5/1/04 Personal Consumption Expenditures (PCE)
There are so many happenings today. It’s the Kentucky Derby with a wide-open field of 18 horses. There is the Berkshire Hathaway annual meeting in Omaha with Buffett and Munger holding court for about six hours. Today marks the one day anniversary of Bush’s “Mission Accomplished” proclamation. Then there is Maj. Gen. Jassim Mohammed Saleh, a former Iraqi Republican Guard member who headed Hussein’s infantry. He was chosen to lead the 1,100 member security force for Fallujah and he is a native of Fallujah and belongs to the Mohammed tribe. Lastly, I could discuss the Rocket going 5-0 in April for the Astros.
I think many Americans are happy to see April 2004 end. A total of 136 U.S. soldiers were killed in combat in April and over 900 were reported wounded. By comparison, from March 20 through April 30, 2003, 115 U.S. soldiers were killed in combat. Since March 20, 2003, at least 738 soldiers have been killed serving our country. Prime Minister Martin asked Bush in the Rose Garden yesterday “a year after you declared an end to major combat, are things getting worse in Iraq rather than better?” Bush stated “we’re making progress. You bet.” Meanwhile, the Bush Cheney team continue their “winning the war on terror tour” and the death toll in Iraq and Afghanistan mounts.
I think many on Wall Street are happy to see April end. For the week the Dow was down 2.3%, the S&P 500 dropped 2.9%, and the Nasdaq fell 6.3%. Friday may have been a better day for the bond market; however, April has not been kind to the yield on treasuries or corporate debt instruments.
There was some good news yesterday. Real consumer spending decelerated in the month of March, rising but 0.1%, the smallest increase in five months. On the other hand, real disposable incomes increased only 0.1% in March, the smallest rise in six months. The personal consumption expenditure price index increased 0.3% while core prices (excluding food and energy prices) rose 0.2%. In the past year the PCE rose 1.6%, and the core rate increased but 1.4% in the same period. Even though that represented the fastest year-over-year inflation since February 2003, it really does not create overbearing worry. I continue to believe that consumer spending is decelerating and the latter will become on-going headline news by this summer. One should note also that, adjusted for inflation, spending rose 0.1% in March after a 0.2% rise in February.
WinnDixie, in an effort to significantly curtail overhead, is cutting 10,000 workers. The company is undergoing a reorganization of its stores.
As I mentioned yesterday, benefit costs rose 6.9% in the first quarter compared with the same March quarter in 2003. Lehman Bros. economist Drew Matus remarked “employees are becoming more expensive despite the fact that wage growth is quite low.”
The personal savings rate was 1.9% in March, the same as the prior month.
Donald Trump’s Trump Hotels & Casino Resorts, whose auditor expressed doubts in March about its ability to survive, stated yesterday it may miss a $73.1 million interest payment due Monday. Trump stated “we’re making good progress.” He sounds a lot like Bush.
Deputy Defense Secretary Paul Wolfowitz estimated that 500 U.S. soldiers had been killed in Iraq, not even close to the actual number of 738. He makes me puke. He should be fired. Maybe Bush should hire Trump to tell Wolfowitz “you’re fired.”
David Healy, an analyst with Burnham Securities: “Tapped-out Americans probably bought more cars and trucks than were good for them during the last recession, and it’s taking some extraordinary price cuts to lure them into buying still more in 2004.”
Friday, April 30, 2004
4/30/04 Wages, Benefits, and Inflation
Our economy is consumer driven. As such, it might be wise to take a peek at the recent information on wages. After all, wages are the engine for consumption. If wages are rapidly escalating, there should be a real concern about the potential of galloping inflation.
From December 2003 to March 2004, total compensation for civilian workers increased 1.1%, seasonally adjusted, a gain from the 0.8% rise in the prior quarter. Of the March quarter advance, benefits rose 2.4% while wages and salaries gained 0.6%. It should be noted that benefits only contribute 30% to total compensation. Nevertheless, two-thirds of the increase in compensation costs was attributable to benefit costs during the quarter ending March 2004. Defined benefit retirement costs accounted for nearly half of the rise in benefit costs.
Annual compensation costs for civilian workers increased 3.8% for the year ended March 2004, compared with a 3.9% over-the-year increase for March 2003. Compensation costs in private industry rose 3.9% in the year ended March 2004, compared with a 3.8% increase in March 2003. In sum, while increases in wages and salaries continued to slow, benefit costs continued to rise sharply during the year ended March 2004. In fact, for civilian workers, wages and salaries increased 2.5% in the year ended March 2004, compared with a gain of 2.9% in March 2003. Benefit costs jumped 6.9% for the period ended March 2004, an increase from the prior year’s 6.1%.
The above-mentioned figures have some important implications. The escalating benefit costs will continue to dampen the desire to hire full-time workers. Therefore, it was not surprising to see that, in March 2004, of the 308,000 additional non-farm payrolls, 296,000 were non-permanent workers. The latter are required to pay for their benefits, including health insurance, and it is contributing to more Americans not having health insurance. They can’t afford the premiums on lower wages. As the number of non-permanent workers increase, the compensation costs for industry are in a better position to decline. This is reflected in the figures for the year ending March 2004. Lastly, if indeed our economy is dependent on the consumer for 70% of the GDP, it is highly unlikely that inflation can remain buoyant while wages and salaries are on the decline. In the quarter ended March 2004, economists had predicted that consumer spending would rise 4.2%. The actual annual rate was 3.8%. With less wages and salaries, I am convinced consumer spending will become more muted. Hence, despite the talk about the Fed raising interest rates, I believe this is a good time to take an initial position in longer-term treasuries.
This morning, Wal-Mart and eight product manufacturers begin testing electronic product codes at select Supercenters and one regional distribution center in the Dallas/Fort Worth metroplex.
The last five years in Arizona have been the driest consecutive years in at least a century. The drought could create serious water restrictions along the Colorado River.
The Conference Board’s Help-Wanted Advertising Index dipped one point in March to 39. The Index was also at 39 exactly one year ago.
The number of people continuing to collect state jobless benefits rose by 3,000 to 3.013 million in the week ended April 17. This number excludes the 80,000 people each week who have lost their unemployment benefits since December 23, 2003. Alfred Broaddus, Federal Reserve Bank of Richmond President, commented last week that “bottom line for me, the economy now looks like the recovery has more momentum that it had.” You’ll have to give Broaddus some leeway. He is a government employee.
Paul Bremer, in a speech given on Feb. 26, 2001, stated “the new administration seems to be paying no attention to the problem of terrorism. What they will do is stagger along until there’s a major incident and then suddenly say, ‘Oh, my God, shouldn’t we be organized to deal with this?’ That’s too bad. They’ve been given a window of opportunity with very little terrorism now, and they’re not taking advantage of it. Maybe the folks in the press ought to be pushing a little bit.” Maybe the voters should assume more of the responsibility. Try not to stagger in the voting booth this time.
Last month, Gateway cut 2,500 workers. Yesterday, they announced a cut of another 1,500 jobs or some 43% of its workforce.
Dow Chemical stated it would cut 3,000 jobs globally this year. In the first quarter, 350 employees were laid off. Last year, 3,500 employees were eliminated from the payroll.
The Reserve Bank of New Zealand raised interest rates for the second time this year. The 25 basis points increase took the present rate to 5.5%.
Our economy is consumer driven. As such, it might be wise to take a peek at the recent information on wages. After all, wages are the engine for consumption. If wages are rapidly escalating, there should be a real concern about the potential of galloping inflation.
From December 2003 to March 2004, total compensation for civilian workers increased 1.1%, seasonally adjusted, a gain from the 0.8% rise in the prior quarter. Of the March quarter advance, benefits rose 2.4% while wages and salaries gained 0.6%. It should be noted that benefits only contribute 30% to total compensation. Nevertheless, two-thirds of the increase in compensation costs was attributable to benefit costs during the quarter ending March 2004. Defined benefit retirement costs accounted for nearly half of the rise in benefit costs.
Annual compensation costs for civilian workers increased 3.8% for the year ended March 2004, compared with a 3.9% over-the-year increase for March 2003. Compensation costs in private industry rose 3.9% in the year ended March 2004, compared with a 3.8% increase in March 2003. In sum, while increases in wages and salaries continued to slow, benefit costs continued to rise sharply during the year ended March 2004. In fact, for civilian workers, wages and salaries increased 2.5% in the year ended March 2004, compared with a gain of 2.9% in March 2003. Benefit costs jumped 6.9% for the period ended March 2004, an increase from the prior year’s 6.1%.
The above-mentioned figures have some important implications. The escalating benefit costs will continue to dampen the desire to hire full-time workers. Therefore, it was not surprising to see that, in March 2004, of the 308,000 additional non-farm payrolls, 296,000 were non-permanent workers. The latter are required to pay for their benefits, including health insurance, and it is contributing to more Americans not having health insurance. They can’t afford the premiums on lower wages. As the number of non-permanent workers increase, the compensation costs for industry are in a better position to decline. This is reflected in the figures for the year ending March 2004. Lastly, if indeed our economy is dependent on the consumer for 70% of the GDP, it is highly unlikely that inflation can remain buoyant while wages and salaries are on the decline. In the quarter ended March 2004, economists had predicted that consumer spending would rise 4.2%. The actual annual rate was 3.8%. With less wages and salaries, I am convinced consumer spending will become more muted. Hence, despite the talk about the Fed raising interest rates, I believe this is a good time to take an initial position in longer-term treasuries.
This morning, Wal-Mart and eight product manufacturers begin testing electronic product codes at select Supercenters and one regional distribution center in the Dallas/Fort Worth metroplex.
The last five years in Arizona have been the driest consecutive years in at least a century. The drought could create serious water restrictions along the Colorado River.
The Conference Board’s Help-Wanted Advertising Index dipped one point in March to 39. The Index was also at 39 exactly one year ago.
The number of people continuing to collect state jobless benefits rose by 3,000 to 3.013 million in the week ended April 17. This number excludes the 80,000 people each week who have lost their unemployment benefits since December 23, 2003. Alfred Broaddus, Federal Reserve Bank of Richmond President, commented last week that “bottom line for me, the economy now looks like the recovery has more momentum that it had.” You’ll have to give Broaddus some leeway. He is a government employee.
Paul Bremer, in a speech given on Feb. 26, 2001, stated “the new administration seems to be paying no attention to the problem of terrorism. What they will do is stagger along until there’s a major incident and then suddenly say, ‘Oh, my God, shouldn’t we be organized to deal with this?’ That’s too bad. They’ve been given a window of opportunity with very little terrorism now, and they’re not taking advantage of it. Maybe the folks in the press ought to be pushing a little bit.” Maybe the voters should assume more of the responsibility. Try not to stagger in the voting booth this time.
Last month, Gateway cut 2,500 workers. Yesterday, they announced a cut of another 1,500 jobs or some 43% of its workforce.
Dow Chemical stated it would cut 3,000 jobs globally this year. In the first quarter, 350 employees were laid off. Last year, 3,500 employees were eliminated from the payroll.
The Reserve Bank of New Zealand raised interest rates for the second time this year. The 25 basis points increase took the present rate to 5.5%.
Thursday, April 29, 2004
4/29/04 Interesting times
Year to date, the Dow and the Nasdaq are down slightly. Yields on U.S. treasuries set new highs for the year yesterday. June gold futures closed at 5 ½ month lows. June live-cattle futures traded above 80 cents for the first time in history. As the U.S. GDP powers forward, the U.S. dollar has suddenly taken a dramatic upturn and, against the euro, has rallied from 1.29 to about 1.18. It has even rallied against the yen from 105 to 110. It proves once again that dead cats can bounce. How bad could the world scene be? A Picasso painting is estimated to sell at auction for between $70 and $100 million. Beauty is in the eye of the person holding the checkbook.
At the end of this year, an international textile quota system will come to an end. World Bank analysts have estimated that China will be the major beneficiary. A U.S. industry study predicted that China could gain up to three-quarters of our domestic market. Their study projected the closure of more than 1,300 U.S. textile plants and related job losses of 650,000, representing more than twice March’s non-farm payroll gains. Cheidu Osakwe, director of the WTO’s textile division, stated “it’s a deal that’s already been done. It can’t be undone.” Don’t look for a dead cat bounce from the U.S. textile industry. I wonder whether pictures of the plant closings will be banned?
Sen. Zell Miller: “This government is in one hell of a mess, and frankly my dear, very few up here give a damn. The individuals are not so much at fault as the rotten and decaying foundation of what is no longer a republic. The Senate is in the sorriest time in its long, checkered and once glorious history. Make no mistake about it: it is the special interest groups and their fund-raising powers that elect U.S. senators and hold them in bondage forever. Senators have become mere cat’s paws for special interests.”
Yesterday, the Senate Government Affairs Committee revealed that defense officials and other federal bureaucrats wasted hundreds of millions of taxpayer dollars misusing federal credit cards, including dubious purchases of jewelry, ski clothes, and many other items. According to auditors from the GAO, those buyers almost never faced even administrative discipline. The GAO study stated that, since, 1994, the use of purchasing cards has risen from $1 billion to $16 billion in 2003, and that a healthy number of those dollars were wasted.
David Wilder is a retired banker from Plainview, Texas. He observed that the United States has moved from a manufacturing to a service economy. He stated “now, we’re trying to send our service out.”
Nokia is the world’s leading manufacturer of mobile phones. In an effort to rekindle sales, the company announced price reductions of about 25% in some of their more expensive handsets.
Standard & Poor’s estimates that, for 2004, S&P 500 operating earnings are expected to set a record and increase 17.8%. As-reported earnings are anticipated to rise 14.3%. They estimate the S&P 500 will close the year with a gain of 9.3%. The strongest gains are expected in the healthcare sector. The May-October period is generally not too inviting for shareowners. This might suggest that the estimated gains for the S&P 500 might not be realized until the last two months of the year. Maybe I’ll go to the beach until November.
The bio-informatics market in India is expected to exceed $2 billion by 2008 while the market for the country’s biotech R&D products and services is likely to rise to around $3 billion by 2010, according to a study by Nasscom-KPMG. I would not be surprised to see these figures come in quite low.
According to a new CBS News/New York Times poll, Bush’s approval rating is at an all-time low, and only 47% of those responding stated the U.S. did the right thing taking military action in Iraq. Just 32% stated Iraq was a threat that required immediate military action a year ago. Three-quarters of those polled stated they had already decided who would get their vote on November 2.
Ten more U.S. soldiers were killed today in Iraq. That brings the total killed in this month of April to 126. I hear a lot about coalition forces this and coalition forces that. When the bullshit talk stops, it’s our American soldiers doing the bulk of the dying.
Year to date, the Dow and the Nasdaq are down slightly. Yields on U.S. treasuries set new highs for the year yesterday. June gold futures closed at 5 ½ month lows. June live-cattle futures traded above 80 cents for the first time in history. As the U.S. GDP powers forward, the U.S. dollar has suddenly taken a dramatic upturn and, against the euro, has rallied from 1.29 to about 1.18. It has even rallied against the yen from 105 to 110. It proves once again that dead cats can bounce. How bad could the world scene be? A Picasso painting is estimated to sell at auction for between $70 and $100 million. Beauty is in the eye of the person holding the checkbook.
At the end of this year, an international textile quota system will come to an end. World Bank analysts have estimated that China will be the major beneficiary. A U.S. industry study predicted that China could gain up to three-quarters of our domestic market. Their study projected the closure of more than 1,300 U.S. textile plants and related job losses of 650,000, representing more than twice March’s non-farm payroll gains. Cheidu Osakwe, director of the WTO’s textile division, stated “it’s a deal that’s already been done. It can’t be undone.” Don’t look for a dead cat bounce from the U.S. textile industry. I wonder whether pictures of the plant closings will be banned?
Sen. Zell Miller: “This government is in one hell of a mess, and frankly my dear, very few up here give a damn. The individuals are not so much at fault as the rotten and decaying foundation of what is no longer a republic. The Senate is in the sorriest time in its long, checkered and once glorious history. Make no mistake about it: it is the special interest groups and their fund-raising powers that elect U.S. senators and hold them in bondage forever. Senators have become mere cat’s paws for special interests.”
Yesterday, the Senate Government Affairs Committee revealed that defense officials and other federal bureaucrats wasted hundreds of millions of taxpayer dollars misusing federal credit cards, including dubious purchases of jewelry, ski clothes, and many other items. According to auditors from the GAO, those buyers almost never faced even administrative discipline. The GAO study stated that, since, 1994, the use of purchasing cards has risen from $1 billion to $16 billion in 2003, and that a healthy number of those dollars were wasted.
David Wilder is a retired banker from Plainview, Texas. He observed that the United States has moved from a manufacturing to a service economy. He stated “now, we’re trying to send our service out.”
Nokia is the world’s leading manufacturer of mobile phones. In an effort to rekindle sales, the company announced price reductions of about 25% in some of their more expensive handsets.
Standard & Poor’s estimates that, for 2004, S&P 500 operating earnings are expected to set a record and increase 17.8%. As-reported earnings are anticipated to rise 14.3%. They estimate the S&P 500 will close the year with a gain of 9.3%. The strongest gains are expected in the healthcare sector. The May-October period is generally not too inviting for shareowners. This might suggest that the estimated gains for the S&P 500 might not be realized until the last two months of the year. Maybe I’ll go to the beach until November.
The bio-informatics market in India is expected to exceed $2 billion by 2008 while the market for the country’s biotech R&D products and services is likely to rise to around $3 billion by 2010, according to a study by Nasscom-KPMG. I would not be surprised to see these figures come in quite low.
According to a new CBS News/New York Times poll, Bush’s approval rating is at an all-time low, and only 47% of those responding stated the U.S. did the right thing taking military action in Iraq. Just 32% stated Iraq was a threat that required immediate military action a year ago. Three-quarters of those polled stated they had already decided who would get their vote on November 2.
Ten more U.S. soldiers were killed today in Iraq. That brings the total killed in this month of April to 126. I hear a lot about coalition forces this and coalition forces that. When the bullshit talk stops, it’s our American soldiers doing the bulk of the dying.
Wednesday, April 28, 2004
4/28/04 The Real McCoy
We know that, over the past 13 months, the Nasdaq has had a huge move upward and the IPO has had a huge rebound in activity. Nevertheless, according to the latest MoneyTree survey from PriceWaterhouseCoopers, Thomson Venture Economics, and the National Venture Capital Association, there was 1% less financing of privately-held companies in this year’s first quarter in the San Francisco Bay Area (this includes Silicon Valley) than the financing levels in the prior year period. In other words, the survey indicates that the rebound in the Bay Area’s venture capital market has stalled. As Jim Healy, managing director with San Francisco-based Sofinnova Ventures explained, “we have reached a turning point in the venture industry. We’re focused on the fundamentals, we’re taking a value-based, disciplined approach to investing.” That certainly represents a major change from the current tech buy approach on Wall Street.
Continental Airlines just posted a $124 million first-quarter loss. Their management stated high fuel costs likely will keep it from breaking even or showing a profit in 2004. Yesterday the company stated it could lay off as many as 500 reservations agents by September.
Alan Greenspan: “The dramatic rise of oil and gas futures was an economic event that can significantly affect the long-term path of the U.S. economy.”
Quantas stated they had no interest in Boeing’s 7E7. Last week 49 union members lost their jobs at Boeing. The company has stopped providing data on monthly layoffs to the media. It just takes a bit more effort to get the numbers.
Detroit’s two largest auto suppliers, Delphi and Visteon, are close to reaching a 7-year contract with the UAW that cuts wages for all future hires, and requires them to pay for more of their health care and much of their retirement. For example, on average UAW workers at both auto supplier companies make $24 per hour. For new hires the rate would drop to $14.
Shell announced it will cut up to 30% of its IT jobs worldwide.
The Republican-dominated Virginia legislature passed a $1.3 billion tax bill, the largest state tax increase in decades, and the sales tax will be boosted from 4.5% to 5%. Tax collections are up for most states, but growing health care costs will make it tough for most states to balance their books. Thirty-three states expect to have budget gaps for fiscal 2005, according to a report released today by the National Conference of State Legislatures.
A Cornell University study published in the April issue of Occupational and Environmental Medicine is the first to add the cost of on-the-job productivity losses from common health problems to an employer’s total health-related expenses. The study indicates that workers who come in sick cost their employers an average of $255 each per year.
During the 2003-2004 fiscal year, India’s gold production rose 20.76% to 10,198.5 kg. India is the world’s largest consumer and importer of gold. It’s annual consumption of gold is around 800 tons.
The Taiwan Institute of Economic Research has revised its 2004 GDP forecast from 4.81% to 5.08%. The revision reflects a sense that Taiwan exports are picking up. A trade surplus of $11.6 billion is anticipated. The forecast specified that it was pinning its expectations in part on the belief that the U.S. Federal Reserve Board is not yet ready to raise interest rates, a move that might diminish the U.S. appetite for Taiwan goods.
German steel manufacturer ThyssenKrupp is raising its prices 11% to 100 euro per ton from July 1 to reflect rising crude oil and freight costs.
Nancy Pelosi: “The Republican leadership in the House refuses to schedule a vote on the bipartisan Crane-Rangel manufacturing bill, which would lower taxes for American manufacturers and keep good paying jobs in the United States.”
The Conference Board reported that, in April, consumers anticipating an increase in their incomes declined to 17% from 18% in the prior month.
Rich Cruz, a partner at the consulting firm Accenture, stated “clearly, U.S. companies have looked offshore because they have to reduce their operating costs in order to survive.” Accenture employs 2,000 Filipino software developers.
Wu Xiaoling, vice governor of the People’s Bank of China, stated China’s growth this year will slow to less than 8% from a six-year high of 9.1% in 2003. However, in this year’s first quarter, growth was 9.7%. Wu remarked that “raw material prices are already too high. It’s obvious our resources and energy can’t support this kind of growth.” According to Morgan Stanley, China accounted for 32% of Japan’s export growth and 36% of South Korea’s last year. China’s inflation rate rose to 3% in March, up from the prior month’s 2.1%. If China’s M2 money supply continues to expand at a rate of about 20%, they won’t need to worry about a soft landing. The landing will be heard around the globe.
The Concord Coalition: “If Congress wants to pass particular tax cuts, it should either reduce mandatory programs or raise other revenues to offset the tax-reduction measures, not simply give itself a free pass to enact tax cuts without financing them.”
More than 125 scientific papers have been published on sulforaphane, SGS, and broccoli sprouts, including 10 in 2004. In essence, new research indicates that consumption of broccoli sprouts may reduce high blood pressure, the risk of heart disease, and stroke. Two studies this year showed that sulforaphane/broccoli sprouts inhibited the growth of human prostate cells, and several studies indicated they kill the bacteria that cause stomach ulcers and can lead to stomach cancer.
Through Monday, April 26, 115 U.S. soldiers have been killed in Iraq this month. Retired Gen. William E. Odom stated “We have failed. The issue is how high a price we’re going to pay… Less, by getting out sooner, or more, by getting out later?” The General opposed the war before it happened.
Yesterday Mexico’s central bank raised the overnight lending rate from 5.5 percent to 6 percent.
We know that, over the past 13 months, the Nasdaq has had a huge move upward and the IPO has had a huge rebound in activity. Nevertheless, according to the latest MoneyTree survey from PriceWaterhouseCoopers, Thomson Venture Economics, and the National Venture Capital Association, there was 1% less financing of privately-held companies in this year’s first quarter in the San Francisco Bay Area (this includes Silicon Valley) than the financing levels in the prior year period. In other words, the survey indicates that the rebound in the Bay Area’s venture capital market has stalled. As Jim Healy, managing director with San Francisco-based Sofinnova Ventures explained, “we have reached a turning point in the venture industry. We’re focused on the fundamentals, we’re taking a value-based, disciplined approach to investing.” That certainly represents a major change from the current tech buy approach on Wall Street.
Continental Airlines just posted a $124 million first-quarter loss. Their management stated high fuel costs likely will keep it from breaking even or showing a profit in 2004. Yesterday the company stated it could lay off as many as 500 reservations agents by September.
Alan Greenspan: “The dramatic rise of oil and gas futures was an economic event that can significantly affect the long-term path of the U.S. economy.”
Quantas stated they had no interest in Boeing’s 7E7. Last week 49 union members lost their jobs at Boeing. The company has stopped providing data on monthly layoffs to the media. It just takes a bit more effort to get the numbers.
Detroit’s two largest auto suppliers, Delphi and Visteon, are close to reaching a 7-year contract with the UAW that cuts wages for all future hires, and requires them to pay for more of their health care and much of their retirement. For example, on average UAW workers at both auto supplier companies make $24 per hour. For new hires the rate would drop to $14.
Shell announced it will cut up to 30% of its IT jobs worldwide.
The Republican-dominated Virginia legislature passed a $1.3 billion tax bill, the largest state tax increase in decades, and the sales tax will be boosted from 4.5% to 5%. Tax collections are up for most states, but growing health care costs will make it tough for most states to balance their books. Thirty-three states expect to have budget gaps for fiscal 2005, according to a report released today by the National Conference of State Legislatures.
A Cornell University study published in the April issue of Occupational and Environmental Medicine is the first to add the cost of on-the-job productivity losses from common health problems to an employer’s total health-related expenses. The study indicates that workers who come in sick cost their employers an average of $255 each per year.
During the 2003-2004 fiscal year, India’s gold production rose 20.76% to 10,198.5 kg. India is the world’s largest consumer and importer of gold. It’s annual consumption of gold is around 800 tons.
The Taiwan Institute of Economic Research has revised its 2004 GDP forecast from 4.81% to 5.08%. The revision reflects a sense that Taiwan exports are picking up. A trade surplus of $11.6 billion is anticipated. The forecast specified that it was pinning its expectations in part on the belief that the U.S. Federal Reserve Board is not yet ready to raise interest rates, a move that might diminish the U.S. appetite for Taiwan goods.
German steel manufacturer ThyssenKrupp is raising its prices 11% to 100 euro per ton from July 1 to reflect rising crude oil and freight costs.
Nancy Pelosi: “The Republican leadership in the House refuses to schedule a vote on the bipartisan Crane-Rangel manufacturing bill, which would lower taxes for American manufacturers and keep good paying jobs in the United States.”
The Conference Board reported that, in April, consumers anticipating an increase in their incomes declined to 17% from 18% in the prior month.
Rich Cruz, a partner at the consulting firm Accenture, stated “clearly, U.S. companies have looked offshore because they have to reduce their operating costs in order to survive.” Accenture employs 2,000 Filipino software developers.
Wu Xiaoling, vice governor of the People’s Bank of China, stated China’s growth this year will slow to less than 8% from a six-year high of 9.1% in 2003. However, in this year’s first quarter, growth was 9.7%. Wu remarked that “raw material prices are already too high. It’s obvious our resources and energy can’t support this kind of growth.” According to Morgan Stanley, China accounted for 32% of Japan’s export growth and 36% of South Korea’s last year. China’s inflation rate rose to 3% in March, up from the prior month’s 2.1%. If China’s M2 money supply continues to expand at a rate of about 20%, they won’t need to worry about a soft landing. The landing will be heard around the globe.
The Concord Coalition: “If Congress wants to pass particular tax cuts, it should either reduce mandatory programs or raise other revenues to offset the tax-reduction measures, not simply give itself a free pass to enact tax cuts without financing them.”
More than 125 scientific papers have been published on sulforaphane, SGS, and broccoli sprouts, including 10 in 2004. In essence, new research indicates that consumption of broccoli sprouts may reduce high blood pressure, the risk of heart disease, and stroke. Two studies this year showed that sulforaphane/broccoli sprouts inhibited the growth of human prostate cells, and several studies indicated they kill the bacteria that cause stomach ulcers and can lead to stomach cancer.
Through Monday, April 26, 115 U.S. soldiers have been killed in Iraq this month. Retired Gen. William E. Odom stated “We have failed. The issue is how high a price we’re going to pay… Less, by getting out sooner, or more, by getting out later?” The General opposed the war before it happened.
Yesterday Mexico’s central bank raised the overnight lending rate from 5.5 percent to 6 percent.
Tuesday, April 27, 2004
4/27/04 Changing Times
Today Motorola will announce an expansion of its automotive electronics products plant in China. Its investment in China is the largest of any American company. Of the company’s $27.1 billion in sales last year, $4.7 billion came from China. The Chinese automotive market, according to the director of Motorola Automotive, is growing at an annual rate of 18.5%. Their 200,000 square foot plant in Tiajin will be completed this year, and will begin producing computers to control engines next year. According to Global Insight, car sales in China grew to 4.1 million in 2003, up from 3.5 million the previous year.
According to China’s information office of the State Council, the country’s urban unemployment rate is 4.3%, and this is if you don’t count people laid off from the state-run enterprises, and 7% if you do. The Xinhua news agency stated “the employment situation in China has been basically stable with 744.3 million Chinese employed last year, a third of them in urban areas and two-thirds in rural areas. That’s almost 97 million more than in 1990.” Officials state that unemployment is still rising but should peak this year.
Standard & Poor’s warned Monday that school districts across the country could see their credit ratings drop because of state budget problems. The number of districts facing downgrades is growing.
U.S. sales of new homes rose 8.9% to a record 1.228 million annual rate in March. The median price of new homes fell last month to $201,400 from $210,000 in February. Prices rose 8.8% in the last year.
According to the UBS Index of Investor Optimism, a joint effort of UBS and the Gallup Organization, the overall Index dropped 12 points this month, down from 85 in March. The drop can be attributed to an 8-point decrease in the Index’s personal dimension, which measures investors’ confidence in their ability to maintain income and reach short-term and long-term investment targets, all of which scored much lower this month. Average expectations for return during the next 12 months dipped to 10.4% from 12.7% in March. It should be noted that, in March 2003, the Index stood at 5, the lowest reading ever. The next month, April 2003, the Index zoomed to 66. March 2003 represented the best equity buying opportunity in quite some time. In sum, even though the present investor optimism level is dropping, the last time it was lower was the October 2003 reading of 69.
Today Motorola will announce an expansion of its automotive electronics products plant in China. Its investment in China is the largest of any American company. Of the company’s $27.1 billion in sales last year, $4.7 billion came from China. The Chinese automotive market, according to the director of Motorola Automotive, is growing at an annual rate of 18.5%. Their 200,000 square foot plant in Tiajin will be completed this year, and will begin producing computers to control engines next year. According to Global Insight, car sales in China grew to 4.1 million in 2003, up from 3.5 million the previous year.
According to China’s information office of the State Council, the country’s urban unemployment rate is 4.3%, and this is if you don’t count people laid off from the state-run enterprises, and 7% if you do. The Xinhua news agency stated “the employment situation in China has been basically stable with 744.3 million Chinese employed last year, a third of them in urban areas and two-thirds in rural areas. That’s almost 97 million more than in 1990.” Officials state that unemployment is still rising but should peak this year.
Standard & Poor’s warned Monday that school districts across the country could see their credit ratings drop because of state budget problems. The number of districts facing downgrades is growing.
U.S. sales of new homes rose 8.9% to a record 1.228 million annual rate in March. The median price of new homes fell last month to $201,400 from $210,000 in February. Prices rose 8.8% in the last year.
According to the UBS Index of Investor Optimism, a joint effort of UBS and the Gallup Organization, the overall Index dropped 12 points this month, down from 85 in March. The drop can be attributed to an 8-point decrease in the Index’s personal dimension, which measures investors’ confidence in their ability to maintain income and reach short-term and long-term investment targets, all of which scored much lower this month. Average expectations for return during the next 12 months dipped to 10.4% from 12.7% in March. It should be noted that, in March 2003, the Index stood at 5, the lowest reading ever. The next month, April 2003, the Index zoomed to 66. March 2003 represented the best equity buying opportunity in quite some time. In sum, even though the present investor optimism level is dropping, the last time it was lower was the October 2003 reading of 69.
Monday, April 26, 2004
4/26/04 It’s Personal
Yesterday more than 1,000 women’s rights, civil rights, and healthcare groups summoned their supporters to the National Mall in Washington, D.C. This was a significant happening. An estimated 1,150,000 came together for by far the largest march in this nation’s history. The March for Women’s Lives was led by seven organizing groups: ACLU, Black Women’s Health Imperative, Feminist Majority, NARAL Pro-Choice America, National Latina Institute for Reproductive Health, National Organization for Women, and Planned Parenthood Federation of America. The political right will scoff and state there were other sponsors, such as, the Socialists Worker’s Party and the Communist Part USA. If that is their focus, they will have missed the point. As Madeline Albright observed, “the truth is durable.” As Anthony Romero expressed, “the government does not belong in our bedrooms. It does not belong in our doctors’ offices… Our fundamental right to privacy is under serious attack by the government.” As Gloria Feldt stated, “they’re not just after abortion rights. This is a full-throttle war on your very health—on your access to real sex education, birth control, medical privacy, and life-saving research.” It should be remembered that the reproductive rights march on this same mall in 1992 helped elect a pro-abortion president, Bill Clinton. Yesterday’s march was professionally organized. It will result, in my opinion, in millions more voting for Kerry in November. These organizers will get out the vote in the upcoming election. As Eleanor Smeal remarked, “we are building an expanded and inclusive movement that will make women’s reproductive rights—just like social security—a third rail of politics.”
At least 17 states are considering tax increases as lawmakers try to come up with budgets for fiscal 2005, which begins July 1 in all but four states. Hiking the tobacco tax is, far and away, the states’ most common revenue raising proposal, but the idea of taxing services is on the table in a handful of states.
In the May issue of Diabetes Care, a new study projects that the number of people with diabetes globally will actually double over the next three decades. The study indicated the U.S. will experience a far more rapid increase than previously expected to an estimated 30.3 million Americans by as early as 2030.
It is becoming increasing apparent that analysts require a global knowledge of markets in order to adequately assess and project quarterly sales and earnings for an increasing number of Fortune 500 companies. For example, in the first quarter of 2003, GM’s automobile sales in China rose by 45%. In this year’s first quarter, the increase jumped to 70%. Then there was the recent case of Motorola. Analysts missed the quarterly numbers by a country mile. They failed to account for the “fabulous” and “excellent” first three months in the Asia Pacific region where “China is our top market followed by Japan. India is placed after that.” Amit Sharma, Motorola vice president, stated “India has 55 million cable homes, who are using analog devices. If they move to digital, it becomes a great opportunity for us. We are already developing products and doing pilots with some customers.”
According to the Federal Reserve, large U.S. bank holdings of mortgage securities reached record levels of $500 billion at the end of March, up 28% from the year earlier period and double the amount held in March 2001.
There was good news coming out of Boeing. They received the first launch order for their 7E7. All Nippon Airways ordered 50 planes—a mix of the short-range 7E7 and the long-range variant—to be delivered beginning in 2008. All Nippon was Boeing’s largest customer in 2003, and more than one quarter of their orders have been for the 767, which the 7E7 is expected to replace. All Nippon has orders pending for nine more 767s. All told, Boeing has only 24 unfilled orders for 767s in its backlog, including the aforementioned nine and 7 from Japan Airlines, another likely candidate for the 7E7. I have previously suggested that the future for the 767 is dim, and transferring orders from the 767 to the 7E7 could have a large impact on the workforce in Everett, Washington. At this time, Boeing is largely a manufacturer of the 737 and, more importantly, dependent on government contracts. Until this order for 50 7E7s, Boeing only had year-to-date orders for 36 planes. The interim period until 2008 shall prove a testing ground for management’s ability to generate positive cash flow.
Yesterday more than 1,000 women’s rights, civil rights, and healthcare groups summoned their supporters to the National Mall in Washington, D.C. This was a significant happening. An estimated 1,150,000 came together for by far the largest march in this nation’s history. The March for Women’s Lives was led by seven organizing groups: ACLU, Black Women’s Health Imperative, Feminist Majority, NARAL Pro-Choice America, National Latina Institute for Reproductive Health, National Organization for Women, and Planned Parenthood Federation of America. The political right will scoff and state there were other sponsors, such as, the Socialists Worker’s Party and the Communist Part USA. If that is their focus, they will have missed the point. As Madeline Albright observed, “the truth is durable.” As Anthony Romero expressed, “the government does not belong in our bedrooms. It does not belong in our doctors’ offices… Our fundamental right to privacy is under serious attack by the government.” As Gloria Feldt stated, “they’re not just after abortion rights. This is a full-throttle war on your very health—on your access to real sex education, birth control, medical privacy, and life-saving research.” It should be remembered that the reproductive rights march on this same mall in 1992 helped elect a pro-abortion president, Bill Clinton. Yesterday’s march was professionally organized. It will result, in my opinion, in millions more voting for Kerry in November. These organizers will get out the vote in the upcoming election. As Eleanor Smeal remarked, “we are building an expanded and inclusive movement that will make women’s reproductive rights—just like social security—a third rail of politics.”
At least 17 states are considering tax increases as lawmakers try to come up with budgets for fiscal 2005, which begins July 1 in all but four states. Hiking the tobacco tax is, far and away, the states’ most common revenue raising proposal, but the idea of taxing services is on the table in a handful of states.
In the May issue of Diabetes Care, a new study projects that the number of people with diabetes globally will actually double over the next three decades. The study indicated the U.S. will experience a far more rapid increase than previously expected to an estimated 30.3 million Americans by as early as 2030.
It is becoming increasing apparent that analysts require a global knowledge of markets in order to adequately assess and project quarterly sales and earnings for an increasing number of Fortune 500 companies. For example, in the first quarter of 2003, GM’s automobile sales in China rose by 45%. In this year’s first quarter, the increase jumped to 70%. Then there was the recent case of Motorola. Analysts missed the quarterly numbers by a country mile. They failed to account for the “fabulous” and “excellent” first three months in the Asia Pacific region where “China is our top market followed by Japan. India is placed after that.” Amit Sharma, Motorola vice president, stated “India has 55 million cable homes, who are using analog devices. If they move to digital, it becomes a great opportunity for us. We are already developing products and doing pilots with some customers.”
According to the Federal Reserve, large U.S. bank holdings of mortgage securities reached record levels of $500 billion at the end of March, up 28% from the year earlier period and double the amount held in March 2001.
There was good news coming out of Boeing. They received the first launch order for their 7E7. All Nippon Airways ordered 50 planes—a mix of the short-range 7E7 and the long-range variant—to be delivered beginning in 2008. All Nippon was Boeing’s largest customer in 2003, and more than one quarter of their orders have been for the 767, which the 7E7 is expected to replace. All Nippon has orders pending for nine more 767s. All told, Boeing has only 24 unfilled orders for 767s in its backlog, including the aforementioned nine and 7 from Japan Airlines, another likely candidate for the 7E7. I have previously suggested that the future for the 767 is dim, and transferring orders from the 767 to the 7E7 could have a large impact on the workforce in Everett, Washington. At this time, Boeing is largely a manufacturer of the 737 and, more importantly, dependent on government contracts. Until this order for 50 7E7s, Boeing only had year-to-date orders for 36 planes. The interim period until 2008 shall prove a testing ground for management’s ability to generate positive cash flow.
Sunday, April 25, 2004
4/25/04 Inept Planning and Decision Making
Hachim al-Hassani: “We hope the U.S. soldiers will not be attacked when they enter Fallujah. If they are attacked, they will respond and this will lead to problems.” U.S. commanders have been threatening an offensive to take Fallujah unless the guerrillas hand over their heavy weaponry. Why have the commanders been waiting? Our attacking forces are low on fuel. There is gas rationing. That’s right. Those are the facts direct from the front. It was not surprising that yesterday there was a suicide boat attack on two offshore oil terminals, the sole outlet of Iraqi crude from the south.
The number of U.S. troops killed in Iraq in April has risen to at least 109. In the last two weeks another 600 have been wounded, and that brings the number wounded to almost 3,900 since the war began and the death toll to 718 since March 20.
Rumsfeld: “It doesn’t mean that you’re going to be able to live through that in a perfect way without people being killed or without people being wounded, and the tragedy of the reality we live in is that that’s happening.”
The tragedy of the reality is that the Administration continues to move forward with inept planning and decision making and risk the lives of Americans. Some may believe I simply criticize. On the contrary, I aim to point out the pitfalls, and have done so over the past one and one-half years. At the outset of the war, I provided facts that, our troops on the front lines, had inadequate supplies and were pushed beyond mental and emotional exhaustion. I have provided facts illustrating inadequate healthcare for our wounded and returning troops. I have discussed inadequate pay and benefits for our troops. I have focused on the invasion predicated on non-factual evidence. Inept planning has become terrifying. Now we are literally running out of gas. I am told that Kuwait has found the current conditions so dangerous that they have been reluctant to make deliveries. That is understandable. According to the Pentagon’s Directorate for Information Operations and Reports, the number of troops wounded this month is approaching 900. In March, 291 were wounded in action. The highest total before this month of April was 413 in October 2003.
Paul Bremer: “Iraq faces a choice. If you do not defend your beloved country, it will not be saved.” I believe, more importantly, the same can be stated for our beloved country, the United States of America. Inept planning and decision making are taking a terrifying toll.
Hachim al-Hassani: “We hope the U.S. soldiers will not be attacked when they enter Fallujah. If they are attacked, they will respond and this will lead to problems.” U.S. commanders have been threatening an offensive to take Fallujah unless the guerrillas hand over their heavy weaponry. Why have the commanders been waiting? Our attacking forces are low on fuel. There is gas rationing. That’s right. Those are the facts direct from the front. It was not surprising that yesterday there was a suicide boat attack on two offshore oil terminals, the sole outlet of Iraqi crude from the south.
The number of U.S. troops killed in Iraq in April has risen to at least 109. In the last two weeks another 600 have been wounded, and that brings the number wounded to almost 3,900 since the war began and the death toll to 718 since March 20.
Rumsfeld: “It doesn’t mean that you’re going to be able to live through that in a perfect way without people being killed or without people being wounded, and the tragedy of the reality we live in is that that’s happening.”
The tragedy of the reality is that the Administration continues to move forward with inept planning and decision making and risk the lives of Americans. Some may believe I simply criticize. On the contrary, I aim to point out the pitfalls, and have done so over the past one and one-half years. At the outset of the war, I provided facts that, our troops on the front lines, had inadequate supplies and were pushed beyond mental and emotional exhaustion. I have provided facts illustrating inadequate healthcare for our wounded and returning troops. I have discussed inadequate pay and benefits for our troops. I have focused on the invasion predicated on non-factual evidence. Inept planning has become terrifying. Now we are literally running out of gas. I am told that Kuwait has found the current conditions so dangerous that they have been reluctant to make deliveries. That is understandable. According to the Pentagon’s Directorate for Information Operations and Reports, the number of troops wounded this month is approaching 900. In March, 291 were wounded in action. The highest total before this month of April was 413 in October 2003.
Paul Bremer: “Iraq faces a choice. If you do not defend your beloved country, it will not be saved.” I believe, more importantly, the same can be stated for our beloved country, the United States of America. Inept planning and decision making are taking a terrifying toll.
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