2/25/06 GM
Almost every analyst following GM has a sell recommendation on the shares, which closed at $20 on Friday. As is frequently the case, they are wrong in their assessment. The market capitalization of the stock has not fallen below the value that will achieved in the sale of GMAC, and that sale could be announced any day. The pending Delphi work stoppage will be settled prior to the March 31 deadline. GM is gaining market share with its new vehicles. February sales will be announced on Wednesday. I expect them to be stronger than the most optimistic forecast.The Chevy HHR, Buick Lucerne, Chevy Impala, and the new SUVs have been received extremely well.
When investing, it is vital to consider the risk/reward. In the case og GM shares, I believe they offer the best rewrad with the smallest downside risk of all the stocks in the Dow. In addition, there is always the possibility of another tender offer by Kirk Kerkorian. If I were he, that's what I would be doing on Monday morning. His upside far outweighs the downside.
Saturday, February 25, 2006
Thursday, February 23, 2006
Employment
2/24/06 Employment
Wal-Mart will expand coverage for workers and build more than 50 health clinics in its stores.
The company will allow more workers to become eligible for the lowest cost health plan, cut the waiting period for part-timers and allow their children to be covered. Wal-Mart will more than quadruple the number of clinics after opening nine in Arkansas, Oklahoma, Florida and Indiana in a pilot program.
The Conference Board Help-Wanted Advertising Index
dipped one point in January. The Index now stands at 37. It was 42 one year ago.
Says Ken Goldstein, labor economist at The Conference Board: "Economic
growth may be picking up in the first quarter but the labor market indicators
aren't showing much improvement through January. The economy only generated
about 195,000 new jobs in January. Online ad volume did recover from a
seasonal-related downturn but was no higher in January than in August. Print
ad volume (which is seasonally adjusted) edged down in January. Initial
unemployment claims improved in January but there is a question about how much
of a role the warm weather played. The JOLTS data (Job Opening and Labor
Turnover) remained relatively flat through December. Finally, consumer
sentiment about job prospects over the next six months dipped in January.
Thus, not only are the indicators suggesting modest gains in hiring, but
consumers also do not think more new jobs will start opening up this spring.
All of these data are consistent with readings from the Coincident Economic
Index, which reflected moderate economic growth through January."
Online job ads rebounded sharply in January to 2,162,000 new unduplicated
online job ads posted for the calendar month, according to The Conference
Board Help-Wanted OnLine Data Series(TM). The January total was up 529,000,
an increase of one-third from the December low. January's total was only
slightly higher than the August 2005 monthly peak of 2,131,000. In January,
there were 1.44 online job ads per 100 persons in the U.S. labor force,
compared to 1.09 in December and 1.21 in November.
Initial jobless claims dropped by 20,000 last week to
278,000, the Labor Department said today in Washington.
Continuing claims, which measure how many people remain on
benefit rolls, rose to 2.495 million from 2.454 million, which
was the lowest since February 2001.
Wal-Mart will expand coverage for workers and build more than 50 health clinics in its stores.
The company will allow more workers to become eligible for the lowest cost health plan, cut the waiting period for part-timers and allow their children to be covered. Wal-Mart will more than quadruple the number of clinics after opening nine in Arkansas, Oklahoma, Florida and Indiana in a pilot program.
The Conference Board Help-Wanted Advertising Index
dipped one point in January. The Index now stands at 37. It was 42 one year ago.
Says Ken Goldstein, labor economist at The Conference Board: "Economic
growth may be picking up in the first quarter but the labor market indicators
aren't showing much improvement through January. The economy only generated
about 195,000 new jobs in January. Online ad volume did recover from a
seasonal-related downturn but was no higher in January than in August. Print
ad volume (which is seasonally adjusted) edged down in January. Initial
unemployment claims improved in January but there is a question about how much
of a role the warm weather played. The JOLTS data (Job Opening and Labor
Turnover) remained relatively flat through December. Finally, consumer
sentiment about job prospects over the next six months dipped in January.
Thus, not only are the indicators suggesting modest gains in hiring, but
consumers also do not think more new jobs will start opening up this spring.
All of these data are consistent with readings from the Coincident Economic
Index, which reflected moderate economic growth through January."
Online job ads rebounded sharply in January to 2,162,000 new unduplicated
online job ads posted for the calendar month, according to The Conference
Board Help-Wanted OnLine Data Series(TM). The January total was up 529,000,
an increase of one-third from the December low. January's total was only
slightly higher than the August 2005 monthly peak of 2,131,000. In January,
there were 1.44 online job ads per 100 persons in the U.S. labor force,
compared to 1.09 in December and 1.21 in November.
Initial jobless claims dropped by 20,000 last week to
278,000, the Labor Department said today in Washington.
Continuing claims, which measure how many people remain on
benefit rolls, rose to 2.495 million from 2.454 million, which
was the lowest since February 2001.
Average incomes after adjusting for inflation actually fell from 2001 to 2004, and the growth in net worth was the weakest in a decade, the Federal Reserve reported Thursday.
A senior Dubai Ports executive, Edward H. Bilkey, said the company will move forward with its $6.8 billion purchase of London-based Peninsular & Oriental Steam Navigation Co., which operates in 18 countries; however, Dubai Ports agreed to temporarily segregate the company's U.S. operations, Bilkey expressed bewilderment over the security concerns expressed in Congress.
"The reaction in the United States has occurred in no other country in the world," Bilkey said. "We need to understand the concerns of the people in the U.S. who are worried about this transaction and make sure that they are addressed to the benefit of all parties."
Wednesday, February 22, 2006
Wages And Inflation
2/23/06 Wages And Inflation
The 0.7 percent increase in the January consumer price index followed a 0.1 percent decline in December, the Labor Department said. Excluding food and energy, so-called core prices rose 0.2 percent after a 0.1 percent December gain.
Economists expected a 0.5 percent increase in the consumer price index, based on the median of 68 forecasts in a Bloomberg News survey. Forecasts ranged from increases of 0.2 percent to 0.6 percent. Core prices were forecast to rise 0.2 percent.
Consumer prices were up 4 percent for the 12 months ended in January compared with a 3.4 percent year-over-year gain the previous month. Core prices were 2.1 percent higher compared with a 2.2 percent year-over-year increase in December.
Weekly earnings of workers, adjusted for inflation, fell 0.2 percent in January and were down 0.4 percent in the last 12 months, the Labor Department said. Energy prices rose 5 percent in January, the most since September, after falling 2.1 percent a month earlier. Fuel costs were up 25 percent in the last 12 months. Gasoline prices rose 6.4 percent in January and natural gas costs increased 1.7 percent. Electricity costs rose 5.5 percent, the most ever.
Food prices, which account for about a fifth of the index, rose 0.5 percent in January, the most since April, after rising 0.1 percent. Last month's gain was led by higher prices for fruits and vegetables.
The cost of all goods including cars, apparel and food rose 0.9 percent last month after falling 0.3 percent in December. Goods prices are 3.8 higher than in January 2005. New car prices rose 0.6 percent last month, the most in a year, and the cost of clothing increased 0.3 percent.
Service prices rose 0.5 percent last month and are up 4.1 percent over the last year.
The 0.7 percent increase in the January consumer price index followed a 0.1 percent decline in December, the Labor Department said. Excluding food and energy, so-called core prices rose 0.2 percent after a 0.1 percent December gain.
Economists expected a 0.5 percent increase in the consumer price index, based on the median of 68 forecasts in a Bloomberg News survey. Forecasts ranged from increases of 0.2 percent to 0.6 percent. Core prices were forecast to rise 0.2 percent.
Consumer prices were up 4 percent for the 12 months ended in January compared with a 3.4 percent year-over-year gain the previous month. Core prices were 2.1 percent higher compared with a 2.2 percent year-over-year increase in December.
Weekly earnings of workers, adjusted for inflation, fell 0.2 percent in January and were down 0.4 percent in the last 12 months, the Labor Department said. Energy prices rose 5 percent in January, the most since September, after falling 2.1 percent a month earlier. Fuel costs were up 25 percent in the last 12 months. Gasoline prices rose 6.4 percent in January and natural gas costs increased 1.7 percent. Electricity costs rose 5.5 percent, the most ever.
Food prices, which account for about a fifth of the index, rose 0.5 percent in January, the most since April, after rising 0.1 percent. Last month's gain was led by higher prices for fruits and vegetables.
The cost of all goods including cars, apparel and food rose 0.9 percent last month after falling 0.3 percent in December. Goods prices are 3.8 higher than in January 2005. New car prices rose 0.6 percent last month, the most in a year, and the cost of clothing increased 0.3 percent.
Service prices rose 0.5 percent last month and are up 4.1 percent over the last year.
Average weekly earnings rose by 3.6 percent, seasonally adjusted, from
January 2005 to January 2006. After deflation by the CPI-W, average weekly
earnings decreased by 0.4 percent. Month after month I continue to report that
wages trail inflation. How can the economy be considered healthy with this
ongoing trend?
Toll Brothers is looking for earnings per share between $4.77 and $5.26, and this
suggests only a mild slowdown in the housing market growth. The last few days some
of the homebuilders have seen their stocks rebound nicely. When everyone is
convinced there is a sharp downturn on the way, almost always the crowd is
mistaken in judgment.
Bush: "It's true that a number of Americans have lost jobs because companies
have shifted operations to India," he said in a speech previewing his
trip to India and Pakistan next week. "We must also recognize that
India's growth is creating new opportunities for our businesses and
farmers and workers."
Sprint Nextel cut 2,400 jobs.
Japan's trade deficit was the highest in 25 years.
Christopher Laird: "
The Japanese economy is strengthening enough to cause an unwinding of the massive YEN carry trade. The last time this happened, there was the LTCM collapse.
Japan has had enough economic growth these last quarters, in production growth and consumer spending, that the BOJ may well end the policy of zero interest rates in Japan.
That zero rate interest policy has lasted about ten years, and is the first source of the liquidity bubbles world wide, and is very much a part of the liquidity bubbles here in the US. Once the BOJ starts to raise interest rates in Japan, the Yen carry trade will start to unwind.
The Yen carry mechanism is to borrow Yen at virtually zero rates, and then to purchase US treasuries at about a 3% interest rate gain net. There are literally trillions USD of yen carry trade positions scattered amongst hedge funds, insurance companies, and mutual funds. The phenomena is so widespread and has gone on so long, that the BOJ and even the BIS does not have data on the known net amount of YEN carry trade floating out there in the world. The result is that the effects of an unwinding of the Yen carry trade are unknown, but are sure to be very negative."
Richard Daughty: "Of course, I could not let it pass without a snide and sneering comment that
the Treasury Department of the United States has now, illegally, put us $64
billion dollars farther in debt, in just a couple of weeks, than is authorized
by law! As aghast as that makes me, I can only imagine with horror what foreign
creditors make of this terrifying development, now that the damned Treasury
Department has proved to the world that laws mean nothing to it, nor to the
executive branch, nor to the legislative branch, who all sit there watching
and doing nothing."
What's New
2/22/06 What's New
General Motors Corp.'s U.S. retail sales fell 1% in the first 12 days of February, while vehicle sales by all automakers fell 8%, a study released Tuesday shows. GM increased its share of the U.S. retail market to 21.8% from 20.3% the year before, said the study by the Power Information Network, a unit of J.D. Power & Associates of Westlake Village, Ca.
A closely watched gauge of future economic activity rose sharply in January, suggesting the nation's economy could see robust growth in the spring. The Conference Board said its Index of Leading Economic Indicators, a measure of the economy's well-being in the near term, rose 1.1% last month, following a 0.3% increase in December.
Honda Motor Co. increased its U.S. retail sales 4% and was the only major automaker to have a sales gain during the first 12 days of Feb. Retail sales for Ford Motor Co. fell 23%, while sales by DaimlerChrysler AG's Chrysler Group fell 16%. Toyota Motor Corp.'s sales fell 1% and Nissan Motor Co.'s sales fell 7%.
Keith Myers, a fellow at London-based think tank Chatham House: "For oil-rich countries with few people, the benefits are enormous," pointing to rapidly modernizing Middle Eastern nations such as Qatar and the United Arab Emirates. "For those with less oil but a huge population, such as Nigeria, it is a very different story." Nigeria's oil wealth does not trickle down.
Record prices are being paid for oilsands leases in Alberta. Three auctions in 2006 have exceeded the total paid in all of 2005.
General Motors Corp.'s U.S. retail sales fell 1% in the first 12 days of February, while vehicle sales by all automakers fell 8%, a study released Tuesday shows. GM increased its share of the U.S. retail market to 21.8% from 20.3% the year before, said the study by the Power Information Network, a unit of J.D. Power & Associates of Westlake Village, Ca.
A closely watched gauge of future economic activity rose sharply in January, suggesting the nation's economy could see robust growth in the spring. The Conference Board said its Index of Leading Economic Indicators, a measure of the economy's well-being in the near term, rose 1.1% last month, following a 0.3% increase in December.
Honda Motor Co. increased its U.S. retail sales 4% and was the only major automaker to have a sales gain during the first 12 days of Feb. Retail sales for Ford Motor Co. fell 23%, while sales by DaimlerChrysler AG's Chrysler Group fell 16%. Toyota Motor Corp.'s sales fell 1% and Nissan Motor Co.'s sales fell 7%.
Keith Myers, a fellow at London-based think tank Chatham House: "For oil-rich countries with few people, the benefits are enormous," pointing to rapidly modernizing Middle Eastern nations such as Qatar and the United Arab Emirates. "For those with less oil but a huge population, such as Nigeria, it is a very different story." Nigeria's oil wealth does not trickle down.
Record prices are being paid for oilsands leases in Alberta. Three auctions in 2006 have exceeded the total paid in all of 2005.
Tuesday, February 21, 2006
Wal-Mart
2/21/06 Wal-Mart
Net sales for the fiscal year ended January 31, 2006, were $312.4 billion,
an increase of 9.5 percent over fiscal 2005. Net income for fiscal 2006
increased 9.4 percent to a record $11.2 billion, up from $10.3 billion in
fiscal 2005. Earnings per share for fiscal 2006 were $2.68, up from $2.41 in
fiscal 2005.
"We're pleased our trend of year-over-year increases in sales and net
income continues," said Wal-Mart Stores President and Chief Executive Officer
Lee Scott. "We added more than $7 billion in sales in the quarter and ended
the year strong."
Scott said he is optimistic about the year as he anticipates positive
results from the company's business strategies to improve the customer
experience.
"Our entire management team is dedicated to growing sales by making our
stores more relevant to today's customers," Scott explained. "We want our
merchandise to appeal to a broad range of customers who are already shopping
our stores. We want customers to shop Wal-Mart for all their needs, from
consumables to electronics, home decor and apparel."
Scott estimated that earnings for this year will be in the $2.88-$2.95 range.
Wall Street estimates are about 2 cents higher; however, it should be noted that,
over the past four quarters, the company exceeded estimates. In my view,
from a valuation standpoint, this is the cheapest the shares have been in years.
John Hussman: "
The key skill required for good investing, in my view, is the willingness to abandon the specific in favor of the average. That means abandoning the attempt to find one or two “special” and unique stocks, and instead applying a careful stock-selection discipline in order to create a whole portfolio with certain “average” characteristics of valuation, market action, financial strength, and so forth. It also means abandoning the attempt to forecast the market's direction over some specific period ahead, and instead aligning the investment position with the “average” return/risk profile that stocks have experienced when historical market conditions have matched prevailing ones.
So winning depends on a specific skill that might not be immediately obvious. That skill is the willingness to focus on average outcomes, and to ignore specific ones. It's a quality that's commonly called “patience,” and it's rewarding precisely because it is rare."
Sunday, February 19, 2006
Bird Flu
2/20/06 Bird Flu
Spreading bird flu will be a major topic of debate during a meeting of EU farm ministers in Brussels today. It is difficult at best to assess the current potential danger of bird flu. My instinct tells me the danger is greater than I had originally thought. It doesn’t keep me up at night; however, I am researching the problem a great deal more.
India began the slaughter of half a million chickens Sunday, as Health Ministry officials investigated the death of a poultry farm owner from the country's first suspected case of bird flu. Some 50,000 poultry are reported to have died from the infection in recent days in the western state of Maharashtra. Officials were also testing for the H5N1 strain in India's most populous state, Uttar Pradesh, after 1,400 birds died at a farm there.
McDonald's acknowledged that wheat and dairy ingredients are indeed used to flavor their french fries. The company had previously denied the claims.
Winter has finally arrived in most sectors of the nation. We'll get a look at the amount of natural gas used during this cold spell.
If intelligence is fabricated, does that mean the intelligence is faulty? Maybe the fabrication was professionally done.
Spreading bird flu will be a major topic of debate during a meeting of EU farm ministers in Brussels today. It is difficult at best to assess the current potential danger of bird flu. My instinct tells me the danger is greater than I had originally thought. It doesn’t keep me up at night; however, I am researching the problem a great deal more.
India began the slaughter of half a million chickens Sunday, as Health Ministry officials investigated the death of a poultry farm owner from the country's first suspected case of bird flu. Some 50,000 poultry are reported to have died from the infection in recent days in the western state of Maharashtra. Officials were also testing for the H5N1 strain in India's most populous state, Uttar Pradesh, after 1,400 birds died at a farm there.
McDonald's acknowledged that wheat and dairy ingredients are indeed used to flavor their french fries. The company had previously denied the claims.
Winter has finally arrived in most sectors of the nation. We'll get a look at the amount of natural gas used during this cold spell.
If intelligence is fabricated, does that mean the intelligence is faulty? Maybe the fabrication was professionally done.
Recurring Themes
2/19/06 Recurring Themes
Royal Dutch Shell suspended exports from the 380,000 barrel-a-day Forcados terminal on Saturday after militants bombed the tanker loading platform, a senior oil industry source said. Nigeria is the world's eighth largest oil exporter and normally pumps about 2.4 million barrels per day.
The median Bay Area home price crested at $225,000 in January 1990, then dipped as low as $205,000 -- almost 9 percent -- before climbing to $229,000 in the middle of May 1996, according to DataQuick. Job levels in the Bay Area have not returned to their lofty Nasdaq-era heights; however, the region is expected to add 40,000 new jobs this year and 55,000 in 2007. "Nothing leads to big declines in house prices except job destruction," said John Krainer, economist at the Federal Reserve Bank of San Francisco.
"We would have had a (housing) correction in 2001, 2002 and 2003 if interest rates hadn't been cut as they were," said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley. Last year, about half of Bay Area home buyers took out interest-only loans, according to San Francisco's LoanPerformance.com.
According to the California Association of Realtors, only 12 percent of Bay Area households can afford the median-priced home.
According to DataQuick, the typical Bay Area home buyer committed to a monthly mortgage payment of $2,867 in December. Meanwhile, the average apartment rent in the region in the fourth quarter was just over $1,324, according to RealFacts. "There's a disconnect between the fundamental value of the asset and the value the market is producing," said Ed Leamer, director of the prestigious Anderson Forecast at UCLA. "It's just like the dot-com period."
According to Mike Burk, the last 6 trading days in February during the 2nd year of the Presidential Cycle years (NASDAQ composite (OTC) data runs from 1963 to the present and S&P 500 (SPX) data runs from 1928 to the present) has a positive bias to the period.
Each day one can find numerous articles on risk, reward, greed, hedging, investor psychology and the like. For me, it’s best to keep it simple: sell to the sleeping point.
In other words, if your positions are keeping you up at night, lighten the positions until you can sleep.
For Bentonville, Ark.-based Wal-Mart, its own Utah bank would save it about $30 million a year, according to Sen. Bennett. Wal-Mart has said only it would save "millions" annually by processing in-house some 140 million debit, credit and electronic transactions from its stores each month.
"It's about debit, credit and check processing only," said Wal-Mart Financial Services President Jane Thompson. "It's not a bank any consumer will see. It would be in an upstairs office in Utah and the money we save is money we'll use to lower prices."
Wal-Mart's ILC, however, would offer certificates of deposit to non-profits, its FDIC filing shows. The fact is Target already has an ILC. GM has an ILC. Why shouldn’t
Wal-Mart? What’s fair for the goose is fair for the gander.
Royal Dutch Shell suspended exports from the 380,000 barrel-a-day Forcados terminal on Saturday after militants bombed the tanker loading platform, a senior oil industry source said. Nigeria is the world's eighth largest oil exporter and normally pumps about 2.4 million barrels per day.
The median Bay Area home price crested at $225,000 in January 1990, then dipped as low as $205,000 -- almost 9 percent -- before climbing to $229,000 in the middle of May 1996, according to DataQuick. Job levels in the Bay Area have not returned to their lofty Nasdaq-era heights; however, the region is expected to add 40,000 new jobs this year and 55,000 in 2007. "Nothing leads to big declines in house prices except job destruction," said John Krainer, economist at the Federal Reserve Bank of San Francisco.
"We would have had a (housing) correction in 2001, 2002 and 2003 if interest rates hadn't been cut as they were," said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley. Last year, about half of Bay Area home buyers took out interest-only loans, according to San Francisco's LoanPerformance.com.
According to the California Association of Realtors, only 12 percent of Bay Area households can afford the median-priced home.
According to DataQuick, the typical Bay Area home buyer committed to a monthly mortgage payment of $2,867 in December. Meanwhile, the average apartment rent in the region in the fourth quarter was just over $1,324, according to RealFacts. "There's a disconnect between the fundamental value of the asset and the value the market is producing," said Ed Leamer, director of the prestigious Anderson Forecast at UCLA. "It's just like the dot-com period."
According to Mike Burk, the last 6 trading days in February during the 2nd year of the Presidential Cycle years (NASDAQ composite (OTC) data runs from 1963 to the present and S&P 500 (SPX) data runs from 1928 to the present) has a positive bias to the period.
Each day one can find numerous articles on risk, reward, greed, hedging, investor psychology and the like. For me, it’s best to keep it simple: sell to the sleeping point.
In other words, if your positions are keeping you up at night, lighten the positions until you can sleep.
For Bentonville, Ark.-based Wal-Mart, its own Utah bank would save it about $30 million a year, according to Sen. Bennett. Wal-Mart has said only it would save "millions" annually by processing in-house some 140 million debit, credit and electronic transactions from its stores each month.
"It's about debit, credit and check processing only," said Wal-Mart Financial Services President Jane Thompson. "It's not a bank any consumer will see. It would be in an upstairs office in Utah and the money we save is money we'll use to lower prices."
Wal-Mart's ILC, however, would offer certificates of deposit to non-profits, its FDIC filing shows. The fact is Target already has an ILC. GM has an ILC. Why shouldn’t
Wal-Mart? What’s fair for the goose is fair for the gander.
Subscribe to:
Posts (Atom)