11/29/03 Mission-Critical Incentives
Many Americans have trouble getting out of bed to go to work. It’s a drudge, a have to. Give them an incentive to wait in line at 5am, and they will come gladly. This year’s holiday season has 27 shopping days compared with last year’s 26. Last year the Thanksgiving shopping weekend started like a house on fire, and then dribbled into plain nothingness. The retailers are determined not to have the same experience. The problem is the stores don’t have enough of the main attractions to go the distance of 27 days. The lines formed all over the country for $19.99 DVD players, $50 seventeen inch monitors, $29.99 comforters, $169 twenty seven inch TVs, $88 digital cameras, and bargains on digital camcorders, desktop and laptop computers, Game Boy Advance SP systems, Hokey Pokey Elmo, HDTVs with flat screens, and Bratz Karaoke machines. The questions I have are can China make enough DVD players for the holidays and can they be sold for $19.99 at a profit or $29.99 for a profit? Main Street shops for the holidays at WalMart, Target, and Best Buy. Early bird specials are not found at Tiffany’s or Gucci’s.
Aside from the proposed $2.2 billion in penalties, Bush needs an additional incentive to remove the steel tariffs he imposed 20 months ago. He wants to win West Virginia, Ohio, and the other steel manufacturing states in 2004. He can gracefully eliminate the tariffs within the next week due to the fact that steel prices have firmed. The Nucors of the United States may not be overjoyed, but they were thrown a bone for almost two years.
Jack Welch was ahead of his time. He forged technology centers in India long before most CEOs knew India was on the map. His Sigma program revolves around efficiency, productivity, and cost reduction. GE Capital India President Pramod Bhasin stated “we are mission-critical to GE.” The 700 business processes accomplished in India produce annual savings of $340 million a year. That’s a lot of incentive for expanding service operations in India.
Sometimes incentives are required to avoid layoffs. Even workers at labor unions are not immune to a difficult job market. About 200 workers at the AFL-CIO are taking two days of unpaid leave to avoid layoffs. The days off were agreed to this past summer in contract negotiations between managers and the union representing about 200 workers at the AFL-CIO. Managers also have agreed to take unpaid time. Maybe the employment picture is not as upbeat as has been depicted by the Labor Department. For example, this month Raytheon, in an effort to cut costs, axed workers at an electrical panel assembly factory. One of those recently fired workers stated “it’s not getting better, it is getting worse. It is definitely getting worse. All three of the aircraft companies here in town (Wichita, Kansas) are still laying off, still sending work out of the country. It’s not good.” A temporary worker with the local Machinists Union remarked “every day, all my clients are laid-off aircraft workers, and there’s thousands of them. Probably after the first of the year, or maybe even before then, we’re going to have so many people we are not going to be able to take care of them.”
The Congressional Budget Office reported that non-defense spending rose 7% in the government’s fiscal year that ended Sept. 30, 75% above the 4% discretionary spending caps that President Bush insisted Congress honor. Since Bush took office in 2001, non-defense spending has increased 13%, and 21% if spending on the war on terrorism is included. Chris Edwards, director of fiscal policy at the Cato Institute, stated “my impression of Bush is that I’ve never seen him give a speech in which he says government is too big and we need to cut costs.” Brian M. Reidl, a budget analyst for the Heritage Foundation, stated mandatory government spending on entitlements, such as, Medicare will reach 11.1% of the nation’s GDP, and that the number will climb exponentially once seniors begin getting government-paid pharmaceuticals in 2006. Reidl remarked “Congress often underestimates entitlements by a lot. By our calculations, it will cost $2 trillion between now and 2030.” That assumes the program is not expanded. He went on to state that “the lawmakers who pushed for the Medicare drug bill never answered the question of how they would pay for it. Apparently, they are leaving the $2 trillion tax hike to future congresses to figure out.” The problem is there is not an incentive to restrain government spending. The American public is on the Atkins diet, and pork is in demand. When the public switches back to the Pritikin diet, maybe fiscal restraint will be in vogue. I won’t hold my breath.
The talents of our medical researchers constantly amaze me. Dr. Qing Wang is the director of The Cleveland Clinic’s Center for Cardiovascular Genetics. He and his colleagues noticed an MEF2A specific genetic deletion mutation. Dr. Wang discovered “the elements missing from this gene represent 21 base pairs of nucleotides and seven amino acids. This deletion affects coronary artery walls, making them less able to protect themselves from plaque buildup and heart disease.” This is the first gene confirmed as a cause of coronary heart disease in humans. Dr. Wang related that “finding the gene opens a new avenue through which scientists can track the pathway that leads to coronary heart disease and heart attack. Genes in that pathway then can be used as targets to design new drugs intended to prevent or treat heart disease. Finding the gene also will make it easier to definitively diagnose patients with highly significant family histories of heart disease. Despite all medical advances to date, heart disease remains the No. 1 killer in the developed world. Someone suffers a coronary event every 29 seconds, and someone dies every minute. Unlocking the genetic secrets of this disease is a first step in a new research avenue to help save countless lives.”
In a typical year in the United States, about 36,000 people die from the flu and 114,000 are hospitalized. This year the flu season has hit early and its impact has been quite severe in Texas, Nevada, Washington, Colorado, and other states. The last pandemic was the Hong Kong flu in 1968-1969.
In the past, I have written of WalMart’s expansion into mainland China in 1996. They employ 15,000 people in China in their 25 stores, and will open another five stores in 2004. Considering the company has over 1,200 stores worldwide, that number may appear insignificant, but not to WalMart. Joe Hatfield, president of the company’s Asian retail operations, states “what this place is going to look like 10 to 20 years from now- and what the consumer will be ready to buy- is hard to even think about. There are 800 million farmers out there who’ve never even tasted a Coke.”
According to the military, 2,401 U.S. troops were listed as wounded in action in Iraq since the war began in March. Updated through yesterday, 300 more have died, and accidents accounted for an additional 136 deaths. The military reported that, adding the number of sick or non-combat wounded, the total would total approximately 10,000. The figures include only those required transfer to medical facilities outside Iraq and not those whose injuries or illnesses were treated in Iraq.
Friday, November 28, 2003
11/28/03 Internet Commerce
Kenneth Stone, an Iowa State University economics professor, estimates that, nationwide, Internet sales will reach record levels this year, and that total holiday Internet sales could reach $10 billion, up from $8 billion a year ago. More than one-third of consumers stated they shall make at least some holiday purchases online, according to the National Retail Federation. Internet sales account for the fastest growing retail sales sector but make up only 1% or less of all retail sales.
You have been reading about the increases in employment in the United States. It would be advisable to look into the numbers. For example, Circuit City hired 12,000 holiday workers, and WalMart hired 14,000 seasonal employees. WalMart’s hiring decision is significant. Since last year’s holiday period, WalMart has been aggressive in opening new stores. At the same time, the company hired the same 14,000 workers when their store total was less. This confirms that WalMart really is not very optimistic about the growth prospects for this year’s holiday sales.
Layoffs are spreading outside the United States. HSBC is cutting 450 from their equities workforce in the investment banking area. Alitalia has announced the elimination of 2,700 jobs, and possibly more will be on the way due to the strike.
Japan’s October industrial production rose only 0.8% in October, and this was less than half the rate economists were expecting. This muted increase should limit the near-term rise of the yen versus the dollar. On the other hand, the pound reached a new 5-year high at 1.72 and the euro traded at a record level of 1.1994 versus the dollar. Trading in the dollar has not been helped by the deadline of nine days given by the WTO to abide by their ruling on the illegality of the U.S. steel import duties. If the duties are not removed, the U.S. will be hit with $2.2 billion in sanctions.
In a matter of a few days you will read about the increased U.S. sales of new cars and trucks for the month of November. The report will be released on Tuesday. Overall increases of about 5+% are anticipated. It would be well to remember that Edmunds.com stated the average incentive spending in the U.S. in November was 31% above the year-ago period. They remarked that December may bring even bigger incentives.
The most recent survey conducted by the Bureau of National Affairs’ Human Resources revealed that 67% of companies gave Thanksgiving and the following day as paid holidays, down from 69% a year earlier. Considering the focus on cost reduction, I guess the numbers could have been worse.
Farmers are paying the price for Bush learning on the job. China’s National Grain and Oils Information Center stated China has nixed a plan to buy U.S. wheat and may have blocked, according to Bloomberg News, a shipment of soybeans. The National Grain report remarked “because of reasons related to upcoming elections, the U.S. unilaterally decided to impose restrictions on Chinese textiles, causing a deadlock in China’s plans to buy more U.S. wheat. The Ministry of Commerce stated U.S. rulings against Chinese imports this year have affected $1.6 billion of goods. Canada, Australia, and the U.S. are China’s main wheat suppliers. I expect Australia will be the main beneficiary of increased wheat exports in 2004 to China.
Starting today, there is a two-day India-EU Business Summit in New Delhi. External Affairs Minister Yashwant Sinha told European businessmen they could make more money in India than in China. Sinha stated that India’s strength lay in its legal system, and remarked “there has been not a single complaint that justice has not been done. There has been not a single case that India has reneged on any agreement.” He went on to state “if you are smart, intelligent, enterprising, you will take advantage of this. But if you look for everything in place before deciding to come, you will miss the bus.” Sinha described the “all-around feel-good” factor in India and stated continuing economic reforms would further bring down tariff barriers. He said “we are on a glide path that will ensure that we have a soft landing, not a crash landing, as tariffs are reduced as the world wants us to do.” Over the past 12 years EU’s total trade with India has risen from 9.9 billion euros per year to 27 billion euros. Europe is the largest export market for Indian products as well as the largest source of imports for India. The United
Kenneth Stone, an Iowa State University economics professor, estimates that, nationwide, Internet sales will reach record levels this year, and that total holiday Internet sales could reach $10 billion, up from $8 billion a year ago. More than one-third of consumers stated they shall make at least some holiday purchases online, according to the National Retail Federation. Internet sales account for the fastest growing retail sales sector but make up only 1% or less of all retail sales.
You have been reading about the increases in employment in the United States. It would be advisable to look into the numbers. For example, Circuit City hired 12,000 holiday workers, and WalMart hired 14,000 seasonal employees. WalMart’s hiring decision is significant. Since last year’s holiday period, WalMart has been aggressive in opening new stores. At the same time, the company hired the same 14,000 workers when their store total was less. This confirms that WalMart really is not very optimistic about the growth prospects for this year’s holiday sales.
Layoffs are spreading outside the United States. HSBC is cutting 450 from their equities workforce in the investment banking area. Alitalia has announced the elimination of 2,700 jobs, and possibly more will be on the way due to the strike.
Japan’s October industrial production rose only 0.8% in October, and this was less than half the rate economists were expecting. This muted increase should limit the near-term rise of the yen versus the dollar. On the other hand, the pound reached a new 5-year high at 1.72 and the euro traded at a record level of 1.1994 versus the dollar. Trading in the dollar has not been helped by the deadline of nine days given by the WTO to abide by their ruling on the illegality of the U.S. steel import duties. If the duties are not removed, the U.S. will be hit with $2.2 billion in sanctions.
In a matter of a few days you will read about the increased U.S. sales of new cars and trucks for the month of November. The report will be released on Tuesday. Overall increases of about 5+% are anticipated. It would be well to remember that Edmunds.com stated the average incentive spending in the U.S. in November was 31% above the year-ago period. They remarked that December may bring even bigger incentives.
The most recent survey conducted by the Bureau of National Affairs’ Human Resources revealed that 67% of companies gave Thanksgiving and the following day as paid holidays, down from 69% a year earlier. Considering the focus on cost reduction, I guess the numbers could have been worse.
Farmers are paying the price for Bush learning on the job. China’s National Grain and Oils Information Center stated China has nixed a plan to buy U.S. wheat and may have blocked, according to Bloomberg News, a shipment of soybeans. The National Grain report remarked “because of reasons related to upcoming elections, the U.S. unilaterally decided to impose restrictions on Chinese textiles, causing a deadlock in China’s plans to buy more U.S. wheat. The Ministry of Commerce stated U.S. rulings against Chinese imports this year have affected $1.6 billion of goods. Canada, Australia, and the U.S. are China’s main wheat suppliers. I expect Australia will be the main beneficiary of increased wheat exports in 2004 to China.
Starting today, there is a two-day India-EU Business Summit in New Delhi. External Affairs Minister Yashwant Sinha told European businessmen they could make more money in India than in China. Sinha stated that India’s strength lay in its legal system, and remarked “there has been not a single complaint that justice has not been done. There has been not a single case that India has reneged on any agreement.” He went on to state “if you are smart, intelligent, enterprising, you will take advantage of this. But if you look for everything in place before deciding to come, you will miss the bus.” Sinha described the “all-around feel-good” factor in India and stated continuing economic reforms would further bring down tariff barriers. He said “we are on a glide path that will ensure that we have a soft landing, not a crash landing, as tariffs are reduced as the world wants us to do.” Over the past 12 years EU’s total trade with India has risen from 9.9 billion euros per year to 27 billion euros. Europe is the largest export market for Indian products as well as the largest source of imports for India. The United
Thursday, November 27, 2003
11/27/03 HAPPY THANKSGIVING
Abraham Lincoln’s Thanksgiving Proclamation of October 3, 1863: “We have forgotten the gracious hand which preserved us in peace and multiplied and enriched and strengthened us, and we have vainly imagined, in the deceitfulness of our hearts, that all these blessings were produced by some superior wisdom and virtue of their own. Intoxicated with unbroken success, we have become to self-sufficient to feel the necessity of redeeming and preserving grace, too proud to pray to the God that made us. It has seemed to me fit and proper that God should be solemnly, reverently, and gratefully acknowledged, as with one heart and one voice, by the whole American people. I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November as a day of Thanksgiving and praise to our beneficent Father Who dwelleth in the heavens.”
Mark Twain: “The observance of Thanksgiving Day- as a function- has become general of late years. The Thankfulness is not so general. This is natural. Two-thirds of the nation have always had hard luck and a hard time during the year, and this has a calming effect upon their enthusiasm.”
Stater Bros. Markets operates 157 supermarkets in Southern California, and employ over 14,000 people. They have been in business for 67 years. Each year on Thanksgiving Day they partner with local charities to help feed the needy. This year they shall be providing meals to more than 60,000 people.
The seniors in the state of Pennsylvania can be thankful for PACE (Pharmaceutical Assistance Contract for the Elderly) and a companion program called PACENET. The benefits are much better than the newly-passed Medicare legislation. The income eligibility limits for seniors are more favorable, PACE enrollees have no deductible, prescription co-payments are lower, and fewer drugs will be paid for under the Medicare plan.
Describing the economy in October and early November, the Federal Reserve remarked that “improvements seemed to be reasonably broad based…layoffs are slowing…demand is rising for temporary workers…retailers were optimistic about the upcoming holidays…residential housing continued to boom.” I was so thankful to read this glowing report. I should not have read anything more, and just stopped there. Unfortunately, I continued to read. Kurt Barnard is president of Retail Forecasting, and along with the management at WalMart, a leading expert on retailing. He stated “we project that this holiday shopping season will be modestly better than last year’s. That isn’t saying much.” He bases his cautious outlook on “5 million people in part-time jobs because they couldn’t find full-time jobs along with 9 million unemployed and 2 million who have been out of work for more than 6 months.” One in five Americans is employed in the retail sector. Seventy five percent of consumers, age 18 and over, will go shopping this Friday or this coming weekend. It appears the hot holiday gift ideas are J. Lo T-shirts, Eminem fleece-lined jackets, DVD players, and yes, making gifts.
Pepsi has been Subway’s supplier of the year for the past 7 years in a row. I guess being the best is not good enough. Yesterday, Subway announced it was switching its global beverage business from Pepsi to Coke. That must have been a costly persuasion, a little like the late night vote switching in favor of the Medicare bill. Subway is the biggest fast-food chain in the U.S. by sales outlets. McDonald’s is the largest in terms of total sales.
I was so thankful to read that the Chicago factory-sector index jumps to 64 in November. I was so excited at this comeback. Then I read that the Chicago employment index fell to 48 from 53. That brought me back to reality in a hurry. I was also disappointed that the Conference Board’s Help-wanted Advertising Index remained at 37 in October, unchanged from September, but down from 40 a year ago. In the last three months, help-wanted advertising declined in seven of the nine U.S. regions.
The housing market has been the strongest sector in the economy in 2003. The Commerce Department announced that sales of new single-family homes dropped 1.9% in September and 3.5% in October. Sales of previously owned homes fell by 4.9% in October. Sales were down in all regions, and, at the current sales pace, the inventory of homes on the market in October rose to 4 months worth. It is the highest level since April.
Many people give gift merchandise cards for the holidays. Until those gift cards are redeemed, retailers cannot count them as revenues. Many of the cards remain outstanding until January.
In 2004, there is a projected $160 billion social security surplus. The government will spend, and not save, those funds for future retirees. If the funds were saved, the projected Federal budget deficit for 2004 would reach $700 billion.
There is good news for which to be thankful. The average number of workers continuing to receive unemployment insurance over the past four weeks fell 42,500 to 3.45 million, the lowest reading since the week ended March 1. The bad news is the latest weekly figures don’t include some 820,000 workers receiving extended federal benefits. In October, about 8.8 million people were classified by the government as unemployed.
Yesterday we learned that the consumer continues to constrain spending. In October, real consumer spending (as opposed to unreal consumer spending!) was unchanged after declining 0.6% in September. There was a 1.9% drop in spending on durable goods in the latest month. The PCE core price rate only rose 1.2%, the smallest increase in 40 years. The Bureau of Economic Analysis plans to release the results of its 12th comprehensive (or benchmark) revision of the national income and product accounts (NIPAS) on Dec. 10, 2003. It could be the mother of all revisions. I might need to get them framed.
Do you remember the Great Atlantic & Pacific Tea Co? The old A&P grocery chain? It’s hard to believe that, at one time, they had five times the number of stores WalMart now has. I don’t think they would have fared too well competing with WalMart’s supercenters carrying similar grocery items.
Dell dismissed reports that it is shifting its technical support service for its business customers from Bangalore to the United States. A spokesperson stated “we are not shifting the work. Dell is committed to India and is growing.” Dell currently has over 2,000 people working at its customer support centers in Bangalore and Hyderabad.
Michael Roux, vice chairman (Australia) of Citigroup, said India could emerge as a major global player in the outsourcing of financial services. He remarked “India is not only doing things at cheaper cost but it is doing things better at cheaper cost. This is a major competitive edge the country has when it comes to outsourcing of financial services.” Swati Piramal, chief scientific officer of pharmaceutical firm Nicholas Piramal India, said India had all the advantages to become a back-office research hub for pharmaceutical companies as well. He stated “ we have all the ingredients in place. India has over 2,000 research institutes, robust IT backup, and vast educated manpower base, among many other things.”
The latest nationwide Harris poll on Iraq finds that there has been little change over the last month in public perceptions of events in Iraq. President Bush’s ratings on Iraq are still negative, 58% to 40%. The largest change was the increase in the majority who think that the level of U.S. casualties in Iraq is unacceptable. Fifty four per cent feel this way now compared to 51% in October and 47% in September.
Abraham Lincoln’s Thanksgiving Proclamation of October 3, 1863: “We have forgotten the gracious hand which preserved us in peace and multiplied and enriched and strengthened us, and we have vainly imagined, in the deceitfulness of our hearts, that all these blessings were produced by some superior wisdom and virtue of their own. Intoxicated with unbroken success, we have become to self-sufficient to feel the necessity of redeeming and preserving grace, too proud to pray to the God that made us. It has seemed to me fit and proper that God should be solemnly, reverently, and gratefully acknowledged, as with one heart and one voice, by the whole American people. I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November as a day of Thanksgiving and praise to our beneficent Father Who dwelleth in the heavens.”
Mark Twain: “The observance of Thanksgiving Day- as a function- has become general of late years. The Thankfulness is not so general. This is natural. Two-thirds of the nation have always had hard luck and a hard time during the year, and this has a calming effect upon their enthusiasm.”
Stater Bros. Markets operates 157 supermarkets in Southern California, and employ over 14,000 people. They have been in business for 67 years. Each year on Thanksgiving Day they partner with local charities to help feed the needy. This year they shall be providing meals to more than 60,000 people.
The seniors in the state of Pennsylvania can be thankful for PACE (Pharmaceutical Assistance Contract for the Elderly) and a companion program called PACENET. The benefits are much better than the newly-passed Medicare legislation. The income eligibility limits for seniors are more favorable, PACE enrollees have no deductible, prescription co-payments are lower, and fewer drugs will be paid for under the Medicare plan.
Describing the economy in October and early November, the Federal Reserve remarked that “improvements seemed to be reasonably broad based…layoffs are slowing…demand is rising for temporary workers…retailers were optimistic about the upcoming holidays…residential housing continued to boom.” I was so thankful to read this glowing report. I should not have read anything more, and just stopped there. Unfortunately, I continued to read. Kurt Barnard is president of Retail Forecasting, and along with the management at WalMart, a leading expert on retailing. He stated “we project that this holiday shopping season will be modestly better than last year’s. That isn’t saying much.” He bases his cautious outlook on “5 million people in part-time jobs because they couldn’t find full-time jobs along with 9 million unemployed and 2 million who have been out of work for more than 6 months.” One in five Americans is employed in the retail sector. Seventy five percent of consumers, age 18 and over, will go shopping this Friday or this coming weekend. It appears the hot holiday gift ideas are J. Lo T-shirts, Eminem fleece-lined jackets, DVD players, and yes, making gifts.
Pepsi has been Subway’s supplier of the year for the past 7 years in a row. I guess being the best is not good enough. Yesterday, Subway announced it was switching its global beverage business from Pepsi to Coke. That must have been a costly persuasion, a little like the late night vote switching in favor of the Medicare bill. Subway is the biggest fast-food chain in the U.S. by sales outlets. McDonald’s is the largest in terms of total sales.
I was so thankful to read that the Chicago factory-sector index jumps to 64 in November. I was so excited at this comeback. Then I read that the Chicago employment index fell to 48 from 53. That brought me back to reality in a hurry. I was also disappointed that the Conference Board’s Help-wanted Advertising Index remained at 37 in October, unchanged from September, but down from 40 a year ago. In the last three months, help-wanted advertising declined in seven of the nine U.S. regions.
The housing market has been the strongest sector in the economy in 2003. The Commerce Department announced that sales of new single-family homes dropped 1.9% in September and 3.5% in October. Sales of previously owned homes fell by 4.9% in October. Sales were down in all regions, and, at the current sales pace, the inventory of homes on the market in October rose to 4 months worth. It is the highest level since April.
Many people give gift merchandise cards for the holidays. Until those gift cards are redeemed, retailers cannot count them as revenues. Many of the cards remain outstanding until January.
In 2004, there is a projected $160 billion social security surplus. The government will spend, and not save, those funds for future retirees. If the funds were saved, the projected Federal budget deficit for 2004 would reach $700 billion.
There is good news for which to be thankful. The average number of workers continuing to receive unemployment insurance over the past four weeks fell 42,500 to 3.45 million, the lowest reading since the week ended March 1. The bad news is the latest weekly figures don’t include some 820,000 workers receiving extended federal benefits. In October, about 8.8 million people were classified by the government as unemployed.
Yesterday we learned that the consumer continues to constrain spending. In October, real consumer spending (as opposed to unreal consumer spending!) was unchanged after declining 0.6% in September. There was a 1.9% drop in spending on durable goods in the latest month. The PCE core price rate only rose 1.2%, the smallest increase in 40 years. The Bureau of Economic Analysis plans to release the results of its 12th comprehensive (or benchmark) revision of the national income and product accounts (NIPAS) on Dec. 10, 2003. It could be the mother of all revisions. I might need to get them framed.
Do you remember the Great Atlantic & Pacific Tea Co? The old A&P grocery chain? It’s hard to believe that, at one time, they had five times the number of stores WalMart now has. I don’t think they would have fared too well competing with WalMart’s supercenters carrying similar grocery items.
Dell dismissed reports that it is shifting its technical support service for its business customers from Bangalore to the United States. A spokesperson stated “we are not shifting the work. Dell is committed to India and is growing.” Dell currently has over 2,000 people working at its customer support centers in Bangalore and Hyderabad.
Michael Roux, vice chairman (Australia) of Citigroup, said India could emerge as a major global player in the outsourcing of financial services. He remarked “India is not only doing things at cheaper cost but it is doing things better at cheaper cost. This is a major competitive edge the country has when it comes to outsourcing of financial services.” Swati Piramal, chief scientific officer of pharmaceutical firm Nicholas Piramal India, said India had all the advantages to become a back-office research hub for pharmaceutical companies as well. He stated “ we have all the ingredients in place. India has over 2,000 research institutes, robust IT backup, and vast educated manpower base, among many other things.”
The latest nationwide Harris poll on Iraq finds that there has been little change over the last month in public perceptions of events in Iraq. President Bush’s ratings on Iraq are still negative, 58% to 40%. The largest change was the increase in the majority who think that the level of U.S. casualties in Iraq is unacceptable. Fifty four per cent feel this way now compared to 51% in October and 47% in September.
11/27/03 HAPPY THANKSGIVING
Abraham Lincoln’s Thanksgiving Proclamation of October 3, 1863: “We have forgotten the gracious hand which preserved us in peace and multiplied and enriched and strengthened us, and we have vainly imagined, in the deceitfulness of our hearts, that all these blessings were produced by some superior wisdom and virtue of their own. Intoxicated with unbroken success, we have become to self-sufficient to feel the necessity of redeeming and preserving grace, too proud to pray to the God that made us. It has seemed to me fit and proper that God should be solemnly, reverently, and gratefully acknowledged, as with one heart and one voice, by the whole American people. I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November as a day of Thanksgiving and praise to our beneficent Father Who dwelleth in the heavens.”
Mark Twain: “The observance of Thanksgiving Day- as a function- has become general of late years. The Thankfulness is not so general. This is natural. Two-thirds of the nation have always had hard luck and a hard time during the year, and this has a calming effect upon their enthusiasm.”
Stater Bros. Markets operates 157 supermarkets in Southern California, and employ over 14,000 people. They have been in business for 67 years. Each year on Thanksgiving Day they partner with local charities to help feed the needy. This year they shall be providing meals to more than 60,000 people.
The seniors in the state of Pennsylvania can be thankful for PACE (Pharmaceutical Assistance Contract for the Elderly) and a companion program called PACENET. The benefits are much better than the newly-passed Medicare legislation. The income eligibility limits for seniors are more favorable, PACE enrollees have no deductible, prescription co-payments are lower, and fewer drugs will be paid for under the Medicare plan.
Describing the economy in October and early November, the Federal Reserve remarked that “improvements seemed to be reasonably broad based…layoffs are slowing…demand is rising for temporary workers…retailers were optimistic about the upcoming holidays…residential housing continued to boom.” I was so thankful to read this glowing report. I should not have read anything more, and just stopped there. Unfortunately, I continued to read. Kurt Barnard is president of Retail Forecasting, and along with the management at WalMart, a leading expert on retailing. He stated “we project that this holiday shopping season will be modestly better than last year’s. That isn’t saying much.” He bases his cautious outlook on “5 million people in part-time jobs because they couldn’t find full-time jobs along with 9 million unemployed and 2 million who have been out of work for more than 6 months.” One in five Americans is employed in the retail sector. Seventy five percent of consumers, age 18 and over, will go shopping this Friday or this coming weekend. It appears the hot holiday gift ideas are J. Lo T-shirts, Eminem fleece-lined jackets, DVD players, and yes, making gifts.
Pepsi has been Subway’s supplier of the year for the past 7 years in a row. I guess being the best is not good enough. Yesterday, Subway announced it was switching its global beverage business from Pepsi to Coke. That must have been a costly persuasion, a little like the late night vote switching in favor of the Medicare bill. Subway is the biggest fast-food chain in the U.S. by sales outlets. McDonald’s is the largest in terms of total sales.
I was so thankful to read that the Chicago factory-sector index jumps to 64 in November. I was so excited at this comeback. Then I read that the Chicago employment index fell to 48 from 53. That brought me back to reality in a hurry. I was also disappointed that the Conference Board’s Help-wanted Advertising Index remained at 37 in October, unchanged from September, but down from 40 a year ago. In the last three months, help-wanted advertising declined in seven of the nine U.S. regions.
The housing market has been the strongest sector in the economy in 2003. The Commerce Department announced that sales of new single-family homes dropped 1.9% in September and 3.5% in October. Sales of previously owned homes fell by 4.9% in October. Sales were down in all regions, and, at the current sales pace, the inventory of homes on the market in October rose to 4 months worth. It is the highest level since April.
Many people give gift merchandise cards for the holidays. Until those gift cards are redeemed, retailers cannot count them as revenues. Many of the cards remain outstanding until January.
In 2004, there is a projected $160 billion social security surplus. The government will spend, and not save, those funds for future retirees. If the funds were saved, the projected Federal budget deficit for 2004 would reach $700 billion.
There is good news for which to be thankful. The average number of workers continuing to receive unemployment insurance over the past four weeks fell 42,500 to 3.45 million, the lowest reading since the week ended March 1. The bad news is the latest weekly figures don’t include some 820,000 workers receiving extended federal benefits. In October, about 8.8 million people were classified by the government as unemployed.
Yesterday we learned that the consumer continues to constrain spending. In October, real consumer spending (as opposed to unreal consumer spending!) was unchanged after declining 0.6% in September. There was a 1.9% drop in spending on durable goods in the latest month. The PCE core price rate only rose 1.2%, the smallest increase in 40 years. The Bureau of Economic Analysis plans to release the results of its 12th comprehensive (or benchmark) revision of the national income and product accounts (NIPAS) on Dec. 10, 2003. It could be the mother of all revisions. I might need to get them framed.
Do you remember the Great Atlantic & Pacific Tea Co? The old A&P grocery chain? It’s hard to believe that, at one time, they had five times the number of stores WalMart now has. I don’t think they would have fared too well competing with WalMart’s supercenters carrying similar grocery items.
Dell dismissed reports that it is shifting its technical support service for its business customers from Bangalore to the United States. A spokesperson stated “we are not shifting the work. Dell is committed to India and is growing.” Dell currently has over 2,000 people working at its customer support centers in Bangalore and Hyderabad.
Michael Roux, vice chairman (Australia) of Citigroup, said India could emerge as a major global player in the outsourcing of financial services. He remarked “India is not only doing things at cheaper cost but it is doing things better at cheaper cost. This is a major competitive edge the country has when it comes to outsourcing of financial services.” Swati Piramal, chief scientific officer of pharmaceutical firm Nicholas Piramal India, said India had all the advantages to become a back-office research hub for pharmaceutical companies as well. He stated “ we have all the ingredients in place. India has over 2,000 research institutes, robust IT backup, and vast educated manpower base, among many other things.”
The latest nationwide Harris poll on Iraq finds that there has been little change over the last month in public perceptions of events in Iraq. President Bush’s ratings on Iraq are still negative, 58% to 40%. The largest change was the increase in the majority who think that the level of U.S. casualties in Iraq is unacceptable. Fifty four per cent feel this way now compared to 51% in October and 47% in September.
Abraham Lincoln’s Thanksgiving Proclamation of October 3, 1863: “We have forgotten the gracious hand which preserved us in peace and multiplied and enriched and strengthened us, and we have vainly imagined, in the deceitfulness of our hearts, that all these blessings were produced by some superior wisdom and virtue of their own. Intoxicated with unbroken success, we have become to self-sufficient to feel the necessity of redeeming and preserving grace, too proud to pray to the God that made us. It has seemed to me fit and proper that God should be solemnly, reverently, and gratefully acknowledged, as with one heart and one voice, by the whole American people. I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November as a day of Thanksgiving and praise to our beneficent Father Who dwelleth in the heavens.”
Mark Twain: “The observance of Thanksgiving Day- as a function- has become general of late years. The Thankfulness is not so general. This is natural. Two-thirds of the nation have always had hard luck and a hard time during the year, and this has a calming effect upon their enthusiasm.”
Stater Bros. Markets operates 157 supermarkets in Southern California, and employ over 14,000 people. They have been in business for 67 years. Each year on Thanksgiving Day they partner with local charities to help feed the needy. This year they shall be providing meals to more than 60,000 people.
The seniors in the state of Pennsylvania can be thankful for PACE (Pharmaceutical Assistance Contract for the Elderly) and a companion program called PACENET. The benefits are much better than the newly-passed Medicare legislation. The income eligibility limits for seniors are more favorable, PACE enrollees have no deductible, prescription co-payments are lower, and fewer drugs will be paid for under the Medicare plan.
Describing the economy in October and early November, the Federal Reserve remarked that “improvements seemed to be reasonably broad based…layoffs are slowing…demand is rising for temporary workers…retailers were optimistic about the upcoming holidays…residential housing continued to boom.” I was so thankful to read this glowing report. I should not have read anything more, and just stopped there. Unfortunately, I continued to read. Kurt Barnard is president of Retail Forecasting, and along with the management at WalMart, a leading expert on retailing. He stated “we project that this holiday shopping season will be modestly better than last year’s. That isn’t saying much.” He bases his cautious outlook on “5 million people in part-time jobs because they couldn’t find full-time jobs along with 9 million unemployed and 2 million who have been out of work for more than 6 months.” One in five Americans is employed in the retail sector. Seventy five percent of consumers, age 18 and over, will go shopping this Friday or this coming weekend. It appears the hot holiday gift ideas are J. Lo T-shirts, Eminem fleece-lined jackets, DVD players, and yes, making gifts.
Pepsi has been Subway’s supplier of the year for the past 7 years in a row. I guess being the best is not good enough. Yesterday, Subway announced it was switching its global beverage business from Pepsi to Coke. That must have been a costly persuasion, a little like the late night vote switching in favor of the Medicare bill. Subway is the biggest fast-food chain in the U.S. by sales outlets. McDonald’s is the largest in terms of total sales.
I was so thankful to read that the Chicago factory-sector index jumps to 64 in November. I was so excited at this comeback. Then I read that the Chicago employment index fell to 48 from 53. That brought me back to reality in a hurry. I was also disappointed that the Conference Board’s Help-wanted Advertising Index remained at 37 in October, unchanged from September, but down from 40 a year ago. In the last three months, help-wanted advertising declined in seven of the nine U.S. regions.
The housing market has been the strongest sector in the economy in 2003. The Commerce Department announced that sales of new single-family homes dropped 1.9% in September and 3.5% in October. Sales of previously owned homes fell by 4.9% in October. Sales were down in all regions, and, at the current sales pace, the inventory of homes on the market in October rose to 4 months worth. It is the highest level since April.
Many people give gift merchandise cards for the holidays. Until those gift cards are redeemed, retailers cannot count them as revenues. Many of the cards remain outstanding until January.
In 2004, there is a projected $160 billion social security surplus. The government will spend, and not save, those funds for future retirees. If the funds were saved, the projected Federal budget deficit for 2004 would reach $700 billion.
There is good news for which to be thankful. The average number of workers continuing to receive unemployment insurance over the past four weeks fell 42,500 to 3.45 million, the lowest reading since the week ended March 1. The bad news is the latest weekly figures don’t include some 820,000 workers receiving extended federal benefits. In October, about 8.8 million people were classified by the government as unemployed.
Yesterday we learned that the consumer continues to constrain spending. In October, real consumer spending (as opposed to unreal consumer spending!) was unchanged after declining 0.6% in September. There was a 1.9% drop in spending on durable goods in the latest month. The PCE core price rate only rose 1.2%, the smallest increase in 40 years. The Bureau of Economic Analysis plans to release the results of its 12th comprehensive (or benchmark) revision of the national income and product accounts (NIPAS) on Dec. 10, 2003. It could be the mother of all revisions. I might need to get them framed.
Do you remember the Great Atlantic & Pacific Tea Co? The old A&P grocery chain? It’s hard to believe that, at one time, they had five times the number of stores WalMart now has. I don’t think they would have fared too well competing with WalMart’s supercenters carrying similar grocery items.
Dell dismissed reports that it is shifting its technical support service for its business customers from Bangalore to the United States. A spokesperson stated “we are not shifting the work. Dell is committed to India and is growing.” Dell currently has over 2,000 people working at its customer support centers in Bangalore and Hyderabad.
Michael Roux, vice chairman (Australia) of Citigroup, said India could emerge as a major global player in the outsourcing of financial services. He remarked “India is not only doing things at cheaper cost but it is doing things better at cheaper cost. This is a major competitive edge the country has when it comes to outsourcing of financial services.” Swati Piramal, chief scientific officer of pharmaceutical firm Nicholas Piramal India, said India had all the advantages to become a back-office research hub for pharmaceutical companies as well. He stated “ we have all the ingredients in place. India has over 2,000 research institutes, robust IT backup, and vast educated manpower base, among many other things.”
The latest nationwide Harris poll on Iraq finds that there has been little change over the last month in public perceptions of events in Iraq. President Bush’s ratings on Iraq are still negative, 58% to 40%. The largest change was the increase in the majority who think that the level of U.S. casualties in Iraq is unacceptable. Fifty four per cent feel this way now compared to 51% in October and 47% in September.
Wednesday, November 26, 2003
11/26/03 Remembering This November
The memories will linger for decades. The yet-to-be conceived will listen to the stories. This country conceived millions of children in the era of the great Depression. I don’t know the name the scholars and the media will place on this period. I only hope our nation has the will and the strength to overcome the irresponsible and willful actions of our leaders.
I make a point of focusing on actions. This November the illegal steel tariffs have not been removed by the Bush administration. This has angered the WTO, the EU, and Japan. We have shown a total disregard for these trading partners. Bush would not stop there. He then angered China by placing trade restrictions on their exports of TVs, bras, and robes. All of these actions reflect a mentality that is limited in ability to conduct commerce. Promoting protectionism creates a landscape for economic destruction.
All Americans know there are significant problems in our healthcare system. Al Americans know our population is aging, and this fact will place burdens on all families. We will all remember this November. Your grandchildren might remember this November even better. They will be left with the brunt of this new Medicare legislation. They will know another meaning for the word ‘doughnut’. By now you all have read that, under this new law, the government pays 75% of the annual coverage (after the deductible) up to $2,250, but then nothing until costs reach $5,100. This out-of-pocket gap or doughnut is $3,600. There is more to this analysis. The average deductible will rise from $250 in 2006 to $415 in 2013, but the doughnut will rise from $5,100 to $9,066 in 2013. The fine print provides more information. There is an asset test for low-income beneficiaries. To qualify as low-income, an individual cannot have assets exceeding $6,000 or as a couple $9,000. A life-insurance policy, for example, exceeding those amounts would disqualify low-income applicants. As Gail Shearer, a health policy analyst at Consumers Union, remarked “I think these numbers will come as a shock to consumers and they are pretty optimistic projections based on what drug costs are going to do.” The AARP 35-million senior organization supported this legislation. Now, after passage, they have a different attitude. David Certner, an official of AARP, stated “one of our complaints has been that this benefit would become more unaffordable over time if pegged to drug costs. This bill does not do enough to hold down drug costs.” Mr. Certner is flying blind. He doesn’t know what the drug costs will be and he has no assurance on the initial monthly premiums. CBO Director Douglas Holtz-Eakin said there is not even an assurance that the initial monthly premium for the drug benefit will be $35. That number could change by 2006 depending on the many “moving pieces” on which the formula is based, he said. You can bet the initial monthly premium will be higher than $35. Have you ever seen government cost estimates go down instead of up? Wall Street will figure out the winners from this legislation. Wall Street will not tell you that the American people are the losers. The yet-to-be born shall be the biggest loser. Unfortunately, this Medicare bill was not aborted. This November you witnessed the dismantling, not the reform, of the Medicare system. The 3-million member Alliance for Retired Americans wrote “Shame on the House and Senate for not taking the time to do the work to give seniors a comprehensive prescription drug benefit.”
Many missed an historic Commerce Department revision. Yesterday the department sharply revised its estimate of inventory reductions. They said stocks of unsold goods had fallen by $14.1 billion in the latest quarter instead of by $35.8 billion as it originally reported. This difference is very significant. Despite the data released on consumer spending, the actual results show the consumer is slowing down on spending, and confirms the caution expressed by WalMart and Target. In fact, consumer demand is waning. Retail sales in October declined. Yesterday the Consumer Federation of America and the Credit Union National Association stated U.S. holiday shopping may not live up to expectations, and that consumers are concerned about the economy, their jobs, and their ability to meet household debt payments. In this survey, 34% said they would spend less during the holidays than they did in 2002, and only 15% stated they would spend more. About 50% said they would spend the same amount. The chief economist for the Credit Union National Association remarked “this is a surprising result.” Severe price cutting will mark this holiday shopping season. Additionally, Edmunds.com reported yesterday that 2004 model year vehicles are selling at a slower pace even as incentives remain high for year-end clearings. They predict “an oversupply of model year 2004 vehicles throughout next year and, subsequently, generate incentives that will help them sell.”
We know that up to 40% of a retailer’s annual sales take place during this holiday period. Mall traffic has fallen significantly in the past years, from 39% of retail dollars in 1995 to 19% in 2002, according to the nation'’ 40 largest retailers and data supplied by Customer Growth Partners. You will remember this November. It will be the last time several shopping centers remain in business. At present, there are about 46,000 shopping centers and 1,250 enclosed malls. Unfortunately, there isn’t enough business to keep them all in business on a profitable basis.
This November there have been thousands and thousands of job cuts announced. Yesterday there were more layoffs, 650 at Autodesk, 100 at Washington Mutual, 90 at the Copeland division of Emerson, and 3,500 at the business tech division of Siemens. This Thanksgiving millions of families will be thankful for the jobs they have. Unfortunately, at least 15 million people are either unemployed or without a full-time job. As a result, tomorrow this country’s soup kitchens will provide a record number of Thanksgiving meals. Thank goodness for the depressed price for turkeys.
This November you will remember that the Mexican peso fell to an all-time low of 11.3867 versus the U.S. dollar. Mexico has also been hurt this year as China replaced them as the second-largest seller of foreign goods to the U.S. Very few currencies have declined against the dollar this year, but the peso has fallen 8.4% in 2003. There is a loud noise on the borders separating Mexico and the United States. It is the banging of throngs of Mexicans attempting to cross into the U.S.
November will be remembered by all as the 300th U.S. soldier was killed by hostile fire in Iraq this month. Since March 20, at least 432 U.S. soldiers have been killed in the Iraq war. Since May 1, at least 290 troops have died and at least 185 from hostile fire.
The memories will linger for decades. The yet-to-be conceived will listen to the stories. This country conceived millions of children in the era of the great Depression. I don’t know the name the scholars and the media will place on this period. I only hope our nation has the will and the strength to overcome the irresponsible and willful actions of our leaders.
I make a point of focusing on actions. This November the illegal steel tariffs have not been removed by the Bush administration. This has angered the WTO, the EU, and Japan. We have shown a total disregard for these trading partners. Bush would not stop there. He then angered China by placing trade restrictions on their exports of TVs, bras, and robes. All of these actions reflect a mentality that is limited in ability to conduct commerce. Promoting protectionism creates a landscape for economic destruction.
All Americans know there are significant problems in our healthcare system. Al Americans know our population is aging, and this fact will place burdens on all families. We will all remember this November. Your grandchildren might remember this November even better. They will be left with the brunt of this new Medicare legislation. They will know another meaning for the word ‘doughnut’. By now you all have read that, under this new law, the government pays 75% of the annual coverage (after the deductible) up to $2,250, but then nothing until costs reach $5,100. This out-of-pocket gap or doughnut is $3,600. There is more to this analysis. The average deductible will rise from $250 in 2006 to $415 in 2013, but the doughnut will rise from $5,100 to $9,066 in 2013. The fine print provides more information. There is an asset test for low-income beneficiaries. To qualify as low-income, an individual cannot have assets exceeding $6,000 or as a couple $9,000. A life-insurance policy, for example, exceeding those amounts would disqualify low-income applicants. As Gail Shearer, a health policy analyst at Consumers Union, remarked “I think these numbers will come as a shock to consumers and they are pretty optimistic projections based on what drug costs are going to do.” The AARP 35-million senior organization supported this legislation. Now, after passage, they have a different attitude. David Certner, an official of AARP, stated “one of our complaints has been that this benefit would become more unaffordable over time if pegged to drug costs. This bill does not do enough to hold down drug costs.” Mr. Certner is flying blind. He doesn’t know what the drug costs will be and he has no assurance on the initial monthly premiums. CBO Director Douglas Holtz-Eakin said there is not even an assurance that the initial monthly premium for the drug benefit will be $35. That number could change by 2006 depending on the many “moving pieces” on which the formula is based, he said. You can bet the initial monthly premium will be higher than $35. Have you ever seen government cost estimates go down instead of up? Wall Street will figure out the winners from this legislation. Wall Street will not tell you that the American people are the losers. The yet-to-be born shall be the biggest loser. Unfortunately, this Medicare bill was not aborted. This November you witnessed the dismantling, not the reform, of the Medicare system. The 3-million member Alliance for Retired Americans wrote “Shame on the House and Senate for not taking the time to do the work to give seniors a comprehensive prescription drug benefit.”
Many missed an historic Commerce Department revision. Yesterday the department sharply revised its estimate of inventory reductions. They said stocks of unsold goods had fallen by $14.1 billion in the latest quarter instead of by $35.8 billion as it originally reported. This difference is very significant. Despite the data released on consumer spending, the actual results show the consumer is slowing down on spending, and confirms the caution expressed by WalMart and Target. In fact, consumer demand is waning. Retail sales in October declined. Yesterday the Consumer Federation of America and the Credit Union National Association stated U.S. holiday shopping may not live up to expectations, and that consumers are concerned about the economy, their jobs, and their ability to meet household debt payments. In this survey, 34% said they would spend less during the holidays than they did in 2002, and only 15% stated they would spend more. About 50% said they would spend the same amount. The chief economist for the Credit Union National Association remarked “this is a surprising result.” Severe price cutting will mark this holiday shopping season. Additionally, Edmunds.com reported yesterday that 2004 model year vehicles are selling at a slower pace even as incentives remain high for year-end clearings. They predict “an oversupply of model year 2004 vehicles throughout next year and, subsequently, generate incentives that will help them sell.”
We know that up to 40% of a retailer’s annual sales take place during this holiday period. Mall traffic has fallen significantly in the past years, from 39% of retail dollars in 1995 to 19% in 2002, according to the nation'’ 40 largest retailers and data supplied by Customer Growth Partners. You will remember this November. It will be the last time several shopping centers remain in business. At present, there are about 46,000 shopping centers and 1,250 enclosed malls. Unfortunately, there isn’t enough business to keep them all in business on a profitable basis.
This November there have been thousands and thousands of job cuts announced. Yesterday there were more layoffs, 650 at Autodesk, 100 at Washington Mutual, 90 at the Copeland division of Emerson, and 3,500 at the business tech division of Siemens. This Thanksgiving millions of families will be thankful for the jobs they have. Unfortunately, at least 15 million people are either unemployed or without a full-time job. As a result, tomorrow this country’s soup kitchens will provide a record number of Thanksgiving meals. Thank goodness for the depressed price for turkeys.
This November you will remember that the Mexican peso fell to an all-time low of 11.3867 versus the U.S. dollar. Mexico has also been hurt this year as China replaced them as the second-largest seller of foreign goods to the U.S. Very few currencies have declined against the dollar this year, but the peso has fallen 8.4% in 2003. There is a loud noise on the borders separating Mexico and the United States. It is the banging of throngs of Mexicans attempting to cross into the U.S.
November will be remembered by all as the 300th U.S. soldier was killed by hostile fire in Iraq this month. Since March 20, at least 432 U.S. soldiers have been killed in the Iraq war. Since May 1, at least 290 troops have died and at least 185 from hostile fire.
Tuesday, November 25, 2003
11/25/03 Consumer Cash Flow
In only a few days ‘Black Friday’ will arrive. This is the name given to the day after Thanksgiving. It describes how retailers are in the ‘red’ all year until ‘Black Friday’ arrives, and then their books turn profitable and they are in the ‘black.’ According to the International Council of Shopping Centers, the day after Thanksgiving usually ranks about fourth or fifth among the 10 busiest shopping days of the year. Last year, 10% of holiday sales were done during the Thanksgiving weekend. The biggest share or 41% was done the week before Christmas as shoppers waited for better bargains. It is interesting to note that, in their Christmas 2003 survey, America’s Research Group found that the number of people planning to shop on ‘Black Friday’ is at the lowest point since 1997. Many serious bargain hunters comb the early morning sales items listed at www.fatwallet.com and www.dealcatcher.com prior to venturing into the stores on ‘Black Friday.’
The fact is that consumers do not have fat wallets right about now. According to a recently issued Deutsche Bank report, “the consumer’s liquidity crisis is the worst that WalMart has seen and is the most pronounced in the last five to seven years. The immediate future is not bright either. According to compliance publisher, BLR, employers are planning their smallest pay increases of the past two decades. A record 1,438 employers participated in this year’s nationwide survey. The average pay raises for 2004 for exempt and non-exempt white-collar employees and unionized and non-unionized plant employees will range from 2.8% to 3.5% with the median close to 3.3%. After deductions, and accounting for inflation, the raises do not fatten the consumers’ wallets. Between now and year end, Fitch Ratings remarks “as consumers remain financially burdened due to the economic landscape, performance is expected to remain challenged over the near term and worsen later in the fourth quarter of 2003.”
Families on Main Street continue to focus on jobs and layoffs. Yesterday Sprint Corp. said it would cut about 2,000 jobs, or about 3% of its workforce, as it attempts to cut costs to offset shrinking revenues and weak demand. Additional layoffs can be expected in 2004. Merck will be meeting with analysts on December 9. Recently, I noted their employee cutbacks. The CEO may describe further cost cutting measures for 2004. Home Depot is consolidating its smaller Northwest division into its Western division. Yesterday the company announced it shall close its Seattle Store Support Center office and cut about 100 jobs.
The U.S. Commerce Department said it shall levy duties of as much as 46% on color televisions imported from China. There is only one television manufacturer left in the U.S., Greenville, Tenn.-based Five Rivers Electronic Innovations LLC. This company and its labor unions alleged that China and Malaysia were “dumping” products in the U.S. at prices below their fair value and sought duties of as much as 80%. The U.S., upon investigation, ruled that the sets were priced 28% to 46% below market value. The Commerce Department did not find any violations from Malaysia. The duties will take effect on December 1.This is but one more act of stupidity brought to you by the Bush Administration. Bush has argued for free trade, and yet, he has violated international trade agreements by imposing steel tariffs, and thus, jeopardize our trade with foreign countries. Now he is taking on China in an attempt to win more votes for 2004. I guess electoral votes mean more to the financial well being of American citizens.
The Austin American Statesman reported that Dell is shifting a call center from Bangalore to call centers in Texas, Idaho, and Tennessee. Dell Spokesman Jon Weisblatt stated “customers weren’t satisfied with the level of support they were receiving, so we’re moving some calls around to make sure they don’t feel that way anymore.”
HealthPartners is a family of nonprofit Minnesota health care organizations focused on improving the health of its 670,000 members. They are offering a new plan to allow Seniors more health plan options that includes an unlimited generic prescription drug package and an open access network. There is an optional add-on solution allows Seniors to have an all-inclusive generic prescription benefit package for the cost of only $29 per month, and after the initial cost of $29, Seniors only have a low co-payment for each prescription.
The University of Pennsylvania’s non-partisan National Annenberg Election Survey released results yesterday that show 49% of seniors polled didn’t want the proposed Medicare legislation to pass. On eof the items causing concern is that, if seniors don’t sign up when they become eligible at age 65, they could face penalties if they enroll later. The drug-coverage plan is billed as voluntary; however, in reality, it is coercive.
In only a few days ‘Black Friday’ will arrive. This is the name given to the day after Thanksgiving. It describes how retailers are in the ‘red’ all year until ‘Black Friday’ arrives, and then their books turn profitable and they are in the ‘black.’ According to the International Council of Shopping Centers, the day after Thanksgiving usually ranks about fourth or fifth among the 10 busiest shopping days of the year. Last year, 10% of holiday sales were done during the Thanksgiving weekend. The biggest share or 41% was done the week before Christmas as shoppers waited for better bargains. It is interesting to note that, in their Christmas 2003 survey, America’s Research Group found that the number of people planning to shop on ‘Black Friday’ is at the lowest point since 1997. Many serious bargain hunters comb the early morning sales items listed at www.fatwallet.com and www.dealcatcher.com prior to venturing into the stores on ‘Black Friday.’
The fact is that consumers do not have fat wallets right about now. According to a recently issued Deutsche Bank report, “the consumer’s liquidity crisis is the worst that WalMart has seen and is the most pronounced in the last five to seven years. The immediate future is not bright either. According to compliance publisher, BLR, employers are planning their smallest pay increases of the past two decades. A record 1,438 employers participated in this year’s nationwide survey. The average pay raises for 2004 for exempt and non-exempt white-collar employees and unionized and non-unionized plant employees will range from 2.8% to 3.5% with the median close to 3.3%. After deductions, and accounting for inflation, the raises do not fatten the consumers’ wallets. Between now and year end, Fitch Ratings remarks “as consumers remain financially burdened due to the economic landscape, performance is expected to remain challenged over the near term and worsen later in the fourth quarter of 2003.”
Families on Main Street continue to focus on jobs and layoffs. Yesterday Sprint Corp. said it would cut about 2,000 jobs, or about 3% of its workforce, as it attempts to cut costs to offset shrinking revenues and weak demand. Additional layoffs can be expected in 2004. Merck will be meeting with analysts on December 9. Recently, I noted their employee cutbacks. The CEO may describe further cost cutting measures for 2004. Home Depot is consolidating its smaller Northwest division into its Western division. Yesterday the company announced it shall close its Seattle Store Support Center office and cut about 100 jobs.
The U.S. Commerce Department said it shall levy duties of as much as 46% on color televisions imported from China. There is only one television manufacturer left in the U.S., Greenville, Tenn.-based Five Rivers Electronic Innovations LLC. This company and its labor unions alleged that China and Malaysia were “dumping” products in the U.S. at prices below their fair value and sought duties of as much as 80%. The U.S., upon investigation, ruled that the sets were priced 28% to 46% below market value. The Commerce Department did not find any violations from Malaysia. The duties will take effect on December 1.This is but one more act of stupidity brought to you by the Bush Administration. Bush has argued for free trade, and yet, he has violated international trade agreements by imposing steel tariffs, and thus, jeopardize our trade with foreign countries. Now he is taking on China in an attempt to win more votes for 2004. I guess electoral votes mean more to the financial well being of American citizens.
The Austin American Statesman reported that Dell is shifting a call center from Bangalore to call centers in Texas, Idaho, and Tennessee. Dell Spokesman Jon Weisblatt stated “customers weren’t satisfied with the level of support they were receiving, so we’re moving some calls around to make sure they don’t feel that way anymore.”
HealthPartners is a family of nonprofit Minnesota health care organizations focused on improving the health of its 670,000 members. They are offering a new plan to allow Seniors more health plan options that includes an unlimited generic prescription drug package and an open access network. There is an optional add-on solution allows Seniors to have an all-inclusive generic prescription benefit package for the cost of only $29 per month, and after the initial cost of $29, Seniors only have a low co-payment for each prescription.
The University of Pennsylvania’s non-partisan National Annenberg Election Survey released results yesterday that show 49% of seniors polled didn’t want the proposed Medicare legislation to pass. On eof the items causing concern is that, if seniors don’t sign up when they become eligible at age 65, they could face penalties if they enroll later. The drug-coverage plan is billed as voluntary; however, in reality, it is coercive.
Monday, November 24, 2003
11/24/03 Payments For Promises Made
Arnold promised to eliminate the unpopular hike in the California car tax. He made good on his promise. He then proposed a $15 billion state bond measure to pay for California’s bills. Timing is a large part of good decision making. Starting on December 10, cities and counties will begin to see reduced revenues from the cut in the car tax. The full impact will be felt in January. The result is “we’re out of money. There is no money for us to provide to local government,” said state Sen. Wes Chesbro, D-Arcata, chairman of the Senate Budget Committee. Berkeley Mayor Tom Bates remarked “we’ve hit the wall.” As such, his city is facing the prospect of laying off police officers and firefighters. Alameda County would raise the county’s sales tax from 8.75% from the current 8.25%. Monterey County will propose a half-cent sales tax increase and so will Santa Cruz County. Contra Costa County said there would need to be cutbacks in local law enforcement. The city of Oakland would have to cut at least 180 jobs. San Jose has an $85 million budget shortfall, and that will rise as the revenues are reduced from cuts in the car tax. More job and service cuts will be forthcoming. Before one makes a promise, it is wise to know how to fund the promise.
President Bush promised to produce a Medicare reform bill. The proposed legislation has an estimated price tag of $400 billion over 10 years. Sen. Don Nickles, R-Okla., told fellow House-Senate negotiators “I predict right now it will come out double that.” That’s a pretty easy prediction to make. Seventy six million baby boomers begin to retire in 2012. Who will address the problem that the large number of employers who currently provide prescription-drug benefits for retirees will drop coverage? Kenneth Thorpe, a health-policy expert at Emory University, anticipates that some 2.1 million private-sector retirees would probably lose their retirement benefits if the GOP bill becomes law. Ross Baker, a political scientist at Rutgers University, remarked “this is the group that can be most easily ignited, if there is any sense that companies are beginning to shut down plans for retirees. Hell hath no fury like seniors inflamed.” Perhaps Stephen Moore of the Club for Growth, an anti-tax group, describes it best in remarking that “the Medicare bill fits into a broader theme, which is that Republicans have lost their fiscal conscience.” How does Senator Kennedy describe this modernized Medicare system with a prescription drug benefit? He stated “you are going to lose seven million that are on Medicaid today, that now are being covered by the states, that are going to lose it with this bill. You are going to have millions that currently have adequate retirement programs that are going to be dropped by this bill. And you are going to see the premiums- the amount that are going to be expended by seniors- your are going to find their premiums are going to go through the roof. And you begin the dismantling of Medicare.” Before one makes a promise, it is wise to have a full comprehension of the impact of the promise.
Joseph Stiglitz won the Nobel Prize in economics in 2001. For a good part of the 1990s, he was the head of President Clinton’s Council of Economic Advisors. Stiglitz, in a recent interview, stated that, in the last quarter, the number of hours worked was down by almost 1%, and that in a jobless recovery, the typical pattern is that hours worked go up because jobs aren’t being created. He observed “this is a recovery in which hours worked aren’t going up. This suggests it may not be recovery. You’re getting firms trying to squeeze more and more work out of workers, working fewer and fewer hours.”
There are many times I feel pretty stupid. Yesterday was one of them. I read the following release: ArvinMeritor terminates tender offer for Dana (ARM, DCN) by Anne Stanley SAN FRANCISCO (CBS.MW) -- Automotive parts maker ArvinMeritor (ARM) announced Sunday it is ending its tender bid of $18 a share for Ohio-based Dana Corp. (DCN) following a decision by Dana's board of directors to reject the latest offer. ArvinMeritor, based in Troy, Mich., started its bid for Dana in July. On Friday, ArvinMeritor stock added 8 cents to close at $18.43. Shares of Dana gained 2 cents to end at $15. I apologize for doing such a poor job of analyzing this potential merger. I am still not certain why Arvin-Meritor chose to drop its tender. The acquisition was well-conceived, and there were benefits for shareholders, customers, and the combined enterprise.
Thomas G. Donlan writes in the Barron’s Editorial Commentary describes the proposed energy legislation as “all the things that had to be assembled to attract 60 votes in the Senate and 218 in the House so that a bill could pass. What’s missing is anything that would justify passing the bill.”
It was only a few weeks ago that I provided the data on the enormous insider selling that had take place in October alongside the puny insider buying. This ration has carried over into November. When the final tally is made, I believe November’s insider selling will dwarf even October’s numbers. November insider buying will continue to be on the puny side.
Arnold promised to eliminate the unpopular hike in the California car tax. He made good on his promise. He then proposed a $15 billion state bond measure to pay for California’s bills. Timing is a large part of good decision making. Starting on December 10, cities and counties will begin to see reduced revenues from the cut in the car tax. The full impact will be felt in January. The result is “we’re out of money. There is no money for us to provide to local government,” said state Sen. Wes Chesbro, D-Arcata, chairman of the Senate Budget Committee. Berkeley Mayor Tom Bates remarked “we’ve hit the wall.” As such, his city is facing the prospect of laying off police officers and firefighters. Alameda County would raise the county’s sales tax from 8.75% from the current 8.25%. Monterey County will propose a half-cent sales tax increase and so will Santa Cruz County. Contra Costa County said there would need to be cutbacks in local law enforcement. The city of Oakland would have to cut at least 180 jobs. San Jose has an $85 million budget shortfall, and that will rise as the revenues are reduced from cuts in the car tax. More job and service cuts will be forthcoming. Before one makes a promise, it is wise to know how to fund the promise.
President Bush promised to produce a Medicare reform bill. The proposed legislation has an estimated price tag of $400 billion over 10 years. Sen. Don Nickles, R-Okla., told fellow House-Senate negotiators “I predict right now it will come out double that.” That’s a pretty easy prediction to make. Seventy six million baby boomers begin to retire in 2012. Who will address the problem that the large number of employers who currently provide prescription-drug benefits for retirees will drop coverage? Kenneth Thorpe, a health-policy expert at Emory University, anticipates that some 2.1 million private-sector retirees would probably lose their retirement benefits if the GOP bill becomes law. Ross Baker, a political scientist at Rutgers University, remarked “this is the group that can be most easily ignited, if there is any sense that companies are beginning to shut down plans for retirees. Hell hath no fury like seniors inflamed.” Perhaps Stephen Moore of the Club for Growth, an anti-tax group, describes it best in remarking that “the Medicare bill fits into a broader theme, which is that Republicans have lost their fiscal conscience.” How does Senator Kennedy describe this modernized Medicare system with a prescription drug benefit? He stated “you are going to lose seven million that are on Medicaid today, that now are being covered by the states, that are going to lose it with this bill. You are going to have millions that currently have adequate retirement programs that are going to be dropped by this bill. And you are going to see the premiums- the amount that are going to be expended by seniors- your are going to find their premiums are going to go through the roof. And you begin the dismantling of Medicare.” Before one makes a promise, it is wise to have a full comprehension of the impact of the promise.
Joseph Stiglitz won the Nobel Prize in economics in 2001. For a good part of the 1990s, he was the head of President Clinton’s Council of Economic Advisors. Stiglitz, in a recent interview, stated that, in the last quarter, the number of hours worked was down by almost 1%, and that in a jobless recovery, the typical pattern is that hours worked go up because jobs aren’t being created. He observed “this is a recovery in which hours worked aren’t going up. This suggests it may not be recovery. You’re getting firms trying to squeeze more and more work out of workers, working fewer and fewer hours.”
There are many times I feel pretty stupid. Yesterday was one of them. I read the following release: ArvinMeritor terminates tender offer for Dana (ARM, DCN) by Anne Stanley SAN FRANCISCO (CBS.MW) -- Automotive parts maker ArvinMeritor (ARM) announced Sunday it is ending its tender bid of $18 a share for Ohio-based Dana Corp. (DCN) following a decision by Dana's board of directors to reject the latest offer. ArvinMeritor, based in Troy, Mich., started its bid for Dana in July. On Friday, ArvinMeritor stock added 8 cents to close at $18.43. Shares of Dana gained 2 cents to end at $15. I apologize for doing such a poor job of analyzing this potential merger. I am still not certain why Arvin-Meritor chose to drop its tender. The acquisition was well-conceived, and there were benefits for shareholders, customers, and the combined enterprise.
Thomas G. Donlan writes in the Barron’s Editorial Commentary describes the proposed energy legislation as “all the things that had to be assembled to attract 60 votes in the Senate and 218 in the House so that a bill could pass. What’s missing is anything that would justify passing the bill.”
It was only a few weeks ago that I provided the data on the enormous insider selling that had take place in October alongside the puny insider buying. This ration has carried over into November. When the final tally is made, I believe November’s insider selling will dwarf even October’s numbers. November insider buying will continue to be on the puny side.
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