12/11/04 The Cost Of Doing Business
Fed Governor Bernanke: “Under a paper-money system, a determined government can always generate higher spending and hence positive inflation.” Unfortunately, over the last several years, the Fed has reached many irrational conclusions. Growing out of excess capacity so that U.S. businesses would regain their ability to raise prices is but one example. The Fed made a crucial error in judgment. This is not a normal economic expansion. In a real economic expansion, people earn more money. In this so-called period of economic growth, real wages have been declining for four years. As we approach the start of 2005, as a generalization, businesses hope to boost domestic revenues by raising prices. (Please do not write about Dell and others lowering the price of computers. As component prices come down, the cost of the hardware declines.)
There is a growing need for businesses to raise prices. Core intermediate goods prices have risen 8% in the past year, the worst inflation since 1981. In November, the prices of raw materials rose 8.7%, the biggest increase since March 2003. In the midst of this landscape, Philadelphia Fed Bank President Santomero stated “I think, at the moment, inflation is contained.” Maybe his moments are different from my moments. Santomero did, however, state “but I am hearing from businessmen that there is pressure on margins.” You bet there is pressure on margins. To combat that pressure, companies have attempted to first cut costs. Hence, hiring is limited to the have to category, and then, mostly part-time workers to avoid the cost of benefits. Secondly, companies have been closing plants, and mostly because of foreign competition. Thirdly, firms have placed a ceiling on overtime hours and attempt to squeeze more productivity out of their workforce. All the while, workers are seeing their wages, adjusted for inflation, declining. That is not an encouraging backdrop for raising prices. As Santomero remarked, “even though there is some pressure on costs, so far, it’s not translating to inflation at the retail level.”
There are other Fed forces at work. Wages are not rising but the Fed has generated the movement to monetize asset inflation, convert that to consumptive purchasing power despite the national net savings rate at record low levels, and not so gently, assist in making record household debt the icing on the cake. This recipe for disaster cannot be found in a Julia Child cookbook. As our real economic growth, adjusted for inflation, falters, the government appetite for deficits continues to grow. The U.S. government posted a $57.8 billion budget shortfall in November. The deficit for the first two months of the 2005 fiscal year is $115.2 billion versus $112.5 billion in the same period one year ago.
Comerica Bank’s National Recession Watch Index forecasts the likelihood of a national recession occurring six to 12 months in the future. The Index registered a 17% probability in November, up from 12% in October. November’s reading was the least favorable outlook since July 2001.
This past week the U.S. dollar broke an eight-week losing streak.
Crude closed under $41 a barrel for the first time in four months.
Wal-Mart has 40 stores in China and expects to increase that number by about 15 in 2005. In the first six months of 2004, Wal-Mart’s revenues in China increased 32%. IBM, Cisco, and Microsoft’s revenue growth should be so good.
Stephen Roach: “Lacking domestic savings, the U.S. must then import surplus savings from abroad in order to grow--- and then run massive current account and trade deficits to attract that capital.”
John Leahy, Airbus’s chief marketing official: “You will see a significant portion of customers that Boeing thought they might have for the 7E7 now switching to the Airbus A350 because of performance of the aircraft.” The A350 will be offered in two different passenger versions with capacities ranging from 245 to 285 seats with a range of 15,900 km or more. Airbus will soon announce several multi-billion dollar orders for the A350.
Up until now, the State Department’s immigrant visa control division has permitted thousands of foreign nurses to get fast-track work permits. After Jan. 1, this will not be allowed. Beginning in 2005, approval could take several years. Thousands of nurses from the Philippines will be impacted, and they have been our major source of imported nurses. Many hospitals have been experiencing a nursing shortage. That shortage can be expected to get worse in the new year.
China’s consumer prices in November slowed to a rise of 2.8%. This is significantly lower than the 4 to 5% increases over the last several months.
UBS’ Gary Gordon: “You can sustain very high levels of consumer debt when rates are falling, but not when they are rising.”
Saturday, December 11, 2004
12/11/04 The Cost Of Doing Business
Fed Governor Bernanke: “Under a paper-money system, a determined government can always generate higher spending and hence positive inflation.” Unfortunately, over the last several years, the Fed has reached many irrational conclusions. Growing out of excess capacity so that U.S. businesses would regain their ability to raise prices is but one example. The Fed made a crucial error in judgment. This is not a normal economic expansion. In a real economic expansion, people earn more money. In this so-called period of economic growth, real wages have been declining for four years. As we approach the start of 2005, as a generalization, businesses hope to boost domestic revenues by raising prices. (Please do not write about Dell and others lowering the price of computers. As component prices come down, the cost of the hardware declines.)
There is a growing need for businesses to raise prices. Core intermediate goods prices have risen 8% in the past year, the worst inflation since 1981. In November, the prices of raw materials rose 8.7%, the biggest increase since March 2003. In the midst of this landscape, Philadelphia Fed Bank President Santomero stated “I think, at the moment, inflation is contained.” Maybe his moments are different from my moments. Santomero did, however, state “but I am hearing from businessmen that there is pressure on margins.” You bet there is pressure on margins. To combat that pressure, companies have attempted to first cut costs. Hence, hiring is limited to the have to category, and then, mostly part-time workers to avoid the cost of benefits. Secondly, companies have been closing plants, and mostly because of foreign competition. Thirdly, firms have placed a ceiling on overtime hours and attempt to squeeze more productivity out of their workforce. All the while, workers are seeing their wages, adjusted for inflation, declining. That is not an encouraging backdrop for raising prices. As Santomero remarked, “even though there is some pressure on costs, so far, it’s not translating to inflation at the retail level.”
There are other Fed forces at work. Wages are not rising but the Fed has generated the movement to monetize asset inflation, convert that to consumptive purchasing power despite the national net savings rate at record low levels, and not so gently, assist in making record household debt the icing on the cake. This recipe for disaster cannot be found in a Julia Child cookbook. As our real economic growth, adjusted for inflation, falters, the government appetite for deficits continues to grow. The U.S. government posted a $57.8 billion budget shortfall in November. The deficit for the first two months of the 2005 fiscal year is $115.2 billion versus $112.5 billion in the same period one year ago.
Comerica Bank’s National Recession Watch Index forecasts the likelihood of a national recession occurring six to 12 months in the future. The Index registered a 17% probability in November, up from 12% in October. November’s reading was the least favorable outlook since July 2001.
This past week the U.S. dollar broke an eight-week losing streak.
Crude closed under $41 a barrel for the first time in four months.
Wal-Mart has 40 stores in China and expects to increase that number by about 15 in 2005. In the first six months of 2004, Wal-Mart’s revenues in China increased 32%. IBM, Cisco, and Microsoft’s revenue growth should be so good.
Stephen Roach: “Lacking domestic savings, the U.S. must then import surplus savings from abroad in order to grow--- and then run massive current account and trade deficits to attract that capital.”
John Leahy, Airbus’s chief marketing official: “You will see a significant portion of customers that Boeing thought they might have for the 7E7 now switching to the Airbus A350 because of performance of the aircraft.” The A350 will be offered in two different passenger versions with capacities ranging from 245 to 285 seats with a range of 15,900 km or more. Airbus will soon announce several multi-billion dollar orders for the A350.
Up until now, the State Department’s immigrant visa control division has permitted thousands of foreign nurses to get fast-track work permits. After Jan. 1, this will not be allowed. Beginning in 2005, approval could take several years. Thousands of nurses from the Philippines will be impacted, and they have been our major source of imported nurses. Many hospitals have been experiencing a nursing shortage. That shortage can be expected to get worse in the new year.
China’s consumer prices in November slowed to a rise of 2.8%. This is significantly lower than the 4 to 5% increases over the last several months.
UBS’ Gary Gordon: “You can sustain very high levels of consumer debt when rates are falling, but not when they are rising.”
Fed Governor Bernanke: “Under a paper-money system, a determined government can always generate higher spending and hence positive inflation.” Unfortunately, over the last several years, the Fed has reached many irrational conclusions. Growing out of excess capacity so that U.S. businesses would regain their ability to raise prices is but one example. The Fed made a crucial error in judgment. This is not a normal economic expansion. In a real economic expansion, people earn more money. In this so-called period of economic growth, real wages have been declining for four years. As we approach the start of 2005, as a generalization, businesses hope to boost domestic revenues by raising prices. (Please do not write about Dell and others lowering the price of computers. As component prices come down, the cost of the hardware declines.)
There is a growing need for businesses to raise prices. Core intermediate goods prices have risen 8% in the past year, the worst inflation since 1981. In November, the prices of raw materials rose 8.7%, the biggest increase since March 2003. In the midst of this landscape, Philadelphia Fed Bank President Santomero stated “I think, at the moment, inflation is contained.” Maybe his moments are different from my moments. Santomero did, however, state “but I am hearing from businessmen that there is pressure on margins.” You bet there is pressure on margins. To combat that pressure, companies have attempted to first cut costs. Hence, hiring is limited to the have to category, and then, mostly part-time workers to avoid the cost of benefits. Secondly, companies have been closing plants, and mostly because of foreign competition. Thirdly, firms have placed a ceiling on overtime hours and attempt to squeeze more productivity out of their workforce. All the while, workers are seeing their wages, adjusted for inflation, declining. That is not an encouraging backdrop for raising prices. As Santomero remarked, “even though there is some pressure on costs, so far, it’s not translating to inflation at the retail level.”
There are other Fed forces at work. Wages are not rising but the Fed has generated the movement to monetize asset inflation, convert that to consumptive purchasing power despite the national net savings rate at record low levels, and not so gently, assist in making record household debt the icing on the cake. This recipe for disaster cannot be found in a Julia Child cookbook. As our real economic growth, adjusted for inflation, falters, the government appetite for deficits continues to grow. The U.S. government posted a $57.8 billion budget shortfall in November. The deficit for the first two months of the 2005 fiscal year is $115.2 billion versus $112.5 billion in the same period one year ago.
Comerica Bank’s National Recession Watch Index forecasts the likelihood of a national recession occurring six to 12 months in the future. The Index registered a 17% probability in November, up from 12% in October. November’s reading was the least favorable outlook since July 2001.
This past week the U.S. dollar broke an eight-week losing streak.
Crude closed under $41 a barrel for the first time in four months.
Wal-Mart has 40 stores in China and expects to increase that number by about 15 in 2005. In the first six months of 2004, Wal-Mart’s revenues in China increased 32%. IBM, Cisco, and Microsoft’s revenue growth should be so good.
Stephen Roach: “Lacking domestic savings, the U.S. must then import surplus savings from abroad in order to grow--- and then run massive current account and trade deficits to attract that capital.”
John Leahy, Airbus’s chief marketing official: “You will see a significant portion of customers that Boeing thought they might have for the 7E7 now switching to the Airbus A350 because of performance of the aircraft.” The A350 will be offered in two different passenger versions with capacities ranging from 245 to 285 seats with a range of 15,900 km or more. Airbus will soon announce several multi-billion dollar orders for the A350.
Up until now, the State Department’s immigrant visa control division has permitted thousands of foreign nurses to get fast-track work permits. After Jan. 1, this will not be allowed. Beginning in 2005, approval could take several years. Thousands of nurses from the Philippines will be impacted, and they have been our major source of imported nurses. Many hospitals have been experiencing a nursing shortage. That shortage can be expected to get worse in the new year.
China’s consumer prices in November slowed to a rise of 2.8%. This is significantly lower than the 4 to 5% increases over the last several months.
UBS’ Gary Gordon: “You can sustain very high levels of consumer debt when rates are falling, but not when they are rising.”
Friday, December 10, 2004
12/10/04 By The Nation But To The Nation
The mounting debt pile mounts each and every day. We have talked and talked about our national debt of $7.5 trillion that is equal to 7.5 times 1000 billion dollars. We have discussed the unfunded liabilities for Medicare and Social Security that amount to over $43 trillion or 43 times 1000 billion dollars. Let us not forget to include the $10 trillion of debt levels accumulated by U.S. households. The latter increased by an annualized 9.1% in the third quarter while household net worth rose 4.5% in the same period to $46.7 trillion, according to the Federal Reserve. There is more. Total U.S. debt, excluding the aforementioned liabilities, increased at a 7.4% annual rate in the third quarter to $23.6 trillion. Debt owed by U.S. businesses increased at a 5.1% rate, the fastest in five quarters. If you take everything together, we have an $11 trillion economy with a household worth of $46.7 trillion balancing on a debt picture of $23.6 trillion + $43 trillion or rounded out to 67 times 1000 billion dollars. Are you still wondering why the dollar has collapsed against all major currencies?
FDR: “Our national debt after all, is an internal debt, owed not only by the nation but to the nation. If our children have to pay the interest they will pay that interest to themselves.” How about the principal?
Morgan Stanley expects credit card companies in 2004 to lose $17 billion in receivables to mortgage refinancings and $89 billion to home-equity loans.
The Bank Credit Analyst points out that, since 1992, emerging Asia’s exports have grown 80% faster than consumption. It’s no wonder our trade deficit is out of control.
According to Cardweb.com, 20% of all holiday-related transactions this year are being placed on debit cards, and that figure continues to grow at 16% annually.
Greenspan stated that the record weight of debt carried by American households and soaring home prices do not represent serious threats to the U.S. economy. He remarked that the vast majority of consumers “appear to calibrate their borrowing and spending to minimize financial difficulties…household finances appear to be in reasonably good shape.”
Publilius Syrus: “Debt is the slavery of the free.”
Ronald Reagan: “We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.”
According to the recent findings of the Duke University/CFO Magazine Business Outlook survey, chief financial officers of U.S. corporations are less bullish about the economy in 2005, and are particularly concerned about health care costs and operating in an increasingly competitive economic environment. More than two-thirds of the CFOs believe that addressing the U.S. budget deficit should be at the top of the president’s list.
Charlie Chaplin: “The saddest thing I can imagine is to get used to luxury.”
The IEA stated “the market is amply supplied with sour crude which can not be readily processed.”
According to the BLS, import prices for non-petroleum industrial supplies and materials were up 16% over the past 12 months. In contrast, agricultural export prices fell for a fifth time in the past 6 months. Over the past year, agricultural prices were down 5.2%; however, for the year ended November, overall export prices increased 4.3% while overall import prices rose 9.5% for the November 2003-2004 period. That is not a healthy tonic for profit margins.
Halliburton is the largest U.S. contractor in Iraq. They have received $10.8 billion in work orders from the Army. Maybe Boeing and Halliburton should merge.
The Conference Board reported that Japan’s leading economic index declined 0.3% in October. It was the third consecutive monthly decline. At the same time, real GDP growth slowed to a 0.3% annual rate in the third quarter of 2004, down from 1.1% in the second quarter and a 5.2% average rate over the previous year.
Private and foreign investors showed little interest in the sale of $9 billion of 10-year Treasury notes. At a yield of 4.15%, one cannot blame them.
Have you ever considered that Santa Claus rallies coincide with the time of holiday bonuses on Wall Street? As a generality, higher stock prices lead to higher bonuses.
Delphi Corp. will cut 3,000 U.S. hourly employees and 5,500 non-U.S. workers. With lower production levels and higher health care and commodity price increases, the company expects a pro-forma net loss of $200 million in 2005 but operating cash flow of at least $900 million. Sprint will cut 700 jobs. Domtar Ltd. is eliminating 790 jobs. Sitel is cutting170 jobs, Reuters is reducing the number of editing positions by 100.
Over a year ago I wrote about beta glucan. There is an increasing amount of research being done on the medicinal power of maitake mushrooms. This “dancing mushroom” has beta glucan, or polysaccharide, a constituent frequently credited for its immuno-stimulant properties. In a recent issue of the Journal of Medicinal Food, it was noted that a polysaccharide extract of maitake increased both innate and adaptive immune responses in mice. In the Winter 2003 issue there was an article indicating that maitake’s immune-enhancing effects may play a role in cancer prevention. In prior studies, there were indications beta glucan had therapeutic value against type 2 diabetes by reducing fasting blood glucose and insulin resistance. During this study period, Maitake SX-Fraction also lowered systolic blood pressure in subjects.
Reportedly, starting early next year, OPEC will cut production by 1 million barrels per day.
Bernard Baruch: “I made my money by selling too soon.”
The mounting debt pile mounts each and every day. We have talked and talked about our national debt of $7.5 trillion that is equal to 7.5 times 1000 billion dollars. We have discussed the unfunded liabilities for Medicare and Social Security that amount to over $43 trillion or 43 times 1000 billion dollars. Let us not forget to include the $10 trillion of debt levels accumulated by U.S. households. The latter increased by an annualized 9.1% in the third quarter while household net worth rose 4.5% in the same period to $46.7 trillion, according to the Federal Reserve. There is more. Total U.S. debt, excluding the aforementioned liabilities, increased at a 7.4% annual rate in the third quarter to $23.6 trillion. Debt owed by U.S. businesses increased at a 5.1% rate, the fastest in five quarters. If you take everything together, we have an $11 trillion economy with a household worth of $46.7 trillion balancing on a debt picture of $23.6 trillion + $43 trillion or rounded out to 67 times 1000 billion dollars. Are you still wondering why the dollar has collapsed against all major currencies?
FDR: “Our national debt after all, is an internal debt, owed not only by the nation but to the nation. If our children have to pay the interest they will pay that interest to themselves.” How about the principal?
Morgan Stanley expects credit card companies in 2004 to lose $17 billion in receivables to mortgage refinancings and $89 billion to home-equity loans.
The Bank Credit Analyst points out that, since 1992, emerging Asia’s exports have grown 80% faster than consumption. It’s no wonder our trade deficit is out of control.
According to Cardweb.com, 20% of all holiday-related transactions this year are being placed on debit cards, and that figure continues to grow at 16% annually.
Greenspan stated that the record weight of debt carried by American households and soaring home prices do not represent serious threats to the U.S. economy. He remarked that the vast majority of consumers “appear to calibrate their borrowing and spending to minimize financial difficulties…household finances appear to be in reasonably good shape.”
Publilius Syrus: “Debt is the slavery of the free.”
Ronald Reagan: “We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.”
According to the recent findings of the Duke University/CFO Magazine Business Outlook survey, chief financial officers of U.S. corporations are less bullish about the economy in 2005, and are particularly concerned about health care costs and operating in an increasingly competitive economic environment. More than two-thirds of the CFOs believe that addressing the U.S. budget deficit should be at the top of the president’s list.
Charlie Chaplin: “The saddest thing I can imagine is to get used to luxury.”
The IEA stated “the market is amply supplied with sour crude which can not be readily processed.”
According to the BLS, import prices for non-petroleum industrial supplies and materials were up 16% over the past 12 months. In contrast, agricultural export prices fell for a fifth time in the past 6 months. Over the past year, agricultural prices were down 5.2%; however, for the year ended November, overall export prices increased 4.3% while overall import prices rose 9.5% for the November 2003-2004 period. That is not a healthy tonic for profit margins.
Halliburton is the largest U.S. contractor in Iraq. They have received $10.8 billion in work orders from the Army. Maybe Boeing and Halliburton should merge.
The Conference Board reported that Japan’s leading economic index declined 0.3% in October. It was the third consecutive monthly decline. At the same time, real GDP growth slowed to a 0.3% annual rate in the third quarter of 2004, down from 1.1% in the second quarter and a 5.2% average rate over the previous year.
Private and foreign investors showed little interest in the sale of $9 billion of 10-year Treasury notes. At a yield of 4.15%, one cannot blame them.
Have you ever considered that Santa Claus rallies coincide with the time of holiday bonuses on Wall Street? As a generality, higher stock prices lead to higher bonuses.
Delphi Corp. will cut 3,000 U.S. hourly employees and 5,500 non-U.S. workers. With lower production levels and higher health care and commodity price increases, the company expects a pro-forma net loss of $200 million in 2005 but operating cash flow of at least $900 million. Sprint will cut 700 jobs. Domtar Ltd. is eliminating 790 jobs. Sitel is cutting170 jobs, Reuters is reducing the number of editing positions by 100.
Over a year ago I wrote about beta glucan. There is an increasing amount of research being done on the medicinal power of maitake mushrooms. This “dancing mushroom” has beta glucan, or polysaccharide, a constituent frequently credited for its immuno-stimulant properties. In a recent issue of the Journal of Medicinal Food, it was noted that a polysaccharide extract of maitake increased both innate and adaptive immune responses in mice. In the Winter 2003 issue there was an article indicating that maitake’s immune-enhancing effects may play a role in cancer prevention. In prior studies, there were indications beta glucan had therapeutic value against type 2 diabetes by reducing fasting blood glucose and insulin resistance. During this study period, Maitake SX-Fraction also lowered systolic blood pressure in subjects.
Reportedly, starting early next year, OPEC will cut production by 1 million barrels per day.
Bernard Baruch: “I made my money by selling too soon.”
Thursday, December 09, 2004
12/9/04 Is There An Escape Hatch?
The most recent IMF forecast indicated that the U.S. deficit absorbed about one-sixth of the world’s gross savings. Unfortunately, such a statement only factored in the current account deficit of $665 billion. How about the budget deficit of $420 billion? Is that chopped liver? Martin Wolf described the predicament a bit differently when stating “U.S. gross external liabilities are some 11 times export earnings, while net liabilities are about three times exports.” Stated simply, we consume too much, create too much debt, and save too little.
Fear not. Help is on the way. The Snowman will be with us for a second Bush term. Our strong dollar policy is more alive than ever. Some traders must have gotten a whiff of this news a couple of days ago. It was then that the dollar rallied and this led to $15 an ounce collapse in the price of gold and to further strengthening in Treasury prices as the ten-year yield dropped to 4.12%. The timing was perfect and coincided with the five-year Treasury note auction. As the dollar strengthened and our flag waved supreme, foreigners bought almost two-thirds of the $15 billion notes sold. It was a day for rejoicing. We were able to refinance some of our nation’s debt. Another bullet was dodged. The Snowman came to the rescue.
Until one day ago, the Baltic Dry Index had risen for 48 consecutive days. The Index does not measure sobriety but rather reflects dry-bulk shipping rates for coal, grain, and other commodities. Between September 29 and December 7, the Index jumped 51.4%. That beats real estate. Imagine the following. On September 11, 2001 the day rate for a large cargo ship carrying goods from Brazil to Japan was $6,000. Today that rate would approach $100,000. This is not poppy cock.
China mentioned that producer prices rose 8.4% in October from the prior year. Much of that increase was due to oil, steel, and coal. With the Chinese government tightening lending policies, it was not surprising that China’s industrial production grew at the slowest rate in 18 months in November. According to a Dec. 1 survey of purchasing managers by CLSA Asia-Pacific Markets, there is a “weakening of demand across a number of product sectors and indicated sharply rising costs continued to undermine manufacturers’ margins.” This does not bode well for GM’s auto operations in China.
Jesse Livermore: “A loss never bothers me after I take it. I forget it overnight. But being wrong- not taking the loss- that is what does damage to the pocketbook and the soul.”
GM’s Red Tag Sale begins tomorrow. It is geared to sparking lease transactions. The company’s German Opel division will cut 9,500 jobs in that country.
John Challenger: “Higher health care and energy costs for employers are definitely taking a toll. Companies are being forced to enact more cost-containment measures to protect profits.” In case you didn’t believe we have an employment soft patch, 2004 will mark the fourth consecutive year that one million or more job cuts were announced by U.S. employers. The good news is that the latest Business Roundtable survey of CEOs at major companies indicated that only 20% expect employment to fall in the coming months. The bad news is that, in the previous survey, the number was 12%.
If you have the holiday blues, please note that Hanukkah arrived earlier in the week. That means we take a respite from low-carb foods and pig out on potato pancakes called latkes and jelly doughnuts without holes called sufganiyot. You can enjoy these fried foods without being able to pronounce them.
Avon mentioned that fourth-quarter U.S. sales would decline about 5%, and that, in 2005, U.S. sales would decline slightly.
The Deloitte & Touche 2004 holiday shopping survey found that 64% of shoppers plan to buy gift cards. According to the National Retail Federation, more than half of all consumers hope to receive gift cards, and yet, the Retail Council estimates that 12% of gift card recipients don’t redeem their cards.
Kansas, Illinois, Wisconsin, Washington, and Missouri have a combined population of 33 million---one million more than the entire population of Canada. These five states urge their citizens to purchase their prescription medicines through Canadian Internet pharmacies. Unfortunately, Canadian health officials have stated repeatedly that their country cannot supply the U.S. need for prescription drugs.
UCLA economists pointed out that inflation-adjusted home prices have risen more than 5% annually over the last five years, five times the usual rate. They stated that prices nationwide are now 25% above their historical long-term average and that “bubbles, once they get going, tend to take a life of their own.”
Kraft Foods will close its yogurt-making plant in South Edmeston, NY and leave 67 employees without work. Masonite Door Corp. will end production at its Richmond plant, and 111 salaried and hourly employees will be out of work.
George Carlin: “By and large, language is a tool to conceal the truth.”
Chip makers Altera and Xilinx cut their quarterly sales forecasts.
U.S. November non-oil import prices rose 0.7%.
U.S. weekly jobless claims increased by 8,000 to 357,000. At some point, economists will realize that the U.S. recession has begun. Wall Street money managers will come to learn that after their recent portfolio gains turn into losses.
The most recent IMF forecast indicated that the U.S. deficit absorbed about one-sixth of the world’s gross savings. Unfortunately, such a statement only factored in the current account deficit of $665 billion. How about the budget deficit of $420 billion? Is that chopped liver? Martin Wolf described the predicament a bit differently when stating “U.S. gross external liabilities are some 11 times export earnings, while net liabilities are about three times exports.” Stated simply, we consume too much, create too much debt, and save too little.
Fear not. Help is on the way. The Snowman will be with us for a second Bush term. Our strong dollar policy is more alive than ever. Some traders must have gotten a whiff of this news a couple of days ago. It was then that the dollar rallied and this led to $15 an ounce collapse in the price of gold and to further strengthening in Treasury prices as the ten-year yield dropped to 4.12%. The timing was perfect and coincided with the five-year Treasury note auction. As the dollar strengthened and our flag waved supreme, foreigners bought almost two-thirds of the $15 billion notes sold. It was a day for rejoicing. We were able to refinance some of our nation’s debt. Another bullet was dodged. The Snowman came to the rescue.
Until one day ago, the Baltic Dry Index had risen for 48 consecutive days. The Index does not measure sobriety but rather reflects dry-bulk shipping rates for coal, grain, and other commodities. Between September 29 and December 7, the Index jumped 51.4%. That beats real estate. Imagine the following. On September 11, 2001 the day rate for a large cargo ship carrying goods from Brazil to Japan was $6,000. Today that rate would approach $100,000. This is not poppy cock.
China mentioned that producer prices rose 8.4% in October from the prior year. Much of that increase was due to oil, steel, and coal. With the Chinese government tightening lending policies, it was not surprising that China’s industrial production grew at the slowest rate in 18 months in November. According to a Dec. 1 survey of purchasing managers by CLSA Asia-Pacific Markets, there is a “weakening of demand across a number of product sectors and indicated sharply rising costs continued to undermine manufacturers’ margins.” This does not bode well for GM’s auto operations in China.
Jesse Livermore: “A loss never bothers me after I take it. I forget it overnight. But being wrong- not taking the loss- that is what does damage to the pocketbook and the soul.”
GM’s Red Tag Sale begins tomorrow. It is geared to sparking lease transactions. The company’s German Opel division will cut 9,500 jobs in that country.
John Challenger: “Higher health care and energy costs for employers are definitely taking a toll. Companies are being forced to enact more cost-containment measures to protect profits.” In case you didn’t believe we have an employment soft patch, 2004 will mark the fourth consecutive year that one million or more job cuts were announced by U.S. employers. The good news is that the latest Business Roundtable survey of CEOs at major companies indicated that only 20% expect employment to fall in the coming months. The bad news is that, in the previous survey, the number was 12%.
If you have the holiday blues, please note that Hanukkah arrived earlier in the week. That means we take a respite from low-carb foods and pig out on potato pancakes called latkes and jelly doughnuts without holes called sufganiyot. You can enjoy these fried foods without being able to pronounce them.
Avon mentioned that fourth-quarter U.S. sales would decline about 5%, and that, in 2005, U.S. sales would decline slightly.
The Deloitte & Touche 2004 holiday shopping survey found that 64% of shoppers plan to buy gift cards. According to the National Retail Federation, more than half of all consumers hope to receive gift cards, and yet, the Retail Council estimates that 12% of gift card recipients don’t redeem their cards.
Kansas, Illinois, Wisconsin, Washington, and Missouri have a combined population of 33 million---one million more than the entire population of Canada. These five states urge their citizens to purchase their prescription medicines through Canadian Internet pharmacies. Unfortunately, Canadian health officials have stated repeatedly that their country cannot supply the U.S. need for prescription drugs.
UCLA economists pointed out that inflation-adjusted home prices have risen more than 5% annually over the last five years, five times the usual rate. They stated that prices nationwide are now 25% above their historical long-term average and that “bubbles, once they get going, tend to take a life of their own.”
Kraft Foods will close its yogurt-making plant in South Edmeston, NY and leave 67 employees without work. Masonite Door Corp. will end production at its Richmond plant, and 111 salaried and hourly employees will be out of work.
George Carlin: “By and large, language is a tool to conceal the truth.”
Chip makers Altera and Xilinx cut their quarterly sales forecasts.
U.S. November non-oil import prices rose 0.7%.
U.S. weekly jobless claims increased by 8,000 to 357,000. At some point, economists will realize that the U.S. recession has begun. Wall Street money managers will come to learn that after their recent portfolio gains turn into losses.
Wednesday, December 08, 2004
12/8/04 To Acknowledge Risk
Charles Tremper: “The first step in the risk management process is to acknowledge the reality risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning.”
Excluding the $2 trillion cost of partially privatizing the Social Security system, excluding $42 trillion of unfunded obligations on entitlements, such as, Medicare and Social Security, and excluding this year’s $665 billion current account deficit, our national debt is equal to about 70% of our total GDP.
The Snowman: “The U.S. is dealing with its deficit.”
Boston is planning steep property tax increases.
Jim Rogers created the Rogers International Commodity Index in 1997 and 1998. It consists of 35 globally traded commodities based on the cost of doing business worldwide and on liquidity. Since Jan. 1, 2004, the Index has increased by approximately 19%. Since Rogers created the Index on August 1, 1998, it has increased by approximately 185%.
The Chicago Mercantile Exchange is the largest U.S. futures exchange. Yesterday a new volume record was set for total foreign exchange futures contracts with 625,912 contracts with a worth of $72.1 billion in notional value. Yesterday volume contract records were set in the yen, Mexican peso, pound, Swiss francs, and Australian dollar.
Yesterday the Bank of Canada kept interest rates unchanged and today the Reserve Bank of Australia kept its lending rates unchanged. When Britain, New Zealand, and Sweden’s central bankers meet this week, they are expected to keep rates unchanged. Only the Fed is expected to raise rates next week.
Later this week, GM will launch a new incentives program called “GM Red Tag Sale.” Last month’s promotion did not prevent a 13% drop in U.S. sales. Maybe they should consider dropping their prices and then giving an incentive on top of that.
In November, total OPEC crude production fell 480,000 barrels per day to 29.82 barrels per day, according to a Platts survey.
The IBD/TIPP Economic Optimism Index fell 0.6 point to 54.5 in December. It was the second straight monthly decline. The index is made up of three key components and all three declined in December--- the six-month economic outlook, the personal financial outlook, and the confidence in federal economic policies.
AOL is cutting 750 jobs. Hamilton Sunstrand will close its electronic manufacturing facility in Farmington, Conn. next Monday, and about 290 employees will lose their jobs.
According to Challenger, Gray, & Christmas, U.S. corporations announced plans to eliminate 104,530 jobs in November, the third month in a row that planned layoffs exceeded 100,000. Announced plans in November rose 2,6% from October’s level, and importantly, they were up 5.1% from November 2003’s 99,452. It is the first time since early 2002 that layoffs were above 100,000 for three months in a row. If you think this is a soft patch, then you need to get a government job.
The BLS announced revised productivity for the third quarter of 2004. The figures were a rise of 1.8% in the nonfarm sector and 2.4% in the business sector. I guess workers have grown tired of busting their asses only to see their wages go down year by year. Can you blame them? When do the workers get a bigger share of the pie?
According to Global IT Services Report, recent revenue growth among large and mid-sized IT services firms may be short-lived. They find evidence of a brief fall-off in IT services revenue growth in the beginning of 2005 before a recovery sometime in the second quarter. They maintain that growth is likely to continue its choppy pattern as unevenness in bookings persists over the course of 2005.
Yesterday Dell began work on its new campus in Hyderabad, India. It will start operations in March next year, and it will house Dell’s call center.
According to the International Council of Shopping Centers, retail chain store sales declined by 1.7% for the week ending December 4. For December, ICSC expects sales to grow by 3.5% to 4% on a year-over-year basis.
Gartner expects enterprise spending on information communications and technology in India to grow at a 16.6% rate in 2005 as compared to Asia Pacific growth at 7.8% next year.
This may come as a big surprise but Wal-Mart has begun to think outside the box. The company’s new stores will not look all the same. They will no longer be standard blue and gray rectangles. The big box designs will become community-friendly designs and the individual community will have a say in that design. City planners have taken to the new approach, and shoppers should also appreciate the effort.
Nobel Laureate Edward Prescott: “I don’t know why the Chinese are subsidizing the Americans so much, holding all this American debt that pays very, very low interest rates. It’s ridiculous for them to hold too much. It’s not in the interest of the Chinese people.” Maybe they need to acknowledge reality risk.
Although crude declined to a three- month low of $41.47 a barrel yesterday, the market still managed to have six stocks decline for every one that rose on the New York Stock Exchange. Maybe the price of crude doesn’t count any more just as some say deficits don’t matter. Next week these same pundits will state that five consecutive Fed interest rate hikes don’t count.
Charles Tremper: “The first step in the risk management process is to acknowledge the reality risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning.”
Excluding the $2 trillion cost of partially privatizing the Social Security system, excluding $42 trillion of unfunded obligations on entitlements, such as, Medicare and Social Security, and excluding this year’s $665 billion current account deficit, our national debt is equal to about 70% of our total GDP.
The Snowman: “The U.S. is dealing with its deficit.”
Boston is planning steep property tax increases.
Jim Rogers created the Rogers International Commodity Index in 1997 and 1998. It consists of 35 globally traded commodities based on the cost of doing business worldwide and on liquidity. Since Jan. 1, 2004, the Index has increased by approximately 19%. Since Rogers created the Index on August 1, 1998, it has increased by approximately 185%.
The Chicago Mercantile Exchange is the largest U.S. futures exchange. Yesterday a new volume record was set for total foreign exchange futures contracts with 625,912 contracts with a worth of $72.1 billion in notional value. Yesterday volume contract records were set in the yen, Mexican peso, pound, Swiss francs, and Australian dollar.
Yesterday the Bank of Canada kept interest rates unchanged and today the Reserve Bank of Australia kept its lending rates unchanged. When Britain, New Zealand, and Sweden’s central bankers meet this week, they are expected to keep rates unchanged. Only the Fed is expected to raise rates next week.
Later this week, GM will launch a new incentives program called “GM Red Tag Sale.” Last month’s promotion did not prevent a 13% drop in U.S. sales. Maybe they should consider dropping their prices and then giving an incentive on top of that.
In November, total OPEC crude production fell 480,000 barrels per day to 29.82 barrels per day, according to a Platts survey.
The IBD/TIPP Economic Optimism Index fell 0.6 point to 54.5 in December. It was the second straight monthly decline. The index is made up of three key components and all three declined in December--- the six-month economic outlook, the personal financial outlook, and the confidence in federal economic policies.
AOL is cutting 750 jobs. Hamilton Sunstrand will close its electronic manufacturing facility in Farmington, Conn. next Monday, and about 290 employees will lose their jobs.
According to Challenger, Gray, & Christmas, U.S. corporations announced plans to eliminate 104,530 jobs in November, the third month in a row that planned layoffs exceeded 100,000. Announced plans in November rose 2,6% from October’s level, and importantly, they were up 5.1% from November 2003’s 99,452. It is the first time since early 2002 that layoffs were above 100,000 for three months in a row. If you think this is a soft patch, then you need to get a government job.
The BLS announced revised productivity for the third quarter of 2004. The figures were a rise of 1.8% in the nonfarm sector and 2.4% in the business sector. I guess workers have grown tired of busting their asses only to see their wages go down year by year. Can you blame them? When do the workers get a bigger share of the pie?
According to Global IT Services Report, recent revenue growth among large and mid-sized IT services firms may be short-lived. They find evidence of a brief fall-off in IT services revenue growth in the beginning of 2005 before a recovery sometime in the second quarter. They maintain that growth is likely to continue its choppy pattern as unevenness in bookings persists over the course of 2005.
Yesterday Dell began work on its new campus in Hyderabad, India. It will start operations in March next year, and it will house Dell’s call center.
According to the International Council of Shopping Centers, retail chain store sales declined by 1.7% for the week ending December 4. For December, ICSC expects sales to grow by 3.5% to 4% on a year-over-year basis.
Gartner expects enterprise spending on information communications and technology in India to grow at a 16.6% rate in 2005 as compared to Asia Pacific growth at 7.8% next year.
This may come as a big surprise but Wal-Mart has begun to think outside the box. The company’s new stores will not look all the same. They will no longer be standard blue and gray rectangles. The big box designs will become community-friendly designs and the individual community will have a say in that design. City planners have taken to the new approach, and shoppers should also appreciate the effort.
Nobel Laureate Edward Prescott: “I don’t know why the Chinese are subsidizing the Americans so much, holding all this American debt that pays very, very low interest rates. It’s ridiculous for them to hold too much. It’s not in the interest of the Chinese people.” Maybe they need to acknowledge reality risk.
Although crude declined to a three- month low of $41.47 a barrel yesterday, the market still managed to have six stocks decline for every one that rose on the New York Stock Exchange. Maybe the price of crude doesn’t count any more just as some say deficits don’t matter. Next week these same pundits will state that five consecutive Fed interest rate hikes don’t count.
Tuesday, December 07, 2004
12/7/04 Intelligence Overhaul
Maybe it’s the case of the holiday blues, but Pimco’s Bill Gross has questioned the U.S. triple-A bond rating. You might remember that over one year ago I too raised this point.
Napoleon Hill: “Accurate thinkers permit no one to do their thinking for them.”
Talking about accurate thinkers, Marc Faber, in a recent speech, offered a few thoughts: “we are at the highest level of consumption as a percentage of the economy ever…what we have is all the spending in the United States, but production and investment and capital formation in China…today foreigners have assets in the U.S. equivalent to $9 trillion and Americans have assets in foreign countries equivalent to $6 trillion which is a negative net asset balance of around $3 trillion…the Japanese market cap is 9% of total market cap in the world. The U.S. is 52% and the rest of Asia is 3.5%. So for 12.5% you get the whole of Asia’s 3.6 billion people with the fastest growing economies of China, Vietnam, and India but for the U.S. you have to pay 52% for a country that is economically doomed.”
Merrill Lynch points out that corporate Japan has budgeted for a yen to dollar rate of 106.5 in the fiscal year to March 2005. The rate averaged 109.7 in the first six months, and it presently is about 103. If the average were to be 103 until March 2005, the target would be hit for the year. Hence, there is no need for Japan to presently intervene in the currency market.
According to the Holiday eSpending report, online consumers spent $8.8 billion in November 2004, up 19% from the prior November.
The Chicago Fed estimates U.S. GDP growth to slow to 3.3%, and forecasts the average price of crude for 2005 at $43.24 a barrel and an inflation rate at 2.4%. Meanwhile, according to the Bank of America Capital Annual CFO Outlook, 63% of CFOs expect their product pricing to increase in 2005 compared to only 37% last year. It will be interesting to see the pricing power of corporations as China continues to export deflating prices. I say that net margins will take it on the chin for 2005.
Michael D. Stephens: “Imagine believing in the control of inflation by curbing the money supply! That is like deciding to stop your dog fouling the sidewalk by plugging up its rear end. It is highly unlikely to succeed, but if it does it kills the hound.”
According to the AARP, drug prices used by older Americans rose 7.4% for the year ended September 2004; however, quarterly drug prices rose an average of 0.5%, and this compares with 1.8% in the year-ago period.
J&J is in talks to buy Guidant.
The Financial Times reports that OPEC is trying to “protect its purchasing power” and is sharply reducing its dollar exposure. I have written repeatedly that OPEC receives dollars for their oil, and therefore, the ongoing decline of our currency is hurting their profit picture. This dollar flight can only get worse over time. Meanwhile, the dollar fell to new lows versus the euro and the pound.
Colgate will cut 12% of its workforce. Concord Camera will layoff 1,700 workers. Interstate Bakeries is closing its Florence, SC plant and the company will cut about 200 employees. Neuvant Aerospace is cutting 207 jobs. The BBC is cutting 2,900 jobs. Credit Suisse will layoff between 200 and 300 workers. These are not visions of sugar plums.
John Hussman: “The entire expansion in U.S. gross domestic investment since the mid-1990s has been financed not by domestic saving, but by an import of foreign capital. There’s your trouble.” If countries are cutting their exposure to the dollar and reducing the rate of savings flowing into our capital markets, then what is the future for our interest rates and our gross domestic investment? Adhering to liquidity and very limited duration of debt holdings will win the day.
Warren Buffett: “You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right—that’s the only thing that makes you right.”
Marc Faber said it best when he observed “by the way the apostles of the new economy are right, the U.S. has a new economy, it resembles Mexico and Brazil.”
Maybe it’s the case of the holiday blues, but Pimco’s Bill Gross has questioned the U.S. triple-A bond rating. You might remember that over one year ago I too raised this point.
Napoleon Hill: “Accurate thinkers permit no one to do their thinking for them.”
Talking about accurate thinkers, Marc Faber, in a recent speech, offered a few thoughts: “we are at the highest level of consumption as a percentage of the economy ever…what we have is all the spending in the United States, but production and investment and capital formation in China…today foreigners have assets in the U.S. equivalent to $9 trillion and Americans have assets in foreign countries equivalent to $6 trillion which is a negative net asset balance of around $3 trillion…the Japanese market cap is 9% of total market cap in the world. The U.S. is 52% and the rest of Asia is 3.5%. So for 12.5% you get the whole of Asia’s 3.6 billion people with the fastest growing economies of China, Vietnam, and India but for the U.S. you have to pay 52% for a country that is economically doomed.”
Merrill Lynch points out that corporate Japan has budgeted for a yen to dollar rate of 106.5 in the fiscal year to March 2005. The rate averaged 109.7 in the first six months, and it presently is about 103. If the average were to be 103 until March 2005, the target would be hit for the year. Hence, there is no need for Japan to presently intervene in the currency market.
According to the Holiday eSpending report, online consumers spent $8.8 billion in November 2004, up 19% from the prior November.
The Chicago Fed estimates U.S. GDP growth to slow to 3.3%, and forecasts the average price of crude for 2005 at $43.24 a barrel and an inflation rate at 2.4%. Meanwhile, according to the Bank of America Capital Annual CFO Outlook, 63% of CFOs expect their product pricing to increase in 2005 compared to only 37% last year. It will be interesting to see the pricing power of corporations as China continues to export deflating prices. I say that net margins will take it on the chin for 2005.
Michael D. Stephens: “Imagine believing in the control of inflation by curbing the money supply! That is like deciding to stop your dog fouling the sidewalk by plugging up its rear end. It is highly unlikely to succeed, but if it does it kills the hound.”
According to the AARP, drug prices used by older Americans rose 7.4% for the year ended September 2004; however, quarterly drug prices rose an average of 0.5%, and this compares with 1.8% in the year-ago period.
J&J is in talks to buy Guidant.
The Financial Times reports that OPEC is trying to “protect its purchasing power” and is sharply reducing its dollar exposure. I have written repeatedly that OPEC receives dollars for their oil, and therefore, the ongoing decline of our currency is hurting their profit picture. This dollar flight can only get worse over time. Meanwhile, the dollar fell to new lows versus the euro and the pound.
Colgate will cut 12% of its workforce. Concord Camera will layoff 1,700 workers. Interstate Bakeries is closing its Florence, SC plant and the company will cut about 200 employees. Neuvant Aerospace is cutting 207 jobs. The BBC is cutting 2,900 jobs. Credit Suisse will layoff between 200 and 300 workers. These are not visions of sugar plums.
John Hussman: “The entire expansion in U.S. gross domestic investment since the mid-1990s has been financed not by domestic saving, but by an import of foreign capital. There’s your trouble.” If countries are cutting their exposure to the dollar and reducing the rate of savings flowing into our capital markets, then what is the future for our interest rates and our gross domestic investment? Adhering to liquidity and very limited duration of debt holdings will win the day.
Warren Buffett: “You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right—that’s the only thing that makes you right.”
Marc Faber said it best when he observed “by the way the apostles of the new economy are right, the U.S. has a new economy, it resembles Mexico and Brazil.”
Monday, December 06, 2004
12/6/04 Cashouts, Equity Lines Of Credit, Subprime Mortgage Loans, & 0 Down Loans
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
12/6/04 Cashouts, Equity Lines Of Credit, Subprime Mortgage Loans, & 0 Down Loans
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
12/6/04 Cashouts, Equity Lines Of Credit, Subprime Mortgage Loans, & 0 Down Loans
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
12/6/04 Cashouts, Equity Lines Of Credit, Subprime Mortgage Loans, & 0 Down Loans
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
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