%, and the S&P 9%.
Crude oil prices have gained 17% since the start of the strike in Venezuela.
Gold is at a 5 1/2 year high at $347 per ounce.
We know that companies are looking for ways to cut costs. The daily layoffs are a daily reminder. What would Jack Welch say about this? In 2001 only 434 civilian federal government workers, out of a 3 million plus workforce, were fired. I guess the rest were great job performers and are a significant reason that this country's productivity is on the rise. Hello! Anyone home?
The treasury department asked Congress to increase the government's borrowing authority, and warned the current $6.4 trillion debt limit may be reached within 60 days. How is that possible? Only a month or so ago the budget deficit for the year ending next September was estimated at $146 billion. To exceed the debt limit the deficit would need to be $100 billion more than just estimated. When will Americans elect officials who actually will reduce the net outflow of government funds? The government produces absolutely nothing, and should be viewed as the employer and spender of last resort. Unlike the vast majority of Americans, do you think civilian federal government workers are worried this holiday season about losing a job or having their hours cut? Do they plan for the worst case scenario? I think not.
Tuesday, December 24, 2002
12/24/02 Posting #2 Haram
Haram is the Arabic word for forbidden. In Saudi Arabia churches are not permitted. Islam is the only accepted religion. As such, to celebrate Christmas one must have a very private gathering in one's home.
During these difficult and stressful times we sometimes overlook the wonders of freedom, and religious freedom is an important part of every day American life. We are indeed very lucky to be U.S. citizens.
Haram is the Arabic word for forbidden. In Saudi Arabia churches are not permitted. Islam is the only accepted religion. As such, to celebrate Christmas one must have a very private gathering in one's home.
During these difficult and stressful times we sometimes overlook the wonders of freedom, and religious freedom is an important part of every day American life. We are indeed very lucky to be U.S. citizens.
12/24/02 Sectors In The S&P 500
For the first time since the bear market started in 2000, every one of the 10 broad sectors in the S&P 500 index dropped in 2002.
Oil hits a 22 month high at $31.43 per barrel. Gasoline prices rose at the pump this week.
November durable goods orders fell 1.4%. Without military orders, the fall would have been 2.3%. It should be noted that economists had predicted a small gain.
According to a poll taken by the Atlanta Journal-Constitution, 30% of those living in the state of Georgia said the economy is declining, and 50% said it is neither mending nor decaying. If people feel this way, it's no wonder that retail holiday sales are disappointing.
For the first time since the bear market started in 2000, every one of the 10 broad sectors in the S&P 500 index dropped in 2002.
Oil hits a 22 month high at $31.43 per barrel. Gasoline prices rose at the pump this week.
November durable goods orders fell 1.4%. Without military orders, the fall would have been 2.3%. It should be noted that economists had predicted a small gain.
According to a poll taken by the Atlanta Journal-Constitution, 30% of those living in the state of Georgia said the economy is declining, and 50% said it is neither mending nor decaying. If people feel this way, it's no wonder that retail holiday sales are disappointing.
Monday, December 23, 2002
12/23/02 Inktomi
Several months ago I mentioned that, in my view, those who purchased internet stocks at highly inflated 2000 prices would not get their capital returned to them. They might rally, I said, from pennies to single digits and to expect nothing more.
Today Yahoo announced the purchase of Inktomi. The latter's shareholders will get less than $2 a share. This is better than pennies and more could not have been anticipated. Inktomi continues to lose money and layoff employees. As a stand-alone company, they didn't have a future. This is not the exception to the rule, but rather the legacy of the dotcoms. What a waste of capital and human effort.
Several months ago I mentioned that, in my view, those who purchased internet stocks at highly inflated 2000 prices would not get their capital returned to them. They might rally, I said, from pennies to single digits and to expect nothing more.
Today Yahoo announced the purchase of Inktomi. The latter's shareholders will get less than $2 a share. This is better than pennies and more could not have been anticipated. Inktomi continues to lose money and layoff employees. As a stand-alone company, they didn't have a future. This is not the exception to the rule, but rather the legacy of the dotcoms. What a waste of capital and human effort.
Saturday, December 21, 2002
12/22/02 An Early Posting For Sunday
In Europe shoppers are spending less on holiday presents, and visits to shopping centers are down from a year ago. The reasons given for consumers curbing their spending- a lack of confidence in economic growth and job security. Sound familiar?
The British pound has risen in value for 3 consecutive weeks. This year it is up 10% vs the dollar but is down 4 1/2% vs the Euro.
WalMart employs 1.4 million people. The second largest private employer is McDonald's, and they employ only 400,000.
In Europe shoppers are spending less on holiday presents, and visits to shopping centers are down from a year ago. The reasons given for consumers curbing their spending- a lack of confidence in economic growth and job security. Sound familiar?
The British pound has risen in value for 3 consecutive weeks. This year it is up 10% vs the dollar but is down 4 1/2% vs the Euro.
WalMart employs 1.4 million people. The second largest private employer is McDonald's, and they employ only 400,000.
12/21/02 "Every Investor Deserves Honest Investment Advice"
During my career on Wall Street I ran two successful brokerage firms. The settlement announced yesterday is both unjust and predictable. Jack Grubman agreed to a lifetime ban and a $15 million fine. His salary in one year- 2001- was $20 million. Grubman's employer, Citibank, paid a fine of only $400 million. Citibank made untold hundreds of millions of dollars in investment banking fees. Citibank agreed to no wrongdoing. They, along with 9 other firms who paid a total of $4.4 billion in fines, neither admitted nor denied charges that they had misled investors. With a settlement like this how could Spitzer then say "every investor deserves honest investment advice"? Spitzer then said "this has been only about one thing- ensuring retail investors get a fair shake." I think a good stocking stuffer for Spitzer would be a "Dow 10,000" cap.
November was the first month since May that investors were net buyers of stock funds. Since the major indexes rallied about 20%, that should come as no surprise.
Fourth quarter GDP growth is estimated at 1.4%.
Accounting irregularities must be viral. $9.1 million in accounting errors were discovered in the Des Moines, Iowa school district.
Retailers should have seen slow holiday sales coming. Consumer credit grew at a slim annual rate of 1% in October. In the 3rd quarter ended September the pace was 3 1/2%.
There are 37,000 U.S. troops in S. Korea.
Gucci's profits were down 14 1/2% for the latest quarter, and the company partially blamed poor sales in Hawaii.
The median price of existing homes in California in November increased 21 1/2% compared to the same period a year ago.
In the Silicon Valley 61% say their company is not hosting a holiday party; 75% are not giving any paid time off; and 60% plan less holiday spending in their households.
As noted in a previous blog, it was now officially announced that Medicare will cut payments to doctors by 4.4%.
Scientists at the National Climatic Data Center found that 2002 is likely to be the second warmest year on record for the globe.
The Philadelphia Inquirer posted a story saying that Al Hakam, 60 miles south of Baghdad, produced anthrax and other biological poisons between 1992 and 1996 when the plant was destroyed. This is according to someone who worked at that facility.
During my career on Wall Street I ran two successful brokerage firms. The settlement announced yesterday is both unjust and predictable. Jack Grubman agreed to a lifetime ban and a $15 million fine. His salary in one year- 2001- was $20 million. Grubman's employer, Citibank, paid a fine of only $400 million. Citibank made untold hundreds of millions of dollars in investment banking fees. Citibank agreed to no wrongdoing. They, along with 9 other firms who paid a total of $4.4 billion in fines, neither admitted nor denied charges that they had misled investors. With a settlement like this how could Spitzer then say "every investor deserves honest investment advice"? Spitzer then said "this has been only about one thing- ensuring retail investors get a fair shake." I think a good stocking stuffer for Spitzer would be a "Dow 10,000" cap.
November was the first month since May that investors were net buyers of stock funds. Since the major indexes rallied about 20%, that should come as no surprise.
Fourth quarter GDP growth is estimated at 1.4%.
Accounting irregularities must be viral. $9.1 million in accounting errors were discovered in the Des Moines, Iowa school district.
Retailers should have seen slow holiday sales coming. Consumer credit grew at a slim annual rate of 1% in October. In the 3rd quarter ended September the pace was 3 1/2%.
There are 37,000 U.S. troops in S. Korea.
Gucci's profits were down 14 1/2% for the latest quarter, and the company partially blamed poor sales in Hawaii.
The median price of existing homes in California in November increased 21 1/2% compared to the same period a year ago.
In the Silicon Valley 61% say their company is not hosting a holiday party; 75% are not giving any paid time off; and 60% plan less holiday spending in their households.
As noted in a previous blog, it was now officially announced that Medicare will cut payments to doctors by 4.4%.
Scientists at the National Climatic Data Center found that 2002 is likely to be the second warmest year on record for the globe.
The Philadelphia Inquirer posted a story saying that Al Hakam, 60 miles south of Baghdad, produced anthrax and other biological poisons between 1992 and 1996 when the plant was destroyed. This is according to someone who worked at that facility.
Friday, December 20, 2002
12/20/02 LIBERTY
"Experience teaches us to be most on our guard to
protect liberty when the government's purpose is
beneficent. Men born to freedom are naturally alert to
repel invasion of their liberty by evil-minded rulers.
The greatest dangers to liberty lurk in insidious
encroachment by men of zeal, well-meaning but without
understanding."
- Louis Dembitz Brandeis
Please get familiar with Bush's Total Information Unit. Hw wants the ISPs to facilitate the monitoring and surveillance of internet users thru this unit.
Approximately 10 securities firms will announce a $1 billion settlement with the SEC. This shall acknowledge misleading investors thru research recommendations aimed at winning investment banking business. Since the beginning of the bear market, $7 trillion has been lost. Does a $1 billion settlement sound just? How about ousting the firms from doing business with the public? It may not be the same, but Pete Rose has been banished from baseball for betting. Please think about it.
Greenspan sees no risk of deflation. He must not be familiar with over-supply overwhelming too little demand mixed with decreasing prices being exported by China. Just like he questions the ability to detect bubbles in real-time(which in fact he did), I question his willingness to acknowledge deflation in real-time(although Fed minutes clearly talk of deflation dangers). He does accept the fact that companies have trouble raising prices. That is some consolation.
In its 18th day the Venezuelan oil strike has resulted in daily production plunging from 3 million barrels to 400,000.
Home Depot has just opened its 1500th location.
Property taxes are rising by as much as 25% for N.Y.C. homeowners.
Gold hits a 6 year high, and is up 25% in 2002.
Weekly jobless claims at 433,000 and the 4 week moving average at 400,000.
Barnes & Noble announce weak holiday sales, and warn for their 4th quarter.
The economic downturn has erased 62,000 jobs in Georgia. Bankruptcies in that state are up 16%, and their GDP has grown only 1% in 2002.
Rupert Murdoch makes new approach to GM to buy DirecTV.
"Experience teaches us to be most on our guard to
protect liberty when the government's purpose is
beneficent. Men born to freedom are naturally alert to
repel invasion of their liberty by evil-minded rulers.
The greatest dangers to liberty lurk in insidious
encroachment by men of zeal, well-meaning but without
understanding."
- Louis Dembitz Brandeis
Please get familiar with Bush's Total Information Unit. Hw wants the ISPs to facilitate the monitoring and surveillance of internet users thru this unit.
Approximately 10 securities firms will announce a $1 billion settlement with the SEC. This shall acknowledge misleading investors thru research recommendations aimed at winning investment banking business. Since the beginning of the bear market, $7 trillion has been lost. Does a $1 billion settlement sound just? How about ousting the firms from doing business with the public? It may not be the same, but Pete Rose has been banished from baseball for betting. Please think about it.
Greenspan sees no risk of deflation. He must not be familiar with over-supply overwhelming too little demand mixed with decreasing prices being exported by China. Just like he questions the ability to detect bubbles in real-time(which in fact he did), I question his willingness to acknowledge deflation in real-time(although Fed minutes clearly talk of deflation dangers). He does accept the fact that companies have trouble raising prices. That is some consolation.
In its 18th day the Venezuelan oil strike has resulted in daily production plunging from 3 million barrels to 400,000.
Home Depot has just opened its 1500th location.
Property taxes are rising by as much as 25% for N.Y.C. homeowners.
Gold hits a 6 year high, and is up 25% in 2002.
Weekly jobless claims at 433,000 and the 4 week moving average at 400,000.
Barnes & Noble announce weak holiday sales, and warn for their 4th quarter.
The economic downturn has erased 62,000 jobs in Georgia. Bankruptcies in that state are up 16%, and their GDP has grown only 1% in 2002.
Rupert Murdoch makes new approach to GM to buy DirecTV.
Thursday, December 19, 2002
12/19/02 Nikkei Hits 20 Year Low
As can be seen in Japan, bear markets can have a long life- just like bull markets.
Crude oil trades over $31 per barrel and is up 55% in 2002.
Conseco files for bankruptcy. It is the third largest company to do so.
GM's Doraville, Ga. plant to cut production and have layoffs. This is GM's sole producer of minivans.
United cutting leisure class airfares by up to 40%. Will it be enough?
Sales fall short at Micron.
Activision cites poor holiday sales.
Blockbuster slashed it's 2002 profit outlook. The shortfall is a big one. So much for nesting.
Winnebago is not optimistic about 2003. Maybe high gas prices will keep folks off the roads.
It is hard to swallow that Iraq speculates it might destroy its own oil fields, food supplies, and power plants. Scorched earth has never been a successful policy.
Business owners are permitted to depreciate SUVs and pickups more quickly than cars. Why? SUVs are classified as light trucks. The SUV must weigh over 6000 pounds. That doesn't sound light to me. I find this matter upsetting, and isn't fair for couples without children or singles. In addition, suppose a mother doesn't want to be a soccer mom? Maybe Trent Lott should take this up as a new popular cause and make people forget the current furor.
As can be seen in Japan, bear markets can have a long life- just like bull markets.
Crude oil trades over $31 per barrel and is up 55% in 2002.
Conseco files for bankruptcy. It is the third largest company to do so.
GM's Doraville, Ga. plant to cut production and have layoffs. This is GM's sole producer of minivans.
United cutting leisure class airfares by up to 40%. Will it be enough?
Sales fall short at Micron.
Activision cites poor holiday sales.
Blockbuster slashed it's 2002 profit outlook. The shortfall is a big one. So much for nesting.
Winnebago is not optimistic about 2003. Maybe high gas prices will keep folks off the roads.
It is hard to swallow that Iraq speculates it might destroy its own oil fields, food supplies, and power plants. Scorched earth has never been a successful policy.
Business owners are permitted to depreciate SUVs and pickups more quickly than cars. Why? SUVs are classified as light trucks. The SUV must weigh over 6000 pounds. That doesn't sound light to me. I find this matter upsetting, and isn't fair for couples without children or singles. In addition, suppose a mother doesn't want to be a soccer mom? Maybe Trent Lott should take this up as a new popular cause and make people forget the current furor.
Wednesday, December 18, 2002
12/18/02 Gold Trading Over $342 Per Ounce
The dollar continues weak and gold exhibits on-going strength, and is now up $80 per ounce since I turned positive on the metal for an investment.
Delta plans 3000 more layoffs in 2003.
For every $1 rise in the cost of a barrel of crude oil the impact is about 1/10 of 1% in the U.S. GDP.
Best Buy cut their 4th quarter earnings estimates.
Venezuela exports 2.8 million barrels of oil per day and accounts for 14% of U.S. oil imports.
December month to date retail sales are projected to be down 5%. WalMart same store sales up about 3% but Target's are well below plan. Further discounting can be expected for this Saturday, the largest shopping day of the year.
In 2002 the dollar has fallen 8% against all major currencies and is at a 3 year low vs the Euro.
California is looking at a $35 billion deficit over the next 18 months.
The dollar continues weak and gold exhibits on-going strength, and is now up $80 per ounce since I turned positive on the metal for an investment.
Delta plans 3000 more layoffs in 2003.
For every $1 rise in the cost of a barrel of crude oil the impact is about 1/10 of 1% in the U.S. GDP.
Best Buy cut their 4th quarter earnings estimates.
Venezuela exports 2.8 million barrels of oil per day and accounts for 14% of U.S. oil imports.
December month to date retail sales are projected to be down 5%. WalMart same store sales up about 3% but Target's are well below plan. Further discounting can be expected for this Saturday, the largest shopping day of the year.
In 2002 the dollar has fallen 8% against all major currencies and is at a 3 year low vs the Euro.
California is looking at a $35 billion deficit over the next 18 months.
12/18/02 Gold Trading Over $342 Per Ounce
The dollar continues weak and gold exhibits on-going strength, and is now up $80 per ounce since I turned positive on the metal for an investment.
Delta plans 3000 more layoffs in 2003.
For every $1 rise in the cost of a barrel of crude oil the impact is about 1/10 of 1% in the U.S. GDP.
Best Buy cut their 4th quarter earnings estimates.
Venezuela exports 2.8 million barrels of oil per day and accounts for 14% of U.S. oil imports.
December month to date retail sales are projected to be down 5%. WalMart same store sales up about 3% but Target's are well below plan. Further discounting can be expected for this Saturday, the largest shopping day of the year.
In 2002 the dollar has fallen 8% against all major currencies and is at a 3 year low vs the Euro.
California is looking at a $35 billion deficit over the next 18 months.
The dollar continues weak and gold exhibits on-going strength, and is now up $80 per ounce since I turned positive on the metal for an investment.
Delta plans 3000 more layoffs in 2003.
For every $1 rise in the cost of a barrel of crude oil the impact is about 1/10 of 1% in the U.S. GDP.
Best Buy cut their 4th quarter earnings estimates.
Venezuela exports 2.8 million barrels of oil per day and accounts for 14% of U.S. oil imports.
December month to date retail sales are projected to be down 5%. WalMart same store sales up about 3% but Target's are well below plan. Further discounting can be expected for this Saturday, the largest shopping day of the year.
In 2002 the dollar has fallen 8% against all major currencies and is at a 3 year low vs the Euro.
California is looking at a $35 billion deficit over the next 18 months.
Tuesday, December 17, 2002
12/17/02 KMart
Kmart to be delisted this week from the NYSE.
Factories and other industrial operations are running at 75% of their capacity in the U.S.
Ernst and Young says employers lose an estimated 20% of every dollar to workplace fraud. That is difficult to imagine.
Some Fed members are concerned further tax cuts "would likely take effect too late to foster much added spending in the year ahead."
The Congressional Budget Office forecasts a $145 billion deficit in 2003. I would be very surprised if the figure were that low.
McDonald's warns of a 4th quarter earnings disappointment.
Albert Einstein: "Insanity is doing the same thing over and over again and expecting different results."
Kmart to be delisted this week from the NYSE.
Factories and other industrial operations are running at 75% of their capacity in the U.S.
Ernst and Young says employers lose an estimated 20% of every dollar to workplace fraud. That is difficult to imagine.
Some Fed members are concerned further tax cuts "would likely take effect too late to foster much added spending in the year ahead."
The Congressional Budget Office forecasts a $145 billion deficit in 2003. I would be very surprised if the figure were that low.
McDonald's warns of a 4th quarter earnings disappointment.
Albert Einstein: "Insanity is doing the same thing over and over again and expecting different results."
Monday, December 16, 2002
12/16/02 The S&P
Since 1950 the S&P has only fallen 12 times in December. So far this month the index is down 5%.
An increasing number of households experience home payments of 35% or more of their before-tax income. For most people that would mean their house payments cost half or more of their take-home income. That's including property taxes and insurance, but not maintenance and utilities.
Two-thirds of Americans desire to be vaccinatined against smallpox. According to studies done by the CDC in the 1960s, for every million vaccinations given, there will be one to two deaths; from 14 to 52 life-threatening reactions uncluding gangrene, encephalitis, and severe skin reactions; and from 500 to 900 other side effects such as rashes, fevers, and viral eruptions far from the vaccination site. Anyone harmed by the vaccine will have to sue the gov't.
According to a November survey of 852 companies, nearly 45% of New York area companies laid off employees in 2002 compared to 39% in the rest of the country. Nearly 28% of New York companies plan more layoffs in 2003, and 31% will continue with hiring freezes.
Chrysler says they no longer exp[ect 2003 to be a bit easier but rather that "competition will stay tough also next year."
Since 1950 the S&P has only fallen 12 times in December. So far this month the index is down 5%.
An increasing number of households experience home payments of 35% or more of their before-tax income. For most people that would mean their house payments cost half or more of their take-home income. That's including property taxes and insurance, but not maintenance and utilities.
Two-thirds of Americans desire to be vaccinatined against smallpox. According to studies done by the CDC in the 1960s, for every million vaccinations given, there will be one to two deaths; from 14 to 52 life-threatening reactions uncluding gangrene, encephalitis, and severe skin reactions; and from 500 to 900 other side effects such as rashes, fevers, and viral eruptions far from the vaccination site. Anyone harmed by the vaccine will have to sue the gov't.
According to a November survey of 852 companies, nearly 45% of New York area companies laid off employees in 2002 compared to 39% in the rest of the country. Nearly 28% of New York companies plan more layoffs in 2003, and 31% will continue with hiring freezes.
Chrysler says they no longer exp[ect 2003 to be a bit easier but rather that "competition will stay tough also next year."
Sunday, December 15, 2002
12/15/02 Tom Ridge And A Promise
When Tom Ridge was governor of Pennsylvania he promised that higher taxes would not result from increases in school pensions and easier eligibility standards for future retirees. So much for that promise. The Pennsylvania Public School Employees' Retirement System dropped $12 million per day or $4.4 billion in its latest budget year. Now trustees of the retirement system want to triple subsidies from Pennsylvania districts. In sum, that means homeowners will pay higher property taxes. I hope the money managers for the retirement system did not charge a fee for this fiasco. The stock market can be a costly venue.
In November there was a 2.3% gain in sales in furniture and other home-furnishings stores. The reason was simple- no money down, no interest, no payments for at least one year and, in most cases, 2 years. It's a page out of auto discounts. It's less the consumer buying but rather the retailer dumping inventory on a heavily discounted basis.
Accel Partners, a California-based venture capital firm, has waived its mangement fee until 2004. Typically, such a fee runs 2-2 1/2% of the assets managed.
An increasing number of drug companies have plants which no longer meet current sterility standards. This is part of the reason for persistent shortages of injected medications in hospitals.
When Tom Ridge was governor of Pennsylvania he promised that higher taxes would not result from increases in school pensions and easier eligibility standards for future retirees. So much for that promise. The Pennsylvania Public School Employees' Retirement System dropped $12 million per day or $4.4 billion in its latest budget year. Now trustees of the retirement system want to triple subsidies from Pennsylvania districts. In sum, that means homeowners will pay higher property taxes. I hope the money managers for the retirement system did not charge a fee for this fiasco. The stock market can be a costly venue.
In November there was a 2.3% gain in sales in furniture and other home-furnishings stores. The reason was simple- no money down, no interest, no payments for at least one year and, in most cases, 2 years. It's a page out of auto discounts. It's less the consumer buying but rather the retailer dumping inventory on a heavily discounted basis.
Accel Partners, a California-based venture capital firm, has waived its mangement fee until 2004. Typically, such a fee runs 2-2 1/2% of the assets managed.
An increasing number of drug companies have plants which no longer meet current sterility standards. This is part of the reason for persistent shortages of injected medications in hospitals.
Saturday, December 14, 2002
12/14/02 My Sigma Nu Experience
The Trent Lott furor brought up a memory. In my college sophomore year I joined Sigma Nu. I was foolishly unaware that the national charter prohibited allowing blacks into our chapter. Many weeks later this fact was brought out. I immediately called a meeting of all our brothers. It was late in the evening. I discussed my feelings on this discrimination, and pointed out that, had I known of this policy, I would not have joined in the first place. I said my alternatives were to resign or to implore the others here in the room to vote to have our chapter go local and leave the national Sigma Nu organization. The meeting went on for some time. Each person had the opportunity to voice his views. A vote was taken. We withdrew from the national organization. From that point onward our local fraternity( no longer called Sigma Nu) invited all minorities to join, and they did.
Michigan Governor-elect Jennifer Granholm said the state's financial picture is more bleak than she had thought, and deep budget cuts will be required. A $1.8 budget deficit looms in the coming fiscal year. Only school funding will be frozen. Caifornia's Davis would do well to learn from Granholm.
As N.YC. moves closer to a transit strike, a judge barred the transit workers from striking.
China has 8 million new urban job-seekers each year. It's a good thing China's economy is growing 7-8%. Their unemployment rate is 4%.
U.S. producer prices declined 0.4% in November. This was the largest drop since a similar decline in May. Deflation is not a rumor.
The Trent Lott furor brought up a memory. In my college sophomore year I joined Sigma Nu. I was foolishly unaware that the national charter prohibited allowing blacks into our chapter. Many weeks later this fact was brought out. I immediately called a meeting of all our brothers. It was late in the evening. I discussed my feelings on this discrimination, and pointed out that, had I known of this policy, I would not have joined in the first place. I said my alternatives were to resign or to implore the others here in the room to vote to have our chapter go local and leave the national Sigma Nu organization. The meeting went on for some time. Each person had the opportunity to voice his views. A vote was taken. We withdrew from the national organization. From that point onward our local fraternity( no longer called Sigma Nu) invited all minorities to join, and they did.
Michigan Governor-elect Jennifer Granholm said the state's financial picture is more bleak than she had thought, and deep budget cuts will be required. A $1.8 budget deficit looms in the coming fiscal year. Only school funding will be frozen. Caifornia's Davis would do well to learn from Granholm.
As N.YC. moves closer to a transit strike, a judge barred the transit workers from striking.
China has 8 million new urban job-seekers each year. It's a good thing China's economy is growing 7-8%. Their unemployment rate is 4%.
U.S. producer prices declined 0.4% in November. This was the largest drop since a similar decline in May. Deflation is not a rumor.
Friday, December 13, 2002
12/13/02 A Weak Dollar and New Highs For Gold And Natural Gas
Yesterday the dollar dropped to its lowest level vs the Euro since January 2000. If you have been reading this blog, you know I believe this weakness will persist.
Gold is approaching a 3 year high. It is exactly 2 1/2 years since I turned bearish on the stock market and bullish on gold.
Natural Gas is at a 19 month high with the lowest supplies since June 2001. This too has been forecast by me.
Jobless claims in the latest week rose 83,000 to 441,000, and represents a return to April layoff levels. That's quite a "soft spot".
AOL is laying off 300. You can expect more to come.
At the end of November GM, Ford, and Chrysler had an unsold inventory of 2 1/2 million cars. I feel confident that this figure can reach 3 million. We just have to be believers in their inept management. The Mojave desert awaits autos. The planes parked there need some company.
Western European car sales declined 6.2% in November.
The ECB lowered its forecast for growth in the dozen nations sharing the Euro to about 1% in 2003. That is a downward revision of 50%! Nexans, the world's largest maker of cables, had lower sales and will idle factories and layoff workers. Alcatel to do the same. Gemplus Int'l, the world's largest maker of smart cards. to layoff about 500 workers in France. Speaking of France, their industrial production dropped 0.6%, the most in a year.
Our money supply is growing but assets are falling(due to lower stock market values and rising personal and corporate bankruptcies). The adjusted monetary base has grown rapidly over the past two years. Upon further analysis, almost all of that growth is in cash! What has happened to those dollars- about 100 billion of them? They have for the most part left the U.S. and reside where the dollar is king. Even though the money supply has risen, the money has been exported and therefore inflation was not created. Should the Fed either monetize the U.S. debt and/or change bank reserve requirements, I suggest it would be a last resort move and not a solution.
I keep wondering. How many of those aforementioned dollars have gone to fund terrorist organizations?
Yesterday the dollar dropped to its lowest level vs the Euro since January 2000. If you have been reading this blog, you know I believe this weakness will persist.
Gold is approaching a 3 year high. It is exactly 2 1/2 years since I turned bearish on the stock market and bullish on gold.
Natural Gas is at a 19 month high with the lowest supplies since June 2001. This too has been forecast by me.
Jobless claims in the latest week rose 83,000 to 441,000, and represents a return to April layoff levels. That's quite a "soft spot".
AOL is laying off 300. You can expect more to come.
At the end of November GM, Ford, and Chrysler had an unsold inventory of 2 1/2 million cars. I feel confident that this figure can reach 3 million. We just have to be believers in their inept management. The Mojave desert awaits autos. The planes parked there need some company.
Western European car sales declined 6.2% in November.
The ECB lowered its forecast for growth in the dozen nations sharing the Euro to about 1% in 2003. That is a downward revision of 50%! Nexans, the world's largest maker of cables, had lower sales and will idle factories and layoff workers. Alcatel to do the same. Gemplus Int'l, the world's largest maker of smart cards. to layoff about 500 workers in France. Speaking of France, their industrial production dropped 0.6%, the most in a year.
Our money supply is growing but assets are falling(due to lower stock market values and rising personal and corporate bankruptcies). The adjusted monetary base has grown rapidly over the past two years. Upon further analysis, almost all of that growth is in cash! What has happened to those dollars- about 100 billion of them? They have for the most part left the U.S. and reside where the dollar is king. Even though the money supply has risen, the money has been exported and therefore inflation was not created. Should the Fed either monetize the U.S. debt and/or change bank reserve requirements, I suggest it would be a last resort move and not a solution.
I keep wondering. How many of those aforementioned dollars have gone to fund terrorist organizations?
Thursday, December 12, 2002
12/12/02 The Trojan
I believe the LA Times had a poor choice of words when characterizing USC's history of sometimes alienating Jews. It was entitled "Day of the Jewish Trojan." As a Jew, I find that an insult. I've never been a party to a trojan.
The LA Times also reports that CSX, of which John Snow has been chairman, didn't pay taxes in 2 out of the last 4 years. If I were a CSX stockholder, I'd be complaining about the 2 years where they did pay taxes.
The state of Washington complains that their tax structure wasn't designed for today's economy because the state doesn't tax groceries, medicine, airplane tickets, legal services, and electronic commerce. The state lawmakers are considering taxing legal, accounting, and engineering services. The Washington constitution bars all but a 1% flat income tax.
More layoffs on the way: Sarah Lee, Aetna Health, Charter Communications,Sprint, Netscape, Yahoo, Inhale Therapeutic, and the University of Illinois.
KMart to close 200-300 stores in January.
Intel's Andy Grove said it would be too optimistic to forecast a semiconductor rebound. What does he know? He only has been running the company for about 35 years!
Kimberly-Clark issued a 4th quarter profit warning due to diaper price wars. The company plans to cut costs by $175-200 million in 2003. Layoffs coming?
There are about 100 million individuals in North America who require cholesterol-lowering products. A recently published study in the British Journal of Nutrition stated that individuals who consume foods containing plant phytosterols enriched with chocolate had their LDL cholesterol reduced by 10%. Sounds good to me. Make mine Lindt orange chocolate.
The foreclosure rate in Northern California is rising.
In 1979 Paul Volcker, the new Fed chairman, decided on a different policy- no longer having the Fed target interest rates, but rather target a level of money supply growth consistent with price stability. The markets would determine the interest rates. As I have said so often, I believe the market does determine interest rates and not the Fed. Greenspan would not agree. In my view, with inflation and deflation in current balance, it would serve the economy well to focus on the optimum level of money supply growth and that focus could jumpstart our dismal economy.
The wagons are circling Trent Lott because he backed Bob Jones University despite its racial policy. Our problems are much bigger than that. Asa Hutchinson, the number 2 person behind Governor Ridge in our Homeland Security department, GRADUATED from Bob Jones University. I know about that university's policies thru the experience my son, Edward, had there. He didn't stay but a day or two.
I believe the LA Times had a poor choice of words when characterizing USC's history of sometimes alienating Jews. It was entitled "Day of the Jewish Trojan." As a Jew, I find that an insult. I've never been a party to a trojan.
The LA Times also reports that CSX, of which John Snow has been chairman, didn't pay taxes in 2 out of the last 4 years. If I were a CSX stockholder, I'd be complaining about the 2 years where they did pay taxes.
The state of Washington complains that their tax structure wasn't designed for today's economy because the state doesn't tax groceries, medicine, airplane tickets, legal services, and electronic commerce. The state lawmakers are considering taxing legal, accounting, and engineering services. The Washington constitution bars all but a 1% flat income tax.
More layoffs on the way: Sarah Lee, Aetna Health, Charter Communications,Sprint, Netscape, Yahoo, Inhale Therapeutic, and the University of Illinois.
KMart to close 200-300 stores in January.
Intel's Andy Grove said it would be too optimistic to forecast a semiconductor rebound. What does he know? He only has been running the company for about 35 years!
Kimberly-Clark issued a 4th quarter profit warning due to diaper price wars. The company plans to cut costs by $175-200 million in 2003. Layoffs coming?
There are about 100 million individuals in North America who require cholesterol-lowering products. A recently published study in the British Journal of Nutrition stated that individuals who consume foods containing plant phytosterols enriched with chocolate had their LDL cholesterol reduced by 10%. Sounds good to me. Make mine Lindt orange chocolate.
The foreclosure rate in Northern California is rising.
In 1979 Paul Volcker, the new Fed chairman, decided on a different policy- no longer having the Fed target interest rates, but rather target a level of money supply growth consistent with price stability. The markets would determine the interest rates. As I have said so often, I believe the market does determine interest rates and not the Fed. Greenspan would not agree. In my view, with inflation and deflation in current balance, it would serve the economy well to focus on the optimum level of money supply growth and that focus could jumpstart our dismal economy.
The wagons are circling Trent Lott because he backed Bob Jones University despite its racial policy. Our problems are much bigger than that. Asa Hutchinson, the number 2 person behind Governor Ridge in our Homeland Security department, GRADUATED from Bob Jones University. I know about that university's policies thru the experience my son, Edward, had there. He didn't stay but a day or two.
Wednesday, December 11, 2002
12/11/02 77% Of Americans Expect Unemployment To Rise In 2003
A quarterly survey by Philadelphia -based Right Management Consultants says one in five employees beleives there is a chance he or she will be laid off in 2003. In addition, laid-off workers believe it shall be difficult to find similar paying jobs.
Snow and ice are blamed for the 2.3% decline in retail sales last week. I always thought where there's a will there's a way. Maybe the will to shop is not overwhelming this holiday season.
Britain posted their biggest ever trade deficit. Falling exports created a deficit for October which was 30% larger than had been forecast.
According to a poll taken by the world's largest organization of CEOs, this country's small business CEOs say the economic forecast is unclear.
Kroger warns of a flat 2003. Schlumberger to lay off 3300 workers.
After more than 7 years of charging some of its customers $3 to talk to a human teller, Bank One Corp. is getting rid of this fee. Maybe the tellers are tongue-tied.
On the same day Jimmy Carter received the Nobel Peace Prize, scud missiles were found on a North Korean ship.
A quarterly survey by Philadelphia -based Right Management Consultants says one in five employees beleives there is a chance he or she will be laid off in 2003. In addition, laid-off workers believe it shall be difficult to find similar paying jobs.
Snow and ice are blamed for the 2.3% decline in retail sales last week. I always thought where there's a will there's a way. Maybe the will to shop is not overwhelming this holiday season.
Britain posted their biggest ever trade deficit. Falling exports created a deficit for October which was 30% larger than had been forecast.
According to a poll taken by the world's largest organization of CEOs, this country's small business CEOs say the economic forecast is unclear.
Kroger warns of a flat 2003. Schlumberger to lay off 3300 workers.
After more than 7 years of charging some of its customers $3 to talk to a human teller, Bank One Corp. is getting rid of this fee. Maybe the tellers are tongue-tied.
On the same day Jimmy Carter received the Nobel Peace Prize, scud missiles were found on a North Korean ship.
Tuesday, December 10, 2002
12/10/02 In November Insiders Sold $14 Worth Of Stock For Every $1 Purchased
This season is turning ugly and certainly not green. As expected, the market has topped out and there are few buyers for stocks at these overvalued levels. However, there are plenty of insiders selling. That selling is at a six month high. You can listen to the pundits who tell you to buy buy buy. Should you pay attention to the trend you will see lower highs and lower lows. This tells the story for the past 3 years. Stand in the way and blood will appear amongst your portfolio. Occasionally, opportunities will appear, and I will attempt to point out their potential for your review. Such was the case not so long ago with Merck at 39. It's now at 59. It is necessary to be patient and to pick your spots.
So far this month consumer sentiment has slumped to its lowest level of the year.
Nokia has lowered its sales forecast for the 4th quarter.
There are loudmouths who have stated that Paul O'Neill stayed in the way of economic growth. Those remarks reflect stupidity and irrationality. O'Neill is a capitalist and the vast proportion of his wealth was found in shares of Alcoa, the company he ran.
John Snow in 1995: "The budget deficit puts a hole in the pocket of every American, every day of our lives." Today the budget deficit resembles the size in 1995 but now Snow has elected to focus on tax cuts and job creation- in true salesman fashion. You get what you pay for.
More layoffs: at MCI, KPMG, Ashford.com, and Service Corp. The explanation for Service Corp is that they used to do the work in-house but now outsource it. The company is in the funeral business and operates cemetaries! Terminations take on a whole other meaning at Service Corp.
This season is turning ugly and certainly not green. As expected, the market has topped out and there are few buyers for stocks at these overvalued levels. However, there are plenty of insiders selling. That selling is at a six month high. You can listen to the pundits who tell you to buy buy buy. Should you pay attention to the trend you will see lower highs and lower lows. This tells the story for the past 3 years. Stand in the way and blood will appear amongst your portfolio. Occasionally, opportunities will appear, and I will attempt to point out their potential for your review. Such was the case not so long ago with Merck at 39. It's now at 59. It is necessary to be patient and to pick your spots.
So far this month consumer sentiment has slumped to its lowest level of the year.
Nokia has lowered its sales forecast for the 4th quarter.
There are loudmouths who have stated that Paul O'Neill stayed in the way of economic growth. Those remarks reflect stupidity and irrationality. O'Neill is a capitalist and the vast proportion of his wealth was found in shares of Alcoa, the company he ran.
John Snow in 1995: "The budget deficit puts a hole in the pocket of every American, every day of our lives." Today the budget deficit resembles the size in 1995 but now Snow has elected to focus on tax cuts and job creation- in true salesman fashion. You get what you pay for.
More layoffs: at MCI, KPMG, Ashford.com, and Service Corp. The explanation for Service Corp is that they used to do the work in-house but now outsource it. The company is in the funeral business and operates cemetaries! Terminations take on a whole other meaning at Service Corp.
Monday, December 09, 2002
12/9/02 John Snow
He was named the new Secretary of the Treasury. His background: Ph.D in economics; lawyer; Chairman of CSX; former Chairman of the Business Roundtable; and Ass't Secretary of Transportation in the Ford Administration when VP Cheney was chief of staff. Paul O'Neill may not have gotten along with the press and possibly he shot his mouth off when he shouldn't, but he is a straight shooter and not a politician. In addition, he was a very successful businessman. I hardly see where Mr. Snow is in Mr. O'Neill's league.
He was named the new Secretary of the Treasury. His background: Ph.D in economics; lawyer; Chairman of CSX; former Chairman of the Business Roundtable; and Ass't Secretary of Transportation in the Ford Administration when VP Cheney was chief of staff. Paul O'Neill may not have gotten along with the press and possibly he shot his mouth off when he shouldn't, but he is a straight shooter and not a politician. In addition, he was a very successful businessman. I hardly see where Mr. Snow is in Mr. O'Neill's league.
Sunday, December 08, 2002
12/8/02 Tis The Season To Cut Costs
Starting Monday for 20 business days HP is laying off contractors in its internal computer systems dept.
American Air asks employees for pay freeze and to cancel pay raises amounting to $130 million.
SunTrust Banks will freeze the salaries of, and won't pay annual bonuses to 130 senior executives. Additionally, a bonus program for 11,000 non-management employees will be permanently eliminated.
Microsoft VP Jim Allchin says that sharing information with competitors could damage national security. He should be a stand-up comic.
Used car prices continue to drop due to a glut of previously owned vehicles.
Will all this talk about further tax cuts make the cut or will it fail to materialize?
Landrieu wins Senate runoff in Louisiana.
Starting Monday for 20 business days HP is laying off contractors in its internal computer systems dept.
American Air asks employees for pay freeze and to cancel pay raises amounting to $130 million.
SunTrust Banks will freeze the salaries of, and won't pay annual bonuses to 130 senior executives. Additionally, a bonus program for 11,000 non-management employees will be permanently eliminated.
Microsoft VP Jim Allchin says that sharing information with competitors could damage national security. He should be a stand-up comic.
Used car prices continue to drop due to a glut of previously owned vehicles.
Will all this talk about further tax cuts make the cut or will it fail to materialize?
Landrieu wins Senate runoff in Louisiana.
Saturday, December 07, 2002
12/7/02 There Are Times For Cheer And Times To Cheer From The Sidelines
The jobless rate for November rose to 6% as non-farm payrolls declined by 40,000 workers. I have written often on this subject and shown statistically how the jobless number is understated. Only 62% of the U.S. population hold jobs. Total manufacturing employment is lower than any time since November 1961.
Even though Americans are paying off debt rather than taking on more debt, the ratio of household debt to the GDP is 77%.
November sales for retailers declined for the first time since 1970. Retailers are faced with deflation.
In Chicago's Cook County visits to food pantries over the past 11 months are up 18.6% over the same period a year ago and total 2 1/4 million visits to food-providing agencies.
Mexico has 100 million people, and more than half are considered impoverished. Only 15% can qualify for credit cards, car loans, and home loans.
Cessna to layoff 1500 workers.
McDonald's Japan expects over a 60% drop in pre-tax profits for 2002.
Paul O'Neill and Larry Lindsey resigned. They didn't create the current economic malaise.
Traditionally the holiday season is a cheery one for the market. Since Oct 9 we have had a terrific rally. That's the present for the holidays. Unfortunately, the times for cheer have ended, and now is the time to cheer from the sidelines. I suggest once again to lighten up on stock positions, and thereby reduce your risk exposure. With limited business investment, consumer spending being harnessed, the jobless rate increasing, a murky economic horizon, and declining prices for goods, it is rational to expect an economy with few bright spots. As investors, the risk reward ratio is not in your favor.
The jobless rate for November rose to 6% as non-farm payrolls declined by 40,000 workers. I have written often on this subject and shown statistically how the jobless number is understated. Only 62% of the U.S. population hold jobs. Total manufacturing employment is lower than any time since November 1961.
Even though Americans are paying off debt rather than taking on more debt, the ratio of household debt to the GDP is 77%.
November sales for retailers declined for the first time since 1970. Retailers are faced with deflation.
In Chicago's Cook County visits to food pantries over the past 11 months are up 18.6% over the same period a year ago and total 2 1/4 million visits to food-providing agencies.
Mexico has 100 million people, and more than half are considered impoverished. Only 15% can qualify for credit cards, car loans, and home loans.
Cessna to layoff 1500 workers.
McDonald's Japan expects over a 60% drop in pre-tax profits for 2002.
Paul O'Neill and Larry Lindsey resigned. They didn't create the current economic malaise.
Traditionally the holiday season is a cheery one for the market. Since Oct 9 we have had a terrific rally. That's the present for the holidays. Unfortunately, the times for cheer have ended, and now is the time to cheer from the sidelines. I suggest once again to lighten up on stock positions, and thereby reduce your risk exposure. With limited business investment, consumer spending being harnessed, the jobless rate increasing, a murky economic horizon, and declining prices for goods, it is rational to expect an economy with few bright spots. As investors, the risk reward ratio is not in your favor.
Friday, December 06, 2002
12/6/02 Soft Retail Results And More Holiday Layoffs
Target's November same-store sales down 6.7%; Kohl's drops 3.4%; and Sears plummets 10.9%.
Humana to cut 2300 jobs. Convergys to layoff 950. Investment Technology Group to reduce workforce by 10%. We are still waiting for AOL to say what their layoff number shall be.
Gateway Computer said weaker than expected holiday season results puts the 4th quarter expectations at risk.
GM is increasing discounts on SUVs and trucks in an attempt to get rid of excess inventory. Cutting production would help.
In the third quarter household debt increased at a 9.6% rate and was the fastest since the 4th quarter of 1989. This is one of the reasons I have stated consumer spending will slow down from an unsustainable level.
The ECB cut rates by a 1/2 point to 2 3/4%. It was the first cut in one year. Within the 12 countries comprising the EU, unemployment hovers around 8 1/2% and retail sales remain on a downward slope. Business investment remains weak. Consumer conffidence is at a 5 year low. Bankruptcies are on the rise. It sounds similar to conditions in the U.S.
Target's November same-store sales down 6.7%; Kohl's drops 3.4%; and Sears plummets 10.9%.
Humana to cut 2300 jobs. Convergys to layoff 950. Investment Technology Group to reduce workforce by 10%. We are still waiting for AOL to say what their layoff number shall be.
Gateway Computer said weaker than expected holiday season results puts the 4th quarter expectations at risk.
GM is increasing discounts on SUVs and trucks in an attempt to get rid of excess inventory. Cutting production would help.
In the third quarter household debt increased at a 9.6% rate and was the fastest since the 4th quarter of 1989. This is one of the reasons I have stated consumer spending will slow down from an unsustainable level.
The ECB cut rates by a 1/2 point to 2 3/4%. It was the first cut in one year. Within the 12 countries comprising the EU, unemployment hovers around 8 1/2% and retail sales remain on a downward slope. Business investment remains weak. Consumer conffidence is at a 5 year low. Bankruptcies are on the rise. It sounds similar to conditions in the U.S.
Thursday, December 05, 2002
12/5/02 The Market Is Long On Soot And Short On Growth
Cisco to continue job cuts. The company is expected to report flat or slightly lower revenue for the quarter ending in January and possibly a further drop in the April quarter.
AOL will announce job cuts and says their rebound not likely until 2004.
Bankruptcy looms for UAL and American Air cuts 1100 flight attendants.
Federated Dept Stores November same-store sales fell 7.4% and December now looks down about 2%.
RJ Reynolds to reduce its workforce by 8% and earnings to be below estimates.
Full-time jobs in private businesses are down 279,000 so far this year. Since January 2001 corporations have slashed about 3 1/2 million jobs. Payroll cuts this year have averaged 121,000 per month. Job openings are down about 7 1/2% from one year ago. Businesses remain reluctant to hire permanent workers.
The ECB will cut rates today. Everyone in Europe is excited and downing a brew at the local pub. Before anyone gets too drunk with joy they might consider that the jobless rate in Germany rose in November to 10%, and that's the highest rate in more than 4 years. There are almost 4 1/4 million Germans out of work.
A further reality check reveals that the EU says the GDP of European economies may fall in the first quarter. The only other contraction since the 1993 recession was in the last quarter of 2001. In addition, it was stated that 2002 would end negatively. The 12 countries making up the EU have a combined GDP of $7 trillion.
Life is a compilation of choices, and that goes for investing. I feel strongly that during this holiday season my readers would be best served by having an eggnog latte and laying off stocks. The big sucking noise you hear is not the foam from the expresso machine. It's the followers buying stocks who are about to be sucked down the chimney. Those individuals will be long on soot and short on capital.
Cisco to continue job cuts. The company is expected to report flat or slightly lower revenue for the quarter ending in January and possibly a further drop in the April quarter.
AOL will announce job cuts and says their rebound not likely until 2004.
Bankruptcy looms for UAL and American Air cuts 1100 flight attendants.
Federated Dept Stores November same-store sales fell 7.4% and December now looks down about 2%.
RJ Reynolds to reduce its workforce by 8% and earnings to be below estimates.
Full-time jobs in private businesses are down 279,000 so far this year. Since January 2001 corporations have slashed about 3 1/2 million jobs. Payroll cuts this year have averaged 121,000 per month. Job openings are down about 7 1/2% from one year ago. Businesses remain reluctant to hire permanent workers.
The ECB will cut rates today. Everyone in Europe is excited and downing a brew at the local pub. Before anyone gets too drunk with joy they might consider that the jobless rate in Germany rose in November to 10%, and that's the highest rate in more than 4 years. There are almost 4 1/4 million Germans out of work.
A further reality check reveals that the EU says the GDP of European economies may fall in the first quarter. The only other contraction since the 1993 recession was in the last quarter of 2001. In addition, it was stated that 2002 would end negatively. The 12 countries making up the EU have a combined GDP of $7 trillion.
Life is a compilation of choices, and that goes for investing. I feel strongly that during this holiday season my readers would be best served by having an eggnog latte and laying off stocks. The big sucking noise you hear is not the foam from the expresso machine. It's the followers buying stocks who are about to be sucked down the chimney. Those individuals will be long on soot and short on capital.
Wednesday, December 04, 2002
12/4/02 Posting #2 Closing The Crown Jewel, A Personal Blog
As readers of this daily blog, you aware that I successfully ran the Holly Sugar Company from December, 1981 until its sale in the Spring of 1988 to the Imperial Sugar Company. During that timeframe our stockholders received the 7th largest annual return of all the thousands of publically traded stocks in the U.S. Today it was announced that Imperial Sugar will be shutting down its crown jewel Houston sugar refinery and laying off 326 people. The plant has been running continuously since 1843, and has been the oldest continuing business in the Houston area and possibly the entire state of Texas. Pointing fingers will not make the company profitable and will not reopen all the plants which have been closed. Jobs have been lost forever and farmers have turned to other crops or sold their land. Only winners provide progress.
As readers of this daily blog, you aware that I successfully ran the Holly Sugar Company from December, 1981 until its sale in the Spring of 1988 to the Imperial Sugar Company. During that timeframe our stockholders received the 7th largest annual return of all the thousands of publically traded stocks in the U.S. Today it was announced that Imperial Sugar will be shutting down its crown jewel Houston sugar refinery and laying off 326 people. The plant has been running continuously since 1843, and has been the oldest continuing business in the Houston area and possibly the entire state of Texas. Pointing fingers will not make the company profitable and will not reopen all the plants which have been closed. Jobs have been lost forever and farmers have turned to other crops or sold their land. Only winners provide progress.
12/4/02 Corporate Bad News
Ford's U.S. vehicle sales fell 20% in November, and they announced production cuts (which my blog predicted 2 weeks ago). HP trimmed their revenue forecast for next year and said technology spending remains tepid (like we needed them to tell us that). Walt Disney issued another profit warning. Tenet Healthcare issued a profit warning for the next two years. Bridgestone cut their profit forecast by a mere 43%.
Now for the good news. Home prices in the UK rose 24% and 25 1/2% on an annualized basis for October and November respectively. As in the U.S., their inflated housing prices have provided a foundation for consumer spending.
Ann Abraham, the Bbritish parliamentary ombudsman, ruled the ministry had "withheld three documents related to reported sightings of unexplained areial phenomena in 1980- the Rendlesham Forest UFO incident." Ms Abraham didn't reveal that the UFO's ultimate goal was the delivery of double digit inflation and 20% interest rates to the U.S. during Carter's presidency.
Ford's U.S. vehicle sales fell 20% in November, and they announced production cuts (which my blog predicted 2 weeks ago). HP trimmed their revenue forecast for next year and said technology spending remains tepid (like we needed them to tell us that). Walt Disney issued another profit warning. Tenet Healthcare issued a profit warning for the next two years. Bridgestone cut their profit forecast by a mere 43%.
Now for the good news. Home prices in the UK rose 24% and 25 1/2% on an annualized basis for October and November respectively. As in the U.S., their inflated housing prices have provided a foundation for consumer spending.
Ann Abraham, the Bbritish parliamentary ombudsman, ruled the ministry had "withheld three documents related to reported sightings of unexplained areial phenomena in 1980- the Rendlesham Forest UFO incident." Ms Abraham didn't reveal that the UFO's ultimate goal was the delivery of double digit inflation and 20% interest rates to the U.S. during Carter's presidency.
Tuesday, December 03, 2002
12/3/02 Merrill Lynch Suggests Investors Reduce Their Equity Exposure
Merrill Lynch believes "the market still appears speculative...such speculation is typically indicative of the end of a market cycle, and not the beginning of a major bull market." They go on to say that it is extremely difficult to forecast corporate growth, and therefore, equities should have lower valuations. These comments should certainly be familiar to anyone who has been reading this blog.
Retailers must make up in volume what they lose in smaller profit margins. Consumers respond to advertised promotions. Talking about promotions, why not do away with rebates and just lower the price? A real sale should not have strings attached to it. When you go bargain hunting, it's wise to feel certain that you are receiving value. With stocks the idea is to buy a dollar of value for no more than 50 cents. Please avoid the fool's gold.
Merrill Lynch believes "the market still appears speculative...such speculation is typically indicative of the end of a market cycle, and not the beginning of a major bull market." They go on to say that it is extremely difficult to forecast corporate growth, and therefore, equities should have lower valuations. These comments should certainly be familiar to anyone who has been reading this blog.
Retailers must make up in volume what they lose in smaller profit margins. Consumers respond to advertised promotions. Talking about promotions, why not do away with rebates and just lower the price? A real sale should not have strings attached to it. When you go bargain hunting, it's wise to feel certain that you are receiving value. With stocks the idea is to buy a dollar of value for no more than 50 cents. Please avoid the fool's gold.
Monday, December 02, 2002
Sunday, December 01, 2002
12/1/02 Download This
Originally the main function of the internet was to share and disseminate information. That still remains true but with an added feature- the downloading of shareware and/or freeware. The latter has had a significant impact on cash flow for many industries. Consider the music industry with CDs and other entertainment arenas. Recently, I learned of download.com and its freeware for games, such as, a game named drugwars. The point is simple. More and more revenue avenues are being closed via free access on the internet. This will, in my view, grow in importance over the years and impact profits.
Originally the main function of the internet was to share and disseminate information. That still remains true but with an added feature- the downloading of shareware and/or freeware. The latter has had a significant impact on cash flow for many industries. Consider the music industry with CDs and other entertainment arenas. Recently, I learned of download.com and its freeware for games, such as, a game named drugwars. The point is simple. More and more revenue avenues are being closed via free access on the internet. This will, in my view, grow in importance over the years and impact profits.
Saturday, November 30, 2002
11/30/02 Benefit This
With lengthier life expectancy the IRA madatory minimum withdrawal rule should be extended from the present 70 1/2 to at least 75, and tax payments on that income should not begin until at least 75 too.
More employees are extending their working lives past 65 simply to pay for health coverage because fewer and fewer companies provide retiree health benefits. When combined with social security benefits, the additional income can place the individual in a catch 22 of a higher tax bracket.
With lengthier life expectancy the IRA madatory minimum withdrawal rule should be extended from the present 70 1/2 to at least 75, and tax payments on that income should not begin until at least 75 too.
More employees are extending their working lives past 65 simply to pay for health coverage because fewer and fewer companies provide retiree health benefits. When combined with social security benefits, the additional income can place the individual in a catch 22 of a higher tax bracket.
Friday, November 29, 2002
11/29/02 Eight Weeks
After today's close the Dow will have risen for 8 consecutive weeks. This is the first time the Dow has done this in the past three years. A good deal of money could have been made during this period which started on Oct. 9. I wrote at that time the market was moving into the most favorable timeframe of the year- late October thru January. I envisioned a bounce but not of this proportions. I have not changed my opinion- the smart move is to sell into this rally and reduce your exposure in companies with serious difficulties. There are few bargains in this market. You might do better shopping at WalMart special sales.
After today's close the Dow will have risen for 8 consecutive weeks. This is the first time the Dow has done this in the past three years. A good deal of money could have been made during this period which started on Oct. 9. I wrote at that time the market was moving into the most favorable timeframe of the year- late October thru January. I envisioned a bounce but not of this proportions. I have not changed my opinion- the smart move is to sell into this rally and reduce your exposure in companies with serious difficulties. There are few bargains in this market. You might do better shopping at WalMart special sales.
Thursday, November 28, 2002
Wednesday, November 27, 2002
11/27/02 Final Demand
The Fed said yesterday that final demand remains vulnerable to weak hiring and a war with Iraq.
Now for the good news. Over the years the market has risen 75% of the time the day before Thanksgiving. So we should look forward to a positive tone today. It would be great if every day of the year were like today.
Forecasters at the NABE cut their estimates for 4th quarter GDP growth to 1.4% from 2.7%. We should be thankful. It could have been negative growth. I'm already in the holiday spirit!
Even I was amazed to read that in 1999 out of 6000 analyst stock recommendations only 8 were labeled to sell. It just goes to prove that in the case of Wall Street analysts even a busted clock is not right twice a day. They are one big train wreck.
The Fed said yesterday that final demand remains vulnerable to weak hiring and a war with Iraq.
Now for the good news. Over the years the market has risen 75% of the time the day before Thanksgiving. So we should look forward to a positive tone today. It would be great if every day of the year were like today.
Forecasters at the NABE cut their estimates for 4th quarter GDP growth to 1.4% from 2.7%. We should be thankful. It could have been negative growth. I'm already in the holiday spirit!
Even I was amazed to read that in 1999 out of 6000 analyst stock recommendations only 8 were labeled to sell. It just goes to prove that in the case of Wall Street analysts even a busted clock is not right twice a day. They are one big train wreck.
Tuesday, November 26, 2002
11/26/02 The Unemployed
The percentage of the unemployed without work for 27 weeks or more rose to 20.3% in October, and in October the average length of unemployment was 17 1/2 weeks. Those unemployed for 6 months or more amounted to 1.66 million Americans.
For the six months ended September 30 Americans filed for over 800,000 bankruptcies, a record number.
Business confidence in Germany fell to a 10 month low.
Last week U.S. chain store sales were on or below plan.
The percentage of the unemployed without work for 27 weeks or more rose to 20.3% in October, and in October the average length of unemployment was 17 1/2 weeks. Those unemployed for 6 months or more amounted to 1.66 million Americans.
For the six months ended September 30 Americans filed for over 800,000 bankruptcies, a record number.
Business confidence in Germany fell to a 10 month low.
Last week U.S. chain store sales were on or below plan.
Monday, November 25, 2002
11/25/02 WalMart Cannot Forecast Sales For December
With only a few days left in November I believe it is rather significant that WalMart seems unwilling and/or uncomfortable to forecast same store sales for December. It appears that their November same store sales will grow at 3% or less.
According to the latest Census Bureau figures, 1.4 million Americans lost their health insurance last year. This trend is indeed serious and impacts lower and middle class family members. Healthcare coverage or the lack of it could become a major issue in the next presidential election.
With only a few days left in November I believe it is rather significant that WalMart seems unwilling and/or uncomfortable to forecast same store sales for December. It appears that their November same store sales will grow at 3% or less.
According to the latest Census Bureau figures, 1.4 million Americans lost their health insurance last year. This trend is indeed serious and impacts lower and middle class family members. Healthcare coverage or the lack of it could become a major issue in the next presidential election.
Sunday, November 24, 2002
11/24/02 Homeland Non-Security
On Friday our do nothing Congress adjourned for the year. They failed to extend beyond December 28 unemployment benefits for approximately 900,000 jobless workers. An additional 95,000 unemployed will exhaust their unemployment benefits each week thereafter. This is clearly a "soft spot" in our economy.
Taxable realized capital gains amounted to $600 billion in 2000, $350 billion in 2001, and are estimated at $250 billion this year. No wonder there are deficits at the federal and state levels.
Stock option income was $250 billion in 2000, and this year the amount will be minimal at best.
On Friday our do nothing Congress adjourned for the year. They failed to extend beyond December 28 unemployment benefits for approximately 900,000 jobless workers. An additional 95,000 unemployed will exhaust their unemployment benefits each week thereafter. This is clearly a "soft spot" in our economy.
Taxable realized capital gains amounted to $600 billion in 2000, $350 billion in 2001, and are estimated at $250 billion this year. No wonder there are deficits at the federal and state levels.
Stock option income was $250 billion in 2000, and this year the amount will be minimal at best.
Saturday, November 23, 2002
11/23/02 Getting In Touch With Their Unsold Side
Only the auto industry could run plants overtime in an economy with "soft spots". After a weak October Chrysler has a 97 day supply of inventory and Ford 81 days. The winter consistently brings with it the lowest prices for used cars, and there is a glut of used cars on lots. It won't be long before the auto companies will be parking their inventory in the Mojave desert next to all the mothballed jet planes. We should remember that new cars account for 15% of consumer retail spending. Maybe the solution is to sell them wholesale to consumers, or better yet, no money down with no interest and with no monthly payments for 5 years. The bottomline is you can expect auto production cutbacks.
Economists for the Philadelphia Fed reduced their growth forecasts for the 4th quarter and for 2003. They still expect growth to exceed 2%.
Prices in Hong Kong have fallen for 48 consecutive months. Their continued deflation, along with Japan's, will place a ceiling on prices in the U.S.
Brocade announced a 12% cutback of its workforce and revised its 1st quarter forecast downward. The stock certainly got slammed. Tax selling could place additional pressure on Brocade shares.
Only the auto industry could run plants overtime in an economy with "soft spots". After a weak October Chrysler has a 97 day supply of inventory and Ford 81 days. The winter consistently brings with it the lowest prices for used cars, and there is a glut of used cars on lots. It won't be long before the auto companies will be parking their inventory in the Mojave desert next to all the mothballed jet planes. We should remember that new cars account for 15% of consumer retail spending. Maybe the solution is to sell them wholesale to consumers, or better yet, no money down with no interest and with no monthly payments for 5 years. The bottomline is you can expect auto production cutbacks.
Economists for the Philadelphia Fed reduced their growth forecasts for the 4th quarter and for 2003. They still expect growth to exceed 2%.
Prices in Hong Kong have fallen for 48 consecutive months. Their continued deflation, along with Japan's, will place a ceiling on prices in the U.S.
Brocade announced a 12% cutback of its workforce and revised its 1st quarter forecast downward. The stock certainly got slammed. Tax selling could place additional pressure on Brocade shares.
Friday, November 22, 2002
11/22/02 Out Of The Woods Perception Has Generated A Big Rally
The Dow and the S&P closed Thursday more than 20% above the Oct. 9 lows. Yesterday the Nasdaq hit its highest level in 5 months.
GE cut its earnings forecast for the 4th quarter and 2003.
Morgan Stanley to cut 2000 jobs.
Over the past year the state of Georgia has shed 2.2% of its jobs-86,500 positions.
Revise this!!!! U.S. leading economic indicators for September were revised lower to a negative 0.4% from negative o.2%. That is a 100% negative revision. For October those leading economic indicators were reported as unchanged. What will they be revised to in December? Creating a false perception can be very damaging. Proceed at your own risk tolerance.
The Dow and the S&P closed Thursday more than 20% above the Oct. 9 lows. Yesterday the Nasdaq hit its highest level in 5 months.
GE cut its earnings forecast for the 4th quarter and 2003.
Morgan Stanley to cut 2000 jobs.
Over the past year the state of Georgia has shed 2.2% of its jobs-86,500 positions.
Revise this!!!! U.S. leading economic indicators for September were revised lower to a negative 0.4% from negative o.2%. That is a 100% negative revision. For October those leading economic indicators were reported as unchanged. What will they be revised to in December? Creating a false perception can be very damaging. Proceed at your own risk tolerance.
Thursday, November 21, 2002
11/21/02 Believe In The Facts Not What You'd Wish To Be True
More than half of BellSouth's workforce has agreed to take time off without pay this year to help the company cut costs. It is among corporate America's largest voluntary furloughs. You can expect to read more of this.
Lucent retirees worry that they will lose retirement medical coverage as the company struggles to avoid filing for bankruptcy protection.
Boeing to cut 5000 more jobs.
Immune Response may file for bankruptcy in a few days.
The gov't originally reported jobless claims for the Nov. 9 week at 388,000. Today that figure was revised upward to 401,000. In addition, the gov't stated that jobless claims for last week dropped 25,000 from the 401,000 revised level. I hope no rational person believes these numbers. They are a figment of someone's imagination and creation.
HP increases job cuts for 2003 by 1100 to 17,900. The original figure was 15,000, then 16,800, and now 17,900. It's nice to know their management has a feel for the business. It must be a joy to work there.
I have this annoying habit of reading cash flow statements. For 2002 HP had a $900 million negative cash flow from operations. So much for making money. HP management said they "are not banking on an improved economy to hit our profitability targets." With only their printer business cash flow positive, you can expect more job cuts in their PC and server divisions. Cost cutting can go just so far. Oracle discovered that.
More than half of BellSouth's workforce has agreed to take time off without pay this year to help the company cut costs. It is among corporate America's largest voluntary furloughs. You can expect to read more of this.
Lucent retirees worry that they will lose retirement medical coverage as the company struggles to avoid filing for bankruptcy protection.
Boeing to cut 5000 more jobs.
Immune Response may file for bankruptcy in a few days.
The gov't originally reported jobless claims for the Nov. 9 week at 388,000. Today that figure was revised upward to 401,000. In addition, the gov't stated that jobless claims for last week dropped 25,000 from the 401,000 revised level. I hope no rational person believes these numbers. They are a figment of someone's imagination and creation.
HP increases job cuts for 2003 by 1100 to 17,900. The original figure was 15,000, then 16,800, and now 17,900. It's nice to know their management has a feel for the business. It must be a joy to work there.
I have this annoying habit of reading cash flow statements. For 2002 HP had a $900 million negative cash flow from operations. So much for making money. HP management said they "are not banking on an improved economy to hit our profitability targets." With only their printer business cash flow positive, you can expect more job cuts in their PC and server divisions. Cost cutting can go just so far. Oracle discovered that.
Wednesday, November 20, 2002
11/20/02 Malpractice Premiums and Medicare Payments
Doctors and hospitals have reported alarming spikes in malpractice premiums as insurers have withdrawn from the market. Many physicians choose to quit practicing.
Medicare payments to doctors were cut 5.4% this year and will be reduced 4.4% next year. More and more doctors will stop accepting Medicare payments for service. Instead they bill Medicare payments in larger amounts, and leave it up to the patients to seek reimbursement.
Home Depot said it expects same store sales in the 4th quarter to drop 3 to 5 %. Home Depot's CFO said the company had cannilbalized 22% of its stores in the 3rd quarter. So much for store clustering.
Agilent, the HP spinoff, is going to layoff another 2500 workers.
October housing starts fell 11%. The percentage drop was the largest in 9 years. We must keep in mind that September was a record for starts. For the past year housing and home construction has been the star in the economy. I thought housing starts would have fallen many months ago. The timing of predictions can often make one look stupid.
If the stock market is to rise from this level, it will need to adeptly climb a daunting wall of worry. Uncertainty offers opportunities and risks. Currently, are the risks outweighed by the rewards? In my view, possibly if one is on mind-altering drugs. I like my reality straight up.
Doctors and hospitals have reported alarming spikes in malpractice premiums as insurers have withdrawn from the market. Many physicians choose to quit practicing.
Medicare payments to doctors were cut 5.4% this year and will be reduced 4.4% next year. More and more doctors will stop accepting Medicare payments for service. Instead they bill Medicare payments in larger amounts, and leave it up to the patients to seek reimbursement.
Home Depot said it expects same store sales in the 4th quarter to drop 3 to 5 %. Home Depot's CFO said the company had cannilbalized 22% of its stores in the 3rd quarter. So much for store clustering.
Agilent, the HP spinoff, is going to layoff another 2500 workers.
October housing starts fell 11%. The percentage drop was the largest in 9 years. We must keep in mind that September was a record for starts. For the past year housing and home construction has been the star in the economy. I thought housing starts would have fallen many months ago. The timing of predictions can often make one look stupid.
If the stock market is to rise from this level, it will need to adeptly climb a daunting wall of worry. Uncertainty offers opportunities and risks. Currently, are the risks outweighed by the rewards? In my view, possibly if one is on mind-altering drugs. I like my reality straight up.
Tuesday, November 19, 2002
11/19/02 Investment Grade Quality Is Never Static
Never be lulled by the pundits. They almost always have an agenda, and the latter is hardly investment grade. Look at Japan. Fifteen years ago this country was held as the role model for management and economic excellence. Now Japan is in the soup, and that's not chicken soup. The Nikkei just made a 19 year low. Fears of bad loans continue to weigh on bank stocks. Deflation casts an economic pall. Talk of nationalizing banks frightens investors. Japan is in need of a savior. Where are the heroes when they are needed?
The WSJ reports today that GE may announce a large charge in order to build reserves at their Employers Re unit. I find that interesting because I had noted about a week ago that Warren Buffett was in talks to buy that unit. Obviously talks broke down, and possibly over insufficent reserves. That is speculation on my part. Maybe Buffett will now turn his attention to Burger King. Hamburgers go well with Coke.
It is an understatement to say I am distressed to learn that Iraq has been making "dusty" VX for 8 years and that last month they imported 25 metric tons of Aerosil to make "dusty" biological weapons. What are the weapons inspectors going to tell us? I never did understand politics.
Never be lulled by the pundits. They almost always have an agenda, and the latter is hardly investment grade. Look at Japan. Fifteen years ago this country was held as the role model for management and economic excellence. Now Japan is in the soup, and that's not chicken soup. The Nikkei just made a 19 year low. Fears of bad loans continue to weigh on bank stocks. Deflation casts an economic pall. Talk of nationalizing banks frightens investors. Japan is in need of a savior. Where are the heroes when they are needed?
The WSJ reports today that GE may announce a large charge in order to build reserves at their Employers Re unit. I find that interesting because I had noted about a week ago that Warren Buffett was in talks to buy that unit. Obviously talks broke down, and possibly over insufficent reserves. That is speculation on my part. Maybe Buffett will now turn his attention to Burger King. Hamburgers go well with Coke.
It is an understatement to say I am distressed to learn that Iraq has been making "dusty" VX for 8 years and that last month they imported 25 metric tons of Aerosil to make "dusty" biological weapons. What are the weapons inspectors going to tell us? I never did understand politics.
Monday, November 18, 2002
11/18/02 Day 1039
You thought I was not counting? Over the past six weeks the market has risen, and will most likely open higher this morning; however, it is day day 1039 since the Dow closed at its all-time high. That is also the timeframe for the longest bear market on record- up to this point- Sept. 3, 1929 to July 8, 1932. During the latter period the Dow plunged 89%. The most the Dow has fallen in this bear market is 38%.
The market is focusing this morning on better than expected earnings for Lowe's Companies. I find much more significant WalMart stating that they see their November same store sales at the low end of their 2-4% growth outlook. For the past several months that growth has not slipped below 3 1/2%. In addition, Federated Dep't Stores said their 2nd week of November sales were disappointing.
An interesting quote comes from Jared Bernstein, an economist with the Economic Policy Institute. He states that "the unemployment rate presents too rosy a picture of labor market conditions now. It leaves out significant groups of people who are unemployed or underemployed." I have been making this same statement for months.
Tokyo's Nikkei close to a 19 year low.
You thought I was not counting? Over the past six weeks the market has risen, and will most likely open higher this morning; however, it is day day 1039 since the Dow closed at its all-time high. That is also the timeframe for the longest bear market on record- up to this point- Sept. 3, 1929 to July 8, 1932. During the latter period the Dow plunged 89%. The most the Dow has fallen in this bear market is 38%.
The market is focusing this morning on better than expected earnings for Lowe's Companies. I find much more significant WalMart stating that they see their November same store sales at the low end of their 2-4% growth outlook. For the past several months that growth has not slipped below 3 1/2%. In addition, Federated Dep't Stores said their 2nd week of November sales were disappointing.
An interesting quote comes from Jared Bernstein, an economist with the Economic Policy Institute. He states that "the unemployment rate presents too rosy a picture of labor market conditions now. It leaves out significant groups of people who are unemployed or underemployed." I have been making this same statement for months.
Tokyo's Nikkei close to a 19 year low.
Sunday, November 17, 2002
11/17/02 Please Remain Standing During The Entire Performance
I was not surprised to read that 84% of Americans have access to a computer either at home or at work. Nearly 3 out of 4 computer users polled are planning to buy some of their holiday gifts online. Most polled were going to buy books, videos, and CDs.
The past year has had more than its share of grim moments. As such, I thought a humorous gift would be most appropriate. Early this morning an idea was sent along to me- talking toilet paper. You record your message in the holder which is provided, and when the toilet paper is pulled for use, your message comes out loud and clear, such as, please remain standing during the entire performance. To receive such a gift idea I must be on a list of those still in their anal period.
Enjoy the day, and as Dale Evans and Roy Rogers would sing, happy trails to you.
I was not surprised to read that 84% of Americans have access to a computer either at home or at work. Nearly 3 out of 4 computer users polled are planning to buy some of their holiday gifts online. Most polled were going to buy books, videos, and CDs.
The past year has had more than its share of grim moments. As such, I thought a humorous gift would be most appropriate. Early this morning an idea was sent along to me- talking toilet paper. You record your message in the holder which is provided, and when the toilet paper is pulled for use, your message comes out loud and clear, such as, please remain standing during the entire performance. To receive such a gift idea I must be on a list of those still in their anal period.
Enjoy the day, and as Dale Evans and Roy Rogers would sing, happy trails to you.
Saturday, November 16, 2002
11/16/02 The Needed Stimulator To The Economy?
A good schtup a day. You think I am joshing. Not true. During the recent 4 day international conference held in Singapore it was declared that healthy sex lives make happy workers, and in turn, this counteracts a drooping economy. This proclamation was made by Emil Ng, the founder of the Asian Federation of Sexology. He went on to state that sexual well-being improves a nation's productivity. Ng also stated that "when the economy is down, sexual activity will be lower, not because of sexual problems, but financial problems. This is a vicious cycle."
I suggest that lunch hours be taken between the sheets and all corporate dining rooms removed. We can install cots in all cubes. We can replace stock options with clean bedding twice a week. I suggest we rally around the motto: screw our way out of the recession.
Yeah baby!
Let's remember the words spoken by Bruce Willis in the movie The Whole Nine Yards:" what's important is how I get along with people who are still alive." He could have been referring to multiple orgasms.
A good schtup a day. You think I am joshing. Not true. During the recent 4 day international conference held in Singapore it was declared that healthy sex lives make happy workers, and in turn, this counteracts a drooping economy. This proclamation was made by Emil Ng, the founder of the Asian Federation of Sexology. He went on to state that sexual well-being improves a nation's productivity. Ng also stated that "when the economy is down, sexual activity will be lower, not because of sexual problems, but financial problems. This is a vicious cycle."
I suggest that lunch hours be taken between the sheets and all corporate dining rooms removed. We can install cots in all cubes. We can replace stock options with clean bedding twice a week. I suggest we rally around the motto: screw our way out of the recession.
Yeah baby!
Let's remember the words spoken by Bruce Willis in the movie The Whole Nine Yards:" what's important is how I get along with people who are still alive." He could have been referring to multiple orgasms.
Friday, November 15, 2002
11/15/02 FBI Warning: Al-Qaida May Favor Spectacular Terrorist Attacks
These attacks would be characterized by "high symbolic value, mass casualties, severe damage to the U.S. economy, and maximum psychological trauma."
Prior to making an investment in a company, it is wise to uncover any uncovered pension fund. For example, GM's pension fund is underfunded by at least $20 billion.
George Plesko, an MIT accounting professor, says in 1992 there was no appreciable difference between pre-tax income and taxable net income reported to the IRS. Just six years later there was a major difference. Stockholders should be made aware of this fact. Also, by 1998 a University of Arizona study showed that the 1579 companies studied had reported almost $1 trillion more in liabilities to the IRS than to public shareholders and tax assets exceeded book assets by $1.9 trillion. These are material disclosures needing to be made.
More "soft spots": Sprint to lay off 1600; Cable and Wireless 3500; and Lehman 4% of their workers. Argentina defaults on a debt payment. Fourth quarter earnings growth for Target will be modest. Dell said it wasn't certain the industry would see a particularly strong 4th quarter. They don't see the signs of customers buying new computers.
These attacks would be characterized by "high symbolic value, mass casualties, severe damage to the U.S. economy, and maximum psychological trauma."
Prior to making an investment in a company, it is wise to uncover any uncovered pension fund. For example, GM's pension fund is underfunded by at least $20 billion.
George Plesko, an MIT accounting professor, says in 1992 there was no appreciable difference between pre-tax income and taxable net income reported to the IRS. Just six years later there was a major difference. Stockholders should be made aware of this fact. Also, by 1998 a University of Arizona study showed that the 1579 companies studied had reported almost $1 trillion more in liabilities to the IRS than to public shareholders and tax assets exceeded book assets by $1.9 trillion. These are material disclosures needing to be made.
More "soft spots": Sprint to lay off 1600; Cable and Wireless 3500; and Lehman 4% of their workers. Argentina defaults on a debt payment. Fourth quarter earnings growth for Target will be modest. Dell said it wasn't certain the industry would see a particularly strong 4th quarter. They don't see the signs of customers buying new computers.
Thursday, November 14, 2002
11/14/02 Pay To Play
Commercial lenders are under the scrutiny glass. Regulators are investigating widespread allegations that commercial banks have been and are making loans contingent upon the borrower's ability to bring in other fee-based business. This practice is called "pay to play". When 3500 financial officers were recently polled, almost 50% believed "pay to play" was a very real issue.
Greenspan said, if necessary, the Fed could buy Treasury debt with longer maturities, which would bring down longer-term interest rates. He really said this to Congress yesterday. He must have blinked and missed the huge rally in long Treasuries over the past week or so. Greenspan doesn't get it. The market movements preempt Fed action. The Fed's policy simply is in reaction to market forces, and the latter set the tone.
Applied Materials expects orders and revenues to fall in its fiscal first quarter. This company is certainly one of the strongholds within the semiconductor industry.
Commercial lenders are under the scrutiny glass. Regulators are investigating widespread allegations that commercial banks have been and are making loans contingent upon the borrower's ability to bring in other fee-based business. This practice is called "pay to play". When 3500 financial officers were recently polled, almost 50% believed "pay to play" was a very real issue.
Greenspan said, if necessary, the Fed could buy Treasury debt with longer maturities, which would bring down longer-term interest rates. He really said this to Congress yesterday. He must have blinked and missed the huge rally in long Treasuries over the past week or so. Greenspan doesn't get it. The market movements preempt Fed action. The Fed's policy simply is in reaction to market forces, and the latter set the tone.
Applied Materials expects orders and revenues to fall in its fiscal first quarter. This company is certainly one of the strongholds within the semiconductor industry.
Wednesday, November 13, 2002
11/13/02 Tightened Bank Lending
Domestic banks cite reduced tolerance for risk and increases in corporate bond defaults as the reasons given for tightened lending practices. As such, recently lowered Fed rates will not do much to improve liquidity in the system.
Eastman Kodak will cut 1300 to 1700 jobs. Research In Motion to cut 220 employees or 10% of its staff.
Philip Morris is experiencing soft cigarette sales. I wonder whether the soft economy is the main reason.
The Business Roundtable survey revealed that 60% of 150 chief executives said their company's employee base would probably be cut next year. The survey showed that capital expenditures are expected to stay flat in 2003. This finding would jibe with Greenspan's testimony before Congress this morning. He doesn't see much vigor in business spending. Without the latter that only leaves the consumer and the government to spend. The holiday season doesn't look like any great shakes, and the government needs to get a budget approved.
Domestic banks cite reduced tolerance for risk and increases in corporate bond defaults as the reasons given for tightened lending practices. As such, recently lowered Fed rates will not do much to improve liquidity in the system.
Eastman Kodak will cut 1300 to 1700 jobs. Research In Motion to cut 220 employees or 10% of its staff.
Philip Morris is experiencing soft cigarette sales. I wonder whether the soft economy is the main reason.
The Business Roundtable survey revealed that 60% of 150 chief executives said their company's employee base would probably be cut next year. The survey showed that capital expenditures are expected to stay flat in 2003. This finding would jibe with Greenspan's testimony before Congress this morning. He doesn't see much vigor in business spending. Without the latter that only leaves the consumer and the government to spend. The holiday season doesn't look like any great shakes, and the government needs to get a budget approved.
Tuesday, November 12, 2002
11/12/02 Trouble Down On The Farm
75% of the soybeans and 33% of the corn grown in the U.S. is genetically engineered. Americans have a positive attitude towards this new agricultural technology. The Economic Union is the 4th largest market for American farmers and accounts for 12% of U.S. farm exports. The EU wants to enforce the new October 17th legislation which covers biotech labeling and trace back rules. These new regs will hinder our farm exports. Basically it means, for example, our genetically engineered corn is approved for sale in the U.S. but not permitted to be shipped to Europe. In essence, Europeans see agricultural biotechnology "as a luxury they don't really need," says Bernd Halling of the biotech industry's trade group.
So far this year 160 publically traded companies have filed for Chapter 11 bankruptcy. Just another "soft spot".
Federated Dep't Stores (Macy's and Bloomingdale's) expects lower November same-store sales and December sales to be up 1% to down 2%.
Buffett's Berkshire Hathaway may buy GE's Employer Re for $8 billion. This would make Berkshire #1 in the reinsurance business.
75% of the soybeans and 33% of the corn grown in the U.S. is genetically engineered. Americans have a positive attitude towards this new agricultural technology. The Economic Union is the 4th largest market for American farmers and accounts for 12% of U.S. farm exports. The EU wants to enforce the new October 17th legislation which covers biotech labeling and trace back rules. These new regs will hinder our farm exports. Basically it means, for example, our genetically engineered corn is approved for sale in the U.S. but not permitted to be shipped to Europe. In essence, Europeans see agricultural biotechnology "as a luxury they don't really need," says Bernd Halling of the biotech industry's trade group.
So far this year 160 publically traded companies have filed for Chapter 11 bankruptcy. Just another "soft spot".
Federated Dep't Stores (Macy's and Bloomingdale's) expects lower November same-store sales and December sales to be up 1% to down 2%.
Buffett's Berkshire Hathaway may buy GE's Employer Re for $8 billion. This would make Berkshire #1 in the reinsurance business.
Monday, November 11, 2002
11/11/02 Veteran's Day
We give thanks to all the Veterans who have provided us with the blessings of freedom and democracy. Every day should commemorate the successes as well as the sacrifices of our Veteran's. They are heroes.
There are many aftermaths from 9/11. Some can be found right on Wall Street. CFSB dismissed its well-regarded market strategist and Merrill Lynch fired its chief economist. Both had one common shortcoming- they failed to directly produce revenue. Over the past 34 months Wall Street has eliminated 68,000 jobs. With little IPO revenue and few merger fees, more layoffs can be expected. This is another "soft spot".
We give thanks to all the Veterans who have provided us with the blessings of freedom and democracy. Every day should commemorate the successes as well as the sacrifices of our Veteran's. They are heroes.
There are many aftermaths from 9/11. Some can be found right on Wall Street. CFSB dismissed its well-regarded market strategist and Merrill Lynch fired its chief economist. Both had one common shortcoming- they failed to directly produce revenue. Over the past 34 months Wall Street has eliminated 68,000 jobs. With little IPO revenue and few merger fees, more layoffs can be expected. This is another "soft spot".
Sunday, November 10, 2002
11/10/02 Another "Soft Spot"
Silicon Valley's jobless rate is now 7.9%. That's the highest level since 1983. Overall in California the rate is 6.4%.
Including today, there are only 7 sundays and 6 saturdays until Christmas.
Sending an email ad costs roughly half a cent and a piece of direct mail advertising about 100 times that amount. A survey has shown that half of on-line consumers are less likely to read on-line promotions. Yet, this year almost $2 billion will be expended on email promotions.
In a recent survey taken by Cigna 3 out of 5 workers say they plan to change their investment strategies if their year-end 401K balance is lower than the year before. I suggest those workers begin to think about new strategies. The new year is right around the corner.
The good news is that misery likes company. With 7 trillion dollars lost in market value in equities over the past 2 1/2 years there must be zillions of folks out there looking for new strategies. A good place to begin is the following: know what you're buying. That goes for stocks and not just underwear and socks.
Silicon Valley's jobless rate is now 7.9%. That's the highest level since 1983. Overall in California the rate is 6.4%.
Including today, there are only 7 sundays and 6 saturdays until Christmas.
Sending an email ad costs roughly half a cent and a piece of direct mail advertising about 100 times that amount. A survey has shown that half of on-line consumers are less likely to read on-line promotions. Yet, this year almost $2 billion will be expended on email promotions.
In a recent survey taken by Cigna 3 out of 5 workers say they plan to change their investment strategies if their year-end 401K balance is lower than the year before. I suggest those workers begin to think about new strategies. The new year is right around the corner.
The good news is that misery likes company. With 7 trillion dollars lost in market value in equities over the past 2 1/2 years there must be zillions of folks out there looking for new strategies. A good place to begin is the following: know what you're buying. That goes for stocks and not just underwear and socks.
Saturday, November 09, 2002
11/9/02 The "Soft Spot" Befalls Turner's In Corning, Iowa
It's a very sad day when tradition's best closes its doors. After 134 years, Turner's Clothing Store is shutting its SE Iowa operation.
Clare Hushbeck, an AARP economist: "Nobody knows what the economy or the markets will do...more people are showing up at soup kitchens and food pantries and that's a real sign of the economic pain that Americans on fixed incomes are experiencing in this recession."
Paul Palmer Jr, Cypress Advisory Services in Houston: "Right now a lot of people lack the confidence to do anything because they don't want to run the risk of losing principal."
Paul McCulley, Pimco, "There is a global deficiency of global aggregate demand."
When there is uncertainty, a lack of confidence, too little demand, and too much supply, you have a recipe for trouble. That's what we have. Trouble.
It's a very sad day when tradition's best closes its doors. After 134 years, Turner's Clothing Store is shutting its SE Iowa operation.
Clare Hushbeck, an AARP economist: "Nobody knows what the economy or the markets will do...more people are showing up at soup kitchens and food pantries and that's a real sign of the economic pain that Americans on fixed incomes are experiencing in this recession."
Paul Palmer Jr, Cypress Advisory Services in Houston: "Right now a lot of people lack the confidence to do anything because they don't want to run the risk of losing principal."
Paul McCulley, Pimco, "There is a global deficiency of global aggregate demand."
When there is uncertainty, a lack of confidence, too little demand, and too much supply, you have a recipe for trouble. That's what we have. Trouble.
Friday, November 08, 2002
11/8/02 The "Soft Spot" Hits Main Street America
McDonald's will miss their already reduced profit forecast, close restaurants, and lay off workers. The poor economy has hit the supermarket business. Safeway lowered its earnings forecast.
Most municipal bonds now have a higher yield than treasury bonds.
The yield curve is flattening. As such, the spread between 2 year and 30 year treasury bonds is narrowing. The yield on the latter is down to 4.82% and the 10 year yields 3.87%.
I have said it so many times. We have widespread overcapacity; too much consumer debt; imports pressing prices lower; and deflation looming on the horizon. Most businesses will continue to cut costs and sidestep hiring and capital investment.
SAS to cut 2700 more jobs.
McDonald's will miss their already reduced profit forecast, close restaurants, and lay off workers. The poor economy has hit the supermarket business. Safeway lowered its earnings forecast.
Most municipal bonds now have a higher yield than treasury bonds.
The yield curve is flattening. As such, the spread between 2 year and 30 year treasury bonds is narrowing. The yield on the latter is down to 4.82% and the 10 year yields 3.87%.
I have said it so many times. We have widespread overcapacity; too much consumer debt; imports pressing prices lower; and deflation looming on the horizon. Most businesses will continue to cut costs and sidestep hiring and capital investment.
SAS to cut 2700 more jobs.
Thursday, November 07, 2002
11/7/02 The Fed Slices, Dices, And Panics
It is difficult to begin the day on a critical note. Providing praise, on the other hand, is quite uplifting. Yesterday the Fed lowered their funds rate to a level below the inflation rate. The latter is 1.4%. In essence, the Fed said this lowered rate would provide the balance between inflation and the "soft spot" we now have in the economy. This statement is an insult to the intelligence of the American people. Inflation is essentially non-existant. Additionally, we do not have a soft spot economically. We have a serious problem on our hands. You don't believe me?
Costco, one of our foremost retailers, today warned about less than expected results due to disappointing same store sales. Sam's Club, a unit of WalMart, announced a 1.6% decline in its October same store sales. WalMart, as a whole, produced a 3.7% sales gain, and this approximated its results for the past several months. The company said November would show a 2 to 4% sales gain, hardly the growth that made WalMart great.
Cisco's latest quarterly results showed a $500 million decline (a bit over 30%) in cash flow from operations from the prior quarter. The CEO expects sales for the current quarter to be flat to down 3 to 4%. He said customers remain cautious regarding spending and are unsure of revenue and profit projections.
Advanced Micro devices announced their need to lay off 20% of the workforce in order to bring costs in line with sharply reduced revenues.
The Bank of England and the European Central Bank both left their rates unchanged. There was a time these institutions would have followed the Fed's lead. Unfortunately, in my view, the Fed has lost its credibility in the marketplace. Only the media finds this Fed newsworthy.
The consumer is beleaguered. Does the Fed want the consumer to borrow more at slightly lower interest rates? Should they take out more car loans? Should they buy more presents on their debt laden credit cards? I don't think so. I believe a clean sweep is in store. Show the exit door to the Chair and the 12 governors and let them follow Harvey Pitt to the showers.
I apologize for this late posting. The .Net Passport server has been down.
It is difficult to begin the day on a critical note. Providing praise, on the other hand, is quite uplifting. Yesterday the Fed lowered their funds rate to a level below the inflation rate. The latter is 1.4%. In essence, the Fed said this lowered rate would provide the balance between inflation and the "soft spot" we now have in the economy. This statement is an insult to the intelligence of the American people. Inflation is essentially non-existant. Additionally, we do not have a soft spot economically. We have a serious problem on our hands. You don't believe me?
Costco, one of our foremost retailers, today warned about less than expected results due to disappointing same store sales. Sam's Club, a unit of WalMart, announced a 1.6% decline in its October same store sales. WalMart, as a whole, produced a 3.7% sales gain, and this approximated its results for the past several months. The company said November would show a 2 to 4% sales gain, hardly the growth that made WalMart great.
Cisco's latest quarterly results showed a $500 million decline (a bit over 30%) in cash flow from operations from the prior quarter. The CEO expects sales for the current quarter to be flat to down 3 to 4%. He said customers remain cautious regarding spending and are unsure of revenue and profit projections.
Advanced Micro devices announced their need to lay off 20% of the workforce in order to bring costs in line with sharply reduced revenues.
The Bank of England and the European Central Bank both left their rates unchanged. There was a time these institutions would have followed the Fed's lead. Unfortunately, in my view, the Fed has lost its credibility in the marketplace. Only the media finds this Fed newsworthy.
The consumer is beleaguered. Does the Fed want the consumer to borrow more at slightly lower interest rates? Should they take out more car loans? Should they buy more presents on their debt laden credit cards? I don't think so. I believe a clean sweep is in store. Show the exit door to the Chair and the 12 governors and let them follow Harvey Pitt to the showers.
I apologize for this late posting. The .Net Passport server has been down.
Wednesday, November 06, 2002
11/6/02 Insurance Premiums
Insurance premiums are rising at their fastest clip in a decade, fueled by increased demand for hospital services and prescription drugs. Premiums are forecast to leap an average 15.4% for employers next year, even as the economy remains shaky and the job market tight.
Some employers are requiring workers to pay 10% to 30% more toward monthly premiums, raising deductibles and setting higher co-payments for office visits, hospital care and drugs. Hewitt Associates estimates that the amount employees will pay in premiums and other costs next year will rise by an average of $342, to $1,753.
Since June 415,000 jobs have been added in agriculture, and that accounts for roughly 50% of the new jobs added since June. Are marijuana farmers being counted now or possibly illegal migrant farm workers being added to payrolls?
The ISM monthly index of non-manufacturing activity(or lack of) showed new orders slowed in October to 50.9 from 52.3, and this is the lowest level since January. The non-manufacturing employment index fell to 46.2, and this is the 20th consecutive month for job losses.
Insurance premiums are rising at their fastest clip in a decade, fueled by increased demand for hospital services and prescription drugs. Premiums are forecast to leap an average 15.4% for employers next year, even as the economy remains shaky and the job market tight.
Some employers are requiring workers to pay 10% to 30% more toward monthly premiums, raising deductibles and setting higher co-payments for office visits, hospital care and drugs. Hewitt Associates estimates that the amount employees will pay in premiums and other costs next year will rise by an average of $342, to $1,753.
Since June 415,000 jobs have been added in agriculture, and that accounts for roughly 50% of the new jobs added since June. Are marijuana farmers being counted now or possibly illegal migrant farm workers being added to payrolls?
The ISM monthly index of non-manufacturing activity(or lack of) showed new orders slowed in October to 50.9 from 52.3, and this is the lowest level since January. The non-manufacturing employment index fell to 46.2, and this is the 20th consecutive month for job losses.
Tuesday, November 05, 2002
11/5/02 More Job Cuts
In October there were 176,010 announced job cuts. This was the second highest monthly number in 2002. Only January had more.
Yesterday Applied Materials announced they are laying off 11% of their workforce, and Dow Jones is cutting an additional 3% of theirs. What I find interesting is that both of these companies are the leaders in their respective fields. Additionally, Jim Morgan, the CEO of Applied Materials, is one of the brightest guys in the Silicon Valley. If Morgan thought business were on the verge of improving, he wouldn't be making these cuts.
Last Friday Network Commerce filed for chapter 11. At one time the company had 650 employees and had a stock market value exceeding $500 million. Between 1998 and 2001 they reported losses exceeding $500 million. How many other stories like this are in the naked city?
Factory orders dropped 2.3% in September.
IBM will spend $700-800 million over the next year on ads to promote "on-demand computing." The spoof ads are intended to counteract technology gloom and doom. In my view, growth in cash flow and net profits might be a much better tonic.
The Dow at 8600 is up 20%(about 1400 points) above its 5 year low of about 7200 set intraday on October 10. I wonder how much new money was suckered into this bear market rally.
In October there were 176,010 announced job cuts. This was the second highest monthly number in 2002. Only January had more.
Yesterday Applied Materials announced they are laying off 11% of their workforce, and Dow Jones is cutting an additional 3% of theirs. What I find interesting is that both of these companies are the leaders in their respective fields. Additionally, Jim Morgan, the CEO of Applied Materials, is one of the brightest guys in the Silicon Valley. If Morgan thought business were on the verge of improving, he wouldn't be making these cuts.
Last Friday Network Commerce filed for chapter 11. At one time the company had 650 employees and had a stock market value exceeding $500 million. Between 1998 and 2001 they reported losses exceeding $500 million. How many other stories like this are in the naked city?
Factory orders dropped 2.3% in September.
IBM will spend $700-800 million over the next year on ads to promote "on-demand computing." The spoof ads are intended to counteract technology gloom and doom. In my view, growth in cash flow and net profits might be a much better tonic.
The Dow at 8600 is up 20%(about 1400 points) above its 5 year low of about 7200 set intraday on October 10. I wonder how much new money was suckered into this bear market rally.
Monday, November 04, 2002
11/4/02 Happy Anniversary Guy
Your smiling eyes are everywhere and light up the sky.
Tomorrow there are 36 governorships, 34 Senate spots, and 435 House seats up for grabs. Hopefully, we will vote with our heads and not focus on the photo-ops. These individuals are to represent your beliefs. With all due respect, maybe they will do a better job than the current array of money managers who are stewards for your money. Everyone should be tired by now of losing money. Are we also tired of bloated government and a do-nothing Congress? The choice is yours. A single vote can make the difference.
After years of reading about the "Microsoft Case" it is finally over. Nothing happened except for the hundreds of millions of dollars wasted on pursuiing competition in our capitalistic society. John D. Rockefeller must be smiling.
Today I will need to rest. I have to prepare myself for the Fed meeting this week. The outcome has so much meaningless suspense.
Your smiling eyes are everywhere and light up the sky.
Tomorrow there are 36 governorships, 34 Senate spots, and 435 House seats up for grabs. Hopefully, we will vote with our heads and not focus on the photo-ops. These individuals are to represent your beliefs. With all due respect, maybe they will do a better job than the current array of money managers who are stewards for your money. Everyone should be tired by now of losing money. Are we also tired of bloated government and a do-nothing Congress? The choice is yours. A single vote can make the difference.
After years of reading about the "Microsoft Case" it is finally over. Nothing happened except for the hundreds of millions of dollars wasted on pursuiing competition in our capitalistic society. John D. Rockefeller must be smiling.
Today I will need to rest. I have to prepare myself for the Fed meeting this week. The outcome has so much meaningless suspense.
Sunday, November 03, 2002
11/3/02 Happy Birthday Guy
This blog is for you. I remember and will never forget. May your soul light up the earth and the stars.
I must have received at least 23 spam messages this week informing me that the Fed will lower interest rates this coming Wednesday. Does this mean that I can borrow at 1.5% or that the economy will turn on a dime? Actually I have given this matter a great deal of thought. I need to give credit where credit is due. The Fed is the second coming of Prozac- generically speaking of course. When I think of Alan Greenspan and his associates, I envision the Lone Ranger and Tonto, Spiderman, Superman, Elvis, John Wayne, and Madonna all coming to the rescue. After all, I read where our economic recovery is in peril. That's correct. Peril. Everything will be ok. I'll have some milk and cookies, go to bed, and wake up in March 2003 when all will be rosy.
The problem with the above scenario is missing the holiday season. The retailers need our dollars to buy merchandise for the Spring. I cannot have on my conscience the thought that my sleeping thru the holidays could contribute to KMart going the way of Loehman's. I would rather stay awake and swallow the peril pill. Reality is easier to digest in the short and long run.
This blog is for you. I remember and will never forget. May your soul light up the earth and the stars.
I must have received at least 23 spam messages this week informing me that the Fed will lower interest rates this coming Wednesday. Does this mean that I can borrow at 1.5% or that the economy will turn on a dime? Actually I have given this matter a great deal of thought. I need to give credit where credit is due. The Fed is the second coming of Prozac- generically speaking of course. When I think of Alan Greenspan and his associates, I envision the Lone Ranger and Tonto, Spiderman, Superman, Elvis, John Wayne, and Madonna all coming to the rescue. After all, I read where our economic recovery is in peril. That's correct. Peril. Everything will be ok. I'll have some milk and cookies, go to bed, and wake up in March 2003 when all will be rosy.
The problem with the above scenario is missing the holiday season. The retailers need our dollars to buy merchandise for the Spring. I cannot have on my conscience the thought that my sleeping thru the holidays could contribute to KMart going the way of Loehman's. I would rather stay awake and swallow the peril pill. Reality is easier to digest in the short and long run.
Saturday, November 02, 2002
11/2/02 Grip That Yellow Brick Road
The drive along the country road is beautiful. The colors are something to behold. Not a cloud on the horizon. I'm in hog heaven. I've just logged 4 straight weeks of stock market gains. November has just begun. How sweet it is! In the last dozen midterm election years there have been only two down Novembers- 1974 and 1994. We've just come off the low in early October and bounced a profitable 1200 Dow points. The consensus is that 4th quarter eanings will increase by 17% and in 2003 by 15%. We're off to the races. Look. I am driving with only one hand on the wheel and my head is outside the front window. The road is so magnificent. There isn't another car to be seen. I'll just drive with no hands and steer with my smile. Not to worry. My airbag has Alan Greenspan stenciled on the front. He's Superman's first cousin on his second wife's side. Alan looks out for all of us. He'll lower interest rates and I'll refinance my mortage for the 11th time in 2002. Capitalism works.
I hope you are one of the lucky ones with health insurance, workman's comp, and a 401K with some worth. I hope you have a job. May I suggest you get a holiday gift for Mr. Greenspan. How about a red, white, and blue parachute?
The drive along the country road is beautiful. The colors are something to behold. Not a cloud on the horizon. I'm in hog heaven. I've just logged 4 straight weeks of stock market gains. November has just begun. How sweet it is! In the last dozen midterm election years there have been only two down Novembers- 1974 and 1994. We've just come off the low in early October and bounced a profitable 1200 Dow points. The consensus is that 4th quarter eanings will increase by 17% and in 2003 by 15%. We're off to the races. Look. I am driving with only one hand on the wheel and my head is outside the front window. The road is so magnificent. There isn't another car to be seen. I'll just drive with no hands and steer with my smile. Not to worry. My airbag has Alan Greenspan stenciled on the front. He's Superman's first cousin on his second wife's side. Alan looks out for all of us. He'll lower interest rates and I'll refinance my mortage for the 11th time in 2002. Capitalism works.
I hope you are one of the lucky ones with health insurance, workman's comp, and a 401K with some worth. I hope you have a job. May I suggest you get a holiday gift for Mr. Greenspan. How about a red, white, and blue parachute?
Friday, November 01, 2002
11/1/02 Hello November
We need some new cooks. The present economic recipe is for the pits. We have lower than anticipated 3rd quarter GDP; higher than expected jobless claims; the number of hours worked each week is down; business has cut investment spending for six straight quarters; there is overcapacity; we have a rising jobless rate; and over the next six months businesses expect to trim payrolls rather than hire. Maybe Wolfgang Puck should become the next Fed chairman.
It's not all bad though. The government continues to hire staff. They are attempting to keep people off the streets. They're reverting to the program initiated in the 1930's. It's not a concern. When the budget deficit gets larger, then more dollars can be printed. It's no wonder the dollar is at a two month low against the Euro.
We need some new cooks. The present economic recipe is for the pits. We have lower than anticipated 3rd quarter GDP; higher than expected jobless claims; the number of hours worked each week is down; business has cut investment spending for six straight quarters; there is overcapacity; we have a rising jobless rate; and over the next six months businesses expect to trim payrolls rather than hire. Maybe Wolfgang Puck should become the next Fed chairman.
It's not all bad though. The government continues to hire staff. They are attempting to keep people off the streets. They're reverting to the program initiated in the 1930's. It's not a concern. When the budget deficit gets larger, then more dollars can be printed. It's no wonder the dollar is at a two month low against the Euro.
Thursday, October 31, 2002
10/31/02 Goblins
The last three weeks should enable this October to be the best October on record. The market has climbed a wall of worry- disastrous consumer sentiment, lousy leading economic indicators, three straight weeks of declines for mortgage applications which provide the sign for slower housing activity, and 40% of consumers planning to spend less on gifts this holiday season. Operationally, the best results have been reported by consumer staple companies- Colgate, P&G, and Unilever.
Yesterday the CEO of IBM chimed in as a forecaster. The market took his word as the gospel. Of course, he missed the extent of the decline in the computing and IT industry as well as the second half economic weakness we are experiencing. What did he say? He stated that short term circumstances are difficult but that customers are ultimately optimistic about the long term. Additionally, he proclaimed the economy has hit bottom or is flattening out. He must have based that on being ultimately optimistic despite difficult short term circumstances. He could be the second coming of Yogi Berra. Come to think of it. There is only one Yogi Berra, and I think Yogi makes more sense.
I for one will not be eating a great deal of candy this Halloween. I am on a candy strike- at least candy made by Hershey's. The stockholders were disenfranchised and never had a chance to sell to Wrigley.
The last three weeks should enable this October to be the best October on record. The market has climbed a wall of worry- disastrous consumer sentiment, lousy leading economic indicators, three straight weeks of declines for mortgage applications which provide the sign for slower housing activity, and 40% of consumers planning to spend less on gifts this holiday season. Operationally, the best results have been reported by consumer staple companies- Colgate, P&G, and Unilever.
Yesterday the CEO of IBM chimed in as a forecaster. The market took his word as the gospel. Of course, he missed the extent of the decline in the computing and IT industry as well as the second half economic weakness we are experiencing. What did he say? He stated that short term circumstances are difficult but that customers are ultimately optimistic about the long term. Additionally, he proclaimed the economy has hit bottom or is flattening out. He must have based that on being ultimately optimistic despite difficult short term circumstances. He could be the second coming of Yogi Berra. Come to think of it. There is only one Yogi Berra, and I think Yogi makes more sense.
I for one will not be eating a great deal of candy this Halloween. I am on a candy strike- at least candy made by Hershey's. The stockholders were disenfranchised and never had a chance to sell to Wrigley.
Wednesday, October 30, 2002
10/30/02 The Consumer Has It Right
The Conference Board proclaimed yesterday that "the outlook for the holiday retail season is now fairly bleak." That statement is perfectly understandable after the latest reading on consumer confidence plummeted to 79.4 from September's 93.7. The expectation was for a number around 90.
The consumer is on the right path to spending less and attempting to save more. The consumer is laden with 14% of disposable income going towards debt service. When you add the latter to paying taxes and accounting for normal living expenses, the monthly budget has difficulty in coming out on a positive note. In itself that is a downer. When you combine it with job layoffs and job instability, you have the foundation for unstable waters. This situation is not easily overcome, and it will take time to right itself.
I have often said over the past three months that the U.S. econnomy could no longer depend on the consumer to carry two-thirds of the load. Business investment is silent. Interest rates are already at a 40 year low. Don't look to the Fed to solve the problems. The landscape is definitely murky.
The Conference Board proclaimed yesterday that "the outlook for the holiday retail season is now fairly bleak." That statement is perfectly understandable after the latest reading on consumer confidence plummeted to 79.4 from September's 93.7. The expectation was for a number around 90.
The consumer is on the right path to spending less and attempting to save more. The consumer is laden with 14% of disposable income going towards debt service. When you add the latter to paying taxes and accounting for normal living expenses, the monthly budget has difficulty in coming out on a positive note. In itself that is a downer. When you combine it with job layoffs and job instability, you have the foundation for unstable waters. This situation is not easily overcome, and it will take time to right itself.
I have often said over the past three months that the U.S. econnomy could no longer depend on the consumer to carry two-thirds of the load. Business investment is silent. Interest rates are already at a 40 year low. Don't look to the Fed to solve the problems. The landscape is definitely murky.
Tuesday, October 29, 2002
10/29/02 The U.S. Economy
A CNN/USA Today/Gallup poll indicated 60% of Americans rated the economy poor in October.
Richard Curtin, director of the University of Michigan's Consumer Research Center, said "consumer spending will depend on getting even larger discounts, and profits will depend on making even larger cost cuts." This sounds like growing deflation and more job cuts.
Curtin went on to say that "accumulated loss in consumer confidence could tip the economy back into recession."
The Conference Board will release its monthly index of consumer confidence this morning.
Talking about confidence or the lack of, IBM is reintroducing a 90 day deferral on financing payments and this includes initial down payments. Financing rates are as low as 3.1%.
Cisco's Catalyst 6500 LAN Switch accounts for about 25% of the company's total sales. Cisco lowered its price on this product by 15-35%.
A CNN/USA Today/Gallup poll indicated 60% of Americans rated the economy poor in October.
Richard Curtin, director of the University of Michigan's Consumer Research Center, said "consumer spending will depend on getting even larger discounts, and profits will depend on making even larger cost cuts." This sounds like growing deflation and more job cuts.
Curtin went on to say that "accumulated loss in consumer confidence could tip the economy back into recession."
The Conference Board will release its monthly index of consumer confidence this morning.
Talking about confidence or the lack of, IBM is reintroducing a 90 day deferral on financing payments and this includes initial down payments. Financing rates are as low as 3.1%.
Cisco's Catalyst 6500 LAN Switch accounts for about 25% of the company's total sales. Cisco lowered its price on this product by 15-35%.
Monday, October 28, 2002
10/28/02 When Is The Bear Market Over For You?
This question is asked time and time again each day. The answer is easy. The bear market has ended when the stocks you purchased at $50 no longer are selling for 5 cents. When they rally to $5, it's time to break open the Pellegrino. When they go back to $10, then mass hysteria has set in and you've hit irrational exuberance. In other words, for most of you the losses will be permanent.
No one likes to lose money; however, it's well to remember that the first loss is the best loss. Limit your losses and let your winners run- but only with the great ones. You never lose money by taking a profit. The stock market does not have a place for hopes and prayers or crystals or tarot cards. Hard work, long hours of study, and independent thought will bring better results.
All of the above may sound harsh and sarcastic. It's meant well, and maybe will provide an improved path to future stock market profits.
This question is asked time and time again each day. The answer is easy. The bear market has ended when the stocks you purchased at $50 no longer are selling for 5 cents. When they rally to $5, it's time to break open the Pellegrino. When they go back to $10, then mass hysteria has set in and you've hit irrational exuberance. In other words, for most of you the losses will be permanent.
No one likes to lose money; however, it's well to remember that the first loss is the best loss. Limit your losses and let your winners run- but only with the great ones. You never lose money by taking a profit. The stock market does not have a place for hopes and prayers or crystals or tarot cards. Hard work, long hours of study, and independent thought will bring better results.
All of the above may sound harsh and sarcastic. It's meant well, and maybe will provide an improved path to future stock market profits.
Sunday, October 27, 2002
10/27/02 World Series Time For The Consumer
Make the retailers pitch to you. There are only 26 shopping days between Thanksgiving and Xmas. DVD players are $59 or less vs $200 two years ago. PlayStation 2 and XBox are being discounted. Digital cameras are being reduced in price. 0 percent financing and free leather recliners are being offered on digital projection televisions. You are in the driver's seat. Drive a hard bargain and drive down the prces. Make deflation work for you. There are too many retailers out there with too much inventory and too few selling days.
We have seen patience on Wall Street pay off. Value will win out. It's only a matter of time. This week the numbers will indicate rising unemployment and lower consumer confidence. Wait for your pitch from the retailer. Don't swing at a ball out of the strike zone. The count is in your favor. Make them pay and not you.
Make the retailers pitch to you. There are only 26 shopping days between Thanksgiving and Xmas. DVD players are $59 or less vs $200 two years ago. PlayStation 2 and XBox are being discounted. Digital cameras are being reduced in price. 0 percent financing and free leather recliners are being offered on digital projection televisions. You are in the driver's seat. Drive a hard bargain and drive down the prces. Make deflation work for you. There are too many retailers out there with too much inventory and too few selling days.
We have seen patience on Wall Street pay off. Value will win out. It's only a matter of time. This week the numbers will indicate rising unemployment and lower consumer confidence. Wait for your pitch from the retailer. Don't swing at a ball out of the strike zone. The count is in your favor. Make them pay and not you.
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.
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.
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.
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.
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.
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.
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.
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.
Saturday, October 19, 2002
10/19/02 Consumers Are Spooked
Halloween sales of candy and costumes are forecast to be flat. WalMart says theirs "are not where we would like them."
Disney's debt rating is reduced for the 3rd time in 2 months. That is not easy to accomplish! No wonder Eisner has board backing.
The U.S. trade gap ballooned to a record $38.5 billion in August. The government takes 60 days to release these figures. I wasn't slow in noticing this news. Our account deficit with China continues to climb. If this trend were to be maintained, it's conceivable China could tender for the U.S. in 2050. Of course, they might not want to be burdened with our healthcare costs and social security concerns.
This should be an exciting world series. We have two former Dodger teammates going head to head as managers. That must be a first.
Halloween sales of candy and costumes are forecast to be flat. WalMart says theirs "are not where we would like them."
Disney's debt rating is reduced for the 3rd time in 2 months. That is not easy to accomplish! No wonder Eisner has board backing.
The U.S. trade gap ballooned to a record $38.5 billion in August. The government takes 60 days to release these figures. I wasn't slow in noticing this news. Our account deficit with China continues to climb. If this trend were to be maintained, it's conceivable China could tender for the U.S. in 2050. Of course, they might not want to be burdened with our healthcare costs and social security concerns.
This should be an exciting world series. We have two former Dodger teammates going head to head as managers. That must be a first.
Friday, October 18, 2002
10/18/02 There's More Than The Headlines
As I often stated, over the past 25 years Microsoft is easily the biggest business success story. Yesterday the media butchered Microsoft's news release. Yes, their 1st quarter results were above expectations. New licensing programs were the major reason. I failed to read, however, that there was a positive swing in investment income to the tune of one billion dollars. Operating margins were lower, and the second quarter will be lower. The company raised their estimate for the entire year by 5 cents per share, and therefore, results should exceed the prior year by maybe 3-5 cents to about $1.90. At $53 the stock is not exactly a bargain.
Over the past week treasuries have been pounded and yields have risen by 55 basis points. This is a huge move in one week, and is another illustration of extreme market volatility. Some money managers have been shifting their asset allocation and purchasing more stocks- in hopes that last week saw the bottom in stock prices. Good luck to them.
Sears dropped another 30% yesterday, and is now down almost 50% in the past 2 weeks. They made additional provisions for uncollectable credit accounts. I hope you don't believe Sears is alone in this area. This is just the tip of the iceberg for financial institutions.
Delta Air is laying off another 8000 and Sun Microsystems 11% of its workforce. Ericsson's numbers were a nightmare. Eastman Kodak's results were a pleasant surprise. Colgate, one of the great ones, continues to deliver in tough times.
It's interesting that the unemployment claims rose sharply, that there was an unexpected decline in September industrial production, and yet housing permits were the highest in 16 years. Maybe record low mortage rates helped the latter. In the last week those rates have risen 15 basis points or more.
As I often stated, over the past 25 years Microsoft is easily the biggest business success story. Yesterday the media butchered Microsoft's news release. Yes, their 1st quarter results were above expectations. New licensing programs were the major reason. I failed to read, however, that there was a positive swing in investment income to the tune of one billion dollars. Operating margins were lower, and the second quarter will be lower. The company raised their estimate for the entire year by 5 cents per share, and therefore, results should exceed the prior year by maybe 3-5 cents to about $1.90. At $53 the stock is not exactly a bargain.
Over the past week treasuries have been pounded and yields have risen by 55 basis points. This is a huge move in one week, and is another illustration of extreme market volatility. Some money managers have been shifting their asset allocation and purchasing more stocks- in hopes that last week saw the bottom in stock prices. Good luck to them.
Sears dropped another 30% yesterday, and is now down almost 50% in the past 2 weeks. They made additional provisions for uncollectable credit accounts. I hope you don't believe Sears is alone in this area. This is just the tip of the iceberg for financial institutions.
Delta Air is laying off another 8000 and Sun Microsystems 11% of its workforce. Ericsson's numbers were a nightmare. Eastman Kodak's results were a pleasant surprise. Colgate, one of the great ones, continues to deliver in tough times.
It's interesting that the unemployment claims rose sharply, that there was an unexpected decline in September industrial production, and yet housing permits were the highest in 16 years. Maybe record low mortage rates helped the latter. In the last week those rates have risen 15 basis points or more.
Thursday, October 17, 2002
10/17/02 Corporate Disappointments
I mentioned yesterday that a 1000 point Dow rally would not prevent bad news from occurring. Yesterday disappointing results were announced by Coke, Boeing, Motorola, Novellus, Plantronics, Ultratech and others. Weyerhaeuser, Honeywell, and Retek all announced layoffs and additional layoffs are expected to be announced within the semiconductor industry.
After the close IBM had a 3rd quarter conference call, and the stock rallied sharply to 70. I listened to the call and read their release. Their income from continuing operations was flat, their revenue was down 2%, and gross margins declined. So why did the stock rally? Management projected a 4th quarter revenue level which excited the Street. I was in the minority. The projection was well within prior announced expectations, and frankly, that projection is nothing to write home about. The Street is grasping for straws, and that has proven to result in unfavorable investing returns.
I mentioned yesterday that a 1000 point Dow rally would not prevent bad news from occurring. Yesterday disappointing results were announced by Coke, Boeing, Motorola, Novellus, Plantronics, Ultratech and others. Weyerhaeuser, Honeywell, and Retek all announced layoffs and additional layoffs are expected to be announced within the semiconductor industry.
After the close IBM had a 3rd quarter conference call, and the stock rallied sharply to 70. I listened to the call and read their release. Their income from continuing operations was flat, their revenue was down 2%, and gross margins declined. So why did the stock rally? Management projected a 4th quarter revenue level which excited the Street. I was in the minority. The projection was well within prior announced expectations, and frankly, that projection is nothing to write home about. The Street is grasping for straws, and that has proven to result in unfavorable investing returns.
Wednesday, October 16, 2002
10/16/02 Perspective On 1000 Dow Points
It was not until some time during 1982 that the Dow was able to rally just above the 1000 mark and to remain above that level. In other words, Dow 1000 was a huge hurdle for a very long time. Now we fast forward to 2002. From last thursday's intraday low to yesterday's close the Dow rallied 1000 points! It took only 4 days for the Dow to rally those 1000 points.
Last evening Sun Microsystems announced that they may have to lay off 8000 employees. Intel said that 4th quarter revenues will be lower than expected and lowered their capital spending budget as well as warning about lower than expected profit margins. Banc One warned about increasing loan losses in 2003. The point is simple. The bad news is not going to stop just because the Dow rallied 1000 points. In a month I believe investors will once again look back and wished they had sold into the rally. As an overall description, the stock market does not represent good value and is not cheap. 10/16/02 Perspective On 1000 Dow Points
It was not until some time during 1982 that the Dow was able to rally just above the 1000 mark and to remain above that level. In other words, Dow 1000 was a huge hurdle for a very long time. Now we fast forward to 2002. From last thursday's intraday low to yesterday's close the Dow rallied 1000 points! It took only 4 days for the Dow to rally those 1000 points.
Last evening Sun Microsystems announced that they may have to lay off 8000 employees. Intel said that 4th quarter revenues will be lower than expected and lowered their capital spending budget as well as warning about lower than expected profit margins. Banc One warned about increasing loan losses in 2003. The point is simple. The bad news is not going to stop just because the Dow rallied 1000 points. In a month I believe investors will once again look back and wished they had sold into the rally. As an overall description, in my view, the stock market does not represent good value and is not cheap.
It was not until some time during 1982 that the Dow was able to rally just above the 1000 mark and to remain above that level. In other words, Dow 1000 was a huge hurdle for a very long time. Now we fast forward to 2002. From last thursday's intraday low to yesterday's close the Dow rallied 1000 points! It took only 4 days for the Dow to rally those 1000 points.
Last evening Sun Microsystems announced that they may have to lay off 8000 employees. Intel said that 4th quarter revenues will be lower than expected and lowered their capital spending budget as well as warning about lower than expected profit margins. Banc One warned about increasing loan losses in 2003. The point is simple. The bad news is not going to stop just because the Dow rallied 1000 points. In a month I believe investors will once again look back and wished they had sold into the rally. As an overall description, the stock market does not represent good value and is not cheap. 10/16/02 Perspective On 1000 Dow Points
It was not until some time during 1982 that the Dow was able to rally just above the 1000 mark and to remain above that level. In other words, Dow 1000 was a huge hurdle for a very long time. Now we fast forward to 2002. From last thursday's intraday low to yesterday's close the Dow rallied 1000 points! It took only 4 days for the Dow to rally those 1000 points.
Last evening Sun Microsystems announced that they may have to lay off 8000 employees. Intel said that 4th quarter revenues will be lower than expected and lowered their capital spending budget as well as warning about lower than expected profit margins. Banc One warned about increasing loan losses in 2003. The point is simple. The bad news is not going to stop just because the Dow rallied 1000 points. In a month I believe investors will once again look back and wished they had sold into the rally. As an overall description, in my view, the stock market does not represent good value and is not cheap.
10/16/02 Perspective On 1000 Dow Points
It was not until some time during 1982 that the Dow was able to rally just above the 1000 mark and to remain above that level. In other words, Dow 1000 was a huge hurdle for a very long time. Now we fast forward to 2002. From last thursday's intraday low to yesterday's close the Dow rallied 1000 points! It took only 4 days for the Dow to rally those 1000 points.
Last evening Sun Microsystems announced that they may have to lay off 8000 employees. Intel said that 4th quarter revenues will be lower than expected and lowered their capital spending budget as well as warning about lower than expected profit margins. Banc One warned about increasing loan losses in 2003. The point is simple. The bad news is not going to stop just because the Dow rallied 1000 points. In a month I believe investors will once again look back and wished they had sold into the rally. As an overall description, the stock market does not represent good value and is not cheap.
Good value is in the eye of the investor. For me the last two times the market was truly an excellent value was in 1982 and in 1974. Patient investors have a better chance to achieve above average results. Often that requires sitting on one's hands and doing nothing.
It was not until some time during 1982 that the Dow was able to rally just above the 1000 mark and to remain above that level. In other words, Dow 1000 was a huge hurdle for a very long time. Now we fast forward to 2002. From last thursday's intraday low to yesterday's close the Dow rallied 1000 points! It took only 4 days for the Dow to rally those 1000 points.
Last evening Sun Microsystems announced that they may have to lay off 8000 employees. Intel said that 4th quarter revenues will be lower than expected and lowered their capital spending budget as well as warning about lower than expected profit margins. Banc One warned about increasing loan losses in 2003. The point is simple. The bad news is not going to stop just because the Dow rallied 1000 points. In a month I believe investors will once again look back and wished they had sold into the rally. As an overall description, the stock market does not represent good value and is not cheap.
Good value is in the eye of the investor. For me the last two times the market was truly an excellent value was in 1982 and in 1974. Patient investors have a better chance to achieve above average results. Often that requires sitting on one's hands and doing nothing.
Tuesday, October 15, 2002
10/15/02 Polls Taken In 1998 And Now
In 1998 a Gallup Poll indicated that two-thirds of those surveyed found it a good time to invest. It was for the next two years. In a recent Associated Press poll 64% thought it a bad idea to invest now. Time will tell how smart those recently surveyed are.
Osama bin Laden: "We congratulate our Islamic world for the heroic operations of courageous jihad carried out by its pious fighter children in Yemen, against the tanker of the crusaders, and in Kuwait, against the American invasion and occupation forces." In my view the free nations of the world must come together to eliminate this on-going horror. Hittler was eliminated and so shall these evil doers.
In 1998 a Gallup Poll indicated that two-thirds of those surveyed found it a good time to invest. It was for the next two years. In a recent Associated Press poll 64% thought it a bad idea to invest now. Time will tell how smart those recently surveyed are.
Osama bin Laden: "We congratulate our Islamic world for the heroic operations of courageous jihad carried out by its pious fighter children in Yemen, against the tanker of the crusaders, and in Kuwait, against the American invasion and occupation forces." In my view the free nations of the world must come together to eliminate this on-going horror. Hittler was eliminated and so shall these evil doers.
Monday, October 14, 2002
10/14/02 Mitchell E. Daniels Jr.
This gentleman is the Director of the OMB(Office of Management and Budget). Last week he wrote a letter to Congress in which he stated "federal government's accounts would never be tolerated in the private sector...repair of the system so badly broken will not happen overnight." He was referring to the trillions of dollars in unsubstantiated balance adjustments occurring yearly in federal departments and related that 20 of the largest agencies had serious chronic problems.
This gentleman is the Director of the OMB(Office of Management and Budget). Last week he wrote a letter to Congress in which he stated "federal government's accounts would never be tolerated in the private sector...repair of the system so badly broken will not happen overnight." He was referring to the trillions of dollars in unsubstantiated balance adjustments occurring yearly in federal departments and related that 20 of the largest agencies had serious chronic problems.
Sunday, October 13, 2002
10/13/2002 The Unsuccessful Investor
A common cause for the lack of success is the frequency with which investors come to believe only what they wish to believe.
One case in point is GE. On friday the company announced that they had hit their targets for the third quarter. The CEO said they had encountered "a more difficult environment than the one we had expected in July... and was counting on extremely low economic growth for 2003." Mr. Immelt did not provide a forecast for their earnings in 2003. He is assuming a 2% growth in the GDP for 2003. It is most unfortunate for investors that they failed to read beyond the 3rd quarter numbers.
Back in 1957 Arthur Rock was one of the forefathers of the Silicon Valley. He stated that this is the worst slump he has seen in the Valley and "there are no jobs. None. Zero."
A recent NY Times/CBS poll indicated about half of Americans are worried that someone in their household will be laid off within a year's time. It's no wonder that consumer confidence is the pits.
A common cause for the lack of success is the frequency with which investors come to believe only what they wish to believe.
One case in point is GE. On friday the company announced that they had hit their targets for the third quarter. The CEO said they had encountered "a more difficult environment than the one we had expected in July... and was counting on extremely low economic growth for 2003." Mr. Immelt did not provide a forecast for their earnings in 2003. He is assuming a 2% growth in the GDP for 2003. It is most unfortunate for investors that they failed to read beyond the 3rd quarter numbers.
Back in 1957 Arthur Rock was one of the forefathers of the Silicon Valley. He stated that this is the worst slump he has seen in the Valley and "there are no jobs. None. Zero."
A recent NY Times/CBS poll indicated about half of Americans are worried that someone in their household will be laid off within a year's time. It's no wonder that consumer confidence is the pits.
Saturday, October 12, 2002
10/12/02 The Cliff
The big story on Friday was not the sharp rally in stocks and the big decline in bonds. The consumer was the main event, and properly so. When you account for two-thirds of the economy, there's no question but that the consumer is all powerful. Unfortunately for the economy, in the latest readings, consumer confidence and expectations fell off a cliff. The drop was a massive plummet. Therefore, it's not surprising that retail sales had their largest drop since November 2001. There are many reasons- the weak job market, Iraq, and growing household debt combined with low savings. Analysts refer to a market being oversold. Well, the consumer is overbought and overspent and overwrought. WalMart listens to the customer better than any other company. WalMart has said for the past three months that its customer, that's you, is slowing down in the buying department. With the holiday season approaching, that's a disaster waiting to happen.
A rally for a few days does not mean the market is oversold. There are always going to be rallies. Analysts simply have a need to provide reasons for happenings after they happen but rarely before they happen. As such, they are mainly worthless despite their large salaries. Listening to analysts is, for the most part, a losing proposition. Do you think Warren Buffett hangs on the words of Wall Street?
This market is highly volatile, and increasingly so. This creates a greater risk, and especially in the derivatives market, which is 10 times the size of our yearly GDP and dwarfs the stock and bond markets. In a perfect world counterparty risk is intended to create zero risk. The world is not perfect, and therefore, not risk free. As such, those creating the custom derivatives, the financial institutions, are increasingly at risk. With heightened geopolitical worries, that aforementioned risk could create massive market dislocations. I don't believe the market adequately accounts for this potential meltdown.
The big story on Friday was not the sharp rally in stocks and the big decline in bonds. The consumer was the main event, and properly so. When you account for two-thirds of the economy, there's no question but that the consumer is all powerful. Unfortunately for the economy, in the latest readings, consumer confidence and expectations fell off a cliff. The drop was a massive plummet. Therefore, it's not surprising that retail sales had their largest drop since November 2001. There are many reasons- the weak job market, Iraq, and growing household debt combined with low savings. Analysts refer to a market being oversold. Well, the consumer is overbought and overspent and overwrought. WalMart listens to the customer better than any other company. WalMart has said for the past three months that its customer, that's you, is slowing down in the buying department. With the holiday season approaching, that's a disaster waiting to happen.
A rally for a few days does not mean the market is oversold. There are always going to be rallies. Analysts simply have a need to provide reasons for happenings after they happen but rarely before they happen. As such, they are mainly worthless despite their large salaries. Listening to analysts is, for the most part, a losing proposition. Do you think Warren Buffett hangs on the words of Wall Street?
This market is highly volatile, and increasingly so. This creates a greater risk, and especially in the derivatives market, which is 10 times the size of our yearly GDP and dwarfs the stock and bond markets. In a perfect world counterparty risk is intended to create zero risk. The world is not perfect, and therefore, not risk free. As such, those creating the custom derivatives, the financial institutions, are increasingly at risk. With heightened geopolitical worries, that aforementioned risk could create massive market dislocations. I don't believe the market adequately accounts for this potential meltdown.
Friday, October 11, 2002
10/11/02 Maintain Trend Focus
Rallies in a bear market provide welcome relief. One might characterize them as a Wall Street Prozac tonic. Unfortunately, the prescription is not necessarily renewable.
Over-all comparable retail sales grew just 1.5% in September. Warnings are being issued about a possible anemic holiday shopping season.
GM is out of stealth mode. They are now offering a new car "purchase" plan- no money down and no payment for 90 days. At least they could include a toaster or possibly the right to return the car after 90 days- a little like an Oreck vacuum.
There is $6 trillion in mortgage debt outstanding. Why would anyone consider the possibility of a bubble in housing?
The other day three men were huddling after returning from a funeral. They were comparing notes on their refinancing experiences. In 1999 these same men probably were discussing day trading and the Nasdaq.
Rallies in a bear market provide welcome relief. One might characterize them as a Wall Street Prozac tonic. Unfortunately, the prescription is not necessarily renewable.
Over-all comparable retail sales grew just 1.5% in September. Warnings are being issued about a possible anemic holiday shopping season.
GM is out of stealth mode. They are now offering a new car "purchase" plan- no money down and no payment for 90 days. At least they could include a toaster or possibly the right to return the car after 90 days- a little like an Oreck vacuum.
There is $6 trillion in mortgage debt outstanding. Why would anyone consider the possibility of a bubble in housing?
The other day three men were huddling after returning from a funeral. They were comparing notes on their refinancing experiences. In 1999 these same men probably were discussing day trading and the Nasdaq.
Thursday, October 10, 2002
10/10/02 It Was Almost Like Old Times
Other than the Dow at a 5 year low and the Nasdaq at a 6 year low and the Nikkei at a 19 year low it could have been 1999.
Amidst the carnage Yahoo, Sun, Intel, Amgen, EBay, Veritas, Seibel, Broadcom, Brocade, Verisign, Amazon, Cisco, and Gilead were all higher yesterday. I was psyched but then I read about GE laying off 1000 at the jet engine division and Abbott Labs laying off 2000 and Virginia laying off 1000 and household debt as a % of GDP at record levels.
Then the sun came out with Glenn Hubbard. He enabled me to sleep better. He said deflation appeared unlikely... that home refinancing had not been excessive...that home refinancing hadn't propped up consumption growth. Now I'm ready for another day.
Winnebago reported record sales and profits for their 4th quarter. Retirees must be taking to the roads. Meanwhile jets increasingly adorn the Mojave landscape. Maybe that's a reason the airline industry has lost $15 billion over the past 24 months. Yes, Boeing did layoff more folks yesterday. If the economy is so sound, as Glenn Hubbard declares, then why are Ford bonds trading at junk levels and Boeing creating an unemployment nightmare in the Seattle environs?
Other than the Dow at a 5 year low and the Nasdaq at a 6 year low and the Nikkei at a 19 year low it could have been 1999.
Amidst the carnage Yahoo, Sun, Intel, Amgen, EBay, Veritas, Seibel, Broadcom, Brocade, Verisign, Amazon, Cisco, and Gilead were all higher yesterday. I was psyched but then I read about GE laying off 1000 at the jet engine division and Abbott Labs laying off 2000 and Virginia laying off 1000 and household debt as a % of GDP at record levels.
Then the sun came out with Glenn Hubbard. He enabled me to sleep better. He said deflation appeared unlikely... that home refinancing had not been excessive...that home refinancing hadn't propped up consumption growth. Now I'm ready for another day.
Winnebago reported record sales and profits for their 4th quarter. Retirees must be taking to the roads. Meanwhile jets increasingly adorn the Mojave landscape. Maybe that's a reason the airline industry has lost $15 billion over the past 24 months. Yes, Boeing did layoff more folks yesterday. If the economy is so sound, as Glenn Hubbard declares, then why are Ford bonds trading at junk levels and Boeing creating an unemployment nightmare in the Seattle environs?
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