9/10/03 Outlining Expectations
The U.S. Army Guard and Reservists face extended tours of duty in Iraq and Kuwait, and will be required to serve up to 12 months in their areas of operation. Time spent at U.S. military basese awaiting deployment doesn't count. Lt. Gen. Roger Schultz, director of the U.S. Army National Guard in Washington said yesterday "we didn't do a very good job of outlining expectations, so right in the middle of a mission- a fairly difficult mission- we are changing the rotation policy as it affects Iraqi Freedom."
The S&P 500 has rallied 28% from the March 11 low. Accompanying this increase, come major expectations for increased earnings and enhanced economic visibility. There isn't any room for disappointment. Today, National City, a Cleveland based bank, lowered its financial outlook for 2003 to reflect the adverse impact of the recent rise in long-term rates on its mortgage business. When it comes to revised downward outlooks and rising long-term rates, National City will have plenty of company.
As I predicted back in July, mortgage lenders are cutting jobs. They aren't alone. 3COM will outsource all manufacturing of its computer-networking equipment and eliminate about 1,000 jobs or one-third of its employees.
The IBD/TIPP Economic Optimism Index dropped 2.3 points to 52.5 in September. Raghavan Mayur, president of TIPP, said "we are seeing a broad-based decline in economic confidence in September." He said the average reading of the last recession was 54.3. The six-month economic outlook fell 4.3 points to 51.
A new study reveals workers in employer-sponsored health plans are paying 48% more out of their own pay for medical care than just 3 years ago.
After 21 years at Sun Microsystems and as co-founder, Bill Joy, the Java pioneer, is leaving the company. There is only one Bill Joy. This is like Babe Ruth leaving Boston for New York.
The UAW's 4-year national contract covering 37,000 hourly workers and 522,000 retirees, surviving spouses, and dependents, expires at midnight Sunday. Chrysler wants to outsource "general service operators" or plant janitors, drive down absenteeism, and reduce job classification. Chrysler should also focus on Toyota. In August, Toyota's 3 brands, Tyota, Lexus, and Scion, eclipsed the combined Chrysler, Dodge, and Jeep U.S. monthly sales for the first time.
Monday, September 08, 2003
Posting for Tuesday
9/09/03 Termites In The Woodwork
W.D. Gann, who died in 1955, is well known for his geometric angles. Many professional investors have looked down on Gann as a financial astrologer. Most of these naysayers couldn’t carry his briefcase. I have long appreciated Gann’s emphasis on patience, a healthy mind and body, and the daily thirst for knowledge. He focused on not losing money, and realizing the power of risk and reward as he waited until the risk/reward ratio was 90% in his favor prior to investing. He did not believe in debt, never drank alcohol, and didn’t drink or take drugs. Gann stated “do the opposite of the masses, and you will make money.” He said “the man who looks forward and sees the darkest side and prepares for it is the man who will succeed, and the nation that prepares for the worst will not have to face the worst.”
John Maynard Keynes: “When the facts change, I change my mind. What do you do, sir?”
The equity tension index (EqTI), says Howard Simons, “is based on the premise that a market’s volatility structure and forward curve each convey as much useful trading information as does the price itself.”
Economist William Gale, a senior fellow at the Brookings Institute, stated “the deficit is not the wolf at the door; it’s more the termites in the woodwork.”
Singapore’s Ministry of Health said on Monday that one man’s “initial tests seem to indicate this person has the SARS virus, but we are doing further tests tonight.”
International Atomic Energy Agency chief Mohamed ElBaradei said “no indication of post-1991 weaponization activities was uncovered in Iraq. In the areas of uranium acquisition, concentration and centrifuge enrichment, extensive field investigation and document analysis revealed no evidence that Iraq had resumed such activities.” His experts had withdrawn from Iraq before the war began in March. He said “the agency observed a substantial degradation in facilities, financial resources and programs throughout Iraq that might support a nuclear infrastructure. The former cadre of nuclear experts was being increasingly dispersed and many key figures were reaching retirement or had left the country.” The International Atomic Energy Agency has a 35-nation board of governors. The aforementioned facts place considerable doubt on Iraq’s nuclear terrorist capabilities. I feel confident that our CIA shared the same view and information. It must have been delayed getting to the White House. Movement over the desert sands takes time.
9/09/03 Termites In The Woodwork
W.D. Gann, who died in 1955, is well known for his geometric angles. Many professional investors have looked down on Gann as a financial astrologer. Most of these naysayers couldn’t carry his briefcase. I have long appreciated Gann’s emphasis on patience, a healthy mind and body, and the daily thirst for knowledge. He focused on not losing money, and realizing the power of risk and reward as he waited until the risk/reward ratio was 90% in his favor prior to investing. He did not believe in debt, never drank alcohol, and didn’t drink or take drugs. Gann stated “do the opposite of the masses, and you will make money.” He said “the man who looks forward and sees the darkest side and prepares for it is the man who will succeed, and the nation that prepares for the worst will not have to face the worst.”
John Maynard Keynes: “When the facts change, I change my mind. What do you do, sir?”
The equity tension index (EqTI), says Howard Simons, “is based on the premise that a market’s volatility structure and forward curve each convey as much useful trading information as does the price itself.”
Economist William Gale, a senior fellow at the Brookings Institute, stated “the deficit is not the wolf at the door; it’s more the termites in the woodwork.”
Singapore’s Ministry of Health said on Monday that one man’s “initial tests seem to indicate this person has the SARS virus, but we are doing further tests tonight.”
International Atomic Energy Agency chief Mohamed ElBaradei said “no indication of post-1991 weaponization activities was uncovered in Iraq. In the areas of uranium acquisition, concentration and centrifuge enrichment, extensive field investigation and document analysis revealed no evidence that Iraq had resumed such activities.” His experts had withdrawn from Iraq before the war began in March. He said “the agency observed a substantial degradation in facilities, financial resources and programs throughout Iraq that might support a nuclear infrastructure. The former cadre of nuclear experts was being increasingly dispersed and many key figures were reaching retirement or had left the country.” The International Atomic Energy Agency has a 35-nation board of governors. The aforementioned facts place considerable doubt on Iraq’s nuclear terrorist capabilities. I feel confident that our CIA shared the same view and information. It must have been delayed getting to the White House. Movement over the desert sands takes time.
9/08/03 Shock-And-Awe
The President’s speech last night reflected the shock-and-awe of human sacrifices and mounting costs of the war in Iraq. The American people and the world were told over and over again that the reason for this war was the massive array of WMD. Last night no mention was made of the daily urgent hunt for the WMD, and the lack of success in finding even a small cache of such weapons. Let there be no misunderstanding. I fiercely and proudly bleed red, white, and blue. Unfortunately, that doesn’t mean I support errors of omission. The President stated “we will do whatever is necessary.” I say go to main street and not land on the U.S. Abraham Lincoln. Listen to the words of LT. Gen. Ricardo Sanchez, the commander of U.S. forces in Iraq: “If a militia or an internal conflict of some nature were to erupt, that would pose a challenge…that I do not have sufficient forces for. The coalition lacks sufficient troops to protect Iraq’s porous borders or its thousands of miles of highways.” Obviously, we aren’t doing whatever is necessary to win the “mop-up operation.” Congress had been told that up to $80 billion would be required for the Iraq reconstruction effort. Now the President asks for another $87 billion. It sounds like the CBO forecasting a budget deficit of $167 billion about 10 months ago, and now they estimate the total to be at least $465 billion. These people either don’t know what they’re doing or they provide errors of omission or both. Any way you look at it, they can’t hack it and won’t admit they mishandled the war effort as well as the economy. A new Zogby International poll puts Bush’s approval rating at 54% negative and 45% positive. After last night’s speech, I would imagine the negative factor would increase once again. Winners don’t look to justify failure.
With respect to the Homeland Security department, a White House official who handles homeland-security issues and who asked not to be identified, said “not a lot is getting done at the top of the department, and nobody’s making them focus on it.” Last week two top officials in that department stepped down amidst growing criticism.
President Bush: “The Americans who assume great risks overseas understand the great cause they are in.” As the polls indicate, the people of Great Britain don’t understand this same cause, and they are our only significant partner in Iraq. Despite growing outrage over the country’s participation in Iraq, Britain’s top government officials announced sending 1200 more troops to Iraq.
Larry Ellison: “We saw the zenith in tech jobs around 2001. We saw a point where half of all capital spending was tech. That will never happen again. My industry will never come back. Nor should it. Computer systems are still too expensive. They’re too labor intensive.”
The annual OracleWorld conference opens today in San Francisco. Grid computing will be the center piece of Oracle speak. On Friday the company will announce quarterly results.
The war in Iraq and today’s equity investing have one large commonality- they both lack an exit strategy.
The President’s speech last night reflected the shock-and-awe of human sacrifices and mounting costs of the war in Iraq. The American people and the world were told over and over again that the reason for this war was the massive array of WMD. Last night no mention was made of the daily urgent hunt for the WMD, and the lack of success in finding even a small cache of such weapons. Let there be no misunderstanding. I fiercely and proudly bleed red, white, and blue. Unfortunately, that doesn’t mean I support errors of omission. The President stated “we will do whatever is necessary.” I say go to main street and not land on the U.S. Abraham Lincoln. Listen to the words of LT. Gen. Ricardo Sanchez, the commander of U.S. forces in Iraq: “If a militia or an internal conflict of some nature were to erupt, that would pose a challenge…that I do not have sufficient forces for. The coalition lacks sufficient troops to protect Iraq’s porous borders or its thousands of miles of highways.” Obviously, we aren’t doing whatever is necessary to win the “mop-up operation.” Congress had been told that up to $80 billion would be required for the Iraq reconstruction effort. Now the President asks for another $87 billion. It sounds like the CBO forecasting a budget deficit of $167 billion about 10 months ago, and now they estimate the total to be at least $465 billion. These people either don’t know what they’re doing or they provide errors of omission or both. Any way you look at it, they can’t hack it and won’t admit they mishandled the war effort as well as the economy. A new Zogby International poll puts Bush’s approval rating at 54% negative and 45% positive. After last night’s speech, I would imagine the negative factor would increase once again. Winners don’t look to justify failure.
With respect to the Homeland Security department, a White House official who handles homeland-security issues and who asked not to be identified, said “not a lot is getting done at the top of the department, and nobody’s making them focus on it.” Last week two top officials in that department stepped down amidst growing criticism.
President Bush: “The Americans who assume great risks overseas understand the great cause they are in.” As the polls indicate, the people of Great Britain don’t understand this same cause, and they are our only significant partner in Iraq. Despite growing outrage over the country’s participation in Iraq, Britain’s top government officials announced sending 1200 more troops to Iraq.
Larry Ellison: “We saw the zenith in tech jobs around 2001. We saw a point where half of all capital spending was tech. That will never happen again. My industry will never come back. Nor should it. Computer systems are still too expensive. They’re too labor intensive.”
The annual OracleWorld conference opens today in San Francisco. Grid computing will be the center piece of Oracle speak. On Friday the company will announce quarterly results.
The war in Iraq and today’s equity investing have one large commonality- they both lack an exit strategy.
Sunday, September 07, 2003
9/07/03 The Road Map To Patience
This evening the president will address the nation and outline the progress made in Iraq, and he will ask for more patience to finish the job. Having not seen the speech, I would doubt much time is devoted to a discussion of the WMD, the reason provided for initiating this conflict. I doubt much time will be devoted to the 149 men and women in uniform who have died in Iraq since May 1. In fact, a mention of the wounded may not be forthcoming. On the other hand, Rumsfeld may have given us a clue as to the tenor of the talk when he said yesterday “the Iraqi people are so much better off than four or five months ago.” I wonder if the American people are better off than they were in January, 2001 when Bush was inaugurated. While Bush asks for patience, the city of Santa Cruz is moving in an opposite direction. Their city council will consider Tuesday a measure that, if passed, would give members the go-ahead to send a letter of inquiry to Congress. The Santa Cruz Mayor and Vice Mayor and one councilman have already signed a draft of a letter to members of the House Judiciary Committee asking them whether any of Bush’s conduct equated to an impeachable offense, such as, whether Bush violated international treaties and the U.S. Constitution by invading and occupying Iraq. The Mayor said “we have to know why the Bush administration lied to us about Iraq.”
On Wednesday the World Trade Organization summit is set to open in Cancun, Mexico. The United States has tried to lower expectations about the outcome of the talks. The main problems focus on agricultural subsidies in developed countries and lower tariffs for manufactured products. Adriano Campolina Soares, director of ActionAid Brazil, stated “people think you in the United States are only willing to give peanuts on agricultural concessions but are charging an amazingly enormous price for that, which are the new issues.” These new issues include government procurement, competition, trade facilitation and a new investment agreement to limit governments’ ability to place checks on trade and investment.
Silicon Valley’s Santa Clara County had 864,500 non-farm jobs in July, about the same number as it had 7 ½ years ago in the beginning of 1996. This week analysts raised their earnings estimates for Siebel Systems and Oracle. With revenue growth missing and a job-loss recovery, I think these analysts are out to lunch. These are the same folks who said tech stocks were going to the moon in 1999 and early 2000. I suggest they should be added to the unemployment rolls. Meanwhile, Jim Cunneen, president of the San Jose Silicon Valley Chamber of Commerce, stated “ we won’t have a meaningful recovery until jobs are added.”
China’s central bank said its economic policy units “unanimously think that the bank loans right now are increasing too fast.” Chinese banks lent more money in the first 7 months of 2003 than in all of last year. Standard & Poor’s estimates that borrowers have defaulted on nearly half of all bank loans in China.
This evening the president will address the nation and outline the progress made in Iraq, and he will ask for more patience to finish the job. Having not seen the speech, I would doubt much time is devoted to a discussion of the WMD, the reason provided for initiating this conflict. I doubt much time will be devoted to the 149 men and women in uniform who have died in Iraq since May 1. In fact, a mention of the wounded may not be forthcoming. On the other hand, Rumsfeld may have given us a clue as to the tenor of the talk when he said yesterday “the Iraqi people are so much better off than four or five months ago.” I wonder if the American people are better off than they were in January, 2001 when Bush was inaugurated. While Bush asks for patience, the city of Santa Cruz is moving in an opposite direction. Their city council will consider Tuesday a measure that, if passed, would give members the go-ahead to send a letter of inquiry to Congress. The Santa Cruz Mayor and Vice Mayor and one councilman have already signed a draft of a letter to members of the House Judiciary Committee asking them whether any of Bush’s conduct equated to an impeachable offense, such as, whether Bush violated international treaties and the U.S. Constitution by invading and occupying Iraq. The Mayor said “we have to know why the Bush administration lied to us about Iraq.”
On Wednesday the World Trade Organization summit is set to open in Cancun, Mexico. The United States has tried to lower expectations about the outcome of the talks. The main problems focus on agricultural subsidies in developed countries and lower tariffs for manufactured products. Adriano Campolina Soares, director of ActionAid Brazil, stated “people think you in the United States are only willing to give peanuts on agricultural concessions but are charging an amazingly enormous price for that, which are the new issues.” These new issues include government procurement, competition, trade facilitation and a new investment agreement to limit governments’ ability to place checks on trade and investment.
Silicon Valley’s Santa Clara County had 864,500 non-farm jobs in July, about the same number as it had 7 ½ years ago in the beginning of 1996. This week analysts raised their earnings estimates for Siebel Systems and Oracle. With revenue growth missing and a job-loss recovery, I think these analysts are out to lunch. These are the same folks who said tech stocks were going to the moon in 1999 and early 2000. I suggest they should be added to the unemployment rolls. Meanwhile, Jim Cunneen, president of the San Jose Silicon Valley Chamber of Commerce, stated “ we won’t have a meaningful recovery until jobs are added.”
China’s central bank said its economic policy units “unanimously think that the bank loans right now are increasing too fast.” Chinese banks lent more money in the first 7 months of 2003 than in all of last year. Standard & Poor’s estimates that borrowers have defaulted on nearly half of all bank loans in China.
Saturday, September 06, 2003
9/06/03 80% Permanent
A study released this week by the Federal Reserve Bank of New York found that about 80% of the jobs lost since the 2001 recession were the result of structural changes by businesses aimed at permanently reducing their labor forces. During the 1990-91 recession, 57% of the job cuts reflected permanent structural changes. It is no wonder that more job seekers are discouraged. In the month of August the number of discouraged workers climbed to over 500,000 for the first time in this job downturn. More than 20% of those without a job have been out of work for six months or longer, and this is a 20-year high.
Richard Yamarone, Argus Research economist: “This is the productivity miracle at work- lost jobs and low inflation.”
Mark Zandi, chief economist at Economy.com: “If we don’t see some good job growth by Thanksgiving, then the spurt in economic activity that we are currently experiencing will fade."
Not since World War II has employment failed to grow for so long during a recovery. The national payroll has shrunk by almost 3 million jobs since March 2001. Most economists are surprised that the loss of jobs continues despite an extraordinary level of economic stimulus- low interest rates, tax cuts and rebates, a rise in government spending and not only military, and mortgage refinancings. In addition, the overall workweek sits at an all-time low while the manufacturing workweek is at a low for the current business cycle.
In its August monetary policy report to the Congress, the FOMC stated “but because of the considerable amount of economic slack prevailing and the economy’s ability to expand without putting upward pressure on prices, the Committee (FOMC) indicated that the small chance of an unwelcome decline in the inflation rate was likely to remain its predominant concern for the foreseeable future.” The Committee might consider how wrong they are in one area. They have continually misjudged the benefits from improved productivity. The fact is household incomes have not been lifted from increased productivity. Business capital spending has hardly improved from increased productivity. On the other hand, inflation remains tame overall. Obviously, there have been price spikes in gasoline, beef, and some other areas.
On Friday December gold rose 1.3% to close at $378.70 an ounce, its highest closing since early February. December silver rose 2.3% to close at $5.15. Palladium closed up 6.7% at $222 an aounce, a five-month high. Hard assets are in growing demand.
Bill Cheney, chief economist at John Hancock Financial Services: “Businesses across the board are figuring ways to do more with fewer people. We may be further than we thought from a truly sustainable economic recovery.”
Labor Secretary Elaine Chao expresses an empathetic viewpoint: “the manufacturing sector has been in a decline for the last 40 years. Having said that, we are very concerned . We are focusing a lot of attention on manufacturing.” That concern and attention and a buck will get you on the bus.
The lack of jobs is taking its toll on consumer confidence, and that was reflected in the latest University of Michigan survey where the drop in confidence was more than expected.
Larry Bartels, a professor of politics and public affairs at Princeton University, says real disposable income per capita (RDI) is the single best predictor of presidential elections. He said “it’s closer to everyday people’s ordinary experience. It’s a measure of what they actually have in their pockets, rather than an abstract economic indicator.” The Investors Business Daily points out that, four times since 1948, the party in the White House lost the popular vote when the RDI per capita grew less than 2%. In the June quarter which just ended, it rose just 1% from a year earlier and at an annualized 1.7% pace. Maybe it’s symbolic that the president is speaking to the nation on Sunday night from the White House and not the oval office.
White House spokeswoman Claire Buchan: “The president’s priorities are that government gets results for the people, and he is focused on protecting Americans, winning the war on terrorism, and ensuring economic security.” I think Ms Buchan needs to take a reality check. A report issued on Wednesday for the Joint Chiefs of Staff said planning for the rebuilding phase of the Iraq war was late in starting and not ready for activation when the war began March 19. Since the May 1 landing on the deck of the carrier USS Abraham Lincoln (the one announcing the end of major combat operations), 149 Americans have died in Iraq, exceeding the 138 who perished during major combat operations. Additionally, no WMD have been found. Osam bin Laden has not been captured. Saddam Hussein is still at large. Meanwhile, troop morale is at a low level and four times they have been given a date by which they would leave Iraq. Each time the date cam and went. The troops have been faced with reductions in pay but only yesterday Bush said “my attitude is, anytime we put our troops in harm’s way, they deserve the best pay, the best training and the best possible equipment.” He must think he’s still on the deck of the USS Abraham Lincoln. If Norman Schwartzkopf were running this operation, things would be a lot different for our troops.
Bush in his 2000 presidential nomination acceptance speech: “Big government is not the answer. The alternative…is to put conservative values and conservative ideas into the thick of the fight for justice and opportunity.” Since late 2000, 500,000 new defense-related jobs have been created, but this number only included 70,000 troops in uniform. That’s big government at its worst. The discretionary spending levels of the Bush years have been deplorable. Reduced spending must be considered curse words at 1600 Pennsylvania Avenue.
Despite the fact that Mexico has lost 200,000 jobs to China, the Mexican government will not support the U.S. efforts to have the yuan float freely. Jose Francisco Gil Diaz, finance minister of Mexico, stated “I am not asking any country to do anything. Maybe what the Chinese are doing now is correct, maybe.”
Phillipine’s Finance Secretary Jose Camacho: “We support the position that each of the APEC economies should be given the respect for applying policies appropriate for its own economy. We should allow the Chinese to determine the timing.”
A study released this week by the Federal Reserve Bank of New York found that about 80% of the jobs lost since the 2001 recession were the result of structural changes by businesses aimed at permanently reducing their labor forces. During the 1990-91 recession, 57% of the job cuts reflected permanent structural changes. It is no wonder that more job seekers are discouraged. In the month of August the number of discouraged workers climbed to over 500,000 for the first time in this job downturn. More than 20% of those without a job have been out of work for six months or longer, and this is a 20-year high.
Richard Yamarone, Argus Research economist: “This is the productivity miracle at work- lost jobs and low inflation.”
Mark Zandi, chief economist at Economy.com: “If we don’t see some good job growth by Thanksgiving, then the spurt in economic activity that we are currently experiencing will fade."
Not since World War II has employment failed to grow for so long during a recovery. The national payroll has shrunk by almost 3 million jobs since March 2001. Most economists are surprised that the loss of jobs continues despite an extraordinary level of economic stimulus- low interest rates, tax cuts and rebates, a rise in government spending and not only military, and mortgage refinancings. In addition, the overall workweek sits at an all-time low while the manufacturing workweek is at a low for the current business cycle.
In its August monetary policy report to the Congress, the FOMC stated “but because of the considerable amount of economic slack prevailing and the economy’s ability to expand without putting upward pressure on prices, the Committee (FOMC) indicated that the small chance of an unwelcome decline in the inflation rate was likely to remain its predominant concern for the foreseeable future.” The Committee might consider how wrong they are in one area. They have continually misjudged the benefits from improved productivity. The fact is household incomes have not been lifted from increased productivity. Business capital spending has hardly improved from increased productivity. On the other hand, inflation remains tame overall. Obviously, there have been price spikes in gasoline, beef, and some other areas.
On Friday December gold rose 1.3% to close at $378.70 an ounce, its highest closing since early February. December silver rose 2.3% to close at $5.15. Palladium closed up 6.7% at $222 an aounce, a five-month high. Hard assets are in growing demand.
Bill Cheney, chief economist at John Hancock Financial Services: “Businesses across the board are figuring ways to do more with fewer people. We may be further than we thought from a truly sustainable economic recovery.”
Labor Secretary Elaine Chao expresses an empathetic viewpoint: “the manufacturing sector has been in a decline for the last 40 years. Having said that, we are very concerned . We are focusing a lot of attention on manufacturing.” That concern and attention and a buck will get you on the bus.
The lack of jobs is taking its toll on consumer confidence, and that was reflected in the latest University of Michigan survey where the drop in confidence was more than expected.
Larry Bartels, a professor of politics and public affairs at Princeton University, says real disposable income per capita (RDI) is the single best predictor of presidential elections. He said “it’s closer to everyday people’s ordinary experience. It’s a measure of what they actually have in their pockets, rather than an abstract economic indicator.” The Investors Business Daily points out that, four times since 1948, the party in the White House lost the popular vote when the RDI per capita grew less than 2%. In the June quarter which just ended, it rose just 1% from a year earlier and at an annualized 1.7% pace. Maybe it’s symbolic that the president is speaking to the nation on Sunday night from the White House and not the oval office.
White House spokeswoman Claire Buchan: “The president’s priorities are that government gets results for the people, and he is focused on protecting Americans, winning the war on terrorism, and ensuring economic security.” I think Ms Buchan needs to take a reality check. A report issued on Wednesday for the Joint Chiefs of Staff said planning for the rebuilding phase of the Iraq war was late in starting and not ready for activation when the war began March 19. Since the May 1 landing on the deck of the carrier USS Abraham Lincoln (the one announcing the end of major combat operations), 149 Americans have died in Iraq, exceeding the 138 who perished during major combat operations. Additionally, no WMD have been found. Osam bin Laden has not been captured. Saddam Hussein is still at large. Meanwhile, troop morale is at a low level and four times they have been given a date by which they would leave Iraq. Each time the date cam and went. The troops have been faced with reductions in pay but only yesterday Bush said “my attitude is, anytime we put our troops in harm’s way, they deserve the best pay, the best training and the best possible equipment.” He must think he’s still on the deck of the USS Abraham Lincoln. If Norman Schwartzkopf were running this operation, things would be a lot different for our troops.
Bush in his 2000 presidential nomination acceptance speech: “Big government is not the answer. The alternative…is to put conservative values and conservative ideas into the thick of the fight for justice and opportunity.” Since late 2000, 500,000 new defense-related jobs have been created, but this number only included 70,000 troops in uniform. That’s big government at its worst. The discretionary spending levels of the Bush years have been deplorable. Reduced spending must be considered curse words at 1600 Pennsylvania Avenue.
Despite the fact that Mexico has lost 200,000 jobs to China, the Mexican government will not support the U.S. efforts to have the yuan float freely. Jose Francisco Gil Diaz, finance minister of Mexico, stated “I am not asking any country to do anything. Maybe what the Chinese are doing now is correct, maybe.”
Phillipine’s Finance Secretary Jose Camacho: “We support the position that each of the APEC economies should be given the respect for applying policies appropriate for its own economy. We should allow the Chinese to determine the timing.”
Friday, September 05, 2003
9/05/03 Slack In Labor And Product Markets
Robert Parry is the president of the Federal Reserve Bank of San Francisco. He said he expects 4- 4.5% growth in this year’s second half but also said there is so much “slack in labor and product markets” and said risks of disinflation would “remain a concern for some time.” Another Fed member, Ben Bernanke, also spoke yesterday and stated that “soft labor markets and excess capacity create a further downward risk to inflation.” It is clear that they are on the same page, and share the same concerns. I believe the bond and stock markets have underestimated the deep-seated nature of these concerns.
There was greater slack in the labor market yesterday. Del Monte will phase out 15% of their positions in San Francisco; PeopleSoft will cut up to 1000 jobs; Dow Chemical said they still have 1700 jobs to cut; and Marathon Oil will layoff 265 workers. The good news is that Boston Scientific, the stent manufacturer, will hire 1200 new workers.
Pension Benefit Guaranty Corp. said private employer pension plans are $400 billion underfunded.
Kraft expects 3rd quarter earnings of 45-47 cents compared with 50 cents in the same quarter a year ago. Analysts had been expecting 49 cents. To reverse the downturn, the company plans promotions and price reductions and intends to cut capital spending and inventories.
A Washington, Iowa promotional calendar plant has been in this southeast Iowa community for 100 years. In January, 200 employees will be without jobs as the Norwood Promotional Products plant closes. Production will be moved to Sleepy Eye, Minn. The plant’s calendars range from art, animals, and religious subjects to making the Playboy calendars.
Productivity in the second quarter rose at a 6.8% annual rate. Possibly more significant, the U.S. supposedly is in its 20th month of economic recovery without job creation. The Federal Reserve has said there is a typical three-month gap between recovery and job creation. Maybe we haven’t been recovering for 20 months or possibly this economy isn’t typical or possibly no one can explain what truly is taking place today. It’s a bit like where have the WPM gone? Have they disappeared forever? Have jobs disappeared forever? Has Osama bin Laden disappeared forever? Who’s on first?
The unemployment rate will be released shortly. All we need to know is that the economists were wrong again. Unemployment claims rose last week to 413,000, their highest level since the week ended July 12.
In the 1994-2002 period, continuing unemployment claims averaged 2.579 million. This year they have averaged 3.575 million, and now stand at 3.663 million. Last quarter hours worked fell at a 2.3% pace and unit labor costs fell at a revised 2.8% annual rate during this period. Industrial capacity utilization remains around 75%.
The stretch of Pennsylvania Avenue in Washington DC between 15th and 17th streets NW has been closed to traffic since 1995. A promise to reopen the avenue was included in the Republican platform on which George W. Bush ran for president. Yesterday the National Capital Planning Commission approved plans for redesigning the portion of Pennsylvania Avenue in front of the White House with “security improvements” but it shall remain closed to traffic. The 2004 Bush budget includes $15 million for construction of improvements. Commission Chairman John Cogbill stated “the plan allows us to breathe new life into America’s Main Street. If they think this is Main Street America, then this country is truly in serious trouble.
The U.S. economy lost 93,000 non-farm payroll jobs in August, and it was the seventh straight month for these job losses. It was the largest decrease in payrolls since March. Economists had been predicting a job gain of 19,000. For at least two weeks I have been describing the daily job cuts across America. There was no way the August number could have been on the plus side.
Robert Parry is the president of the Federal Reserve Bank of San Francisco. He said he expects 4- 4.5% growth in this year’s second half but also said there is so much “slack in labor and product markets” and said risks of disinflation would “remain a concern for some time.” Another Fed member, Ben Bernanke, also spoke yesterday and stated that “soft labor markets and excess capacity create a further downward risk to inflation.” It is clear that they are on the same page, and share the same concerns. I believe the bond and stock markets have underestimated the deep-seated nature of these concerns.
There was greater slack in the labor market yesterday. Del Monte will phase out 15% of their positions in San Francisco; PeopleSoft will cut up to 1000 jobs; Dow Chemical said they still have 1700 jobs to cut; and Marathon Oil will layoff 265 workers. The good news is that Boston Scientific, the stent manufacturer, will hire 1200 new workers.
Pension Benefit Guaranty Corp. said private employer pension plans are $400 billion underfunded.
Kraft expects 3rd quarter earnings of 45-47 cents compared with 50 cents in the same quarter a year ago. Analysts had been expecting 49 cents. To reverse the downturn, the company plans promotions and price reductions and intends to cut capital spending and inventories.
A Washington, Iowa promotional calendar plant has been in this southeast Iowa community for 100 years. In January, 200 employees will be without jobs as the Norwood Promotional Products plant closes. Production will be moved to Sleepy Eye, Minn. The plant’s calendars range from art, animals, and religious subjects to making the Playboy calendars.
Productivity in the second quarter rose at a 6.8% annual rate. Possibly more significant, the U.S. supposedly is in its 20th month of economic recovery without job creation. The Federal Reserve has said there is a typical three-month gap between recovery and job creation. Maybe we haven’t been recovering for 20 months or possibly this economy isn’t typical or possibly no one can explain what truly is taking place today. It’s a bit like where have the WPM gone? Have they disappeared forever? Have jobs disappeared forever? Has Osama bin Laden disappeared forever? Who’s on first?
The unemployment rate will be released shortly. All we need to know is that the economists were wrong again. Unemployment claims rose last week to 413,000, their highest level since the week ended July 12.
In the 1994-2002 period, continuing unemployment claims averaged 2.579 million. This year they have averaged 3.575 million, and now stand at 3.663 million. Last quarter hours worked fell at a 2.3% pace and unit labor costs fell at a revised 2.8% annual rate during this period. Industrial capacity utilization remains around 75%.
The stretch of Pennsylvania Avenue in Washington DC between 15th and 17th streets NW has been closed to traffic since 1995. A promise to reopen the avenue was included in the Republican platform on which George W. Bush ran for president. Yesterday the National Capital Planning Commission approved plans for redesigning the portion of Pennsylvania Avenue in front of the White House with “security improvements” but it shall remain closed to traffic. The 2004 Bush budget includes $15 million for construction of improvements. Commission Chairman John Cogbill stated “the plan allows us to breathe new life into America’s Main Street. If they think this is Main Street America, then this country is truly in serious trouble.
The U.S. economy lost 93,000 non-farm payroll jobs in August, and it was the seventh straight month for these job losses. It was the largest decrease in payrolls since March. Economists had been predicting a job gain of 19,000. For at least two weeks I have been describing the daily job cuts across America. There was no way the August number could have been on the plus side.
Thursday, September 04, 2003
9/04/05 Leveraging A Little Bit
On August 5 Cisco issued its first quarter 2004 revenue guidance. At that time the company expected revenues to be slightly up 2 to 4% from the prior year’s period, and that would equate to roughly $4.86 billion. Earnings per share before one-time items would approach 15 cents. The news was not greeted with enthusiasm, and the stock proceeded to drop about 10% over 2 days. Yesterday it hit a new high. The CEO said “August was a little bit above my expectations.” It should be noted that August is normally a slow month. He also said that investors should not get too excited because Cisco is still not seeing companies boost spending. In sum, the little bit above expectations announcement resulted in a market cap increase of $3.5 billion. That’s pretty good leverage when one realizes the August revenues might have been less than $100 million above the most recent forecasts.
Alfred Adler: “It is very obvious that we are not influenced by “facts” but by our interpretation of the facts.”
Ian Campbell, UPI Chief Economist Correspondent, said “in 2004 low growth or outright recession is likely for the U.S. economy, and the global impact of that will be negative.”
RSA cut 1000 jobs. Gateway will shut a computer assembly plant in Hampton, VA with 450 employees, and cut an undisclosed number of employees at 2 facilities in South Dakota which employ 3,450 people.
The latest Federal Reserve “beige book” said “labor markets remain slack across the nation. It said, where there were gains in wages, they were modest. At the same time, increasing health care expenses created a rise in overall labor compensation costs.
G.M.’s August U.S. car sales were down 8%. They cited weaker sales to corporate and rental car customers. Ford’s August U.S. sales of cars and trucks fell 12%. The company is lowering production in the current quarter by 1.2% and in the fourth quarter by 6.4%.
Shortly after 9/11, Amazon’s stock traded at $8, and I mentioned that I thought it was a promising risk/reward at that level. I never thought it would rise to $47 in 2 years. Yesterday it traded at that price. Sales are expected to reach $5 billion this year on earnings per share of 55 cents. Next year earnings could increase 50%; however, at the present price level for the stock, the risk/reward no longer looks promising. With those having a long term holding appetite, Exult could prove rewarding. At $8 the stock is not being given away; however, 5 years ago they had no revenue and today its about $500 million. They’ve grown from 2 employees to about 2000, and have $100 million in cash, and should earn about 17 cents this year but next year could bring an increase in earnings of 100%. The market cap is $880 million; however, in several years, their revenues could approach $2.5 billion. They are the leaders in integrated human resources management, and that’s a growing field. Their customer base is loyal and pleased with the results to date.
China is the world’s sixth largest economy, and rising yearly to higher rankings. Each year 20 million people enter their labor market.
Gold is trading around $375 per ounce and nearing the yearly highs.
On August 5 Cisco issued its first quarter 2004 revenue guidance. At that time the company expected revenues to be slightly up 2 to 4% from the prior year’s period, and that would equate to roughly $4.86 billion. Earnings per share before one-time items would approach 15 cents. The news was not greeted with enthusiasm, and the stock proceeded to drop about 10% over 2 days. Yesterday it hit a new high. The CEO said “August was a little bit above my expectations.” It should be noted that August is normally a slow month. He also said that investors should not get too excited because Cisco is still not seeing companies boost spending. In sum, the little bit above expectations announcement resulted in a market cap increase of $3.5 billion. That’s pretty good leverage when one realizes the August revenues might have been less than $100 million above the most recent forecasts.
Alfred Adler: “It is very obvious that we are not influenced by “facts” but by our interpretation of the facts.”
Ian Campbell, UPI Chief Economist Correspondent, said “in 2004 low growth or outright recession is likely for the U.S. economy, and the global impact of that will be negative.”
RSA cut 1000 jobs. Gateway will shut a computer assembly plant in Hampton, VA with 450 employees, and cut an undisclosed number of employees at 2 facilities in South Dakota which employ 3,450 people.
The latest Federal Reserve “beige book” said “labor markets remain slack across the nation. It said, where there were gains in wages, they were modest. At the same time, increasing health care expenses created a rise in overall labor compensation costs.
G.M.’s August U.S. car sales were down 8%. They cited weaker sales to corporate and rental car customers. Ford’s August U.S. sales of cars and trucks fell 12%. The company is lowering production in the current quarter by 1.2% and in the fourth quarter by 6.4%.
Shortly after 9/11, Amazon’s stock traded at $8, and I mentioned that I thought it was a promising risk/reward at that level. I never thought it would rise to $47 in 2 years. Yesterday it traded at that price. Sales are expected to reach $5 billion this year on earnings per share of 55 cents. Next year earnings could increase 50%; however, at the present price level for the stock, the risk/reward no longer looks promising. With those having a long term holding appetite, Exult could prove rewarding. At $8 the stock is not being given away; however, 5 years ago they had no revenue and today its about $500 million. They’ve grown from 2 employees to about 2000, and have $100 million in cash, and should earn about 17 cents this year but next year could bring an increase in earnings of 100%. The market cap is $880 million; however, in several years, their revenues could approach $2.5 billion. They are the leaders in integrated human resources management, and that’s a growing field. Their customer base is loyal and pleased with the results to date.
China is the world’s sixth largest economy, and rising yearly to higher rankings. Each year 20 million people enter their labor market.
Gold is trading around $375 per ounce and nearing the yearly highs.
Wednesday, September 03, 2003
9/03/03 Employment, Presenteeism, And The Consumer
Yesterday morning a financial TV station announced that Challenger, Gray, and Christmas stated layoffs for August had amounted to 79,925, and this figure was down 6% from July’s numbers. Was the viewer to cheer after hearing these layoff numbers? Was this to be taken as good news? Get real. We know the consumer is 70% of the economy. If layoffs persist on a monthly basis, consumption will be effected negatively. If that happens, an economic recovery shall not become a sustainable reality. In the last week of August, U.S. chain store sales lost momentum as they only rose 0.1% in the week ended August 30. I have said on several occasions that the economic blip upward in June, July, and August would be coming due to the tax cut and the child credit, and then the improvement would peter out. The reason was and still is the loss of jobs and the impact on the consumer. If anyone can prove my thinking incorrect, I would be pleased to hear from you. To put this bluntly and respectfully, it is not possible to manipulate consumer sentiment with growing unemployment lines. The media and Washington DC can talk a good game, and so can analysts on Wall Street, but they don’t make out the paychecks for Americans. In addition, unemployment benefits are paid for by the taxpayers and not by promises of a better future.
Presenteeism is what happens when people are too afraid to call in sick. Jeffrey Pfeffer, professor at Stanford University’s Graduate School of Business, says “there is no evidence that excessive hours are necessary for competitive success. But somehow we’ve gotten in our minds that to succeed in this world is to work yourself to death.” In Japan they have a word to describe death from over work. It’s karoshi, and the Japanese government has reported 10,000 cases a year of managers, executives, and engineers who have died from overwork.
Job cut announcements have totaled about 800,000 so far this year. The media will tell you that’s good news because that number is down 15% from the first 8 months of 2002. Meanwhile, the ISM Employment Index fell in August. This is the 35th straight month below the 50 level that separates growth from expansion. Norbert Ore, head of the ISM manufacturing survey committee, said “we have to see significant growth in manufacturing before industries will rehire.” With factories closing, I don’t see much reason to look for rehiring. Additionally, Rick Cobb, executive VP of Challenger, Gray, and Christmas, states “there has yet to be any significant indication of a rebound in capital spending that would support the view that employers will begin hiring en masse.”
Once again, the petroleum industry unjustly struck the pocketbooks of consumers over the Labor Day weekend. There was such a BS shortage that gasoline and crude futures fell more than 6% yesterday to close at their lowest levels since July. October unleaded gasoline fell 8 cents to close below 85 cents a gallon in New York. October crude was down over $2 per barrel to $29.41. It’s time consumers banned together and struck the hearts of the petroleum industry. Every American who drives should commit to reducing weekly gas usage by 1 gallon per week. That means driving 20 miles less per week. That should be achievable. Let’s see how the petroleum industry likes being on the receiving end- like the tobacco industry.
Treasury Department General Counsel David Aufhauser is resigning from his post on Sept. 30 due to the fact that the “campaign against the financing of terror…has defined a significant amount” of his job. Washington DC is a revolving door for employees. There appears to be growing discontent.
DHL announced they would be cutting 2,870 jobs or 6% of the workforce.
You have to hand it to Chrysler. They are on their toes and super promotional. They beat GM to the punch and announced “aggressive” new consumer incentives on most of its 2004 model year vehicles. Despite offering cash rebates of up to $4,500, the Big Three automakers have lost 1.5 percentage points of the U.S. market share since the beginning of 2003. In the second quarter Chrysler lost $1.1 billion due to the high cost of incentives. I guess they feel they’re on a roll, and need to keep those cars coming off the factory floor so that they can be sold at a loss. Maybe they’ll make it up in the volume. GM will announce their incentive program today. Of course, the industry will make a big media splash of record car sales in August. All they need to do now is make a profit on the sales. It’s no big deal if your name is Toyota.
Yesterday morning a financial TV station announced that Challenger, Gray, and Christmas stated layoffs for August had amounted to 79,925, and this figure was down 6% from July’s numbers. Was the viewer to cheer after hearing these layoff numbers? Was this to be taken as good news? Get real. We know the consumer is 70% of the economy. If layoffs persist on a monthly basis, consumption will be effected negatively. If that happens, an economic recovery shall not become a sustainable reality. In the last week of August, U.S. chain store sales lost momentum as they only rose 0.1% in the week ended August 30. I have said on several occasions that the economic blip upward in June, July, and August would be coming due to the tax cut and the child credit, and then the improvement would peter out. The reason was and still is the loss of jobs and the impact on the consumer. If anyone can prove my thinking incorrect, I would be pleased to hear from you. To put this bluntly and respectfully, it is not possible to manipulate consumer sentiment with growing unemployment lines. The media and Washington DC can talk a good game, and so can analysts on Wall Street, but they don’t make out the paychecks for Americans. In addition, unemployment benefits are paid for by the taxpayers and not by promises of a better future.
Presenteeism is what happens when people are too afraid to call in sick. Jeffrey Pfeffer, professor at Stanford University’s Graduate School of Business, says “there is no evidence that excessive hours are necessary for competitive success. But somehow we’ve gotten in our minds that to succeed in this world is to work yourself to death.” In Japan they have a word to describe death from over work. It’s karoshi, and the Japanese government has reported 10,000 cases a year of managers, executives, and engineers who have died from overwork.
Job cut announcements have totaled about 800,000 so far this year. The media will tell you that’s good news because that number is down 15% from the first 8 months of 2002. Meanwhile, the ISM Employment Index fell in August. This is the 35th straight month below the 50 level that separates growth from expansion. Norbert Ore, head of the ISM manufacturing survey committee, said “we have to see significant growth in manufacturing before industries will rehire.” With factories closing, I don’t see much reason to look for rehiring. Additionally, Rick Cobb, executive VP of Challenger, Gray, and Christmas, states “there has yet to be any significant indication of a rebound in capital spending that would support the view that employers will begin hiring en masse.”
Once again, the petroleum industry unjustly struck the pocketbooks of consumers over the Labor Day weekend. There was such a BS shortage that gasoline and crude futures fell more than 6% yesterday to close at their lowest levels since July. October unleaded gasoline fell 8 cents to close below 85 cents a gallon in New York. October crude was down over $2 per barrel to $29.41. It’s time consumers banned together and struck the hearts of the petroleum industry. Every American who drives should commit to reducing weekly gas usage by 1 gallon per week. That means driving 20 miles less per week. That should be achievable. Let’s see how the petroleum industry likes being on the receiving end- like the tobacco industry.
Treasury Department General Counsel David Aufhauser is resigning from his post on Sept. 30 due to the fact that the “campaign against the financing of terror…has defined a significant amount” of his job. Washington DC is a revolving door for employees. There appears to be growing discontent.
DHL announced they would be cutting 2,870 jobs or 6% of the workforce.
You have to hand it to Chrysler. They are on their toes and super promotional. They beat GM to the punch and announced “aggressive” new consumer incentives on most of its 2004 model year vehicles. Despite offering cash rebates of up to $4,500, the Big Three automakers have lost 1.5 percentage points of the U.S. market share since the beginning of 2003. In the second quarter Chrysler lost $1.1 billion due to the high cost of incentives. I guess they feel they’re on a roll, and need to keep those cars coming off the factory floor so that they can be sold at a loss. Maybe they’ll make it up in the volume. GM will announce their incentive program today. Of course, the industry will make a big media splash of record car sales in August. All they need to do now is make a profit on the sales. It’s no big deal if your name is Toyota.
Tuesday, September 02, 2003
9/02/03 I’m Lovin It
That’s the new worldwide McDonald’s ad campaign which begins this week. I’m not so sure the employees in Bellevue, WA are lovin it. Their store was located at a prime site, and was in existence for about 2 decades. Without any publicity, the store closed over this weekend. Located in Bellevue is Burger King, Wendy’s, and the rest of the usual suspects. Arby’s is across the street from McDonald’s. Maybe the competition got too heated from those roast beef sandwiches.
You gotta love Bush’s recipe for fixing our manufacturing base and the loss of jobs in this area. The government does not manufacture anything- except for the items produced in various prisons by inmates. Come to think of it, that’s low cost labor that should be able to compete with China. Many inmates get paid 20 cents or less per hour for working. Of course, they get free food, housing, clothing, and healthcare. Back to Bush. He named a “czar” to address the loss of manufacturing jobs. He did accomplish something. He created a job. At the same time, he was consistent with his economic policy of increased discretionary spending and generating unneeded overhead in Washington.
The Snowman is over in China jawboning the Chinese government to overhaul its currency system with its yuan fixed at 8.3 to the U.S. dollar. Whose fault is it that the U.S. has a $103 billion trade deficit with China? Are we going to blame it on the exchange rate? Maybe, if our budget deficit were reduced by cutting government spending, our dollar would have a greater purchasing value. Winners accept responsibility and losers blame others. There seem to be plenty of blaming others in Washington DC. Presently, the yuan will not be revalued. It is thought that doing so would exacerbate the problems evident at many of their local banks. China will continue to purchase our treasury notes. Looking at the situation rationally, China is taking the money from the trade surplus generated with the U.S. and investing most of that money in our government bonds. The money is remaining, for the most part, in this country.
Government statistics talk about the recovery. Wall Street buys the talk. If the recovery were for real, then why did the economy lose 44,000 jobs in August? I am tired of jobs being described as a lagging indicator. If jobs were being added, lagging indicator would not be utilized in the description. The stock market, on the other hand, is considered a leading indicator. Why? The sarcastic answer is so few money managers beat the averages and indexes over time. In other words, a bunch of also-rans are the leading indicator. They should get czar jobs in Washington DC.
That’s the new worldwide McDonald’s ad campaign which begins this week. I’m not so sure the employees in Bellevue, WA are lovin it. Their store was located at a prime site, and was in existence for about 2 decades. Without any publicity, the store closed over this weekend. Located in Bellevue is Burger King, Wendy’s, and the rest of the usual suspects. Arby’s is across the street from McDonald’s. Maybe the competition got too heated from those roast beef sandwiches.
You gotta love Bush’s recipe for fixing our manufacturing base and the loss of jobs in this area. The government does not manufacture anything- except for the items produced in various prisons by inmates. Come to think of it, that’s low cost labor that should be able to compete with China. Many inmates get paid 20 cents or less per hour for working. Of course, they get free food, housing, clothing, and healthcare. Back to Bush. He named a “czar” to address the loss of manufacturing jobs. He did accomplish something. He created a job. At the same time, he was consistent with his economic policy of increased discretionary spending and generating unneeded overhead in Washington.
The Snowman is over in China jawboning the Chinese government to overhaul its currency system with its yuan fixed at 8.3 to the U.S. dollar. Whose fault is it that the U.S. has a $103 billion trade deficit with China? Are we going to blame it on the exchange rate? Maybe, if our budget deficit were reduced by cutting government spending, our dollar would have a greater purchasing value. Winners accept responsibility and losers blame others. There seem to be plenty of blaming others in Washington DC. Presently, the yuan will not be revalued. It is thought that doing so would exacerbate the problems evident at many of their local banks. China will continue to purchase our treasury notes. Looking at the situation rationally, China is taking the money from the trade surplus generated with the U.S. and investing most of that money in our government bonds. The money is remaining, for the most part, in this country.
Government statistics talk about the recovery. Wall Street buys the talk. If the recovery were for real, then why did the economy lose 44,000 jobs in August? I am tired of jobs being described as a lagging indicator. If jobs were being added, lagging indicator would not be utilized in the description. The stock market, on the other hand, is considered a leading indicator. Why? The sarcastic answer is so few money managers beat the averages and indexes over time. In other words, a bunch of also-rans are the leading indicator. They should get czar jobs in Washington DC.
Monday, September 01, 2003
9/1/03 The Truth On Labor Day
Worker productivity rises off the charts, and yet, jobs are outsourced to lower labor cost countries. Workers accept pay and benefit cuts only to see a factory shut down. At some point the landscape for workers and management/owners must find a happy medium. There is less and less loyalty within the workplace, and clearly less satisfaction during difficult economic times amidst heightened stress. It may be Labor Day, but today there is much less to celebrate. It’s one thing to have a job, and another thing to keep the job. Millions of Americans have learned that all too well. The U.S. needs to regain some of its sheen. That is not something that can be blamed on 9/11.
A study by researchers at the University of Illinois said, at the current rate, a full recovery in the technology sector is unlikely to come before 2012. The current industry’s job growth is estimated at approximately 1%, and this is down from the double-digit increases in the late 1990s.
This is an appropriate time to explore how some companies offer opportunities for growth and responsibility and maintain a winning team. A good example is a privately owned company with locations in California, Nevada, and Arizona. Most of their management personnel rise through the ranks and are promoted from hourly worker levels. Store managers, on average, have been with the company for over 13 years and make about $100,000 per year. Customer loyalty is at the highest level, and repeat business is the norm. A husband and wife team started the company in 1948, and family members have been at the helm since then. The menu has never changed. They were the first drive-thru hamburger stand in California. Their motto remains the same: “Give customers the freshest, highest quality foods you can buy and provide them with friendly service in a sparkling clean environment.” The potatoes are cut fresh on site for the french fries. The shakes have real ice cream. There are only double double burgers, cheeseburgers, and hamburgers. Those are the five items on the menu. The meat is fresh, the lettuce is fresh, and the tomatoes are ripe. Everything is cooked to order, and yet it is fast food. This is the Krispy Kreme of the hamburger business. It is the Starbucks of the hamburger business. There aren’t any franchised locations. The customers are dealing with the owners or staff trained by the owners. This is where children and grown-ups come to eat time and time again. Their sales are up 10% this year at the same time Burger King and McDonald’s and Wendy’s are struggling. Winners find a way to win even when the times get tougher. Maybe some day In-N-Out Burger will go public. That will be a real meal.
It’s the end of the summer and it’s been a long summer. There’s been too little sleep and too much on my plate. I take responsibility for this, and somehow I wish that at times I could be more than one person. It may seem that I am not everything I am cranked out to be. For that I apologize. I would never want to create disappointment. Unfortunately, sometimes the demands on my time may create difficulties for others. There are no excuses. I will try to do better.
Worker productivity rises off the charts, and yet, jobs are outsourced to lower labor cost countries. Workers accept pay and benefit cuts only to see a factory shut down. At some point the landscape for workers and management/owners must find a happy medium. There is less and less loyalty within the workplace, and clearly less satisfaction during difficult economic times amidst heightened stress. It may be Labor Day, but today there is much less to celebrate. It’s one thing to have a job, and another thing to keep the job. Millions of Americans have learned that all too well. The U.S. needs to regain some of its sheen. That is not something that can be blamed on 9/11.
A study by researchers at the University of Illinois said, at the current rate, a full recovery in the technology sector is unlikely to come before 2012. The current industry’s job growth is estimated at approximately 1%, and this is down from the double-digit increases in the late 1990s.
This is an appropriate time to explore how some companies offer opportunities for growth and responsibility and maintain a winning team. A good example is a privately owned company with locations in California, Nevada, and Arizona. Most of their management personnel rise through the ranks and are promoted from hourly worker levels. Store managers, on average, have been with the company for over 13 years and make about $100,000 per year. Customer loyalty is at the highest level, and repeat business is the norm. A husband and wife team started the company in 1948, and family members have been at the helm since then. The menu has never changed. They were the first drive-thru hamburger stand in California. Their motto remains the same: “Give customers the freshest, highest quality foods you can buy and provide them with friendly service in a sparkling clean environment.” The potatoes are cut fresh on site for the french fries. The shakes have real ice cream. There are only double double burgers, cheeseburgers, and hamburgers. Those are the five items on the menu. The meat is fresh, the lettuce is fresh, and the tomatoes are ripe. Everything is cooked to order, and yet it is fast food. This is the Krispy Kreme of the hamburger business. It is the Starbucks of the hamburger business. There aren’t any franchised locations. The customers are dealing with the owners or staff trained by the owners. This is where children and grown-ups come to eat time and time again. Their sales are up 10% this year at the same time Burger King and McDonald’s and Wendy’s are struggling. Winners find a way to win even when the times get tougher. Maybe some day In-N-Out Burger will go public. That will be a real meal.
It’s the end of the summer and it’s been a long summer. There’s been too little sleep and too much on my plate. I take responsibility for this, and somehow I wish that at times I could be more than one person. It may seem that I am not everything I am cranked out to be. For that I apologize. I would never want to create disappointment. Unfortunately, sometimes the demands on my time may create difficulties for others. There are no excuses. I will try to do better.
Sunday, August 31, 2003
8/31/03 Our Breathing Is Labored
Do you like getting stabbed in the back? Do you like making your children’s world more fiscally burdensome than yours? Do you like being made to look stupid? It’s pay back time. It’s time for accountability. Look in the mirror. What do you see? If you said, an apathetic American, you are correct. I’m no different. I may have a big mouth and one vote, but I have not gotten out in the political trenches to change things either. Many Americans are happy with their tax cut and child credit check. How do you think the government is paying for the budget deficits? And the CBO says the deficits will rise at least in the near future. These deficits must be funded through additional revenues, and the latter spell increased taxes ranging from a minimum of $4000 to $7000 per household depending on the size of the deficit. There is only one alternative to increased taxation to offset these deficits and that’s to make large spending cuts. I know some of you think I’m being too rough. Actually, I need to be tougher. Bush and the Congress are the WPM. This year non-defense discretionary spending will be about 4% of the GDP. That is more than unacceptable. That is indefensible and irresponsible. Elect no official without a pledge to cut spending by at least 15%. Mandatory spending will exceed 11% of GDP this year. If we can work on a cure for cancer, we certainly can find a cure for pork, welfare, waste, and abuse spending. If we do not cut government spending drastically, our breathing will no longer be labored. The fresh air will cease to exist. Freedom will be lost.
Ford is gloating that August will be their best month this year for car sales. They have little to show for their efforts except the $4000 in incentives on each vehicle. The Big Three share of the auto market has fallen from 60% from 70% over the last five years. Asian auto makers now have over a 32% share up from 25 % only five years ago. All Japanese auto plants in North America are non-union and their labor costs amount to $7,000 per vehicle as compared with the U.S. auto makers’ labor costs of $7,500 per vehicle.
The GM labor contract with the UAW expires on September 14. The company is proposing to freeze hourly wages through 2007, plus paying three bonuses worth $1,066 assuming no overtime pay. GM would double the $3-5 workers pay now for each drug prescription. Workers would continue not paying part of the monthly health insurance premium. The UAW is in a poor bargaining position. Their membership has declined from 1.5 million to 639,000 over the past 25 years. The auto companies maintain they must hold down wages, benefits, and positions to stay competitive. The fact is simple. A growing number of consumers prefer Japanese vehicles. The trend is not friendly for the U.S. auto worker. Overall, labor unions currently represent only 9% of private-sector workers.
Challenger, Gray, & Christmas state that 4.1 million jobs have been cut since January 2001. The Bureau of Labor Statistics reports that 2.6 million fewer people are employed now than in January 2001. These facts explain why Bush is being compared to Hoover on job losses. Even if analysts are correct and 12,000 new jobs outside the agricultural sector were added to U.S. payrolls in August, it still would be only a pimple on an elephant’s ass. Come November 2004, jobs will become a big factor in the election.
Walker Information, a research firm in Minneapolis, said by 2012 more people shall be leaving than entering the workforce. They note that, the hiring and training of replacements, costs up to 1.5 times the position’s annual salary.
Jonathan Golub, VP and U.S. equity strategist with JP Morgan Fleming Asset Management: “What’s leading the market are companies that have no earnings and no dividends…there is a meaningful disparity between the well established companies and the rest.”
Do you like getting stabbed in the back? Do you like making your children’s world more fiscally burdensome than yours? Do you like being made to look stupid? It’s pay back time. It’s time for accountability. Look in the mirror. What do you see? If you said, an apathetic American, you are correct. I’m no different. I may have a big mouth and one vote, but I have not gotten out in the political trenches to change things either. Many Americans are happy with their tax cut and child credit check. How do you think the government is paying for the budget deficits? And the CBO says the deficits will rise at least in the near future. These deficits must be funded through additional revenues, and the latter spell increased taxes ranging from a minimum of $4000 to $7000 per household depending on the size of the deficit. There is only one alternative to increased taxation to offset these deficits and that’s to make large spending cuts. I know some of you think I’m being too rough. Actually, I need to be tougher. Bush and the Congress are the WPM. This year non-defense discretionary spending will be about 4% of the GDP. That is more than unacceptable. That is indefensible and irresponsible. Elect no official without a pledge to cut spending by at least 15%. Mandatory spending will exceed 11% of GDP this year. If we can work on a cure for cancer, we certainly can find a cure for pork, welfare, waste, and abuse spending. If we do not cut government spending drastically, our breathing will no longer be labored. The fresh air will cease to exist. Freedom will be lost.
Ford is gloating that August will be their best month this year for car sales. They have little to show for their efforts except the $4000 in incentives on each vehicle. The Big Three share of the auto market has fallen from 60% from 70% over the last five years. Asian auto makers now have over a 32% share up from 25 % only five years ago. All Japanese auto plants in North America are non-union and their labor costs amount to $7,000 per vehicle as compared with the U.S. auto makers’ labor costs of $7,500 per vehicle.
The GM labor contract with the UAW expires on September 14. The company is proposing to freeze hourly wages through 2007, plus paying three bonuses worth $1,066 assuming no overtime pay. GM would double the $3-5 workers pay now for each drug prescription. Workers would continue not paying part of the monthly health insurance premium. The UAW is in a poor bargaining position. Their membership has declined from 1.5 million to 639,000 over the past 25 years. The auto companies maintain they must hold down wages, benefits, and positions to stay competitive. The fact is simple. A growing number of consumers prefer Japanese vehicles. The trend is not friendly for the U.S. auto worker. Overall, labor unions currently represent only 9% of private-sector workers.
Challenger, Gray, & Christmas state that 4.1 million jobs have been cut since January 2001. The Bureau of Labor Statistics reports that 2.6 million fewer people are employed now than in January 2001. These facts explain why Bush is being compared to Hoover on job losses. Even if analysts are correct and 12,000 new jobs outside the agricultural sector were added to U.S. payrolls in August, it still would be only a pimple on an elephant’s ass. Come November 2004, jobs will become a big factor in the election.
Walker Information, a research firm in Minneapolis, said by 2012 more people shall be leaving than entering the workforce. They note that, the hiring and training of replacements, costs up to 1.5 times the position’s annual salary.
Jonathan Golub, VP and U.S. equity strategist with JP Morgan Fleming Asset Management: “What’s leading the market are companies that have no earnings and no dividends…there is a meaningful disparity between the well established companies and the rest.”
Saturday, August 30, 2003
8/30/03 Monetary Policy Landscape Uncertainty
Alan Greenspan: "Uncertainty is the defining characteristic of the monetary poicy landscape."
Alan Greenspan: "Only a limited number of risks can be qantified with any confidence. And even those risks are generally unquantifiable...becuse we may not fully apprciate even the full range of possibilities, let alone each possibility's likelihood."
The above quotes came from a speech given by Alan Greenspan at the annual Kansas City Federal Reserve Bank meeting held in Jackson Hole, Wyoming. The taxpayers footthe bill to have this speech on risk management and to have the Fed's goal of price stability and the maximum sustainable economic growth reaffirmed. In other words, it's a time to enjoy nature over the Labor Day weekend in beautiful Jackson, where I lived for sevral years.
Warren Buffett: "Risk comes from not knowing what you're doing."
Without the $350 billion tax cut, July disposable income would have gained only 0.2%.
The Mexican peso is flirting with a record low, and stands at a little over 11 to the dollar.
Stephen Roach, chief economist at Morgan Stanley, said "as long as hiring and wage income generation remain deficient, once the policy stimulus fades, there will be little fundamental fuel for the world's only growth engine. I still see the U.S.primarily thru the lens of a post-bubble economy that has failed to purge the excesses of the late 1990s.
Accroding to new statistics released yesterday by Right Management Consultants of Philalphia, unmploye workers at almost all levels are needing nearly twice as long to find new jobs as they did two years ago.
Alan Greenspan: "Uncertainty is the defining characteristic of the monetary poicy landscape."
Alan Greenspan: "Only a limited number of risks can be qantified with any confidence. And even those risks are generally unquantifiable...becuse we may not fully apprciate even the full range of possibilities, let alone each possibility's likelihood."
The above quotes came from a speech given by Alan Greenspan at the annual Kansas City Federal Reserve Bank meeting held in Jackson Hole, Wyoming. The taxpayers footthe bill to have this speech on risk management and to have the Fed's goal of price stability and the maximum sustainable economic growth reaffirmed. In other words, it's a time to enjoy nature over the Labor Day weekend in beautiful Jackson, where I lived for sevral years.
Warren Buffett: "Risk comes from not knowing what you're doing."
Without the $350 billion tax cut, July disposable income would have gained only 0.2%.
The Mexican peso is flirting with a record low, and stands at a little over 11 to the dollar.
Stephen Roach, chief economist at Morgan Stanley, said "as long as hiring and wage income generation remain deficient, once the policy stimulus fades, there will be little fundamental fuel for the world's only growth engine. I still see the U.S.primarily thru the lens of a post-bubble economy that has failed to purge the excesses of the late 1990s.
Accroding to new statistics released yesterday by Right Management Consultants of Philalphia, unmploye workers at almost all levels are needing nearly twice as long to find new jobs as they did two years ago.
Friday, August 29, 2003
8/29/03 Layoffs And Plant Closings Continue
On a day when the growth estimates for the second quarter were raised, several companies announced layoffs and plant closings. In fact, it was one of the busiest days in some weeks for such announcements. First out of the box was Oneida, the plate and dinnerware manufacturer, laying off 100 workers and mulling plant closings in Mexico, China, Italy, and possibly Buffalo. Then Chrysler said significant additional job cuts may be required unless the company can increase U.S. sales. They have closed 7 factories and cut 30,000 jobs since 2001, and it's thought a cut of another 12,000 jobs could be needed over a period of time. After Chrysler, Goodyear anounced cutting 500 jobs. Finally, Novellus said they may close facilities to improve profit margins and may announce job cuts. This company competes with Applied Materials, and the latter has been undergoing significant restructuring. It would appear that companies feel a continuing need to close factories and plants to improve their profitability and to remain competitive in the marketplace. I see no end to this trend, and it looms large for more job losses.
The Commerce Department said after-tax corporate profits were down 3.4% for the second quarter.
Albert Einstein: "The hardest thing in the world to understand is income tax."
Margaret Thatcher: "The usual socialist disease: they have run out of other people's money."
On August 2, 2002 30 year mortgage rates were 6.43%. Now they are 6.32%.
According to the CBO, Congress is set to vote on a Medicare package that could cut up to $16 billion of Medicare funding for cancer care over the next 10 years.
In July, there were inflows of $21 billion in stock funds and $8 billion in outflows for bond funds. The good news is that, in the latest week for August, there were inflows into both types of funds.
Ronald Reagan: "The three stages of government: if it works, tax it. If it still works, regulate it. If it stops working, subsidize it."
On a day when the growth estimates for the second quarter were raised, several companies announced layoffs and plant closings. In fact, it was one of the busiest days in some weeks for such announcements. First out of the box was Oneida, the plate and dinnerware manufacturer, laying off 100 workers and mulling plant closings in Mexico, China, Italy, and possibly Buffalo. Then Chrysler said significant additional job cuts may be required unless the company can increase U.S. sales. They have closed 7 factories and cut 30,000 jobs since 2001, and it's thought a cut of another 12,000 jobs could be needed over a period of time. After Chrysler, Goodyear anounced cutting 500 jobs. Finally, Novellus said they may close facilities to improve profit margins and may announce job cuts. This company competes with Applied Materials, and the latter has been undergoing significant restructuring. It would appear that companies feel a continuing need to close factories and plants to improve their profitability and to remain competitive in the marketplace. I see no end to this trend, and it looms large for more job losses.
The Commerce Department said after-tax corporate profits were down 3.4% for the second quarter.
Albert Einstein: "The hardest thing in the world to understand is income tax."
Margaret Thatcher: "The usual socialist disease: they have run out of other people's money."
On August 2, 2002 30 year mortgage rates were 6.43%. Now they are 6.32%.
According to the CBO, Congress is set to vote on a Medicare package that could cut up to $16 billion of Medicare funding for cancer care over the next 10 years.
In July, there were inflows of $21 billion in stock funds and $8 billion in outflows for bond funds. The good news is that, in the latest week for August, there were inflows into both types of funds.
Ronald Reagan: "The three stages of government: if it works, tax it. If it still works, regulate it. If it stops working, subsidize it."
Thursday, August 28, 2003
8/28/03 Funding The Supply Of Debt
Mark Faber: "between 1997 and 2001 to generate one dollar of GDP growth, 4.8 dollars of new debt was created."
Yesterday $25 billion of 2 year treasuries brought a yield of 2.04% or more than 100 basis points above the Federal Funds rate. Foreign central banks purchased only 26% of the issue compared with 36% of the last 2 year sale. Next month we will witness more than $50 billion of 2 year, 5 year, and 10 year notes being auctioned. This on-going supply hopefully will be met with eager buyers. Unfortunately, I believe the appetite for our treasury notes is waning.
Why do I make this statement? The recipe for these treasury auctions is not too appealing. It is a mixture of the speed of our monetary printing presses; increasing debt loads from growing trade and currency account deficits; the rising rate of government spending; overcapacity; slack demand creating price reductions and greater buyer incentives; and the need for debts to be reduced- either through payments, defaults, or worse yet, hyperinflation.
Federal government spending doesn't create sustainable GDP growth. It creates a false impression that the economy is vibrant. That spending comes from a combination of tax receipts and printing money in the form of debt. In other words, the government consumes and does not produce. As increasing amounts of debt are required to generate GDP growth, our treasury notes take on a risky dimension. It is the latter which makes foreign buyers of our debt instruments wary of getting severe indigestion. I know such a suggestion will be met with horror and blasphemy. I've munched on that combo before and not been worse for wear.
Silicon Graphics cuts 600 workers.
Craig Conway, PeopleSoft CEO: "The Oracle saga has flatlined. I don't think it has a heartbeat. I don't think it has a breath."
The U.S. Energy Department said yesterday it is probably underestimating the amount of fule utilities are storing for the winter because of its mathematical model methods.
Mark Faber: "between 1997 and 2001 to generate one dollar of GDP growth, 4.8 dollars of new debt was created."
Yesterday $25 billion of 2 year treasuries brought a yield of 2.04% or more than 100 basis points above the Federal Funds rate. Foreign central banks purchased only 26% of the issue compared with 36% of the last 2 year sale. Next month we will witness more than $50 billion of 2 year, 5 year, and 10 year notes being auctioned. This on-going supply hopefully will be met with eager buyers. Unfortunately, I believe the appetite for our treasury notes is waning.
Why do I make this statement? The recipe for these treasury auctions is not too appealing. It is a mixture of the speed of our monetary printing presses; increasing debt loads from growing trade and currency account deficits; the rising rate of government spending; overcapacity; slack demand creating price reductions and greater buyer incentives; and the need for debts to be reduced- either through payments, defaults, or worse yet, hyperinflation.
Federal government spending doesn't create sustainable GDP growth. It creates a false impression that the economy is vibrant. That spending comes from a combination of tax receipts and printing money in the form of debt. In other words, the government consumes and does not produce. As increasing amounts of debt are required to generate GDP growth, our treasury notes take on a risky dimension. It is the latter which makes foreign buyers of our debt instruments wary of getting severe indigestion. I know such a suggestion will be met with horror and blasphemy. I've munched on that combo before and not been worse for wear.
Silicon Graphics cuts 600 workers.
Craig Conway, PeopleSoft CEO: "The Oracle saga has flatlined. I don't think it has a heartbeat. I don't think it has a breath."
The U.S. Energy Department said yesterday it is probably underestimating the amount of fule utilities are storing for the winter because of its mathematical model methods.
Tuesday, August 26, 2003
8/27/03 The Very First Time
Microsoft has been in business for close to 30 years. Each year the company has made a practice of giving each employee a raise. The company employees close to 60,000 people. Today Microsoft sent a letter to every employee. For the very first time the company is giving a raise to no one. They stated that it was the management’s belief that employees were already receiving higher comparative salaries than that found at other companies. When I say times are different, many folks scoff at me. They just don’t get it. When they lose their shirts and their pants, they might see the light.
The talk around Sun Microsystems is that another round of layoffs is around the corner. We’ll just have to wait and see.
The CBO forecast a federal budget deficit of $480 billion in 2004. Given the fact that they have raise their deficit forecasts for 2003 seven times, I feel confident we can look for more of the same in coming months. The CBO forecasts unemployment at 6.2% for 2003 and 2004.
According to Tuesday’s ABC and Money Magazine survey, the consumer comfort index fell to a negative 17 in the latest week from a negative 16 in the prior week. That indicates a good deal of skepticism with respect to the anticipated economic recovery.
PeopleSoft is once again offering a money back guarantee on its products and those of newly acquired J.D. Edwards, and has promise five times the value of the software license fees in the event PeopleSoft is acquired and Oracle discontinues support for the product.
Microsoft has been in business for close to 30 years. Each year the company has made a practice of giving each employee a raise. The company employees close to 60,000 people. Today Microsoft sent a letter to every employee. For the very first time the company is giving a raise to no one. They stated that it was the management’s belief that employees were already receiving higher comparative salaries than that found at other companies. When I say times are different, many folks scoff at me. They just don’t get it. When they lose their shirts and their pants, they might see the light.
The talk around Sun Microsystems is that another round of layoffs is around the corner. We’ll just have to wait and see.
The CBO forecast a federal budget deficit of $480 billion in 2004. Given the fact that they have raise their deficit forecasts for 2003 seven times, I feel confident we can look for more of the same in coming months. The CBO forecasts unemployment at 6.2% for 2003 and 2004.
According to Tuesday’s ABC and Money Magazine survey, the consumer comfort index fell to a negative 17 in the latest week from a negative 16 in the prior week. That indicates a good deal of skepticism with respect to the anticipated economic recovery.
PeopleSoft is once again offering a money back guarantee on its products and those of newly acquired J.D. Edwards, and has promise five times the value of the software license fees in the event PeopleSoft is acquired and Oracle discontinues support for the product.
8/26/03 Mexico’s Problem Is China
With a drop in export orders, manufacturing companies in Mexico continue to layoff workers. Unemployment is at its highest level in more than 5 years. The problem is China and its cheaper labor costs. The U.S is Mexico’s largest export market and buys 85% of Mexico’s exports; however, thru the first six months of 2003, Chinese exports to the U.S. have grown 25% and are equal at this time to Mexico’s exports to the U.S. During this period, Mexico has experienced a 4.2% decline in non-oil exports.
Na
A month ago Cadence Design announced a layoff of 500 workers or 10% of its workforce. Their CEO said they will move more engineering jobs to India and China where he said “we can get three to five equivalent engineers for what we pay here.”
Siebel Systems said business software is under pricing pressure and their CEO said there’s “almost desperate pricing “ among its competitors.
The U.S. has been occupying Iraq for 117 days. More soldiers have been killed in this period than when there was heavy combat. The Administration has asked for patience. It’s hard to be patient with a daily average of 25 guerilla attacks on our troops. This is Bush’s Viet Nam and our troops are paying the price for an inept exit strategy.
Although less than 5% of Australian companies’ overseas assets are in Asia, some 60% of Australia’s international trade is with its Asian economic partners. Only 10% of Australia’s foreign trade is with the U.S.
With a drop in export orders, manufacturing companies in Mexico continue to layoff workers. Unemployment is at its highest level in more than 5 years. The problem is China and its cheaper labor costs. The U.S is Mexico’s largest export market and buys 85% of Mexico’s exports; however, thru the first six months of 2003, Chinese exports to the U.S. have grown 25% and are equal at this time to Mexico’s exports to the U.S. During this period, Mexico has experienced a 4.2% decline in non-oil exports.
Na
A month ago Cadence Design announced a layoff of 500 workers or 10% of its workforce. Their CEO said they will move more engineering jobs to India and China where he said “we can get three to five equivalent engineers for what we pay here.”
Siebel Systems said business software is under pricing pressure and their CEO said there’s “almost desperate pricing “ among its competitors.
The U.S. has been occupying Iraq for 117 days. More soldiers have been killed in this period than when there was heavy combat. The Administration has asked for patience. It’s hard to be patient with a daily average of 25 guerilla attacks on our troops. This is Bush’s Viet Nam and our troops are paying the price for an inept exit strategy.
Although less than 5% of Australian companies’ overseas assets are in Asia, some 60% of Australia’s international trade is with its Asian economic partners. Only 10% of Australia’s foreign trade is with the U.S.
Monday, August 25, 2003
8/25/03 President Bush
The markets might consider paying some attention to the August 21-22 poll taken by Newsweek. It is the first time a plurality has opposed a second term for Bush. 49% of registered voters polled would not like to see Bush re-elected, compared with 44% who said they would. The poll indicates increasing concerns about the economy and the continued violence in Iraq where our troops are killed and wounded daily. Wall Street, for the most part, depends on analyst upgrades/downgrades and CEO predictions, and pays very little attention to the every day person on Main Street. In fact, Wall Street looks down on those every day people. They are viewed as having limited investing intelligence. That’s why such a small percentage of mutual fund managers match, much less beat, the averages over time. If there is one major mistake the people on Main Street continue to make, it’s giving their hard-earned money to mutual fund managers, and then paying a fee for under-performance. Don’t worry. This mistake won’t last forever.
The Newsweek poll augurs poorly for the U.S. stock market. Disenchantment with Bush can only lead to lower consumer confidence and the latter to lower consumption levels. If the consumer is 70% of the economy, then the so-called jobless recovery will not last long, and that’s exactly what I have been saying. Money flow will no longer pour into stocks, and that’s what has been taking place over the last 120 days. You need to stay ahead of the curve and anticipate that change. Get the stretchers ready. A great many money managers will be carried out.
There are approximately 6 million small employers and they employ about half of all workers and create most of the new jobs. According to a survey conducted by the National Federation of Independent Business trade group, despite the recent tax cut which raised to $100,000 from $25,000 the amount small businesses could write off annually on capital goods spending, only 26% of small companies plan to buy computers and other big-ticket items in the near future. This is down from 30% before Bush signed the latest tax cut bill. Wall Street seems to have an endless appetite for buying technology stocks. As I said, Wall Street has little respect outside their own small community.
Today in Taipei Intel’s CEO Craig Barrett told reporters that “it is too early to say we have seen the emergence of a total turnaround” in the semiconductor industry. The small business owners could have told you that. I wonder how long it’s going to take for Intel to trade up to $29 again. I wouldn’t hold my breath.
According to Harvard’s Joint Center for Housing Studies, $214 billion was spent on home improvement in 2001, up from $190 billion in 1999. Households spending $20,000 or more accounted for 48.3% of the home improvement market in 2001 compared with 33.3% in 1995. Nesting has grown in importance, but I believe, as money becomes scarcer for the average family, that less money will begin to be spent on home improvement. Rather than large ticket items, such as, Viking ranges and Sub Zero refrigerators, less expensive alternatives will be sought.
I want to close with a personal remark. I get lots of email criticizing my negativity. I do not walk on water and never will. That may come as a disappointment to my Mother, but she died some time ago. However, I am a good swimmer. I have no trouble negotiating the deepest end of the pool or the waves in the ocean. I make plenty of mistakes. Few can state, though, they missed the tech debacle beginning in 2000. Few missed the disaster of October 1987 but caught the upswing in 1982 and 1974. Yes, I have missed, for the most part, the bull move beginning in early March. On the other hand, I will also miss riding out on a stretcher, and that is coming soon to your neighborhood.
The markets might consider paying some attention to the August 21-22 poll taken by Newsweek. It is the first time a plurality has opposed a second term for Bush. 49% of registered voters polled would not like to see Bush re-elected, compared with 44% who said they would. The poll indicates increasing concerns about the economy and the continued violence in Iraq where our troops are killed and wounded daily. Wall Street, for the most part, depends on analyst upgrades/downgrades and CEO predictions, and pays very little attention to the every day person on Main Street. In fact, Wall Street looks down on those every day people. They are viewed as having limited investing intelligence. That’s why such a small percentage of mutual fund managers match, much less beat, the averages over time. If there is one major mistake the people on Main Street continue to make, it’s giving their hard-earned money to mutual fund managers, and then paying a fee for under-performance. Don’t worry. This mistake won’t last forever.
The Newsweek poll augurs poorly for the U.S. stock market. Disenchantment with Bush can only lead to lower consumer confidence and the latter to lower consumption levels. If the consumer is 70% of the economy, then the so-called jobless recovery will not last long, and that’s exactly what I have been saying. Money flow will no longer pour into stocks, and that’s what has been taking place over the last 120 days. You need to stay ahead of the curve and anticipate that change. Get the stretchers ready. A great many money managers will be carried out.
There are approximately 6 million small employers and they employ about half of all workers and create most of the new jobs. According to a survey conducted by the National Federation of Independent Business trade group, despite the recent tax cut which raised to $100,000 from $25,000 the amount small businesses could write off annually on capital goods spending, only 26% of small companies plan to buy computers and other big-ticket items in the near future. This is down from 30% before Bush signed the latest tax cut bill. Wall Street seems to have an endless appetite for buying technology stocks. As I said, Wall Street has little respect outside their own small community.
Today in Taipei Intel’s CEO Craig Barrett told reporters that “it is too early to say we have seen the emergence of a total turnaround” in the semiconductor industry. The small business owners could have told you that. I wonder how long it’s going to take for Intel to trade up to $29 again. I wouldn’t hold my breath.
According to Harvard’s Joint Center for Housing Studies, $214 billion was spent on home improvement in 2001, up from $190 billion in 1999. Households spending $20,000 or more accounted for 48.3% of the home improvement market in 2001 compared with 33.3% in 1995. Nesting has grown in importance, but I believe, as money becomes scarcer for the average family, that less money will begin to be spent on home improvement. Rather than large ticket items, such as, Viking ranges and Sub Zero refrigerators, less expensive alternatives will be sought.
I want to close with a personal remark. I get lots of email criticizing my negativity. I do not walk on water and never will. That may come as a disappointment to my Mother, but she died some time ago. However, I am a good swimmer. I have no trouble negotiating the deepest end of the pool or the waves in the ocean. I make plenty of mistakes. Few can state, though, they missed the tech debacle beginning in 2000. Few missed the disaster of October 1987 but caught the upswing in 1982 and 1974. Yes, I have missed, for the most part, the bull move beginning in early March. On the other hand, I will also miss riding out on a stretcher, and that is coming soon to your neighborhood.
Sunday, August 24, 2003
8/24/03 Thought Is Free
Bertrand Russell: “Men fear thought as they fear nothing else on earth, more than ruin, more even than death. Thought is subversive and revolutionary, destructive and terrible, thought is merciless to privilege, established institutions, and comfortable habit. Thought looks into the pit of hell and is not afraid. Thought is great and swift and free, the light of the world, and the chief glory of man.”
The shroud of debt: this year’s budget deficit of almost $500 billion; this year’s trade account deficit of almost $500 billion; unfunded Medicare liabilities exceeding $35 trillion; unfunded Social Security liabilities exceeding $7 trillion; and the treasury printing presses running low on WD 40.
In the 12 months ending in July 2003, the core PPI was up 1.5%, a 37-year low. Federal Reserve Governor Ben Bernanke said “even if the economy recovers smartly for the rest of the year and next, the ongoing slack in the economy may still lead to continuing disinflation.” It’s an interesting thought- that the economy could recover smartly and yet there not be enough demand to swallow the slack and raise prices. If there’s not enough demand, surely there won’t be a need to hire additional workers. If there’s slack, it’s hard to imagine how the nation’s and the consumers’ debt levels will be reduced.
From 1960 to 1980, only 204,000 businesses failed in the U.S. From 1981-2001, more than 1 million U.S. companies have failed. Seton Hall University’s Stillman School of Business recently surveyed 1,900 executives. In the findings, 77% predicted an increase in business failures over the next five years. More than 80% said banks would tighten credit markets which will lead to increased business failures, and 76% said foreign competition would also contribute to more businesses failing.
Michael Fox, executive director of the Conn. chapter of the Gasoline and Automotive Service Dealers of America, said on Friday “I literally came to work and gas across the street was $1.83. I went to the bank, it was $1.90. I went to lunch it was $1.99.”
According to the U.S. Dept of Energy, Mexico ranks as the world’s fourth-largest oil producer. The U.S. imports almost 1.5 million barrels of oil per day from Mexico, our friendly trading partner that nationalized U.S. oil interests in 1936 and renamed the properties Pemex. Some sane people call that stealing. Some politicians call it the price of doing business. I’ll let you decide.
Nigel Calder: “The aim isn’t to degrade mind to matter, but to upgrade the properties of matter to account for mind, and to tell how from the dust and water of the earth, natural forces conjured a mental system capable of asking why it exists.”
St. Augustine: “People travel to wonder at the height of mountains, at the huge waves of the sea, at the long courses of rivers, at the vast compass of the ocean, at the circular motion of the stars; and they pass by themselves without wondering.”
Bertrand Russell: “Men fear thought as they fear nothing else on earth, more than ruin, more even than death. Thought is subversive and revolutionary, destructive and terrible, thought is merciless to privilege, established institutions, and comfortable habit. Thought looks into the pit of hell and is not afraid. Thought is great and swift and free, the light of the world, and the chief glory of man.”
The shroud of debt: this year’s budget deficit of almost $500 billion; this year’s trade account deficit of almost $500 billion; unfunded Medicare liabilities exceeding $35 trillion; unfunded Social Security liabilities exceeding $7 trillion; and the treasury printing presses running low on WD 40.
In the 12 months ending in July 2003, the core PPI was up 1.5%, a 37-year low. Federal Reserve Governor Ben Bernanke said “even if the economy recovers smartly for the rest of the year and next, the ongoing slack in the economy may still lead to continuing disinflation.” It’s an interesting thought- that the economy could recover smartly and yet there not be enough demand to swallow the slack and raise prices. If there’s not enough demand, surely there won’t be a need to hire additional workers. If there’s slack, it’s hard to imagine how the nation’s and the consumers’ debt levels will be reduced.
From 1960 to 1980, only 204,000 businesses failed in the U.S. From 1981-2001, more than 1 million U.S. companies have failed. Seton Hall University’s Stillman School of Business recently surveyed 1,900 executives. In the findings, 77% predicted an increase in business failures over the next five years. More than 80% said banks would tighten credit markets which will lead to increased business failures, and 76% said foreign competition would also contribute to more businesses failing.
Michael Fox, executive director of the Conn. chapter of the Gasoline and Automotive Service Dealers of America, said on Friday “I literally came to work and gas across the street was $1.83. I went to the bank, it was $1.90. I went to lunch it was $1.99.”
According to the U.S. Dept of Energy, Mexico ranks as the world’s fourth-largest oil producer. The U.S. imports almost 1.5 million barrels of oil per day from Mexico, our friendly trading partner that nationalized U.S. oil interests in 1936 and renamed the properties Pemex. Some sane people call that stealing. Some politicians call it the price of doing business. I’ll let you decide.
Nigel Calder: “The aim isn’t to degrade mind to matter, but to upgrade the properties of matter to account for mind, and to tell how from the dust and water of the earth, natural forces conjured a mental system capable of asking why it exists.”
St. Augustine: “People travel to wonder at the height of mountains, at the huge waves of the sea, at the long courses of rivers, at the vast compass of the ocean, at the circular motion of the stars; and they pass by themselves without wondering.”
Saturday, August 23, 2003
8/23/03 Misleading Information Is Not Reassuring
Frequently, I receive angry emails criticizing my negative remarks about information released by the government. Let’s set the record straight. I am not negative. I state, without hesitation, that most often the information is purposely released incorrectly, and will be corrected at a later date when it will not make the headlines. Yesterday a finding was issued by the Environmental Protection Agency’s Office of the Inspector General. “When the EPA made a September 18 announcement (after the 9/11 attack) that the air was
‘safe’ to breathe, it did not have sufficient data and analyses to make such a blanket statement. Furthermore, the White House Council on Environmental Quality influenced…the information that EPA communicated to the public through its early press releases when it convinced EPA to add reassuring statements and delete cautionary ones.” A discovery of asbestos at higher than safe levels in dust samples from lower Manhattan was changed to state that “samples confirm previous reports that ambient air quality meets OSHA standards and consequently is not a cause for public concern. Yesterday Bush’s senior environmental advisor stated the actions were justified by national security. James Connaughton, chairman of the White House Council on Environmental Quality (I didn’t know such a Council existed until now), stated “We were trying to quickly get out the best information we could so that people didn’t overreact and also so people didn’t under-react.” Connaughton is a perfect example of why this country needs a massive layoff of government workers.
There is another problem brewing in Washington, DC. Starting when students return to classes on Sept. 2, public schools will offer alternatives to regular hamburgers. Initially, the offering will include veggie burgers. Then they hope to expand into fruit-based burgers like prune, cherry, and blueberry burgers. This is an effort to combat the obesity problem in schools. Between the rap music and prune burgers our school children will keep all UFOs at bay.
I have been thinking of the announcement Intel made yesterday. They basically said their chip shipments for notebook computers and for servers outweighed the softness for chips used in communication businesses, and the company increased their quarterly guidance for shipments and gross margins. At the same time, their CFO said it’s unclear whether the strength in the first part of the 3rd quarter will be sustainable. Knowing the latter, then why did the company make this announcement on August 22? It makes no sense. Intel had scheduled a mid-quarter update for September 4, and intends to keep to that schedule. With Labor Day coming up, there are only seven business days between August 22 and September 4. If the CFO is not sure about sustainability, then they should have taken the additional time until the 4th. Although not as large as Intel, I’ve run a large public company. It’s wise to be conservative.
U.S. drivers are utilizing 9.4 million barrels of gasoline a day in their cars. We have 149 refineries with a capacity to produce 8.8 million barrels a day. Imports make up the difference. Conservation might be in order. Refiners took heavy losses during 2002; however, at present, according to oil analyst Jacques Rousseau, refineries are enjoying margins of about $14 per barrel, compared to a more normal $5.
The Domino Sugar plant will shut down in Brooklyn, NY and 190 workers will be laid off. It marks the 15th sugar refinery closed in the United States in the past 23 years.
Cash-strapped companies are seeking alternatives to fulfill under-funded pension obligations. Northwest Airlines received approval to use stock from its privately held regional affiliate, Pinnacle Airlines Corp. The airline owes $223 million to its plans for 2002. Navistar International recently used company stock to supplement pension contributions. U.S. Steel is seeking approval to use 170,000 acres of timberland to cover pension shortfalls.
India has a population of 1.1 billion people. Yet, in 2002, U.S. exports to India only totaled $4.1 billion with imports from India amounting to $11.8 billion. By comparison, the U.S. exported more than $22 billion worth of goods to China in 2002. China has a population of 1.3 billion people.
Yesterday Bush made his first trip to the state of Washington since his election. It was a perfect example of how to alienate people on main street. The primary stop was a $2,000 plate luncheon attended by 850 people at Craig McCaw’s home in the Hunts Point section on Lake Washington in Bellevue. This is the richest enclave in the state with only 450 people living in this lakeside suburb of East Seattle. Prior to the lunch he toured a dam and made comments on the salmon run and the environment and met six local businessmen at Boeing field. The most important employer in the state, Microsoft, was not on the agenda nor was Dr. Leroy Hood, the leading human genome scientist in this country. You cannot isolate yourself from the common voter and expect to understand the problems in every day lives. Nor can you expect to win Washington in November 2004.
Frequently, I receive angry emails criticizing my negative remarks about information released by the government. Let’s set the record straight. I am not negative. I state, without hesitation, that most often the information is purposely released incorrectly, and will be corrected at a later date when it will not make the headlines. Yesterday a finding was issued by the Environmental Protection Agency’s Office of the Inspector General. “When the EPA made a September 18 announcement (after the 9/11 attack) that the air was
‘safe’ to breathe, it did not have sufficient data and analyses to make such a blanket statement. Furthermore, the White House Council on Environmental Quality influenced…the information that EPA communicated to the public through its early press releases when it convinced EPA to add reassuring statements and delete cautionary ones.” A discovery of asbestos at higher than safe levels in dust samples from lower Manhattan was changed to state that “samples confirm previous reports that ambient air quality meets OSHA standards and consequently is not a cause for public concern. Yesterday Bush’s senior environmental advisor stated the actions were justified by national security. James Connaughton, chairman of the White House Council on Environmental Quality (I didn’t know such a Council existed until now), stated “We were trying to quickly get out the best information we could so that people didn’t overreact and also so people didn’t under-react.” Connaughton is a perfect example of why this country needs a massive layoff of government workers.
There is another problem brewing in Washington, DC. Starting when students return to classes on Sept. 2, public schools will offer alternatives to regular hamburgers. Initially, the offering will include veggie burgers. Then they hope to expand into fruit-based burgers like prune, cherry, and blueberry burgers. This is an effort to combat the obesity problem in schools. Between the rap music and prune burgers our school children will keep all UFOs at bay.
I have been thinking of the announcement Intel made yesterday. They basically said their chip shipments for notebook computers and for servers outweighed the softness for chips used in communication businesses, and the company increased their quarterly guidance for shipments and gross margins. At the same time, their CFO said it’s unclear whether the strength in the first part of the 3rd quarter will be sustainable. Knowing the latter, then why did the company make this announcement on August 22? It makes no sense. Intel had scheduled a mid-quarter update for September 4, and intends to keep to that schedule. With Labor Day coming up, there are only seven business days between August 22 and September 4. If the CFO is not sure about sustainability, then they should have taken the additional time until the 4th. Although not as large as Intel, I’ve run a large public company. It’s wise to be conservative.
U.S. drivers are utilizing 9.4 million barrels of gasoline a day in their cars. We have 149 refineries with a capacity to produce 8.8 million barrels a day. Imports make up the difference. Conservation might be in order. Refiners took heavy losses during 2002; however, at present, according to oil analyst Jacques Rousseau, refineries are enjoying margins of about $14 per barrel, compared to a more normal $5.
The Domino Sugar plant will shut down in Brooklyn, NY and 190 workers will be laid off. It marks the 15th sugar refinery closed in the United States in the past 23 years.
Cash-strapped companies are seeking alternatives to fulfill under-funded pension obligations. Northwest Airlines received approval to use stock from its privately held regional affiliate, Pinnacle Airlines Corp. The airline owes $223 million to its plans for 2002. Navistar International recently used company stock to supplement pension contributions. U.S. Steel is seeking approval to use 170,000 acres of timberland to cover pension shortfalls.
India has a population of 1.1 billion people. Yet, in 2002, U.S. exports to India only totaled $4.1 billion with imports from India amounting to $11.8 billion. By comparison, the U.S. exported more than $22 billion worth of goods to China in 2002. China has a population of 1.3 billion people.
Yesterday Bush made his first trip to the state of Washington since his election. It was a perfect example of how to alienate people on main street. The primary stop was a $2,000 plate luncheon attended by 850 people at Craig McCaw’s home in the Hunts Point section on Lake Washington in Bellevue. This is the richest enclave in the state with only 450 people living in this lakeside suburb of East Seattle. Prior to the lunch he toured a dam and made comments on the salmon run and the environment and met six local businessmen at Boeing field. The most important employer in the state, Microsoft, was not on the agenda nor was Dr. Leroy Hood, the leading human genome scientist in this country. You cannot isolate yourself from the common voter and expect to understand the problems in every day lives. Nor can you expect to win Washington in November 2004.
Friday, August 22, 2003
8/22/03 Unemployment Without Benefits
While market indices continue to move higher and the unemployment headlines read brighter, a growing cancer is hitting the job market. Employees are being encouraged to take time off without pay. That means the employee is still an employee but cannot receive unemployment benefits. Why would an employee be willing to swallow such a pill? That employee can’t find another paying job. Cost cutting has become such an overwhelming problem that counties are getting into the act as well. The Chicago County Board of Commissioners last week agreed to encourage employees to take days off in the remaining months of the year without pay. The suggestion was for every employee to take five days off without pay. If volunteers did not come forward, then the commissioners would make the request a mandatory one. A staffing professional describes the situation in the Silicon Valley: “very few companies nowadays can afford to maintain the staffing levels of a year ago. Choosing to avoid the bad press and morale deflation that can accompany layoffs, the current trend is about making ripples, not waves. So, valley companies are getting wily, crafty, even creative-and employees, more or less, are putting up with it even if some of the moves are illegal. Still, it beats a pink slip.” Miles Locker, the attorney for the California state Labor Commissioner, says “ a forfeiture of accrued vacation is 100% illegal. You cannot take away vacation time that’s already accrued. It absolutely violates the California Labor Code. What we’re hearing is just widespread violations.” According to the 1997 decision made in Digiacinto v. Ameriko-Omserv Corp., an employer can change an employee’s vacation plan at any time, but they can’t take away vacation time an employee has already earned.
Nobel Prize winning economist Robert Solow: “When real GDP falls below potential, it is…because producers and sellers cannot find enough willing buyers at the prices they are charging.” A good example would be the recent price cutting in the PC market. The IBD/TIPP home computer purchase index fell nearly 17% to 18.6 in August. Last year, the index dropped only 3% between July and August. Roger Kay, an analyst with International Data Corp., said “since Dell sells directly, it would be the first to notice slumping demand.” This week they cut prices on desktop PCs and notebooks. It should be noted that the home computer purchase index has been an early indicator of sales. In the survey only 21% in August said they were “very likely” or “somewhat likely” to buy a new PC in the next six months and this is down from 26% in July.
The highest prices for gasoline at the pump appear to be just around the corner. Yesterday the futures price in New York rose by close to 10 cents, the biggest move since 1991. The wholesale price in California is already at a record. With almost 30 million motorists on the road for Labor Day weekend, there will be more than chump change being expended at the gas pumps. As gas prices absorb consumer dollars, less money will be available for retailers. That's life in the fast lane.
The Russell 2000 index, which tracks smaller capitalization stocks, recorded its tenth consecutive daily gain. For the year it’s up 29%. The S&P 500 index is up 14%. Small has been the place to be.
Two more U.S. soldiers were killed in Iraq, bringing the number of American combat deaths to 179, 32 more than were killed during the first Gulf War. The daily toll mounts with no end in sight. Winning is not achieved fighting an enemy hidden in shadows and rarely visible around corners or in alleys.
Boeing officially notified another 1,440 employees of October layoffs.
Microsoft has issued 33 security advisory bulletins this year. With an R&D budget exceeding $6 billion, you would think some progress would be accomplished in the security arena.
How can the economic war on recession be won with the current state of joblessness? Since Bush took his oath of office, there has been a loss of 3.25 million non-farm private jobs lost. That’s why old-timers are reminded of Herbert Hoover and the depression years.
I reread a statement Greenspan made some months back. He said 10 million mortgages were refinanced in 2002. He estimated the net dollar value of these refinancings at $1.75 trillion. With 6.4 million homes sold in 2002, he said another $350 billion in home equity was realized through capital gains from these sales. In total, he estimated that households realized $700 billion in built up equity from housing in 2002. We know that, since the end of May, refinancing of mortgages has dropped by 70%. If we review Greenspan’s above- mentioned account, quickly we realize the vast change in consumer liquidity over the past 60 days. There is no way that the tax cut and the child credit could have come close to offsetting this liquidity reduction. The net effect should be felt in lessened consumer spending in coming months. Maybe the PC survey was an early indicator.
While lowering its earnings forecast for 2004, Schering-Plough also announced reducing the quarterly dividend to 5.5 cents from 17 cents, eliminating bonuses, and through voluntary retirement, cutting staff by roughly 1,000 or more.
While market indices continue to move higher and the unemployment headlines read brighter, a growing cancer is hitting the job market. Employees are being encouraged to take time off without pay. That means the employee is still an employee but cannot receive unemployment benefits. Why would an employee be willing to swallow such a pill? That employee can’t find another paying job. Cost cutting has become such an overwhelming problem that counties are getting into the act as well. The Chicago County Board of Commissioners last week agreed to encourage employees to take days off in the remaining months of the year without pay. The suggestion was for every employee to take five days off without pay. If volunteers did not come forward, then the commissioners would make the request a mandatory one. A staffing professional describes the situation in the Silicon Valley: “very few companies nowadays can afford to maintain the staffing levels of a year ago. Choosing to avoid the bad press and morale deflation that can accompany layoffs, the current trend is about making ripples, not waves. So, valley companies are getting wily, crafty, even creative-and employees, more or less, are putting up with it even if some of the moves are illegal. Still, it beats a pink slip.” Miles Locker, the attorney for the California state Labor Commissioner, says “ a forfeiture of accrued vacation is 100% illegal. You cannot take away vacation time that’s already accrued. It absolutely violates the California Labor Code. What we’re hearing is just widespread violations.” According to the 1997 decision made in Digiacinto v. Ameriko-Omserv Corp., an employer can change an employee’s vacation plan at any time, but they can’t take away vacation time an employee has already earned.
Nobel Prize winning economist Robert Solow: “When real GDP falls below potential, it is…because producers and sellers cannot find enough willing buyers at the prices they are charging.” A good example would be the recent price cutting in the PC market. The IBD/TIPP home computer purchase index fell nearly 17% to 18.6 in August. Last year, the index dropped only 3% between July and August. Roger Kay, an analyst with International Data Corp., said “since Dell sells directly, it would be the first to notice slumping demand.” This week they cut prices on desktop PCs and notebooks. It should be noted that the home computer purchase index has been an early indicator of sales. In the survey only 21% in August said they were “very likely” or “somewhat likely” to buy a new PC in the next six months and this is down from 26% in July.
The highest prices for gasoline at the pump appear to be just around the corner. Yesterday the futures price in New York rose by close to 10 cents, the biggest move since 1991. The wholesale price in California is already at a record. With almost 30 million motorists on the road for Labor Day weekend, there will be more than chump change being expended at the gas pumps. As gas prices absorb consumer dollars, less money will be available for retailers. That's life in the fast lane.
The Russell 2000 index, which tracks smaller capitalization stocks, recorded its tenth consecutive daily gain. For the year it’s up 29%. The S&P 500 index is up 14%. Small has been the place to be.
Two more U.S. soldiers were killed in Iraq, bringing the number of American combat deaths to 179, 32 more than were killed during the first Gulf War. The daily toll mounts with no end in sight. Winning is not achieved fighting an enemy hidden in shadows and rarely visible around corners or in alleys.
Boeing officially notified another 1,440 employees of October layoffs.
Microsoft has issued 33 security advisory bulletins this year. With an R&D budget exceeding $6 billion, you would think some progress would be accomplished in the security arena.
How can the economic war on recession be won with the current state of joblessness? Since Bush took his oath of office, there has been a loss of 3.25 million non-farm private jobs lost. That’s why old-timers are reminded of Herbert Hoover and the depression years.
I reread a statement Greenspan made some months back. He said 10 million mortgages were refinanced in 2002. He estimated the net dollar value of these refinancings at $1.75 trillion. With 6.4 million homes sold in 2002, he said another $350 billion in home equity was realized through capital gains from these sales. In total, he estimated that households realized $700 billion in built up equity from housing in 2002. We know that, since the end of May, refinancing of mortgages has dropped by 70%. If we review Greenspan’s above- mentioned account, quickly we realize the vast change in consumer liquidity over the past 60 days. There is no way that the tax cut and the child credit could have come close to offsetting this liquidity reduction. The net effect should be felt in lessened consumer spending in coming months. Maybe the PC survey was an early indicator.
While lowering its earnings forecast for 2004, Schering-Plough also announced reducing the quarterly dividend to 5.5 cents from 17 cents, eliminating bonuses, and through voluntary retirement, cutting staff by roughly 1,000 or more.
Thursday, August 21, 2003
8/21/03 Focus On The Truth
J. Dennis Delafield, manager of the Delafield Fund: “The first principle of winning is not to lose. I never worry about what we don’t make. I worry about what we might lose.”
Mark Husson. Merrill Lynch retail analyst: “Wal-Mart’s impact has been like the Black Death. The plague comes to your village, and everyone gets sick, but not everyone dies.” In 1994, Wal-Mart had 2% of the Dallas market for grocery sales, and today the share has risen to 16%. Trent Crowe, one of the company’s district managers, said “I’ve been all over, and this is as competitive market as there is. No one’s giving us anything.” Can you imagine what Kroger, Albertson, Safeway, Tom Thumb are mumbling?
You don’t need an economist to read the tea leaves. The answers are right under your nose. Just look. Focus on jobs, business capital spending, revenues, and inventory levels. Don’t drain your brain with the rest of the gibberish. It’s basic. Are businesses hiring? On balance the net result is no. Are businesses spending on capital projects? A survey of chief executives by the Business Roundtable last month indicated that 74% expected capital spending to remain at the present dismal levels over the next six months. In April the survey the same question resulted in an answer of 55%. As Cynthia Latta, an economist at Global Insight said, “we are seeing a lot of empty manufacturing facilities as companies close them down because they simply can’t compete with cheap imported goods. We don’t see any early end to that trend.” Is there topline growth or revenue pick up? If there were, inventory levels would be higher. The Institute of Supply Managers’ inventory index stands at a lowly 45.9. Economists are looking at an inventory build up to enhance GDP growth. They will have a long wait for that to happen. Technology advances enhance inventory management, and thus, there is a limited requirement to keep growing inventories on hand. No company is more advanced in this area than Wal-Mart. They wrote the book and keep writing new chapters. This company stays lean and runs all out. As Mark Husson said, they are like the Black Death. As a stockholder, you couldn’t ask for more. As a competitor, they are worse than your worst nightmare. The West Nile virus looks inviting next to Wal-Mart. The bottom line on the truth is simple. Forget the headlines. Look at how companies are being run. Corporate America for the most part is in survival mode. It’s not just Eastman Kodak or Hewlett Packard. It’s everywhere along main street.
Presco Steel Inc. in Gainsville is shutting down after 28 years in business. They are a steel making and steel erecting company, and will cut 87 jobs when the plant closes in October. They are the leading fabricator of regional malls. Assistant plant manager Doug Wimpy said “we’ve got too much overhead here, so they’re closing us down. But, we’re the best, most modern of the plants, so they’re taking all of our modern equipment and sending it to our sister companies. Most of the equipment is going to a sister company of ours down in Stone Mountain.” There are thousands of such stories in the naked city.
According to a report from the Federation for American Immigration Reform using U.S. Census Bureau data, Georgia taxpayers spend $231 million a year to educate illegal alien children. According to the report, U.S. taxpayers spend $7.4 billion a year to educate illegal alien children- enough money to put a computer on the desk of every junior high school student in America.
According to a study in the New England Journal of Medicine, administrative expenses consume almost $300 billion of health-care spending in the U.S., or 31% of the total. Costs for staff dedicated to billing and coordination between doctors and insurers add up to more than $1,000 per person each year.
North American-based manufacturers of semiconductor equipment posted $763 million in orders in July and a book-to-bill ratio of 0.97, according to the trade association SEMI. This means that $97 worth of new orders was received for every $100 of product billed for the month. The bookings were 35% below the orders posted for July 2002.
Through July, there have been four straight months of money inflows into stocks. In July, $21 billion flowed into stocks but this represented the first month since 2001 for a withdrawal of funds from the bond market. A total of $8.8 billion was withdrawn.
This morning the euro traded below $1.10, and it was the lowest level since April 29. With weakness in Germany and France, the euro region economy is on the brink of a recession. As such, money is being withdrawn from the euro and switched into the U.S dollar. Our economy is viewed as one with improving growth prospects. The dollar’s 200 day moving average is at $1.095. This a spot where the euro could get some buying support.
Over the past three months the Nikkei has risen 30%. Most everyone’s attention has been on the Nasdaq, the Dow, and the S&P 500. When the Nikkei surge reaches the headlines, then all will notice and pile in. That’s what happened with the euro at the $1.18 level. When the sheep pile aboard, even the ark runs the risk of capsizing.
J. Dennis Delafield, manager of the Delafield Fund: “The first principle of winning is not to lose. I never worry about what we don’t make. I worry about what we might lose.”
Mark Husson. Merrill Lynch retail analyst: “Wal-Mart’s impact has been like the Black Death. The plague comes to your village, and everyone gets sick, but not everyone dies.” In 1994, Wal-Mart had 2% of the Dallas market for grocery sales, and today the share has risen to 16%. Trent Crowe, one of the company’s district managers, said “I’ve been all over, and this is as competitive market as there is. No one’s giving us anything.” Can you imagine what Kroger, Albertson, Safeway, Tom Thumb are mumbling?
You don’t need an economist to read the tea leaves. The answers are right under your nose. Just look. Focus on jobs, business capital spending, revenues, and inventory levels. Don’t drain your brain with the rest of the gibberish. It’s basic. Are businesses hiring? On balance the net result is no. Are businesses spending on capital projects? A survey of chief executives by the Business Roundtable last month indicated that 74% expected capital spending to remain at the present dismal levels over the next six months. In April the survey the same question resulted in an answer of 55%. As Cynthia Latta, an economist at Global Insight said, “we are seeing a lot of empty manufacturing facilities as companies close them down because they simply can’t compete with cheap imported goods. We don’t see any early end to that trend.” Is there topline growth or revenue pick up? If there were, inventory levels would be higher. The Institute of Supply Managers’ inventory index stands at a lowly 45.9. Economists are looking at an inventory build up to enhance GDP growth. They will have a long wait for that to happen. Technology advances enhance inventory management, and thus, there is a limited requirement to keep growing inventories on hand. No company is more advanced in this area than Wal-Mart. They wrote the book and keep writing new chapters. This company stays lean and runs all out. As Mark Husson said, they are like the Black Death. As a stockholder, you couldn’t ask for more. As a competitor, they are worse than your worst nightmare. The West Nile virus looks inviting next to Wal-Mart. The bottom line on the truth is simple. Forget the headlines. Look at how companies are being run. Corporate America for the most part is in survival mode. It’s not just Eastman Kodak or Hewlett Packard. It’s everywhere along main street.
Presco Steel Inc. in Gainsville is shutting down after 28 years in business. They are a steel making and steel erecting company, and will cut 87 jobs when the plant closes in October. They are the leading fabricator of regional malls. Assistant plant manager Doug Wimpy said “we’ve got too much overhead here, so they’re closing us down. But, we’re the best, most modern of the plants, so they’re taking all of our modern equipment and sending it to our sister companies. Most of the equipment is going to a sister company of ours down in Stone Mountain.” There are thousands of such stories in the naked city.
According to a report from the Federation for American Immigration Reform using U.S. Census Bureau data, Georgia taxpayers spend $231 million a year to educate illegal alien children. According to the report, U.S. taxpayers spend $7.4 billion a year to educate illegal alien children- enough money to put a computer on the desk of every junior high school student in America.
According to a study in the New England Journal of Medicine, administrative expenses consume almost $300 billion of health-care spending in the U.S., or 31% of the total. Costs for staff dedicated to billing and coordination between doctors and insurers add up to more than $1,000 per person each year.
North American-based manufacturers of semiconductor equipment posted $763 million in orders in July and a book-to-bill ratio of 0.97, according to the trade association SEMI. This means that $97 worth of new orders was received for every $100 of product billed for the month. The bookings were 35% below the orders posted for July 2002.
Through July, there have been four straight months of money inflows into stocks. In July, $21 billion flowed into stocks but this represented the first month since 2001 for a withdrawal of funds from the bond market. A total of $8.8 billion was withdrawn.
This morning the euro traded below $1.10, and it was the lowest level since April 29. With weakness in Germany and France, the euro region economy is on the brink of a recession. As such, money is being withdrawn from the euro and switched into the U.S dollar. Our economy is viewed as one with improving growth prospects. The dollar’s 200 day moving average is at $1.095. This a spot where the euro could get some buying support.
Over the past three months the Nikkei has risen 30%. Most everyone’s attention has been on the Nasdaq, the Dow, and the S&P 500. When the Nikkei surge reaches the headlines, then all will notice and pile in. That’s what happened with the euro at the $1.18 level. When the sheep pile aboard, even the ark runs the risk of capsizing.
Wednesday, August 20, 2003
8/20/03 Stocks And Dividends
There are several examples where companies are paying out dividends but the company is not earning that dividend. It is important, once again, for the investor to focus on cash flow (net income + depreciation) as well as free cash flow- the cash flow remaining after capital expenditures and other necessary items, for example, R&D, are expended. A relevant case study might be RJR, the cigarette company which manufactures Camel, Winston, Salem, Doral, Vantage, and others. Aside from the on-going litigation awards and expenses, RJR’s profits and sales are down sharply from year ago levels because of increased competition from discount cigarette brands. RJR is not the only company facing these hurdles, but the company is lowering its forecasts for the remainder of the year and is expected to announce layoffs in September. At present they employ about 8,000. The stock is down about 50% from its $60 high. The question one might ask is where would the stock trade if the dividend were lowered significantly from the present $3.80 to possibly $1.80 per share? If the company were to earn only $2.40 per share, a dividend of $1.80 would still be a healthy chunk of income. It’s fair to say that many analysts expect the dividend to be cut, but is the stock fully discounting the cut? That’s hard to say. Hypothetically, if the dividend were reduced to $1.80 and the stock dropped to $25, then the yield would still approximate 7% and that’s a good deal higher than is afforded in most other stocks. The average stock yield is about 1.5%. It’s good to keep an eye on companies like RJR. Often they represent opportunities after the dividend is cut. A necessary reduction can be a sign reflecting reality on the part of the board of directors, and too often, directors fight reality.
Yesterday Carly Fiorina reflected on the disappointing results provided by Hewlett Packard. In addition, the revenue numbers issued by Intuit were also disappointing. The stock of Intuit sells at a fancy P/E, and therefore, the marketplace will not be too forgiving.
I read where the price of gasoline had risen almost 30 cents a gallon in ten days in the Seattle area. That’s an eye-opener.
Chuck Phillips of Oracle: “We were already getting PeopleSoft customers switching over, and that’s one of the reasons PeopleSoft sought out J.D. Edwards-they were getting squeezed.” They certainly weren’t getting squeezed by Oracle. The latter sought out PeopleSoft and wanted to merge Oracle’s application business with PeopleSoft. You have to forgive Phillips. He’s knew at his job.
Mortgage applications peaked the last week in May. For the week ended August 15, refinancing applications are down 70% from the peak and overall mortgage applications down 60% from that high water mark.
The economy of California and that of France are roughly the same size. For the second quarter, France’s GDP shrank 0.3%. Economists had been predicting no change in the rate. French exports declined 0.6% in the quarter.
Residential construction accounts for 5% of the value of goods and services produced in the U.S., and low mortgage rates have helped fuel housing starts to their highest level in 17 years. As mortgage rates rise and mortgage applications decline, it is only natural that housing starts will begin to decline. How much they decline we will have to wait and see. Clearly, housing starts have helped to provide an underpinning to the U.S. economy.
Microsoft said its latest versions of its Office programs will be made available on Oct. 21, and this is later than expected. Microsoft took an extra three months to test Office with users.
Boeing issued 60-day layoff warning notices to 255 workers. The cuts are separate from Boeings plans to cut up to 10,000 jobs this year- mostly from the commercial aircraft division.
There are several examples where companies are paying out dividends but the company is not earning that dividend. It is important, once again, for the investor to focus on cash flow (net income + depreciation) as well as free cash flow- the cash flow remaining after capital expenditures and other necessary items, for example, R&D, are expended. A relevant case study might be RJR, the cigarette company which manufactures Camel, Winston, Salem, Doral, Vantage, and others. Aside from the on-going litigation awards and expenses, RJR’s profits and sales are down sharply from year ago levels because of increased competition from discount cigarette brands. RJR is not the only company facing these hurdles, but the company is lowering its forecasts for the remainder of the year and is expected to announce layoffs in September. At present they employ about 8,000. The stock is down about 50% from its $60 high. The question one might ask is where would the stock trade if the dividend were lowered significantly from the present $3.80 to possibly $1.80 per share? If the company were to earn only $2.40 per share, a dividend of $1.80 would still be a healthy chunk of income. It’s fair to say that many analysts expect the dividend to be cut, but is the stock fully discounting the cut? That’s hard to say. Hypothetically, if the dividend were reduced to $1.80 and the stock dropped to $25, then the yield would still approximate 7% and that’s a good deal higher than is afforded in most other stocks. The average stock yield is about 1.5%. It’s good to keep an eye on companies like RJR. Often they represent opportunities after the dividend is cut. A necessary reduction can be a sign reflecting reality on the part of the board of directors, and too often, directors fight reality.
Yesterday Carly Fiorina reflected on the disappointing results provided by Hewlett Packard. In addition, the revenue numbers issued by Intuit were also disappointing. The stock of Intuit sells at a fancy P/E, and therefore, the marketplace will not be too forgiving.
I read where the price of gasoline had risen almost 30 cents a gallon in ten days in the Seattle area. That’s an eye-opener.
Chuck Phillips of Oracle: “We were already getting PeopleSoft customers switching over, and that’s one of the reasons PeopleSoft sought out J.D. Edwards-they were getting squeezed.” They certainly weren’t getting squeezed by Oracle. The latter sought out PeopleSoft and wanted to merge Oracle’s application business with PeopleSoft. You have to forgive Phillips. He’s knew at his job.
Mortgage applications peaked the last week in May. For the week ended August 15, refinancing applications are down 70% from the peak and overall mortgage applications down 60% from that high water mark.
The economy of California and that of France are roughly the same size. For the second quarter, France’s GDP shrank 0.3%. Economists had been predicting no change in the rate. French exports declined 0.6% in the quarter.
Residential construction accounts for 5% of the value of goods and services produced in the U.S., and low mortgage rates have helped fuel housing starts to their highest level in 17 years. As mortgage rates rise and mortgage applications decline, it is only natural that housing starts will begin to decline. How much they decline we will have to wait and see. Clearly, housing starts have helped to provide an underpinning to the U.S. economy.
Microsoft said its latest versions of its Office programs will be made available on Oct. 21, and this is later than expected. Microsoft took an extra three months to test Office with users.
Boeing issued 60-day layoff warning notices to 255 workers. The cuts are separate from Boeings plans to cut up to 10,000 jobs this year- mostly from the commercial aircraft division.
Tuesday, August 19, 2003
8/19/03 Pop Up Ads
There’s a columnist for Forbes Magazine who is a money manager. He uses pop up ads to attract new investors to his firm. I’ve always held the belief that one’s investment record negates the need for ads. After reading his latest article, I can see why he utilizes pop up ads. Rather than placing a title of “today’s bearish analysts can’t be trusted,” maybe he should consider the thought that everyone is entitled to an opinion and maybe others run rings around his performance record. Another columnist relies on a 68% increase in Deere’s earnings as a reason to be bullish. I outlined what the facts are for Deere. The management is lowering its forecasts going forward, and the strength in the construction business was tied to lower mortgage and interest rates. July and August will, in all probability, be the last strong months for new home starts and construction in general. In fact, I look for layoffs to take place within the mortgage industry and the construction business.
A columnist for another financial organization wrote “as with the end of the 1990s bull market, anyone who says he called the bond bust of 2003 deserves skeptical scrutiny. I must be deserving of double skeptical scrutiny. As hard as I try, I am unable to bat a perfect 1000. I’m far from that. I picked up the Nikkei at the bottom at 7600 but preferred it to the Nasdaq. It was a great pick but the rise in the Nasdaq offset my gains. I’ve made wonderful calls in HD, MCD, AMZN, and many others- all near their lows- but eliminated the positions way too early. No one is clairvoyant. That’s what’s wonderful about the markets. They keep you humble. You are bound to make mistakes, and the prices are a daily reminder of those mistakes. The scorecard is loud and clear. No one needs pop up ads.
Cupertino’s Advanced Forecasting cautions that the worldwide semiconductor industry has not changed its fundamentals and it sees the possibility of a repeat of the boom-and-bust cycle. It should be noted that “Advanced Forecasting predicted in early 1999 that the growth rate of the underlying demand for Ics would slow significantly in the summer of 2000…. Instead of slowing down, the momentum continued, leading to inflated targets, overbookings, overcapacity, and inventories, causing the longest and deepest recession in semiconductor industry,” said Advanced’s Rosa Luis. Maybe the industry is learning. On Monday IBM said it cut 600 jobs in its chip-making division, which lost money in the second quarter due to weak technology demand and a slow start at its new plant. IBM also said it would require about 3000 executive and support employees to take one unpaid week of leave during the current quarter. IBM spokesman Scott Sykes said “these moves are designed to make us more competitive and improve our profitability.” If the economy were strong, I doubt whether these actions would have been taken. The market seems to ignore the on-going layoffs. I guess they only count to those families impacted. Maybe the columnist for Bloomberg is correct when he says “The U.S. economy’s naysayers just don’t know history.” I guess I deserve skeptical scrutiny. Pal, I know history and I’m not reading tea leaves!
There’s a columnist for Forbes Magazine who is a money manager. He uses pop up ads to attract new investors to his firm. I’ve always held the belief that one’s investment record negates the need for ads. After reading his latest article, I can see why he utilizes pop up ads. Rather than placing a title of “today’s bearish analysts can’t be trusted,” maybe he should consider the thought that everyone is entitled to an opinion and maybe others run rings around his performance record. Another columnist relies on a 68% increase in Deere’s earnings as a reason to be bullish. I outlined what the facts are for Deere. The management is lowering its forecasts going forward, and the strength in the construction business was tied to lower mortgage and interest rates. July and August will, in all probability, be the last strong months for new home starts and construction in general. In fact, I look for layoffs to take place within the mortgage industry and the construction business.
A columnist for another financial organization wrote “as with the end of the 1990s bull market, anyone who says he called the bond bust of 2003 deserves skeptical scrutiny. I must be deserving of double skeptical scrutiny. As hard as I try, I am unable to bat a perfect 1000. I’m far from that. I picked up the Nikkei at the bottom at 7600 but preferred it to the Nasdaq. It was a great pick but the rise in the Nasdaq offset my gains. I’ve made wonderful calls in HD, MCD, AMZN, and many others- all near their lows- but eliminated the positions way too early. No one is clairvoyant. That’s what’s wonderful about the markets. They keep you humble. You are bound to make mistakes, and the prices are a daily reminder of those mistakes. The scorecard is loud and clear. No one needs pop up ads.
Cupertino’s Advanced Forecasting cautions that the worldwide semiconductor industry has not changed its fundamentals and it sees the possibility of a repeat of the boom-and-bust cycle. It should be noted that “Advanced Forecasting predicted in early 1999 that the growth rate of the underlying demand for Ics would slow significantly in the summer of 2000…. Instead of slowing down, the momentum continued, leading to inflated targets, overbookings, overcapacity, and inventories, causing the longest and deepest recession in semiconductor industry,” said Advanced’s Rosa Luis. Maybe the industry is learning. On Monday IBM said it cut 600 jobs in its chip-making division, which lost money in the second quarter due to weak technology demand and a slow start at its new plant. IBM also said it would require about 3000 executive and support employees to take one unpaid week of leave during the current quarter. IBM spokesman Scott Sykes said “these moves are designed to make us more competitive and improve our profitability.” If the economy were strong, I doubt whether these actions would have been taken. The market seems to ignore the on-going layoffs. I guess they only count to those families impacted. Maybe the columnist for Bloomberg is correct when he says “The U.S. economy’s naysayers just don’t know history.” I guess I deserve skeptical scrutiny. Pal, I know history and I’m not reading tea leaves!
Monday, August 18, 2003
8/18/03 Kansas City Royals
The Royals are a team with a payroll of $41 miilion. By comparison, the Yankees payroll is $180 million. For the first time since 1993, the Royals won a home series with the Yankees. It is Tony Pena's first year as a big-league manager. With Pena, with 43 games left, the Royals have already won more games and sold more tickets than all of last year. As DH Mike Sweeney says, "Tony Pena is the manager of the year and we're playing Tony Pena baseball. He tells us 'Go out and have fun, boys. Don't get nervous, don't feel pressure, just have fun.'" Quoting Confucius, Pena says "if you love what you're doing, you don't have to work for the rest of your life." I couldn't agree more. That's exactly how I feel. There is another key to the success the Royals are enjoying. They continue their winning ways because their .306 average with runners in scoring position is the best in the majors. In other words, when it counts they deliver. One can carry that thought over to investing. You don't need to swing for the fences. If you do, there will be far too many strikeouts produced which translate into losses. You need to get on base, and then bring that runner home by hitting your pitch. For example, it is much more difficult to time a turnaround situation than to find a good buying opportunity in WalMart or Microsoft. They are the leaders in their field and have demonstrated winning ways for 25 years. You too can have fun and bring the runner in scoring position across home plate. Have a plan when you go up to the investing plate. Prepare and have fun. Winning creates passion and passion creates winning.
The Federal Bureau of Labor Statistics show 4.7 million people who want to work full time have settled for part-time jobs, nearly a 50% increase from three years ago. More than 1 in 5 jobless workers or 2 million people have been out of work longer than half a year.
A growing number of immigrants are moving back to their home countries of Pakistan, India, China, Singapore, and VietNam- countries with job and economic opportunities. China is expanding at 8% a year and India last year grew at 4.3%.
Beginning with the last quarter of 2001 and for the next three quarters thereafter, the GDP expanded by 3.3%. However, during the 3rd quarter of 2002, the average nonfarm employment was 1.5 million less jobs than the previous year's comparable quarter. The rear view mirror and its experience, therefore, doesn't present a pretty employment picture for this period leading up to the next presidential election.
The Royals are a team with a payroll of $41 miilion. By comparison, the Yankees payroll is $180 million. For the first time since 1993, the Royals won a home series with the Yankees. It is Tony Pena's first year as a big-league manager. With Pena, with 43 games left, the Royals have already won more games and sold more tickets than all of last year. As DH Mike Sweeney says, "Tony Pena is the manager of the year and we're playing Tony Pena baseball. He tells us 'Go out and have fun, boys. Don't get nervous, don't feel pressure, just have fun.'" Quoting Confucius, Pena says "if you love what you're doing, you don't have to work for the rest of your life." I couldn't agree more. That's exactly how I feel. There is another key to the success the Royals are enjoying. They continue their winning ways because their .306 average with runners in scoring position is the best in the majors. In other words, when it counts they deliver. One can carry that thought over to investing. You don't need to swing for the fences. If you do, there will be far too many strikeouts produced which translate into losses. You need to get on base, and then bring that runner home by hitting your pitch. For example, it is much more difficult to time a turnaround situation than to find a good buying opportunity in WalMart or Microsoft. They are the leaders in their field and have demonstrated winning ways for 25 years. You too can have fun and bring the runner in scoring position across home plate. Have a plan when you go up to the investing plate. Prepare and have fun. Winning creates passion and passion creates winning.
The Federal Bureau of Labor Statistics show 4.7 million people who want to work full time have settled for part-time jobs, nearly a 50% increase from three years ago. More than 1 in 5 jobless workers or 2 million people have been out of work longer than half a year.
A growing number of immigrants are moving back to their home countries of Pakistan, India, China, Singapore, and VietNam- countries with job and economic opportunities. China is expanding at 8% a year and India last year grew at 4.3%.
Beginning with the last quarter of 2001 and for the next three quarters thereafter, the GDP expanded by 3.3%. However, during the 3rd quarter of 2002, the average nonfarm employment was 1.5 million less jobs than the previous year's comparable quarter. The rear view mirror and its experience, therefore, doesn't present a pretty employment picture for this period leading up to the next presidential election.
Saturday, August 16, 2003
Posting For 8/17/03: The Miscellaneous Report
According to the SoyFoods Association of North America, the soy-food industry has grown 13% to $3.65 billion in sales in 2002. Soymilk sales have grown six times from $100 million in 1995 to about $600 million in 2002. Soy milk is lactose-free, lowers cholestrol, strengthens bones, but it has high levels of polyunsaturated fat and carbohydrates, and does not contain calcium and potassium. Nevertheless, production of soymilk surpassed 100 million gallons last year, and, I believe, will continue to gain in popularity.
Philip Morris' attorney, John Mulderig, said "the bottom line is a party shouldn't be forced into bankriuptcy and deprived of the right to appeal." This statement was made in response to friday's ruling the company had to post a $12 billion bond to secure the judgment while the decision is appealed. The present state law requires losers of lawsuits to post the amount of the judgment as well as enough to cover court costs and interest.
June air travel was only down 4% from 2002 but 15.5% below June 2000. Several airlines posted second quater profits only because of federal aid which no longer is available. Fall fare sales have arrived early this year. United and Delta threw in a free night at a hotel. The airlines are starting to catch the auto rebate bug.
Iowa, according to the census, is gaining more people from California than any other state. Immigration experts said this fact is tied to the availability of $10 an hour jobs in meatpacking plants, and these jobs have attracted large Hispanic populations to Iowa,and they have become the largest minority segment in the state.
One of the reasons the U.S. government gave for the strong GDP second quarter was agriculture. Yet, Deere during this quarter, had "planned lower production volumes in the agricultural equipment division." Turning to Deere, the stock is at its highest level in many years. Once again, investors looked at the headline. Looking further, "excluding the impact of changes in currency-exchange rates, overseas sales were down 3% for the quarter." In addition, another benefit to net income was a lower tax rate. Going forward, excluding the impact of currency and price, net equipment sales are "forecast to be slightly lower for the fourth quarter." The physical volume of agricultural equipment sales is expected to be down slightly as "production in the U.S. and Canada will be down 7% in the fourth quarter, as inventories are reduced in line with our asset management objectives." The stock is at $55 and has a Scouter rating of 9. The stock broke below $40 in April. At 24 times earnings, sales of $16 billion, a market cap of $13 billion, this, I believe, is a wonderful time to consider selling into strength. Deere is a cyclical company, and, as interest rates rise, their construction business will not be able to carry the day.
According to the SoyFoods Association of North America, the soy-food industry has grown 13% to $3.65 billion in sales in 2002. Soymilk sales have grown six times from $100 million in 1995 to about $600 million in 2002. Soy milk is lactose-free, lowers cholestrol, strengthens bones, but it has high levels of polyunsaturated fat and carbohydrates, and does not contain calcium and potassium. Nevertheless, production of soymilk surpassed 100 million gallons last year, and, I believe, will continue to gain in popularity.
Philip Morris' attorney, John Mulderig, said "the bottom line is a party shouldn't be forced into bankriuptcy and deprived of the right to appeal." This statement was made in response to friday's ruling the company had to post a $12 billion bond to secure the judgment while the decision is appealed. The present state law requires losers of lawsuits to post the amount of the judgment as well as enough to cover court costs and interest.
June air travel was only down 4% from 2002 but 15.5% below June 2000. Several airlines posted second quater profits only because of federal aid which no longer is available. Fall fare sales have arrived early this year. United and Delta threw in a free night at a hotel. The airlines are starting to catch the auto rebate bug.
Iowa, according to the census, is gaining more people from California than any other state. Immigration experts said this fact is tied to the availability of $10 an hour jobs in meatpacking plants, and these jobs have attracted large Hispanic populations to Iowa,and they have become the largest minority segment in the state.
One of the reasons the U.S. government gave for the strong GDP second quarter was agriculture. Yet, Deere during this quarter, had "planned lower production volumes in the agricultural equipment division." Turning to Deere, the stock is at its highest level in many years. Once again, investors looked at the headline. Looking further, "excluding the impact of changes in currency-exchange rates, overseas sales were down 3% for the quarter." In addition, another benefit to net income was a lower tax rate. Going forward, excluding the impact of currency and price, net equipment sales are "forecast to be slightly lower for the fourth quarter." The physical volume of agricultural equipment sales is expected to be down slightly as "production in the U.S. and Canada will be down 7% in the fourth quarter, as inventories are reduced in line with our asset management objectives." The stock is at $55 and has a Scouter rating of 9. The stock broke below $40 in April. At 24 times earnings, sales of $16 billion, a market cap of $13 billion, this, I believe, is a wonderful time to consider selling into strength. Deere is a cyclical company, and, as interest rates rise, their construction business will not be able to carry the day.
8/16/03 Wall Street Knows Best?
This year the Nasdaq is up 27%, the S&P 500 is up 13%, and the Dow is up 12%. This past week there was a rotation into cyclical stocks which rose over 3% during the past five trading days. International Paper, Caterpillar, and Alcoa all moved higher with International Paper the standout. Wall Street appears to have their own take on cyclical companies. The Street ignores what's happening with plant closings. Due to poor market conditions and efforts to cut costs, Weyerhaeuser announced on Friday they will shut down two plants in Oregon and lay off 200 workers. The company is down to having just 5000 employees in Oregon, which is a major lumber state, and the last time I checked, lumber goes into the making of paper. Wall Street has always jumped on cyclical stocks as an economy gets stronger. But, there is another side to the story. Cyclical stocks are the last group to move higher in a rising stock market. I call them the last gasp stocks. Eventually, I find, they will take your breath away.
There was a mixed picture as industrial production rose 0.5% in July mostly because utility output increased 3.9% due to warmer weather. On the other hand, the output of nondurable goods fell 0.4%. Looking at the numbers rationally, the facts are that in July 2003 manufacturing production is down 1.4% and business equipment 1.1% from year ago levels. If you think the economy is stronger, I suggest you need a reality check. As long as companies are shutting down plants and reducing employment, this economy is on a one way ticket to palookaville.
This year the Nasdaq is up 27%, the S&P 500 is up 13%, and the Dow is up 12%. This past week there was a rotation into cyclical stocks which rose over 3% during the past five trading days. International Paper, Caterpillar, and Alcoa all moved higher with International Paper the standout. Wall Street appears to have their own take on cyclical companies. The Street ignores what's happening with plant closings. Due to poor market conditions and efforts to cut costs, Weyerhaeuser announced on Friday they will shut down two plants in Oregon and lay off 200 workers. The company is down to having just 5000 employees in Oregon, which is a major lumber state, and the last time I checked, lumber goes into the making of paper. Wall Street has always jumped on cyclical stocks as an economy gets stronger. But, there is another side to the story. Cyclical stocks are the last group to move higher in a rising stock market. I call them the last gasp stocks. Eventually, I find, they will take your breath away.
There was a mixed picture as industrial production rose 0.5% in July mostly because utility output increased 3.9% due to warmer weather. On the other hand, the output of nondurable goods fell 0.4%. Looking at the numbers rationally, the facts are that in July 2003 manufacturing production is down 1.4% and business equipment 1.1% from year ago levels. If you think the economy is stronger, I suggest you need a reality check. As long as companies are shutting down plants and reducing employment, this economy is on a one way ticket to palookaville.
Friday, August 15, 2003
8/15/03 How’s This Picture?
We spend billions in an attempt to rebuild Iraq. Our troops risk their lives so that the Iraqi people will have a better life. About one American soldier is killed daily, and more are wounded. As a thanks for a job well done, the Pentagon wants to cut the pay of our 148,000 troops in Iraq. Unless action is taken very quickly, our fighting forces will lose a pay increase approved last April of $75 in “imminent danger pay” and $150 a month in “family separation allowances.” The Defense Department is in favor of the cuts, and says its budget beginning October 1 cannot provide for the higher payments. It will be up to Congress to maintain the increases as a part of its annual defense appropriations legislation. Is there something wrong with this picture?
California has provided the necessary votes for the recall measure to come to a vote. In doing my analysis, one point became clear. The measure is to recall Gray Davis. Should Davis resign prior to the recall and the LT Governor take over, then the latter would become governor and there would not be a recall.
California has a $38 billion budget deficit and yet the highest mean priced homes are in the Bay Area of San Francisco at $560,200 and in the June quarter price increases of 24% took place on and around Riverside and San Bernardino in Southern California and 21% for Los Angeles. At the same time, unemployment remains at a very high level in the SiliconValley. Is there anything wrong with this picture?
The Dow and the Nasdaq have had spectacular gains over the past 5 months. At the same time Charles Schwab continues to lay off people and close offices. They plan to fire another 250 workers and close 20 more branches. At the end of 2000 the company employed 26,300 and that I down to 16,000. Up to the latest announcement, Schwab had closed 31 branches. A Schwab spokesperson said “we are very cautious about the environment, so we are continuing to be vigilant on the expense front.”
The index of mortgage applications fell 16% and the refinancing index 20% in the latest week to the lowest levels in about one year. Joseph Abate, a senior economist at Lehman Bros, said “higher mortgage rates will not leave the economy unscathed. They will work through several channels to reduce significantly the stimulus they have provided to the economy since the recession began.
We spend billions in an attempt to rebuild Iraq. Our troops risk their lives so that the Iraqi people will have a better life. About one American soldier is killed daily, and more are wounded. As a thanks for a job well done, the Pentagon wants to cut the pay of our 148,000 troops in Iraq. Unless action is taken very quickly, our fighting forces will lose a pay increase approved last April of $75 in “imminent danger pay” and $150 a month in “family separation allowances.” The Defense Department is in favor of the cuts, and says its budget beginning October 1 cannot provide for the higher payments. It will be up to Congress to maintain the increases as a part of its annual defense appropriations legislation. Is there something wrong with this picture?
California has provided the necessary votes for the recall measure to come to a vote. In doing my analysis, one point became clear. The measure is to recall Gray Davis. Should Davis resign prior to the recall and the LT Governor take over, then the latter would become governor and there would not be a recall.
California has a $38 billion budget deficit and yet the highest mean priced homes are in the Bay Area of San Francisco at $560,200 and in the June quarter price increases of 24% took place on and around Riverside and San Bernardino in Southern California and 21% for Los Angeles. At the same time, unemployment remains at a very high level in the SiliconValley. Is there anything wrong with this picture?
The Dow and the Nasdaq have had spectacular gains over the past 5 months. At the same time Charles Schwab continues to lay off people and close offices. They plan to fire another 250 workers and close 20 more branches. At the end of 2000 the company employed 26,300 and that I down to 16,000. Up to the latest announcement, Schwab had closed 31 branches. A Schwab spokesperson said “we are very cautious about the environment, so we are continuing to be vigilant on the expense front.”
The index of mortgage applications fell 16% and the refinancing index 20% in the latest week to the lowest levels in about one year. Joseph Abate, a senior economist at Lehman Bros, said “higher mortgage rates will not leave the economy unscathed. They will work through several channels to reduce significantly the stimulus they have provided to the economy since the recession began.
Thursday, August 14, 2003
8/14/03 England, Germany, France, Italy, and Spain
What do those countries all have in common? Their ten year government bonds yield less than our 10 year government bonds which now provide a return of 4.64 per cent. Does that concern anyone? Of course not. Those economies are doing poorly and ours is recovering in strong fashion. Right? Wrong. The media makes a big deal because our trade deficit dropped $2 billion to about $40 billion in the month. Get real. Some civilian aircraft got delivered. Boeing has laid off over 35,000 workers in the commercial aircraft division. They are phasing out the 767 due to no new orders. Their airliner business is punk. Meanwhile the real story continues. Imports from China hit their highest level in 8 months.
Then the media reported unemployment dropped. It didn't. It rose. Then producer prices were announced as rising 0.1 per cent for the month and this declined from 0.5 per cent in June. It should be noted that in July food prices fell for the first time in 10 months. Everyone laughs that the Fed is concerned with deflation. Consumer prices tomorrow will show almost no increase as well.
So what's going on? The Fed is scared. That's right. They are printing and printing money, and that should generate inflation. It hasn't. The government is spending and spending money like nobody's business, and yet, the private sector can't generate topline growth, and the person on main street has little confidence in the way the economy is being managed.
Imports from China continue to rise. Next month the Snowman will go to China and tell the Chinese officials to raise the value of their currency in relationship to the dollar. We may as well dicate to them. We do with every other country. It's too bad we can't run our own show. The other countries will get the last laugh when we slide into something more serious than a recession. They don't have long to wait.
What do those countries all have in common? Their ten year government bonds yield less than our 10 year government bonds which now provide a return of 4.64 per cent. Does that concern anyone? Of course not. Those economies are doing poorly and ours is recovering in strong fashion. Right? Wrong. The media makes a big deal because our trade deficit dropped $2 billion to about $40 billion in the month. Get real. Some civilian aircraft got delivered. Boeing has laid off over 35,000 workers in the commercial aircraft division. They are phasing out the 767 due to no new orders. Their airliner business is punk. Meanwhile the real story continues. Imports from China hit their highest level in 8 months.
Then the media reported unemployment dropped. It didn't. It rose. Then producer prices were announced as rising 0.1 per cent for the month and this declined from 0.5 per cent in June. It should be noted that in July food prices fell for the first time in 10 months. Everyone laughs that the Fed is concerned with deflation. Consumer prices tomorrow will show almost no increase as well.
So what's going on? The Fed is scared. That's right. They are printing and printing money, and that should generate inflation. It hasn't. The government is spending and spending money like nobody's business, and yet, the private sector can't generate topline growth, and the person on main street has little confidence in the way the economy is being managed.
Imports from China continue to rise. Next month the Snowman will go to China and tell the Chinese officials to raise the value of their currency in relationship to the dollar. We may as well dicate to them. We do with every other country. It's too bad we can't run our own show. The other countries will get the last laugh when we slide into something more serious than a recession. They don't have long to wait.
Wednesday, August 13, 2003
8/13/03 Your Neighborhood
The Fed worries about prices not rising as certain segments of the economy show some improvement; however, prices in your neighborhood might be going up. That's the way the world works. There are many exceptions to generalizations, but it's still your hurt and your cash flow is diminishing. This is one more reason why the study of individual behavior and experience is worthwhile, and why it's important to listen to the stories of the people and not simply the politicians.
Everyone on Wall Street has their take on the economy and stock and bond prices. There are literally a million stories in the naked city. To be a successful investor you must sift through the fiction and get to the facts. For me, as a generalization, demand does not meet supply. Of course, that may not be the case with workers' comp or various types of insurance. I am talking a generalization, and therefore, businesses, as a whole, do not have pricing power that sticks. You can fly between the west coast and Ft. Lauderdale for $211. There are other markets where the competition and the pricing is less attractive. It's supply and demand. As long as companies continue to focus on cost cutting, employment levels will continue to decline. Reliant Energy, for example, just announced laying off 650 workers. The unemployment beat goes on. The unit labor cost will continue to decline. There are hundreds who line up for 2 job openings. The hours worked will continue to decline. Increased productivity creates less hours worked. You bust your cohones to hopefully stay in the same cash flow space. That doesn't do much for consumer optimism or confidence. You can read about how certain economic segments are doing a bit better. As a generalization, nothing much has changed- except for stock prices. It's up to the markets to walk the talk. Bring on the topline growth. Bring on higher prices and higher margins. If you can't do it, then the Fed has a right to worry. You have a right to worry. The market had better worry. It's time to put up or shut up. Give me your best shot. I'm ready to be surprised.
The Fed worries about prices not rising as certain segments of the economy show some improvement; however, prices in your neighborhood might be going up. That's the way the world works. There are many exceptions to generalizations, but it's still your hurt and your cash flow is diminishing. This is one more reason why the study of individual behavior and experience is worthwhile, and why it's important to listen to the stories of the people and not simply the politicians.
Everyone on Wall Street has their take on the economy and stock and bond prices. There are literally a million stories in the naked city. To be a successful investor you must sift through the fiction and get to the facts. For me, as a generalization, demand does not meet supply. Of course, that may not be the case with workers' comp or various types of insurance. I am talking a generalization, and therefore, businesses, as a whole, do not have pricing power that sticks. You can fly between the west coast and Ft. Lauderdale for $211. There are other markets where the competition and the pricing is less attractive. It's supply and demand. As long as companies continue to focus on cost cutting, employment levels will continue to decline. Reliant Energy, for example, just announced laying off 650 workers. The unemployment beat goes on. The unit labor cost will continue to decline. There are hundreds who line up for 2 job openings. The hours worked will continue to decline. Increased productivity creates less hours worked. You bust your cohones to hopefully stay in the same cash flow space. That doesn't do much for consumer optimism or confidence. You can read about how certain economic segments are doing a bit better. As a generalization, nothing much has changed- except for stock prices. It's up to the markets to walk the talk. Bring on the topline growth. Bring on higher prices and higher margins. If you can't do it, then the Fed has a right to worry. You have a right to worry. The market had better worry. It's time to put up or shut up. Give me your best shot. I'm ready to be surprised.
Tuesday, August 12, 2003
8/12/03 Optimism Is Wearing Off
Today is the Open Market Meeting for the Fed. I considered giving my thoughts about what they might say, and then I realized their statements are irrelevant. The market determines the level of interest rates. As for policy, the Fed is excellent at increasing the velocity of currency in circulation. That back-office function could be outsourced to India at a significant savings.
The Congressional Budget Office projected the Pentagon’s antiterrorism effort in Iraq and Afghanistan may reach $59 billion next year. Taxpayers for Common Sense (paying taxes makes no sense) suggests that postwar costs over the next decade may be as high as $465 billion. The American Academy of Arts and Sciences (they represent the movie industry) project the costs at $615 billion. I think the latter figure includes props and renting elephants for certain scenes.
Alliant Energy of Iowa is paying 30-40% more for natural gas this summer than it did last year. The company intends to offer a “worry proof” bill which lets consumers lock in a price for natural gas before a heating season starts. Another energy company in Iowa, MidAmerican Energy, will, starting in October, compute its budget-billing charges based on energy consumption over a two-year period, and this might smooth out the spikes in energy consumption resulting from a mild winter. Natural gas is Iowa’s main heating fuel.
Arizona has no gasoline refineries and all of its supply must be imported from other states. There is a “west line” coming from California refineries and an “east line” extending from El Paso to Phoenix. There was a temporary shutdown of the east pipeline that supplies 30% of the Valley’s gasoline. It caused shortages at many stations and, since Friday, prices have risen as much as 40 cents per gallon.
In the new IBP/TIPP poll, the Economic Optimism Index fell 1.4 points to 54.8 in August. Importantly, the Federal Policies component fell 3.6 points to 49.1. That’s the lowest reading since the poll began in February 2001. The poll indicates that the summertime tax rebates for families with children may have helped to keep optimism high, but now “the boost we got from May’s tax cut is wearing off.” Jobs continue to be a big concern. 27% of those surveyed say a family member has lost a job in the past 12 months. One-fifth say they fear a family member will lose a job in the next 12 months. 73% say it’s hard to find a job in their area. 35% say it is very hard to find a job.
A new report from Multimedia Research Group, Inc. and Fuji-Keizai USA provides a comprehensive market analysis for the biochip industry. This includes a forecast for DNA chips, DNA chip equipment, DNA chip making and processing services, and DNA chip software and services. They project the total biochip market size to grow from $1.1 billion in 2002 to $2.7 billion in 2007 with a compound annual growth rate of 19.5%. Biochips are being used to accelerate the research processes and help increase productivity to shorten the current 10-15 year drug development cycle.
Today is the Open Market Meeting for the Fed. I considered giving my thoughts about what they might say, and then I realized their statements are irrelevant. The market determines the level of interest rates. As for policy, the Fed is excellent at increasing the velocity of currency in circulation. That back-office function could be outsourced to India at a significant savings.
The Congressional Budget Office projected the Pentagon’s antiterrorism effort in Iraq and Afghanistan may reach $59 billion next year. Taxpayers for Common Sense (paying taxes makes no sense) suggests that postwar costs over the next decade may be as high as $465 billion. The American Academy of Arts and Sciences (they represent the movie industry) project the costs at $615 billion. I think the latter figure includes props and renting elephants for certain scenes.
Alliant Energy of Iowa is paying 30-40% more for natural gas this summer than it did last year. The company intends to offer a “worry proof” bill which lets consumers lock in a price for natural gas before a heating season starts. Another energy company in Iowa, MidAmerican Energy, will, starting in October, compute its budget-billing charges based on energy consumption over a two-year period, and this might smooth out the spikes in energy consumption resulting from a mild winter. Natural gas is Iowa’s main heating fuel.
Arizona has no gasoline refineries and all of its supply must be imported from other states. There is a “west line” coming from California refineries and an “east line” extending from El Paso to Phoenix. There was a temporary shutdown of the east pipeline that supplies 30% of the Valley’s gasoline. It caused shortages at many stations and, since Friday, prices have risen as much as 40 cents per gallon.
In the new IBP/TIPP poll, the Economic Optimism Index fell 1.4 points to 54.8 in August. Importantly, the Federal Policies component fell 3.6 points to 49.1. That’s the lowest reading since the poll began in February 2001. The poll indicates that the summertime tax rebates for families with children may have helped to keep optimism high, but now “the boost we got from May’s tax cut is wearing off.” Jobs continue to be a big concern. 27% of those surveyed say a family member has lost a job in the past 12 months. One-fifth say they fear a family member will lose a job in the next 12 months. 73% say it’s hard to find a job in their area. 35% say it is very hard to find a job.
A new report from Multimedia Research Group, Inc. and Fuji-Keizai USA provides a comprehensive market analysis for the biochip industry. This includes a forecast for DNA chips, DNA chip equipment, DNA chip making and processing services, and DNA chip software and services. They project the total biochip market size to grow from $1.1 billion in 2002 to $2.7 billion in 2007 with a compound annual growth rate of 19.5%. Biochips are being used to accelerate the research processes and help increase productivity to shorten the current 10-15 year drug development cycle.
Monday, August 11, 2003
8/12/03 A Special Blog: How The West Was Won
The California recall will go down as one of the great moments in American history. It’s not about Grey Davis. This story is about the power of the people, and they’re speaking up for their rights. This is a prime example for why so many Americans have died in wars over the past 227 years. People like Diane Feinstein and others have spoken out against the recall and mentioned the fiscal cost to California. As voters go to the polls in October, their votes will extinguish the words of the naysayers. As for the politicians who are afraid of the independence of the American people, vote them out of office. A politician serves at the request of the voters, and power is not in the hands of the politician but with the voter. The Constitution made certain of that.
It’s about time the voters turn their attention to Washington, DC. Since Bush became President, non-defense discretionary spending has jumped close to 30%. It is irrational and irresponsible to increase government spending in this fashion when receipts are dwindling due to a recessionary economy. If Bush won’t control spending, then the voters must. Ross Perot would never have compiled a spending record like Bush has. This President cannot buy your vote. Davis couldn’t, and Bush can’t. The California voters have shown they have the smarts to cut their losses short. Now it’s time for the voters across this great land to do the same. Elect a fiscally responsible individual, and one who can effectuate meaningful nation building. The world is getting smaller, and the job market is getting more competitive. Americans are the most talented workers on the face of the earth. They need the opportunities to show their worth.
Rising mortgage interest bills shall mean larger tax deductions for taxpayers, and this shall increase the nation’s budget deficit even more.
The Indian rupee has been depreciating over the last 40 years. Not this year. On a year-over-year basis it has appreciated about 5% against the U.S. dollar, 7% against the yen, and 4% against the pound. Against the euro it has declined 5%. The rupee is a mirror of India’s vibrant economy and bulging forex reserves.
India’s population is growing by 20 million every year. India faces a crisis with respect to the inadequate availability of water – especially in rural India where groundwater levels have plunged dramatically.
The California recall will go down as one of the great moments in American history. It’s not about Grey Davis. This story is about the power of the people, and they’re speaking up for their rights. This is a prime example for why so many Americans have died in wars over the past 227 years. People like Diane Feinstein and others have spoken out against the recall and mentioned the fiscal cost to California. As voters go to the polls in October, their votes will extinguish the words of the naysayers. As for the politicians who are afraid of the independence of the American people, vote them out of office. A politician serves at the request of the voters, and power is not in the hands of the politician but with the voter. The Constitution made certain of that.
It’s about time the voters turn their attention to Washington, DC. Since Bush became President, non-defense discretionary spending has jumped close to 30%. It is irrational and irresponsible to increase government spending in this fashion when receipts are dwindling due to a recessionary economy. If Bush won’t control spending, then the voters must. Ross Perot would never have compiled a spending record like Bush has. This President cannot buy your vote. Davis couldn’t, and Bush can’t. The California voters have shown they have the smarts to cut their losses short. Now it’s time for the voters across this great land to do the same. Elect a fiscally responsible individual, and one who can effectuate meaningful nation building. The world is getting smaller, and the job market is getting more competitive. Americans are the most talented workers on the face of the earth. They need the opportunities to show their worth.
Rising mortgage interest bills shall mean larger tax deductions for taxpayers, and this shall increase the nation’s budget deficit even more.
The Indian rupee has been depreciating over the last 40 years. Not this year. On a year-over-year basis it has appreciated about 5% against the U.S. dollar, 7% against the yen, and 4% against the pound. Against the euro it has declined 5%. The rupee is a mirror of India’s vibrant economy and bulging forex reserves.
India’s population is growing by 20 million every year. India faces a crisis with respect to the inadequate availability of water – especially in rural India where groundwater levels have plunged dramatically.
8/11/03 Another Employment Hurdle
Gartner, Inc. says one out of ten technology jobs in the U.S. will move overseas by the end of 2004. That fails to address another subject. The State Department issued 28,098 L-1 visas from Oct 2002 to March 2003, and this represented a 7% increase from the same period a year earlier. Each L-1 visa lets a worker enter the U.S. multiple times for up to 7 years, and facilitates a company transferring workers from overseas offices to the U.S. Importantly, it also permits companies to continue paying workers their home country wages.
In June, unemployment in the euro zone countries amounted to 8.9%. There are 12.5 million people out of work. “If nothing is changed the OECD predicts the unemployment rate will average 8.25 per cent over the period 2003 to 2008,” said Laurence Boone, euro area economist at the Paris-based Organization for Economic Co-operation and Development. In Germany there are over 4 million unemployed workers, and that’s Europe’s largest economy. In the euro zone, taxes and contributions amount to over 40% of gross wages. A.T. Kearney’s study indicates that European banks will move 10,000 back office jobs abroad to low-cost countries by 2008.
Lakshman Achuthan of New York-based Economic Cycle Research Institute says “China’s the manufacturer and India’s the back office, that seems to be the way it’s shaping up. Industrial jobs are being lost to low cost producers in Asia. And those jobs are unlikely to return when the recovery begins.”
The Bank of Japan sold a record $76 billion yen from January through July.
According to the United States Department of Agriculture, nearly 13 million American children are at risk for hunger today. A recent survey conducted by the Alliance to End Hunger found that more than 43% of respondents said there were hungry people in their own communities who do not have enough to eat, and one quarter of the respondents were personally worried that they or someone in their family could go hungry and not have enough to eat in the future. More than 65% of voters say hunger is ‘an important election issue.’
Foot Locker is Nike’s largest customer. Due to a dispute on shoe prices and selection, Foot Locker is cutting back on Nike orders, and this will impact Nike’s results for the rest of the year. Nike has also said demand for golf products may remain weak due to the slow U.S. economy. In fiscal 2003 Nike earned $2.44 per share on revenues of about $10 billion. Analysts anticipate earnings of $3.16 per share for fiscal 2004. Those estimates, in my view, need to be reduced to $2.75 or lower. At $52.81and a market cap of $14 billion, the stock appears, at best, fully priced. Additionally, with the trend towards Americans weighing more, Nike is behind the times with their shoe styles. Few models are designed for wide feet. New Balance, on the other hand, provides a much larger array of widths.
Gartner, Inc. says one out of ten technology jobs in the U.S. will move overseas by the end of 2004. That fails to address another subject. The State Department issued 28,098 L-1 visas from Oct 2002 to March 2003, and this represented a 7% increase from the same period a year earlier. Each L-1 visa lets a worker enter the U.S. multiple times for up to 7 years, and facilitates a company transferring workers from overseas offices to the U.S. Importantly, it also permits companies to continue paying workers their home country wages.
In June, unemployment in the euro zone countries amounted to 8.9%. There are 12.5 million people out of work. “If nothing is changed the OECD predicts the unemployment rate will average 8.25 per cent over the period 2003 to 2008,” said Laurence Boone, euro area economist at the Paris-based Organization for Economic Co-operation and Development. In Germany there are over 4 million unemployed workers, and that’s Europe’s largest economy. In the euro zone, taxes and contributions amount to over 40% of gross wages. A.T. Kearney’s study indicates that European banks will move 10,000 back office jobs abroad to low-cost countries by 2008.
Lakshman Achuthan of New York-based Economic Cycle Research Institute says “China’s the manufacturer and India’s the back office, that seems to be the way it’s shaping up. Industrial jobs are being lost to low cost producers in Asia. And those jobs are unlikely to return when the recovery begins.”
The Bank of Japan sold a record $76 billion yen from January through July.
According to the United States Department of Agriculture, nearly 13 million American children are at risk for hunger today. A recent survey conducted by the Alliance to End Hunger found that more than 43% of respondents said there were hungry people in their own communities who do not have enough to eat, and one quarter of the respondents were personally worried that they or someone in their family could go hungry and not have enough to eat in the future. More than 65% of voters say hunger is ‘an important election issue.’
Foot Locker is Nike’s largest customer. Due to a dispute on shoe prices and selection, Foot Locker is cutting back on Nike orders, and this will impact Nike’s results for the rest of the year. Nike has also said demand for golf products may remain weak due to the slow U.S. economy. In fiscal 2003 Nike earned $2.44 per share on revenues of about $10 billion. Analysts anticipate earnings of $3.16 per share for fiscal 2004. Those estimates, in my view, need to be reduced to $2.75 or lower. At $52.81and a market cap of $14 billion, the stock appears, at best, fully priced. Additionally, with the trend towards Americans weighing more, Nike is behind the times with their shoe styles. Few models are designed for wide feet. New Balance, on the other hand, provides a much larger array of widths.
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