12/9/03 Smile For The Camera
Over the weekend there were thousands of Santas in malls and shopping centers. Everyone was having a jolly old time. Children were having their picture taken with Old Nick, and parents, relatives, and friends were beaming with delight. Optimism is in the air. As Michael Medved would say, it’s the greatest place on God’s green earth. But how green is it?
I am very sorry to report that 32% of Americans spent refund checks from the Bush tax cuts. According to the Cambridge Consumer Credit Index, those folks purchased consumer goods. Specifically, 20% of Americans used the money on everyday purchases, while 10% spent on “something they always wanted to buy” and 2% used the money for other kinds of purchases. Of those surveyed, 18% deposited the refund checks into savings accounts; 48% used the money to pay off bills and credit cards. Only 2% invested the money in stocks, bonds, or mutual funds. It should be noted that 68% of Americans did not receive any refunds as a result of the income tax cut legislation.
While the Dow was nearing 10,000 yesterday, the House adjourned without re-authorizing a program to help the nation’s unemployed. House Speaker Dennis Hastert spoke on the House floor and remarked “the economic growth rate hit 8.2% in the last quarter. The Dow Jones has reached its highest level in 18 months. And the job rate shows the best signs of improvement in two years.” On the other hand, Rep. Steny Hoyer, D-Md., stated “I know the president and our Republican colleagues would like nothing more than to pronounce our economy healed and to unfurl the banner reading, ‘Mission Accomplished,’ but it is plain that millions of Americans continue to be hurting.” With the program not extended, an estimated 2.1 million people will lose their aid. In California, 66,696 will lose their federal jobless benefits as of December 21, and an estimated 339,000 more state residents will be cut off between January and June. We must remember that, in November, there were 2 million unemployed persons looking for work in our country for 27 weeks or longer, and another 1.5 million persons marginally attached to the labor force, and not to be forgotten, the 457,000 discouraged workers. For these folks, the United States is not looking so green.
The Dollar Index, often overlooked, is not so green. This Index charts the U.S. dollar against a basket of six currencies of U.S. trading partners, and yesterday it traded at the weakest point in six years. This decline should come as no surprise as the euro traded above 1.22, the pound at an 11 year high versus the dollar, and the yen made another 3-year high against the dollar, and this despite the Bank of Japan, on behalf of the Ministry of Finance, having sold a record $166 billion yen this year.
With the heavy snowstorm along the East coast, the price of crude oil traded back up to the $31 per barrel level. Yesterday natural gas in New York had its biggest one-day rally in more than nine months on forecasts for another cold wave hitting our shores. Gas for January delivery rose 13% to $6.902 per million BTU. It was the biggest rally since Feb. 24. This increase was on top of last week’s 25% rise in price. According to the Energy Information Administration, homeowners in the Midwest will spend an average $848 this winter for natural gas, an increase of 6.1%. When your paycheck only goes up by a penny, and that’s not very green, the increase in natural gas prices can hurt the pocket book.
For those in the South, you can look forward to a jolt as well. GM, our great automotive manufacturer, is losing over a billion dollars a year at their Spring Hill, Tennessee plant. This facility employs 5,647 people making Saturns. Unlike GM’s other plants, Spring Hill’s hourly workers are exempted from temporary layoffs. I said are and not will continue to be. The Saturn division has lost money in 12 of the past 13 years. The workers take 30 hours to build a vehicle, about eight hours more than Honda’s small-car plant in Lordstown, Ohio, stated Harbours & Associates, experts in vehicle manufacturing. GM is trying to change the present employment contract at Spring Hill. I believe Saturn is an endangered car, and so are the 5,647 employees who would be wise to save for a rainy day and cut back on holiday gift giving.
The large weekend snowstorm hurt sales at department stores, but many consumers were cuddly in front of their TV sets. HSN, the home-shopping network, had a record-breaking sales day on Saturday with more than $30 million worth of goods purchased. The previous record was $16.9 million set in December 2002.
Christmas time does bring a smile to candy manufacturers. Christmas is the third-largest period for candy sales, trailing Halloween and Easter. According to the National Confectioners Association, holidays can account for as much as 40% of annual candy revenues. I know Enstrom Candies of Grand Junction, Colorado turns out the best toffee confection one can possibly imagine. They make the world a better place.
As we know, Bush signed the new Medicare legislation. The CBO estimates the states will save $17 billion in Medicaid cost over the next decade. I do not think so. There is a ‘clawback’ provision requiring states to return to the federal government a significant portion of their savings starting in 2006. In Minnesota, Medicaid Director Mary Kennedy stated “ we’re going to be in effect billed for what the federal government assumes we have saved by not being the direct provider of the benefit.” Mike Fogarty, CEO of the Oklahoma Health Care Authority, added “it’s definitely going to put some states in a quandry when in order to preserve the benefit to their own citizens they’re going to have to supplement the Medicare system with a 100% state benefit.” Many states providing comprehensive drug benefits for dual-eligibles with few restrictions have reason to have serious worries. This Medicare bill will take the smiles off millions of people. The true costs are not known. Even the CBO has stated it could cost as much as $2 trillion in its second decade. The CBO is always low in its cost estimates. CBO Director Douglas Holtz-Eakin stated yesterday it is impossible to know exactly what will happen but said it is “highly unlikely that we’ll end up on the course we’ve set.” I have to believe Bush knew that while he signed the bill and brought smiles to the face of many, including his own.
As the Dow approaches 10,000, please be careful not to smile too much. As the Fed discusses maintaining the short-term interest rates at 1%, they have been slowly but surely cutting off the growth in the money supply. It is the only method the Fed has to offset the spending habit exhibited by Bush and the Congress. The Fed has warned Washington to cut back spending, but they smile and ignore the warnings. Starting in October. The money supply growth dwindled. It continued through November, and into the present in December. The refi money has dwindled to a trickle. The child credit money is behind us. The tax credit money is accounted for. There has never been a time on Wall Street when stocks continued to rise in the face of a serious slowing, and in some cases a contraction, of the money supply. I suggest you shift your attention from one percent rates, a 10,000 Dow, to the money supply. The latter will not bring a smile to your face. The good news is you have two more weeks to sit on Santa’s lap. Please smile for the camera.
Monday, December 08, 2003
12/8/03 Sharing Rising Healthcare Costs In the Workplace
According to a nationwide survey of 3,000 businesses, both large and small, by Mercer Human Resource Consulting, total health benefit cost per employee for active employees has risen from $3,817 in 1998 to $6,215 in 2003. The annual change in average total health benefit cost was 6.1% in 1998 and in 2003 was 10.1%, down from 14.7% in the prior year. This coming year is expected to be the fourth consecutive year of double-digit premium hikes. Mercer Consulting stated “employers had been absorbing a lot of the cost increases. It seemed like in 2003, they got pretty darn aggressive in shifting those costs to employees.” The average contribution from a single employee on an HMO plan rose from 31% to 35% in 2003, and the family contribution increased from 50% to 57%. For some employees, those higher contributions may mean a reduction in total compensation because salaries have increased on average by just 3%. Family coverage for the PPO plans increased from 53% last year to 58% in 2003, while single family coverage remained unchanged at 27%, according to the survey. In dollars, the average U.S. worker paid $101 per month for an HMO and $82 for a PPO plan in 2003. Families paid $352 for the HMO and $381 for the PPO. Employees will be hard pressed to share a greater burden of the healthcare costs in the workplace. They can’t afford the costs when an hourly income increases by a mere penny and/or salaries rise at or below the rate of inflation. There isn’t enough employee cash flow to fund increased cost-sharing measures in the workplace.
According to U.S. government figures, China exported $108.6 billion worth of goods to the U.S. in the first 9 months of 2003. In contrast, U.S. companies sold only $18.9 billion of worth of goods in China. If that troubles you, discontinue the purchase of goods made in China.
It’s no wonder the American consumer continues to purchase cars from GM, F, and Chrysler. According to CNW Marketing Research, GM spent $4,406 per vehicle on incentives in November up from $4,312 in October. Ford spent $4,396 up from October’s $4,271. Chrysler’s incentives increased to $4,351 from $4,235. The good news is that the incentives might be increased for December. The goal for the Big Three is to provide an incentive in every pot for the holidays. They are on a roll, and hopefully will not slow down at this point in time.
Gift cards are a growing business. According to Bain & Co., Americans are expected to spend $45 billion on gift cards this year, up 18% from 2002. Statistics show that 16% of people who receive a gift card never use the entire balance. On the other hand, more than 50% of gift cards are redeemed within a month. A spokesperson for Louisville, Ky.-based Stored Value Systems, a company that designs gift card programs, stated that business is growing at 40% a year. A key factor in the success has been the knowledge that one in seven people who receive a gift card become repeat customers at the place where they cash it.
The Oncologist is a bimonthly international peer-reviewed journal for physicians devoted to cancer patient care. This journal reported that “today in America, one in three women and one in two men will develop cancer in their lifetime…the average age for males diagnosed with cancer is 68 and is 65 for females, and approximately 9.6 million people in the United States are living with cancer. For all cancer sites African American males and Caucasian females have the highest rates.”
According to a survey conducted in November by Kurt Salmon, 84% of consumers have said they plan to shop at discounters, such as, WalMart, compared with 28% who stated they plan to shop at department stores. According to Customer Growth Partners LLC, only 19% of retail sales will be compiled in malls in 2003, down from 39% in 1995.
Researchers at IBM are releasing a nanotech paper at today’s industry conference in Washington, D.C. The IBM scientists believe they are the first to use naturally forming patterns of molecules not as circuits that have to be connected o larger wires, but as stencils that light can be shone through to create circuitry in silicon. Chuck Black of IBM stated that “we don’t just give a nice picture of some sort of material. That’s often where nanotech presentations will end. We take that pattern that nature gives us and have done something with it. We understand it and we know how to build things with it.” IBM predicts prototype devices using the technique could emerge in three to five years.
John DeStefano, five-term mayor of New Haven, Conn. and president of the National League of Cities: “It’s rather bizarre that the federal government is not satisfied with driving itself into deficit, they’ve got to drive us into deficit too.”
According to a nationwide survey of 3,000 businesses, both large and small, by Mercer Human Resource Consulting, total health benefit cost per employee for active employees has risen from $3,817 in 1998 to $6,215 in 2003. The annual change in average total health benefit cost was 6.1% in 1998 and in 2003 was 10.1%, down from 14.7% in the prior year. This coming year is expected to be the fourth consecutive year of double-digit premium hikes. Mercer Consulting stated “employers had been absorbing a lot of the cost increases. It seemed like in 2003, they got pretty darn aggressive in shifting those costs to employees.” The average contribution from a single employee on an HMO plan rose from 31% to 35% in 2003, and the family contribution increased from 50% to 57%. For some employees, those higher contributions may mean a reduction in total compensation because salaries have increased on average by just 3%. Family coverage for the PPO plans increased from 53% last year to 58% in 2003, while single family coverage remained unchanged at 27%, according to the survey. In dollars, the average U.S. worker paid $101 per month for an HMO and $82 for a PPO plan in 2003. Families paid $352 for the HMO and $381 for the PPO. Employees will be hard pressed to share a greater burden of the healthcare costs in the workplace. They can’t afford the costs when an hourly income increases by a mere penny and/or salaries rise at or below the rate of inflation. There isn’t enough employee cash flow to fund increased cost-sharing measures in the workplace.
According to U.S. government figures, China exported $108.6 billion worth of goods to the U.S. in the first 9 months of 2003. In contrast, U.S. companies sold only $18.9 billion of worth of goods in China. If that troubles you, discontinue the purchase of goods made in China.
It’s no wonder the American consumer continues to purchase cars from GM, F, and Chrysler. According to CNW Marketing Research, GM spent $4,406 per vehicle on incentives in November up from $4,312 in October. Ford spent $4,396 up from October’s $4,271. Chrysler’s incentives increased to $4,351 from $4,235. The good news is that the incentives might be increased for December. The goal for the Big Three is to provide an incentive in every pot for the holidays. They are on a roll, and hopefully will not slow down at this point in time.
Gift cards are a growing business. According to Bain & Co., Americans are expected to spend $45 billion on gift cards this year, up 18% from 2002. Statistics show that 16% of people who receive a gift card never use the entire balance. On the other hand, more than 50% of gift cards are redeemed within a month. A spokesperson for Louisville, Ky.-based Stored Value Systems, a company that designs gift card programs, stated that business is growing at 40% a year. A key factor in the success has been the knowledge that one in seven people who receive a gift card become repeat customers at the place where they cash it.
The Oncologist is a bimonthly international peer-reviewed journal for physicians devoted to cancer patient care. This journal reported that “today in America, one in three women and one in two men will develop cancer in their lifetime…the average age for males diagnosed with cancer is 68 and is 65 for females, and approximately 9.6 million people in the United States are living with cancer. For all cancer sites African American males and Caucasian females have the highest rates.”
According to a survey conducted in November by Kurt Salmon, 84% of consumers have said they plan to shop at discounters, such as, WalMart, compared with 28% who stated they plan to shop at department stores. According to Customer Growth Partners LLC, only 19% of retail sales will be compiled in malls in 2003, down from 39% in 1995.
Researchers at IBM are releasing a nanotech paper at today’s industry conference in Washington, D.C. The IBM scientists believe they are the first to use naturally forming patterns of molecules not as circuits that have to be connected o larger wires, but as stencils that light can be shone through to create circuitry in silicon. Chuck Black of IBM stated that “we don’t just give a nice picture of some sort of material. That’s often where nanotech presentations will end. We take that pattern that nature gives us and have done something with it. We understand it and we know how to build things with it.” IBM predicts prototype devices using the technique could emerge in three to five years.
John DeStefano, five-term mayor of New Haven, Conn. and president of the National League of Cities: “It’s rather bizarre that the federal government is not satisfied with driving itself into deficit, they’ve got to drive us into deficit too.”
Sunday, December 07, 2003
12/7/03 A White Christmas
Last year a snowstorm hit the eastern seaboard in the first week of December, and placed a damper on the retail sector as weekly sales at the major chain stores declined 2.3% during this time. The industry never found its legs, and the shopping season was a major disappointment. Will history repeat as the snow blankets the coast from Maine to Virginia and North Carolina? Consumer confidence was much reduced last year as Americans worried about a possible war with Iraq and the economy was weaker. Will the present snowstorm delay purchases at the chains and/or will consumers turn increasingly to the convenience of shopping online? According to Jupiter Research, Internet retail sales this holiday season are expected to increase 21% to $16.8 billion. According to the latest American Customer Satisfaction Index update published by the University of Michigan, satisfaction with Internet retailers rose 6 percentage points during 2002 to 83 on a scale of 100, and this compares with an unchanged rating of 75 for bricks and mortar retailers.
According to the American Express Retail Index on Internet shopping, 54% of those polled will log on this holiday season to compare prices, browse, and potentially purchase gifts. This is up from 46% of shoppers surveyed last year. The polling was taken before the snow began to fall. The survey found that, of those surfing the Net during the holiday season, 31% plan to purchase gifts on the Internet, up from 18% last year. American Express found that this year 62% of online shoppers shall be using the Net to compare prices, up from 56% last year. A whopping 78% say deep discounts will motivate them, while 53% stated they are motivated to buy only by offers of free delivery or gift-wrapping. The survey found that the average age of the typical holiday shopper using the Internet is 42 years old with an average household income of $64,500. Interestingly, 72% of online shoppers are 18 to 49 years old while 26% are 50 years and older.
Meanwhile, it is noteworthy to look at the service Americans use to get onto the Internet. According to the Yankee Group, there will be 51.5 million dial-up households at the end of this December, down from 54.5 million a year ago. Consumers are changing from slow dial-up service to DSL and cable lines. SBC Communications recently cut its lowest broadband price to $26.95 per month. SBC stated that about 70% of DSL subscribers have moved up from the slow dial-up connection. The service offers download speeds better than 6 times as fast as dial-up modems. The nation’s broadband leader, Comcast, briefly offered a $19.95 monthly rate in a few markets. Bruce Leichtman’s Durham, NC firm conducts research on broadband products and services. He remarked “deals are nice to attract customers. But it’s a whole different game to retain them.”
In re-reading the Bureau of Labor statistics, I was struck by the fact that only 328,000 net new jobs have been created since July. More importantly, revised data reveal that average monthly employment during the third quarter was 82,000 jobs below the second quarter’s monthly employment average. Considering the recent strength in the economy, this data is more than disappointing. The press has been fed the idea by this Administration that non-farm employment growth is a lagging indicator. Employment growth goes side by side with economic growth. Such was the case following the recessions of 1973-75 and 1981-82, and only the 1990-91 recession was an exception.
We should learn by now that one cannot always believe what appears in print or on the TV screen. Before Saturday, the Oklahoma football team had trailed six minutes all season. The undefeated Sooners were hailed as one of the best football teams in history. Kansas State entered the game as a two-touchdown underdog. The Wildcats won the biggest game of their 108 years of football. They crushed this almighty team from Oklahoma 35-7, and the win earned them a trip to the Fiesta Bowl in Tempe, Arizona on Jan. 2. It can get your mind wondering. What will be the next big upset in the United States? Thinking on a snowy Sunday is a good thing.
Last year a snowstorm hit the eastern seaboard in the first week of December, and placed a damper on the retail sector as weekly sales at the major chain stores declined 2.3% during this time. The industry never found its legs, and the shopping season was a major disappointment. Will history repeat as the snow blankets the coast from Maine to Virginia and North Carolina? Consumer confidence was much reduced last year as Americans worried about a possible war with Iraq and the economy was weaker. Will the present snowstorm delay purchases at the chains and/or will consumers turn increasingly to the convenience of shopping online? According to Jupiter Research, Internet retail sales this holiday season are expected to increase 21% to $16.8 billion. According to the latest American Customer Satisfaction Index update published by the University of Michigan, satisfaction with Internet retailers rose 6 percentage points during 2002 to 83 on a scale of 100, and this compares with an unchanged rating of 75 for bricks and mortar retailers.
According to the American Express Retail Index on Internet shopping, 54% of those polled will log on this holiday season to compare prices, browse, and potentially purchase gifts. This is up from 46% of shoppers surveyed last year. The polling was taken before the snow began to fall. The survey found that, of those surfing the Net during the holiday season, 31% plan to purchase gifts on the Internet, up from 18% last year. American Express found that this year 62% of online shoppers shall be using the Net to compare prices, up from 56% last year. A whopping 78% say deep discounts will motivate them, while 53% stated they are motivated to buy only by offers of free delivery or gift-wrapping. The survey found that the average age of the typical holiday shopper using the Internet is 42 years old with an average household income of $64,500. Interestingly, 72% of online shoppers are 18 to 49 years old while 26% are 50 years and older.
Meanwhile, it is noteworthy to look at the service Americans use to get onto the Internet. According to the Yankee Group, there will be 51.5 million dial-up households at the end of this December, down from 54.5 million a year ago. Consumers are changing from slow dial-up service to DSL and cable lines. SBC Communications recently cut its lowest broadband price to $26.95 per month. SBC stated that about 70% of DSL subscribers have moved up from the slow dial-up connection. The service offers download speeds better than 6 times as fast as dial-up modems. The nation’s broadband leader, Comcast, briefly offered a $19.95 monthly rate in a few markets. Bruce Leichtman’s Durham, NC firm conducts research on broadband products and services. He remarked “deals are nice to attract customers. But it’s a whole different game to retain them.”
In re-reading the Bureau of Labor statistics, I was struck by the fact that only 328,000 net new jobs have been created since July. More importantly, revised data reveal that average monthly employment during the third quarter was 82,000 jobs below the second quarter’s monthly employment average. Considering the recent strength in the economy, this data is more than disappointing. The press has been fed the idea by this Administration that non-farm employment growth is a lagging indicator. Employment growth goes side by side with economic growth. Such was the case following the recessions of 1973-75 and 1981-82, and only the 1990-91 recession was an exception.
We should learn by now that one cannot always believe what appears in print or on the TV screen. Before Saturday, the Oklahoma football team had trailed six minutes all season. The undefeated Sooners were hailed as one of the best football teams in history. Kansas State entered the game as a two-touchdown underdog. The Wildcats won the biggest game of their 108 years of football. They crushed this almighty team from Oklahoma 35-7, and the win earned them a trip to the Fiesta Bowl in Tempe, Arizona on Jan. 2. It can get your mind wondering. What will be the next big upset in the United States? Thinking on a snowy Sunday is a good thing.
Saturday, December 06, 2003
12/6/03 Show Me The Money
Yesterday Bush attended a noontime $2,000-a-plate fund-raiser at the Hyatt Regency in Baltimore. While collecting $1 million more for his election campaign, he proclaimed that “the tax relief we passed is working for the American people.” It’s true the American people are working harder but where is the remuneration? The average hourly earnings of production or non-supervisory workers on private non-farm payrolls increased by one cent in November, and the average weekly earnings amount to $524.09. Over the year, average hourly earnings increased by 2.1%, and after inflation, the average worker has absolutely nothing to show for his increased productivity. As Dean Baker of the Center for Economic & Policy Research points out, “this is the lowest rate of nominal wage growth that we’ve seen since 1964, when data was first collected.” When was the last time Bush appeared at an unemployment office? When was the last time he held a “conversation” with workers who are on strike over the threat of decreased healthcare benefits? You can hold up a fake turkey, you can avoid going to funerals for our fallen U.S. soldiers, you can hold up a banner stating ‘mission accomplished,’ but you can’t fool all the people all the time. Leaders bleed with the people. Leaders bleed with the troops. Leaders feel and know the pain. Bush raised $4.6 million this week in Detroit, Newark, Pittsburgh, and Baltimore. For 40 consecutive months the manufacturing sector has lost jobs. The average duration of unemployment is 20.1 weeks, a 19-year high. More than 2 million jobless Americans have been out of work for more than a half-year. They represent almost 24% of the total unemployed. Bush may have a job but millions do not.
As Andrew Stettner, policy analyst for the National Employment Law Project points out, the Labor Department’s household payroll survey is widely skewed. It counts as employed anyone working even one hour. For example, Stettner stated, “if you fix the roof of your friend one weekend and he gives you 100 bucks, then you are employed. All sorts of part-time employment is included.” Until the duration to find a job comes down, unemployment will not be reduced. That has not happened. In addition, as the Labor Department stated, in November 1.5 million persons were marginally attached to the labor force. These individuals wanted and were available to work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed, however, because they did not actively search for work in the 4 weeks preceding the survey. There were 457,000 discouraged workers in November, and they are described as not currently looking for work specifically because they believed no jobs were available for them. Within the marginally attached, another 1 million Americans had not searched for work for reasons such as school or family responsibilities. Mark Zandi of Economy.com describes the situation quite accurately. He remarked “what’s disconcerting is that if you’re unemployed, you’re staying unemployed.” In addition, starting December 21, about 90,000 jobless Americans a week will not have access to extra unemployment benefits. For millions, the doldrums will continue. Economist Richard Carlson of Spectrum Economics in Mountain View, CA observed that “nationally, this is an economists’ recovery. Everything we measure is good except jobs.”
Actually, there is something else in the wind that is changing the economic landscape. Retailers are wary. The retail sector added fewer workers for the holidays than a year ago. They were smart to do so. Consumers are using less credit. According to the Cambridge Consumer Credit Index survey, 38% of all Americans plan to use less credit to purchase holiday gifts this year, up by 7 percentage points from a year ago. Another 29% plan to use the same amount of credit as they did last year, and that is down 2 percentage points from 2002. Another 29% plan not to use any credit cards this season, down by 7 percentage points from last year. In terms of the overall consumer debt picture, the survey indicates that, in December, 30% of Americans say they have taken on more debt, with 22% taking on a little and 9% taking on a lot more debt. Conversely, 70% of Americans have paid off debt, with 53% paying off a little and 17% paying off a lot. The numbers in this survey are borne out by the recent Federal Reserve numbers. Consumer credit increased by only one-half of one percent in October 2003 and November edged up even less. In December 2002 consumer credit contracted, and it offset the rise in the prior two months so that consumer credit was unchanged for last year’s fourth quarter. This contraction helped to explain the very poor retail sales for 2002’s holiday shopping season. Should this December follow the most recent two months of only a slight increase in consumer credit, then this holiday shopping season will not be much better than last year’s. If that is the case, business optimism for the near future will be significantly dampened. A growing number of people are frustrated with high credit card interest rates and other bank fees. In addition, families are hurting from longer layoffs, low wages, few overtime hours, and increased costs for health care, natural gas, local taxes and fees. Families have less capacity to spend. Their free cash flow is dwindling. The growth in consumer spending is on the decline. The use of consumer credit is on the decline. With two-thirds of our GDP generated by the consumer, the results looking out are less dependable. The consumer is getting the picture. The Bush Administration’s spending habits continue out of control, and I suggest a prompt enrollment in spenders’ anonymous might be in order.
Yesterday was another debacle for the U.S. dollar. The euro has risen 15% this year versus the greenback. The yen is at a 3-year high versus the dollar, and the Swiss franc is at a 5-year high. Meanwhile, gold jumped to another multi-year high of $407 per ounce. The one bright spot was that the two-year U.S. Treasury had its biggest gain since January 2002. The disappointing job report created a significant decline in yields on Treasury bonds.
There was an interesting development in Hyderabad, India. Intel is looking to implement 1,000 Wi-Fi hot spots in India by mid-2004 for various customers and has initiated a wireless verification program in the country to improve performance and enable interoperability across these locations. The intention is to improve compatibility for Intel’s Centrino mobile technology in hot spots and to make WLAN work in India.
Yesterday Bush attended a noontime $2,000-a-plate fund-raiser at the Hyatt Regency in Baltimore. While collecting $1 million more for his election campaign, he proclaimed that “the tax relief we passed is working for the American people.” It’s true the American people are working harder but where is the remuneration? The average hourly earnings of production or non-supervisory workers on private non-farm payrolls increased by one cent in November, and the average weekly earnings amount to $524.09. Over the year, average hourly earnings increased by 2.1%, and after inflation, the average worker has absolutely nothing to show for his increased productivity. As Dean Baker of the Center for Economic & Policy Research points out, “this is the lowest rate of nominal wage growth that we’ve seen since 1964, when data was first collected.” When was the last time Bush appeared at an unemployment office? When was the last time he held a “conversation” with workers who are on strike over the threat of decreased healthcare benefits? You can hold up a fake turkey, you can avoid going to funerals for our fallen U.S. soldiers, you can hold up a banner stating ‘mission accomplished,’ but you can’t fool all the people all the time. Leaders bleed with the people. Leaders bleed with the troops. Leaders feel and know the pain. Bush raised $4.6 million this week in Detroit, Newark, Pittsburgh, and Baltimore. For 40 consecutive months the manufacturing sector has lost jobs. The average duration of unemployment is 20.1 weeks, a 19-year high. More than 2 million jobless Americans have been out of work for more than a half-year. They represent almost 24% of the total unemployed. Bush may have a job but millions do not.
As Andrew Stettner, policy analyst for the National Employment Law Project points out, the Labor Department’s household payroll survey is widely skewed. It counts as employed anyone working even one hour. For example, Stettner stated, “if you fix the roof of your friend one weekend and he gives you 100 bucks, then you are employed. All sorts of part-time employment is included.” Until the duration to find a job comes down, unemployment will not be reduced. That has not happened. In addition, as the Labor Department stated, in November 1.5 million persons were marginally attached to the labor force. These individuals wanted and were available to work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed, however, because they did not actively search for work in the 4 weeks preceding the survey. There were 457,000 discouraged workers in November, and they are described as not currently looking for work specifically because they believed no jobs were available for them. Within the marginally attached, another 1 million Americans had not searched for work for reasons such as school or family responsibilities. Mark Zandi of Economy.com describes the situation quite accurately. He remarked “what’s disconcerting is that if you’re unemployed, you’re staying unemployed.” In addition, starting December 21, about 90,000 jobless Americans a week will not have access to extra unemployment benefits. For millions, the doldrums will continue. Economist Richard Carlson of Spectrum Economics in Mountain View, CA observed that “nationally, this is an economists’ recovery. Everything we measure is good except jobs.”
Actually, there is something else in the wind that is changing the economic landscape. Retailers are wary. The retail sector added fewer workers for the holidays than a year ago. They were smart to do so. Consumers are using less credit. According to the Cambridge Consumer Credit Index survey, 38% of all Americans plan to use less credit to purchase holiday gifts this year, up by 7 percentage points from a year ago. Another 29% plan to use the same amount of credit as they did last year, and that is down 2 percentage points from 2002. Another 29% plan not to use any credit cards this season, down by 7 percentage points from last year. In terms of the overall consumer debt picture, the survey indicates that, in December, 30% of Americans say they have taken on more debt, with 22% taking on a little and 9% taking on a lot more debt. Conversely, 70% of Americans have paid off debt, with 53% paying off a little and 17% paying off a lot. The numbers in this survey are borne out by the recent Federal Reserve numbers. Consumer credit increased by only one-half of one percent in October 2003 and November edged up even less. In December 2002 consumer credit contracted, and it offset the rise in the prior two months so that consumer credit was unchanged for last year’s fourth quarter. This contraction helped to explain the very poor retail sales for 2002’s holiday shopping season. Should this December follow the most recent two months of only a slight increase in consumer credit, then this holiday shopping season will not be much better than last year’s. If that is the case, business optimism for the near future will be significantly dampened. A growing number of people are frustrated with high credit card interest rates and other bank fees. In addition, families are hurting from longer layoffs, low wages, few overtime hours, and increased costs for health care, natural gas, local taxes and fees. Families have less capacity to spend. Their free cash flow is dwindling. The growth in consumer spending is on the decline. The use of consumer credit is on the decline. With two-thirds of our GDP generated by the consumer, the results looking out are less dependable. The consumer is getting the picture. The Bush Administration’s spending habits continue out of control, and I suggest a prompt enrollment in spenders’ anonymous might be in order.
Yesterday was another debacle for the U.S. dollar. The euro has risen 15% this year versus the greenback. The yen is at a 3-year high versus the dollar, and the Swiss franc is at a 5-year high. Meanwhile, gold jumped to another multi-year high of $407 per ounce. The one bright spot was that the two-year U.S. Treasury had its biggest gain since January 2002. The disappointing job report created a significant decline in yields on Treasury bonds.
There was an interesting development in Hyderabad, India. Intel is looking to implement 1,000 Wi-Fi hot spots in India by mid-2004 for various customers and has initiated a wireless verification program in the country to improve performance and enable interoperability across these locations. The intention is to improve compatibility for Intel’s Centrino mobile technology in hot spots and to make WLAN work in India.
Friday, December 05, 2003
12/5/03 Wall Street Expectations
Wall Street analysts do the investing world a serious disservice. In an effort to raise the upside potential for stock prices, they are dedicated in their efforts to increase their earnings projections. Often this raised guidance goes against the forecasts provided by management. The most recent example is with the four-week sales period ending November 28 for WalMart. The company was quite clear in their prediction that comparable sales for this period would be in the range of a 3 to 5 per cent increase. In fact, total U.S. sales were reported up 3.9%. The International division’s comp sales rose 15.8%. The aforementioned figures are essentially identical for the latest forty-three week period. These numbers proved disappointing to Wall Street. They had chosen to ignore WalMart’s predictions. I guess the analysts think they are smarter and know more about the company’s business than does its management. That should not be surprising. According to Thomson Financial, in November U.S. corporate insiders sold $43 worth of their companies’ shares for every $1 they purchased. Insider sales amounted to $4.5 billion for the month. The ignorant greed on Wall Street will lead to many a financial ruin. You can back test that statement, and take it to the bank. As an aside, for the December five-week period, WalMart’s management is “forecasting comparative sales for the total company to be in the 3 to 5 percent range.” That is identical to their guidance for November. Over the years their predictions have been on the money.
Ellen Tolley, a spokeswoman for the National Retail Federation, stated “we think retailers will probably hire about the same amount of people as they did last year and ask them to work more hours. Last year, retailers nationwide hired about 750,000 people to help in the crucial final quarter.” Kurt Barnard, president and chief economist for Barnard’s Retail Consulting Group, remarked “the idea for almost every business in America today is to cut costs as much as possible. Staffing is a very important way to achieve that.” Surveying some big retailers, Limited Brands is hiring the same 75,000 seasonal workers as last year. Nordstrom said it’s hiring the same number of seasonal workers in the Bay Area this year. On the other hand, the Gap is hiring 20,000 seasonal workers, and that’s a 30% increase from last year. For non-retail seasonal jobs, Kelly Services’ president stated “we saw a slight increase, say 1 to 2 percent. Last year was flat to negative.” FedEx Ground hired 2,500 seasonal workers, the same as a year ago. UPS is adding 50,000 seasonal workers, the same as last year. I have no doubt that the payroll number released this morning shall be a large one. No matter the spin, I know from my research that the vast majority of the increased employment is of a seasonal nature, and it will be only marginally better than last year’s holiday season.
I strongly suggest that you circle December 20 on your calendar. This is the date jobless workers who have exhausted their regular unemployment benefits stop receiving more benefits. Since March 2002, the federal unemployment program has provided up to 13 weeks of additional benefits to people who exhaust their state benefits and still have not been able to find a job. Under this program, people in some high unemployment states, such as, California were eligible for a second 13-week extension of federal benefits after their first 13-week extension ran out. After December 20, people who are already receiving extended benefits will continue to receive them until their allotment is exhausted, or through April 3, whichever occurs first. If regular benefits expire December 21 or later, there are no more benefits received. If the present program is not extended, an estimated 66,696 people in California will run out of state benefits. It should be noted that California’s unemployment insurance fund is expected to run out of money in January.
According to the California Chamber of Commerce, to replenish this fund, employers will have to pay an average of $346 per worker in 2004, up from $210 per worker in 2003.
According to IDC, in 2004 offshore outsourcing will increase 100% in the U.S. IT market, and that by 2007, approximately 25% of the IT services market will be outsourced and accomplished offshore. This trend can only create greater unemployment problems for California as well as other states with a large IT base.
Tyson Foods announced the closing of facilities in Manchester, New Hampshire and Augusta, Maine. About 720 workers will lose their jobs. The company is making an effort to further improve long-term manufacturing efficiencies. A spokesperson for Tyson stated “while it is never easy to make business decisions like these that affect the lives of our team members and the communities in which we operate, these steps are necessary for us to meet our responsibilities to all of our stakeholders.”
Robert Parry, San Francisco Fed President, remarked last week “the inflation rate, which is already down to one and a quarter percent, may slip even lower—despite rapid economic growth.” That statement should make for an interesting Fed meeting next week.
The Oxford Research International survey on Iraq indicated that 78.8% of respondents have little or no confidence in the U.S. and British occupation forces. In contrast, about 70% of Iraqis had a lot or a great deal of trust in their religious leaders, and they had more trust in the United Nations (34.6%) than the U.S. and British occupation forces. Only 1.1% of Iraqis said the U.S.-led reconstruction efforts is what Iraqis need most in the next 12 months. One more U.S. soldier was killed in Iraq today.
Wall Street analysts do the investing world a serious disservice. In an effort to raise the upside potential for stock prices, they are dedicated in their efforts to increase their earnings projections. Often this raised guidance goes against the forecasts provided by management. The most recent example is with the four-week sales period ending November 28 for WalMart. The company was quite clear in their prediction that comparable sales for this period would be in the range of a 3 to 5 per cent increase. In fact, total U.S. sales were reported up 3.9%. The International division’s comp sales rose 15.8%. The aforementioned figures are essentially identical for the latest forty-three week period. These numbers proved disappointing to Wall Street. They had chosen to ignore WalMart’s predictions. I guess the analysts think they are smarter and know more about the company’s business than does its management. That should not be surprising. According to Thomson Financial, in November U.S. corporate insiders sold $43 worth of their companies’ shares for every $1 they purchased. Insider sales amounted to $4.5 billion for the month. The ignorant greed on Wall Street will lead to many a financial ruin. You can back test that statement, and take it to the bank. As an aside, for the December five-week period, WalMart’s management is “forecasting comparative sales for the total company to be in the 3 to 5 percent range.” That is identical to their guidance for November. Over the years their predictions have been on the money.
Ellen Tolley, a spokeswoman for the National Retail Federation, stated “we think retailers will probably hire about the same amount of people as they did last year and ask them to work more hours. Last year, retailers nationwide hired about 750,000 people to help in the crucial final quarter.” Kurt Barnard, president and chief economist for Barnard’s Retail Consulting Group, remarked “the idea for almost every business in America today is to cut costs as much as possible. Staffing is a very important way to achieve that.” Surveying some big retailers, Limited Brands is hiring the same 75,000 seasonal workers as last year. Nordstrom said it’s hiring the same number of seasonal workers in the Bay Area this year. On the other hand, the Gap is hiring 20,000 seasonal workers, and that’s a 30% increase from last year. For non-retail seasonal jobs, Kelly Services’ president stated “we saw a slight increase, say 1 to 2 percent. Last year was flat to negative.” FedEx Ground hired 2,500 seasonal workers, the same as a year ago. UPS is adding 50,000 seasonal workers, the same as last year. I have no doubt that the payroll number released this morning shall be a large one. No matter the spin, I know from my research that the vast majority of the increased employment is of a seasonal nature, and it will be only marginally better than last year’s holiday season.
I strongly suggest that you circle December 20 on your calendar. This is the date jobless workers who have exhausted their regular unemployment benefits stop receiving more benefits. Since March 2002, the federal unemployment program has provided up to 13 weeks of additional benefits to people who exhaust their state benefits and still have not been able to find a job. Under this program, people in some high unemployment states, such as, California were eligible for a second 13-week extension of federal benefits after their first 13-week extension ran out. After December 20, people who are already receiving extended benefits will continue to receive them until their allotment is exhausted, or through April 3, whichever occurs first. If regular benefits expire December 21 or later, there are no more benefits received. If the present program is not extended, an estimated 66,696 people in California will run out of state benefits. It should be noted that California’s unemployment insurance fund is expected to run out of money in January.
According to the California Chamber of Commerce, to replenish this fund, employers will have to pay an average of $346 per worker in 2004, up from $210 per worker in 2003.
According to IDC, in 2004 offshore outsourcing will increase 100% in the U.S. IT market, and that by 2007, approximately 25% of the IT services market will be outsourced and accomplished offshore. This trend can only create greater unemployment problems for California as well as other states with a large IT base.
Tyson Foods announced the closing of facilities in Manchester, New Hampshire and Augusta, Maine. About 720 workers will lose their jobs. The company is making an effort to further improve long-term manufacturing efficiencies. A spokesperson for Tyson stated “while it is never easy to make business decisions like these that affect the lives of our team members and the communities in which we operate, these steps are necessary for us to meet our responsibilities to all of our stakeholders.”
Robert Parry, San Francisco Fed President, remarked last week “the inflation rate, which is already down to one and a quarter percent, may slip even lower—despite rapid economic growth.” That statement should make for an interesting Fed meeting next week.
The Oxford Research International survey on Iraq indicated that 78.8% of respondents have little or no confidence in the U.S. and British occupation forces. In contrast, about 70% of Iraqis had a lot or a great deal of trust in their religious leaders, and they had more trust in the United Nations (34.6%) than the U.S. and British occupation forces. Only 1.1% of Iraqis said the U.S.-led reconstruction efforts is what Iraqis need most in the next 12 months. One more U.S. soldier was killed in Iraq today.
Thursday, December 04, 2003
12/4/03 Another Look At Employment Trends
Xerox announced the elimination of about 800 jobs in the United States. It is a further effort to streamline their operations. Over the last two years, the company has cut its worldwide payroll by about a third to its present staff of 62,000. A Xerox spokesperson stated “our approach now is to react and adapt to business conditions to stay competitive.” There is a good deal of talk about the rebound in the semiconductor industry. Yesterday, chip maker ON Semiconductor stated they would close manufacturing operations in East Greenwich, Rhode Island and cut about 330 jobs as part of a cost-cutting effort. The company will transfer those operations to lower cost manufacturing facilities outside of North America. Navistar International, the world’s fourth-largest truck manufacturer, stated it will cut 1,600 employees who will be given early-retirement incentives. The other side of the employment equation can be found at Norm Thompson, a mail order company located in Portland, Oregon. The holiday season is their busy time of the year. They have hired 2000 seasonal workers, 1000 for their call center and 1000 for their distribution center. Naturally, after the holiday shopping season is over, their services will no longer be required. The aforementioned is a pretty fair look at the present-day employment picture. It gives you a window to Friday’s payroll report. The headlines will make for stunning reading. President Bush will proclaim his tax cuts are working, and people are returning to work. He is quite correct. Some have returned to work for the holidays.
The Administration can boast about the gains in productivity in the third quarter. Companies are squeezing more out of their workforce. Hours worked remain about unchanged and so do wages, and bonuses are slim pickings. Of course, that formula doesn’t do much for the standard of living on Main Street. When you cheer for the home team, please keep in mind that unit labor costs, or the amount paid for each unit of production, fell at a 5.8% annual rate last quarter, after a 3.2% drop in the previous three months. The last time labor costs fell more was a 6.5% decline in the second quarter of 1983.
While companies are squeeeeezing you, so is your government. You will feel it on April 15, 2004. That is the day you will be officially screwed. Remember those lower tax rates squeezed into your paychecks? For many taxpayers those tax cuts shall push more people into paying the Alternative Minimum Tax or AMT. According to the U.S. Congress’ Joint Committee on Taxation, 2.5 million Americans will be driven into the AMT on their 2003 taxes and that shall jump to 3 million in another year. Tom Ochsenschlager, a partner with Grant Thornton, stated that those earning income mainly from capital gains and dividends “should be concerned.” He remarked that it is very difficult to generalize about AMT. In my view, it would be quite wise to get with an accountant about AMT. John Battaglia, a director at Deloitte, stated “if you find yourself in AMT in 2003, you would not want to prepay your state and local income taxes. You’re not going to get the benefit of that deduction in AMT. One should also note that exercised but unsold stock options are taxed under AMT. If the stock is down significantly, it might be to your advantage to sell the stock prior to year-end and less income would be picked up. Under AMT, one is taxed on the difference between the grant price and the sale price, not the exercise price. There shall be another surprise. Interest on a home equity loan can only be deducted if the funds were used to buy, build, or remodel a home, and not for personal purposes under AMT. In sum, for millions of Americans the tax cuts delivered to your doorstep shall be nullified by the AMT, and that is the bad news. The good news is it’s only politics as usual. In the words of Chief Justice John Marshall, “the power to tax is the power to destroy.”
I am delighted to report that Costco, one of the great ones, had a great November. Their over-all same-store sales rose 14% with a 10% rise in the United States and a 29% increase in international sales. Their management knows how to run a business.
The other day I wrote where the Governor of Indiana was attempting to void an outsourcing contract with Tata, an IT consulting company located in India. I am happy to report that the lawmakers in Indiana opposed the Governor’s actions, as they felt it could affect Indiana’s drive to attract foreign investment. However, this will not be the last we hear of this problem. New Jersey Senator Shirley Turner is reported considering legislation that will ban the outsourcing of state contracts to companies based abroad. Outsourcing will continue to grow. Britain’s largest insurer Aviva Plc just announced it would create 2,500 back office jobs in India in addition to the 1,200 jobs that had already been transferred there.
When Chinese Premier Wen Jiabao visits the United States, he shall participate in a luncheon in Boston on Wednesday. The luncheon is being sponsored by Boston’s largest insurance company, Liberty Mutual, which ia opening a major branch office in China next month in Chongqing. The state of Massachusetts has a growing relationship with China. According to the Massachusetts Institute for Social and Economic Research, the state’s exports to China rose 47% to $416 million in the first three months of the year.
Saudi Oil Minister Ali al-Naimi announced today that “ a decision must be taken during this meeting to cut production starting from the first quarter of next year. OPEC should in its statement indicate it will cut its output starting from February.” OPEC’s previous price target was $25 per barrel and they want to raise it to a range of $22-28 with sales hopefully at the upper part of the range. Naimi stated the dollar’s sharp slump against the euro over the past two years justified the higher $28 price for OPEC crude. If we were in his shoes, we’d be making the same point.
A recent survey by the Segal Company revealed that retail prescription drug costs are set to rise by 18.1% in 2004, only a small decrease from the 19.5% jump this year. Costs for PPO plans are projected to increase 14.4% in 2004, roughly the same as this year. For HMOs, healthcare costs are anticipated to rise by 13.7% in 2004, again only a small decline from this year’s 14.4% rise.
Xerox announced the elimination of about 800 jobs in the United States. It is a further effort to streamline their operations. Over the last two years, the company has cut its worldwide payroll by about a third to its present staff of 62,000. A Xerox spokesperson stated “our approach now is to react and adapt to business conditions to stay competitive.” There is a good deal of talk about the rebound in the semiconductor industry. Yesterday, chip maker ON Semiconductor stated they would close manufacturing operations in East Greenwich, Rhode Island and cut about 330 jobs as part of a cost-cutting effort. The company will transfer those operations to lower cost manufacturing facilities outside of North America. Navistar International, the world’s fourth-largest truck manufacturer, stated it will cut 1,600 employees who will be given early-retirement incentives. The other side of the employment equation can be found at Norm Thompson, a mail order company located in Portland, Oregon. The holiday season is their busy time of the year. They have hired 2000 seasonal workers, 1000 for their call center and 1000 for their distribution center. Naturally, after the holiday shopping season is over, their services will no longer be required. The aforementioned is a pretty fair look at the present-day employment picture. It gives you a window to Friday’s payroll report. The headlines will make for stunning reading. President Bush will proclaim his tax cuts are working, and people are returning to work. He is quite correct. Some have returned to work for the holidays.
The Administration can boast about the gains in productivity in the third quarter. Companies are squeezing more out of their workforce. Hours worked remain about unchanged and so do wages, and bonuses are slim pickings. Of course, that formula doesn’t do much for the standard of living on Main Street. When you cheer for the home team, please keep in mind that unit labor costs, or the amount paid for each unit of production, fell at a 5.8% annual rate last quarter, after a 3.2% drop in the previous three months. The last time labor costs fell more was a 6.5% decline in the second quarter of 1983.
While companies are squeeeeezing you, so is your government. You will feel it on April 15, 2004. That is the day you will be officially screwed. Remember those lower tax rates squeezed into your paychecks? For many taxpayers those tax cuts shall push more people into paying the Alternative Minimum Tax or AMT. According to the U.S. Congress’ Joint Committee on Taxation, 2.5 million Americans will be driven into the AMT on their 2003 taxes and that shall jump to 3 million in another year. Tom Ochsenschlager, a partner with Grant Thornton, stated that those earning income mainly from capital gains and dividends “should be concerned.” He remarked that it is very difficult to generalize about AMT. In my view, it would be quite wise to get with an accountant about AMT. John Battaglia, a director at Deloitte, stated “if you find yourself in AMT in 2003, you would not want to prepay your state and local income taxes. You’re not going to get the benefit of that deduction in AMT. One should also note that exercised but unsold stock options are taxed under AMT. If the stock is down significantly, it might be to your advantage to sell the stock prior to year-end and less income would be picked up. Under AMT, one is taxed on the difference between the grant price and the sale price, not the exercise price. There shall be another surprise. Interest on a home equity loan can only be deducted if the funds were used to buy, build, or remodel a home, and not for personal purposes under AMT. In sum, for millions of Americans the tax cuts delivered to your doorstep shall be nullified by the AMT, and that is the bad news. The good news is it’s only politics as usual. In the words of Chief Justice John Marshall, “the power to tax is the power to destroy.”
I am delighted to report that Costco, one of the great ones, had a great November. Their over-all same-store sales rose 14% with a 10% rise in the United States and a 29% increase in international sales. Their management knows how to run a business.
The other day I wrote where the Governor of Indiana was attempting to void an outsourcing contract with Tata, an IT consulting company located in India. I am happy to report that the lawmakers in Indiana opposed the Governor’s actions, as they felt it could affect Indiana’s drive to attract foreign investment. However, this will not be the last we hear of this problem. New Jersey Senator Shirley Turner is reported considering legislation that will ban the outsourcing of state contracts to companies based abroad. Outsourcing will continue to grow. Britain’s largest insurer Aviva Plc just announced it would create 2,500 back office jobs in India in addition to the 1,200 jobs that had already been transferred there.
When Chinese Premier Wen Jiabao visits the United States, he shall participate in a luncheon in Boston on Wednesday. The luncheon is being sponsored by Boston’s largest insurance company, Liberty Mutual, which ia opening a major branch office in China next month in Chongqing. The state of Massachusetts has a growing relationship with China. According to the Massachusetts Institute for Social and Economic Research, the state’s exports to China rose 47% to $416 million in the first three months of the year.
Saudi Oil Minister Ali al-Naimi announced today that “ a decision must be taken during this meeting to cut production starting from the first quarter of next year. OPEC should in its statement indicate it will cut its output starting from February.” OPEC’s previous price target was $25 per barrel and they want to raise it to a range of $22-28 with sales hopefully at the upper part of the range. Naimi stated the dollar’s sharp slump against the euro over the past two years justified the higher $28 price for OPEC crude. If we were in his shoes, we’d be making the same point.
A recent survey by the Segal Company revealed that retail prescription drug costs are set to rise by 18.1% in 2004, only a small decrease from the 19.5% jump this year. Costs for PPO plans are projected to increase 14.4% in 2004, roughly the same as this year. For HMOs, healthcare costs are anticipated to rise by 13.7% in 2004, again only a small decline from this year’s 14.4% rise.
Wednesday, December 03, 2003
12/3/03 A Holiday Season Minus FAO Schwarz
During the holiday shopping season New York City dwellers and its visitors can look forward to the lighting of the gigantic Christmas tree, ice skating in Central Park, and browsing through FAO Schwarz, a tradition since 1870. Steiff toys could be seen throughout, and children from all over the world would walk through the front door wide-eyed and mouth open in total amazement. Grown-ups would be caught up in this splendor. Who would have ever thought FAO could close? For me, it has always been better than Disneyland and Disney World. Having just filed for bankruptcy for the second time this year, it would appear that the lights could go dim at FAO. This is a great deal more than just a shame. In a world fraught with terror, FAO brought a smile to everyone’s face- no matter the race, the creed, or the color. You can’t say that statement very often today. The talk today will be about the rising productivity in the labor force, and how wonderful it is that it creates a falling unit labor cost. Of course, it also negates the real need to hire more workers. I’m all for efficiency. Anyone who has worked with me (I never say for me. It’s obnoxious) knows my dedication towards the highest quality at the lowest cost of production. They also know my adherence to top pay for top work along with top healthcare and other benefits. In the present work place, the employee is confronted with reduced benefits, reduced hours worked, stagnant pay, less job security, stingy bonuses, but more productivity requested. This is not the formula for the successful long term running of a business.
According to a survey by Challenger, Gray, and Christmas, corporate layoffs amounted to 99,452 in November. It is good to note that this survey does not track actual reductions in the labor force, only announcements. In addition, and more importantly, the survey only delineates a small fraction of all layoffs. According to government data, about 1.5 million workers lost their jobs in the first four weeks of November and filed for state unemployment benefits. Friday’s employment report will show about a 200,000 increase in jobs for November. Naturally, those jobs are mostly seasonal for the holidays and not permanent. How is that number of 200,000 possible? I suggest you write President Bush and ask him as he has a large team of economic advisors. This year announced job cuts have numbered 104,000 per month. As such, the November figures are close to the year’s average.
The Department of Defense, the Veterans Affairs Department, and state Medicaid programs negotiate discounts with drug manufacturers. For example, Zocor costs the VA 66 cents and retails for $3.77 per pill. Plavix costs the VA $2.01 and retails for $3.63. How is it then that, in the new Medicare legislation, there is a prohibition against the government negotiating prices with pharmaceutical companies? Is the Administration promoting a formal means for controlling prices in the healthcare industry? I believe Washington DC should be declared a no-trade zone. Quite obviously, competitive forces hang in the chad.
Yesterday the Redbook report on retail sales was not very cheery. It indicated that retail sales ended November down 2.8% compared with October. The report indicated that department stores struggled, discounters had solid gains, and on-line retailers fared best of all on a comparative basis.
It’s hard to believe that Microsoft and now WalMart are trading below year earlier levels. These companies are in the top five of the highest market capitalizations of all publicly traded equities. Both stocks are trading below their 5o day and 200 day moving averages. A word of caution for WalMart shoppers. Effective Feb.1, the company will no longer accept the MasterCard signature debit card because the fees are too high. Customers will still be able to use MasterCard debit cards if they use their PINs.
Bill Ford announced yesterday that Ford Motor expects to source about $1 billion in automotive parts from China next year, and mentioned they may eventually open the door to exports from its auto operations in China. I wonder how many more layoffs that will mean for their auto parts suppliers as well as their U.S. automotive workers. Over the last two years I wondered when Boeing would “outsource” its top management. Finally, that was accomplished. I wonder the same thing about Ford and Chrysler.
Tracy DeGregorio, director at Decision Resources, stated about the pharmaceutical and health care industry “it’s really a numbers game. R&D expenditure for each of the top 12 companies approached or exceeded $2 billion, and for some it was well over $3 billion. An annual investment of this magnitude can be made only by a very limited number of firms, and is probably the lowest threshold for a company that wishes to stay in the game indefinitely. Mid-tier European pharmaceutical companies are at particular risk, as they are too numerous and too small.”
Simon Furnell, customer services director of Lloyds TSB Insurance stated that the transfer of processing ad call center work to India was an inescapable fact. Recently, Lloyds announced the closing of a call center in Newcastle and shall move 750 jobs to Hyderabad in India.
The Conference Board stated that the $35-trillion world economy is not growing fast enough to provide jobs for millions of people who want them. Their report indicated that half of the current 2-3% average annual economic growth in the global economy is needed t provide employment for the 40 million people flooding the world’s job markets each year. Their chief economist remarked “there is simply not enough growth to go around…to think that what was viewed as the boom times of the 1990s was actually the slowest-growing decade in the world economy in the past 40 years.”
Since entering the Chinese market in 1996, WalMart has opened 31 stores in 15 cities. The Ministry of Commerce has approved the company’s entry into Shanghai, and they plan to open three stores in that location in 2004.
Pepsi has about 142,000 employees worldwide. Yesterday the company announced cutting about 750 jobs as it reorganizes its North American soft drink business and international operations and closes its Frito-Lay plant in Louisville, Kentucky and other manufacturing facilities in an effort to cut costs.
In an effort to cool consumer spending, the surge in credit growth, and the boom in their housing market, Australia’s central bank increased its benchmark interest rate a quarter percentage point for the second month in a row. The target for overnight funds was increased to 5.25%. Our Fed has maintained a 1% rate for overnight funds in an effort to stimulate the economy. Ignoring the usury rates on credit card balances, I believe it is fair to state that credit is too cheap in our country and that the growth of credit is both irresponsible and undermines the financial stability, or what’s left of it, of the U.S. It is hardly surprising that the Australian dollar rose to a new six-year high of 73.32 versus our dollar. Meanwhile, the euro hit record highs against the U.S. dollar for the fourth consecutive trading day. To put matters in perspective, the euro was introduced in January 1999 at $1.1740. Over the next 21 months it declined down to $0.8225 in October 2000. Since that time, it has risen to its present level of $1.2115. If the U.S. has a strong dollar policy, then the policy is defective and/or the American public is not being told the truth.
During the holiday shopping season New York City dwellers and its visitors can look forward to the lighting of the gigantic Christmas tree, ice skating in Central Park, and browsing through FAO Schwarz, a tradition since 1870. Steiff toys could be seen throughout, and children from all over the world would walk through the front door wide-eyed and mouth open in total amazement. Grown-ups would be caught up in this splendor. Who would have ever thought FAO could close? For me, it has always been better than Disneyland and Disney World. Having just filed for bankruptcy for the second time this year, it would appear that the lights could go dim at FAO. This is a great deal more than just a shame. In a world fraught with terror, FAO brought a smile to everyone’s face- no matter the race, the creed, or the color. You can’t say that statement very often today. The talk today will be about the rising productivity in the labor force, and how wonderful it is that it creates a falling unit labor cost. Of course, it also negates the real need to hire more workers. I’m all for efficiency. Anyone who has worked with me (I never say for me. It’s obnoxious) knows my dedication towards the highest quality at the lowest cost of production. They also know my adherence to top pay for top work along with top healthcare and other benefits. In the present work place, the employee is confronted with reduced benefits, reduced hours worked, stagnant pay, less job security, stingy bonuses, but more productivity requested. This is not the formula for the successful long term running of a business.
According to a survey by Challenger, Gray, and Christmas, corporate layoffs amounted to 99,452 in November. It is good to note that this survey does not track actual reductions in the labor force, only announcements. In addition, and more importantly, the survey only delineates a small fraction of all layoffs. According to government data, about 1.5 million workers lost their jobs in the first four weeks of November and filed for state unemployment benefits. Friday’s employment report will show about a 200,000 increase in jobs for November. Naturally, those jobs are mostly seasonal for the holidays and not permanent. How is that number of 200,000 possible? I suggest you write President Bush and ask him as he has a large team of economic advisors. This year announced job cuts have numbered 104,000 per month. As such, the November figures are close to the year’s average.
The Department of Defense, the Veterans Affairs Department, and state Medicaid programs negotiate discounts with drug manufacturers. For example, Zocor costs the VA 66 cents and retails for $3.77 per pill. Plavix costs the VA $2.01 and retails for $3.63. How is it then that, in the new Medicare legislation, there is a prohibition against the government negotiating prices with pharmaceutical companies? Is the Administration promoting a formal means for controlling prices in the healthcare industry? I believe Washington DC should be declared a no-trade zone. Quite obviously, competitive forces hang in the chad.
Yesterday the Redbook report on retail sales was not very cheery. It indicated that retail sales ended November down 2.8% compared with October. The report indicated that department stores struggled, discounters had solid gains, and on-line retailers fared best of all on a comparative basis.
It’s hard to believe that Microsoft and now WalMart are trading below year earlier levels. These companies are in the top five of the highest market capitalizations of all publicly traded equities. Both stocks are trading below their 5o day and 200 day moving averages. A word of caution for WalMart shoppers. Effective Feb.1, the company will no longer accept the MasterCard signature debit card because the fees are too high. Customers will still be able to use MasterCard debit cards if they use their PINs.
Bill Ford announced yesterday that Ford Motor expects to source about $1 billion in automotive parts from China next year, and mentioned they may eventually open the door to exports from its auto operations in China. I wonder how many more layoffs that will mean for their auto parts suppliers as well as their U.S. automotive workers. Over the last two years I wondered when Boeing would “outsource” its top management. Finally, that was accomplished. I wonder the same thing about Ford and Chrysler.
Tracy DeGregorio, director at Decision Resources, stated about the pharmaceutical and health care industry “it’s really a numbers game. R&D expenditure for each of the top 12 companies approached or exceeded $2 billion, and for some it was well over $3 billion. An annual investment of this magnitude can be made only by a very limited number of firms, and is probably the lowest threshold for a company that wishes to stay in the game indefinitely. Mid-tier European pharmaceutical companies are at particular risk, as they are too numerous and too small.”
Simon Furnell, customer services director of Lloyds TSB Insurance stated that the transfer of processing ad call center work to India was an inescapable fact. Recently, Lloyds announced the closing of a call center in Newcastle and shall move 750 jobs to Hyderabad in India.
The Conference Board stated that the $35-trillion world economy is not growing fast enough to provide jobs for millions of people who want them. Their report indicated that half of the current 2-3% average annual economic growth in the global economy is needed t provide employment for the 40 million people flooding the world’s job markets each year. Their chief economist remarked “there is simply not enough growth to go around…to think that what was viewed as the boom times of the 1990s was actually the slowest-growing decade in the world economy in the past 40 years.”
Since entering the Chinese market in 1996, WalMart has opened 31 stores in 15 cities. The Ministry of Commerce has approved the company’s entry into Shanghai, and they plan to open three stores in that location in 2004.
Pepsi has about 142,000 employees worldwide. Yesterday the company announced cutting about 750 jobs as it reorganizes its North American soft drink business and international operations and closes its Frito-Lay plant in Louisville, Kentucky and other manufacturing facilities in an effort to cut costs.
In an effort to cool consumer spending, the surge in credit growth, and the boom in their housing market, Australia’s central bank increased its benchmark interest rate a quarter percentage point for the second month in a row. The target for overnight funds was increased to 5.25%. Our Fed has maintained a 1% rate for overnight funds in an effort to stimulate the economy. Ignoring the usury rates on credit card balances, I believe it is fair to state that credit is too cheap in our country and that the growth of credit is both irresponsible and undermines the financial stability, or what’s left of it, of the U.S. It is hardly surprising that the Australian dollar rose to a new six-year high of 73.32 versus our dollar. Meanwhile, the euro hit record highs against the U.S. dollar for the fourth consecutive trading day. To put matters in perspective, the euro was introduced in January 1999 at $1.1740. Over the next 21 months it declined down to $0.8225 in October 2000. Since that time, it has risen to its present level of $1.2115. If the U.S. has a strong dollar policy, then the policy is defective and/or the American public is not being told the truth.
Tuesday, December 02, 2003
12/2/03 ‘Virtual’ Colonoscopy For CEOs And Politicians
Dr.Perry J. Pickhardt of the University of Wisconsin Medical School believes “virtual colonoscopy is an accurate screening tool…and hopefully this will lead to more widespread screening.” He presented his findings yesterday at a Chicago meeting of the Radiological Society of North America, and they will be published later this week in the New England Journal of Medicine. I am suggesting that we take this X-ray technique to another level. Presently, the virtual procedure minimizes the psychological barrier that prevents a great many Americans from undergoing screening for colorectal cancer. Snaking the tiny TV camera is not the most pleasant experience. In this vein, I think we could utilize this screening tool prior to hiring a CEO or electing a politician for office. We might be in a better position to make an early discovery of the predisposition to various ills, such as, cheating, lying, many other forms of unethical behavior, being hooked on pork and cover-ups, and the inability to admit mistakes. In an editorial in the New England Journal of Medicine, Dr. Thomas Lamont of the Beth Israel Deaconess Medical Center in Boston suggested that the technique is now “ready for prime time.” I would think stockholders in Enron, MCI, Tyco, and many other companies, would concur with Dr. Lamont.
China’s premier, Wen Jiabao, makes his first official visit to the United States this weekend. To make him feel welcome, the Administration is holding “creeping protectionism” in his honor rather than a state dinner. This makes perfect sense. After all, China is now the fastest-growing export market for U.S. products. Last year our exports to China increased by 19%, and in 2003 they have risen 22%. Congress is considering legislation that could impose tariffs on apple juice, CD players, and other products made in China. We can always depend on Sen. Charles Schumer (D) of New York. He is the chief sponsor of proposed legislation that would require Bush to impose 27.5% across-the-board tariffs on Chinese goods unless China lets its currency float. I would recommend Schumer as an excellent candidate for a ‘virtual’ colonoscopy. Maybe we can prevent his illness from spreading.
As the Nasdaq marches to the 2000 level, I was especially interested in the CIO Magazine’s monthly “Tech Poll” for November. In October, the poll showed that Chief Information Officers planned to increase tech spending by 6% over the next 12 months. These CIOs must not read the bullish headlines for tech. The November poll revealed their plans to increase tech spending by 4.2%. At this rate, by the time February comes around, they may not increase their spending at all. That would not surprise me. But would it interrupt the Nasdaq’s climb? Never! Onward and upward until it implodes.
I cannot understand this. The Nasdaq is up 45% this year, and other smaller indices have reached new all-time highs. Yet, officials of the Retirement Systems of Alabama (RSA) are asking for more money from the state next year in part to make up for their investment losses in 2001 and 2002. They need a 20-year old money manager with a fresh perspective. Alabama paid an estimated $285million to RSA in the 2003 budget year, which ended Sept. 30. RSA officials expect the state to pay $364 million this year, and in 2005, $427 million.
Lois Huff, senior vice president at Columbus, Ohio-based consulting firm Retail Forward, stated retailers are cautious about this year’s holiday spending season. Her company predicts retail sales will increase between 3.5% and 4% this holiday, or one-half to 1 percentage points grater than the 2.2% sales growth of the 2002 holiday season. Talking about the shoppers, she stated “while they may be slightly better off than a decade ago, they realize things change very quickly, whether it’s the stock market, corporate scandals, terrorism, or war.”
Toys “R” Us recently announced a company restructuring, and that included eliminating 3,800 national jobs and closing their Kids “R” Us and Imaginarium chains. Yesterday, the company stated they would close its Lawrenceville, Georgia distribution facility and cut 89 jobs by Jan. 25, 2004. On the other hand, DuPont yesterday announced major changes, and they will include some large layoffs to occur in the latter part of April, 2004. Now their employees can fret for five months about the size of the layoffs, and the yet-to-be named persons on the list. Management of DuPont would be prime candidates for a ‘virtual’ colonoscopy.
A new service allows banks to federally insure accounts of up to $1.5 million. Promontory Interfinancial Network LLC of Arlington, Va., headed by Eugene Ludwig, a former comptroller of the currency, devised the idea. They have more than 500 community banks nationwide signed up. Basically, this network of banks can safeguard funds beyond the FDIC $100,000 limit by swapping customer deposits. At the same time, their customers’ money continues to circulate within the local community. The service recently expanded to individual retirement accounts.
Researchers at St. Jude Children’s Research Hospital in Memphis, Tenn. Issued their finding that the United States is not adequately prepared to respond to a worldwide outbreak of influenza, which many experts say may be imminent. Dr. Robert Webster, a member of the Infectious Disease department and holder of the Rose Marie Thomas Chair at St. Jude, stated “if an influenza pandemic started tomorrow, we would not be able to head it off with vaccines because the production facilities available to produce them are grossly inadequate.”
It is no secret that Mervyn’s has been an under-performer for its owner, Target. Yesterday about 150 employees at Mervyn’s at SeaTac Mall in Federal Way, WA were told that the store would close Jan 5. The store will be knocked down and replaced by a larger Target store set to open next October, and it will also take the place of a smaller Target location near-by. The latter will remain in business until the new Target is opened.
On Monday an American soldier was killed west of Baghdad near the town of Habbaniya. Since President Bush declared an end to major hostilities in Iraq on May 1, a total of 188 U.S. soldiers have been killed in combat.
Dr.Perry J. Pickhardt of the University of Wisconsin Medical School believes “virtual colonoscopy is an accurate screening tool…and hopefully this will lead to more widespread screening.” He presented his findings yesterday at a Chicago meeting of the Radiological Society of North America, and they will be published later this week in the New England Journal of Medicine. I am suggesting that we take this X-ray technique to another level. Presently, the virtual procedure minimizes the psychological barrier that prevents a great many Americans from undergoing screening for colorectal cancer. Snaking the tiny TV camera is not the most pleasant experience. In this vein, I think we could utilize this screening tool prior to hiring a CEO or electing a politician for office. We might be in a better position to make an early discovery of the predisposition to various ills, such as, cheating, lying, many other forms of unethical behavior, being hooked on pork and cover-ups, and the inability to admit mistakes. In an editorial in the New England Journal of Medicine, Dr. Thomas Lamont of the Beth Israel Deaconess Medical Center in Boston suggested that the technique is now “ready for prime time.” I would think stockholders in Enron, MCI, Tyco, and many other companies, would concur with Dr. Lamont.
China’s premier, Wen Jiabao, makes his first official visit to the United States this weekend. To make him feel welcome, the Administration is holding “creeping protectionism” in his honor rather than a state dinner. This makes perfect sense. After all, China is now the fastest-growing export market for U.S. products. Last year our exports to China increased by 19%, and in 2003 they have risen 22%. Congress is considering legislation that could impose tariffs on apple juice, CD players, and other products made in China. We can always depend on Sen. Charles Schumer (D) of New York. He is the chief sponsor of proposed legislation that would require Bush to impose 27.5% across-the-board tariffs on Chinese goods unless China lets its currency float. I would recommend Schumer as an excellent candidate for a ‘virtual’ colonoscopy. Maybe we can prevent his illness from spreading.
As the Nasdaq marches to the 2000 level, I was especially interested in the CIO Magazine’s monthly “Tech Poll” for November. In October, the poll showed that Chief Information Officers planned to increase tech spending by 6% over the next 12 months. These CIOs must not read the bullish headlines for tech. The November poll revealed their plans to increase tech spending by 4.2%. At this rate, by the time February comes around, they may not increase their spending at all. That would not surprise me. But would it interrupt the Nasdaq’s climb? Never! Onward and upward until it implodes.
I cannot understand this. The Nasdaq is up 45% this year, and other smaller indices have reached new all-time highs. Yet, officials of the Retirement Systems of Alabama (RSA) are asking for more money from the state next year in part to make up for their investment losses in 2001 and 2002. They need a 20-year old money manager with a fresh perspective. Alabama paid an estimated $285million to RSA in the 2003 budget year, which ended Sept. 30. RSA officials expect the state to pay $364 million this year, and in 2005, $427 million.
Lois Huff, senior vice president at Columbus, Ohio-based consulting firm Retail Forward, stated retailers are cautious about this year’s holiday spending season. Her company predicts retail sales will increase between 3.5% and 4% this holiday, or one-half to 1 percentage points grater than the 2.2% sales growth of the 2002 holiday season. Talking about the shoppers, she stated “while they may be slightly better off than a decade ago, they realize things change very quickly, whether it’s the stock market, corporate scandals, terrorism, or war.”
Toys “R” Us recently announced a company restructuring, and that included eliminating 3,800 national jobs and closing their Kids “R” Us and Imaginarium chains. Yesterday, the company stated they would close its Lawrenceville, Georgia distribution facility and cut 89 jobs by Jan. 25, 2004. On the other hand, DuPont yesterday announced major changes, and they will include some large layoffs to occur in the latter part of April, 2004. Now their employees can fret for five months about the size of the layoffs, and the yet-to-be named persons on the list. Management of DuPont would be prime candidates for a ‘virtual’ colonoscopy.
A new service allows banks to federally insure accounts of up to $1.5 million. Promontory Interfinancial Network LLC of Arlington, Va., headed by Eugene Ludwig, a former comptroller of the currency, devised the idea. They have more than 500 community banks nationwide signed up. Basically, this network of banks can safeguard funds beyond the FDIC $100,000 limit by swapping customer deposits. At the same time, their customers’ money continues to circulate within the local community. The service recently expanded to individual retirement accounts.
Researchers at St. Jude Children’s Research Hospital in Memphis, Tenn. Issued their finding that the United States is not adequately prepared to respond to a worldwide outbreak of influenza, which many experts say may be imminent. Dr. Robert Webster, a member of the Infectious Disease department and holder of the Rose Marie Thomas Chair at St. Jude, stated “if an influenza pandemic started tomorrow, we would not be able to head it off with vaccines because the production facilities available to produce them are grossly inadequate.”
It is no secret that Mervyn’s has been an under-performer for its owner, Target. Yesterday about 150 employees at Mervyn’s at SeaTac Mall in Federal Way, WA were told that the store would close Jan 5. The store will be knocked down and replaced by a larger Target store set to open next October, and it will also take the place of a smaller Target location near-by. The latter will remain in business until the new Target is opened.
On Monday an American soldier was killed west of Baghdad near the town of Habbaniya. Since President Bush declared an end to major hostilities in Iraq on May 1, a total of 188 U.S. soldiers have been killed in combat.
Monday, December 01, 2003
12/1/03 Protectionism Is Replacing Free Enterprise In your Neighborhood
Bush blinked and will remove almost all of the steel tariffs. I thought the world of protectionism had taken a step backwards. I was so very wrong. Today, the Indiana state senate committee will look into why the state awarded a computer contract to an Indian company that planned to import 65 Indian technicians to work alongside 18 current state employees to upgrade the processing of unemployment claims. Tata Consultancy Services underbid Accenture Ltd. And Deloitte Consulting for the $15.2 million contract. The state of Indiana has routinely awarded contracts to outside companies in their effort to trim costs. State Sen. Jeff Drozda, a Republican, wants “to send a message to other states. We’re supposed to be helping unemployed and underemployed Hoosiers.” Drozda wants to examine the pay scales Tata proposed for the workers it would have imported. It should be noted that, according to Ron Hira, a professor at Rochester Institute of Technology, there are about 500,000 non-citizens working in the United States under special visas. The bottom line is the $15.2 million contract to Tata has been canceled. The matter will not end here. As Phiroz Vanrevala, executive vice president of Tata stated, “It (the government IT contract) is a big market for Indian companies. If this sort of thing happens, obviously it is going to restrict our choice to compete in that market. The initial market is not there. But looking to the long term view of the market, it is something we need to worry about and engage with governments to ensure that we can do something. We bid on a contract and we won that. If someone wants to cancel it, we will see what recourse we need to take. This is a government-related issue. We expect our government and industry association like Nasscom to respond to it. A single company is not going to take that up.” He added that the contract had been canceled because of a statutory change and not because Tata did not perform.
While India was ripping up the contract awarded to Tata, Hewlett-Packard announced the buy-out of its Indian subsidiary, Digital GlobalSoftLtd. They will pay a premium of 50% of the average price over the last 26 weeks of trading for the stock they do not already own. The Indian government is not expected to interfere with this purchase. It is most unfortunate that politicians like Drozda are elected to represent their constituency.
This Friday the Labor Department will issue their report on jobs. As we know, they announced that 286,000 jobs were added from August through October. It is anticipated that the report will indicate that 150,000 people were added to the employment rolls in November. Before you get all excited and work yourself up into the need for a cold shower, let's examine some reality. If people were getting hired permanently, a few things would be first taking place. We would be seeing employees working longer than 33 hours per week. That has not happened. We would see more people working overtime hours. That has not happened. We would be seeing an increase in the help-wanted advertising index. That has not happened. On the other hand, the job placement firm of Challenger, Gray & Christmas reported that planned layoffs at U.S. firms were 171,874 in October, more than double September’s total and the highest in a year. A survey of 74 companies by Pacific Staffing, a firm that supplies temporary workers to hundreds of local businesses in the Sacramento, CA area, found that most were not planning to add employees. It’s President Jay Jurschak stated “ we haven’t seen a big spike the way you would have in previous recoveries.” Intel projects sales in the fourth quarter of about $8.7 billion, and this would equal its record fourth quarter of 2000. At that time, Intel employed 86,000 people and now has 79,000 employees. A spokesperson for the company remarked that Intel has no plan to add more employees in the U.S. until the economy “improves significantly.” Scott Montrey of the National Assn. of Manufacturers expressed the situation quite well. He stated “if you survived the last few years, you’ve done it by being really mean and lean. And once you get lean and mean, you don’t go back to being fat and lazy.” John Challenger remarked “my sense is that hiring and job creation will be meager. There are huge transformative forces at work, with technology and globalization forcing us in different directions. I think we’re in uncharted territory.” In sum, when you see the 150,000 jobs announced on Friday, please remember it’s the holiday season. Temporary workers are hired in the stores. We know that, between Circuit City and WalMart, over 25,000 were added to the payrolls for the holiday shopping season. Of course, we could go around the horn, so to speak, and visit with Target, Federated, Sears, etc. to see how many they hired for this holiday season. I am certain of one thing. More permanent workers are losing their jobs and/or having those jobs outsourced than are being hired on a permanent basis. More factories are being shut down than are being expanded or opened. In a speech to the Economic Club of Washington, the Snowman stated “there can’t be a jobless recovery. The nature of a recovery is to recover. You don’t recover if lots of people are looking for work and can’t find work.” When you look around, you’ll see over 15 million people searching for work. I don’t think you’ll be in need of that cold shower. Staying warm in the winter is a good thing.
Dr. Charles Cefalu is the president of the Louisiana Geriatric Society and a former board member of the American Geriatric Society. That makes him a maven on geriatrics. He stated that Medicare has cut reimbursement of primary care physicians who treat the elderly (I prefer the word ‘seasoned’) by 17% in the past three years. According to Dr. Cefalu, more than 60% of doctors who offer such care are threatening to end it, if the proposed 4.5% reduction in Medicare reimbursement goes through in fiscal 2004. Dr. Robert Butler, head of the International Longevity Center in New York, remarked “older people are very disadvantaged by the U.S. medical system. Only about 40% of their costs are covered by Medicare and Medicaid…care of older people needs to be dramatically improved.”
Senator John McCain: “Congress is now spending money like a drunken sailor, and I’ve never known a sailor, drunk or sober, with the imagination that this Congress has…the President cannot say, as he has many times, that ‘I’m going to tell Congress to enforce some spending discipline’ and then not veto bills…Any economist will tell you cannot have this level of debt of increasing deficits without eventually it affecting interest rates and inflation. Those are the greatest enemies of middle-income Americans and retired Americans.”
Last year’s holiday shopping season got off to a strong start. Over the last three days, stores had a sales gain of about 4%. It was a solid but not spectacular long weekend of shopping for the retailers. Last year’s holiday results were about unchanged from 2001. According to the International Council of Shopping Centers, a year ago 41% of holiday sales took place in the week before Christmas and the busiest shopping day over the last few years has been the Saturday before Christmas. We will need to wait a bit longer to see how this holiday shopping season will pan out.
Bush blinked and will remove almost all of the steel tariffs. I thought the world of protectionism had taken a step backwards. I was so very wrong. Today, the Indiana state senate committee will look into why the state awarded a computer contract to an Indian company that planned to import 65 Indian technicians to work alongside 18 current state employees to upgrade the processing of unemployment claims. Tata Consultancy Services underbid Accenture Ltd. And Deloitte Consulting for the $15.2 million contract. The state of Indiana has routinely awarded contracts to outside companies in their effort to trim costs. State Sen. Jeff Drozda, a Republican, wants “to send a message to other states. We’re supposed to be helping unemployed and underemployed Hoosiers.” Drozda wants to examine the pay scales Tata proposed for the workers it would have imported. It should be noted that, according to Ron Hira, a professor at Rochester Institute of Technology, there are about 500,000 non-citizens working in the United States under special visas. The bottom line is the $15.2 million contract to Tata has been canceled. The matter will not end here. As Phiroz Vanrevala, executive vice president of Tata stated, “It (the government IT contract) is a big market for Indian companies. If this sort of thing happens, obviously it is going to restrict our choice to compete in that market. The initial market is not there. But looking to the long term view of the market, it is something we need to worry about and engage with governments to ensure that we can do something. We bid on a contract and we won that. If someone wants to cancel it, we will see what recourse we need to take. This is a government-related issue. We expect our government and industry association like Nasscom to respond to it. A single company is not going to take that up.” He added that the contract had been canceled because of a statutory change and not because Tata did not perform.
While India was ripping up the contract awarded to Tata, Hewlett-Packard announced the buy-out of its Indian subsidiary, Digital GlobalSoftLtd. They will pay a premium of 50% of the average price over the last 26 weeks of trading for the stock they do not already own. The Indian government is not expected to interfere with this purchase. It is most unfortunate that politicians like Drozda are elected to represent their constituency.
This Friday the Labor Department will issue their report on jobs. As we know, they announced that 286,000 jobs were added from August through October. It is anticipated that the report will indicate that 150,000 people were added to the employment rolls in November. Before you get all excited and work yourself up into the need for a cold shower, let's examine some reality. If people were getting hired permanently, a few things would be first taking place. We would be seeing employees working longer than 33 hours per week. That has not happened. We would see more people working overtime hours. That has not happened. We would be seeing an increase in the help-wanted advertising index. That has not happened. On the other hand, the job placement firm of Challenger, Gray & Christmas reported that planned layoffs at U.S. firms were 171,874 in October, more than double September’s total and the highest in a year. A survey of 74 companies by Pacific Staffing, a firm that supplies temporary workers to hundreds of local businesses in the Sacramento, CA area, found that most were not planning to add employees. It’s President Jay Jurschak stated “ we haven’t seen a big spike the way you would have in previous recoveries.” Intel projects sales in the fourth quarter of about $8.7 billion, and this would equal its record fourth quarter of 2000. At that time, Intel employed 86,000 people and now has 79,000 employees. A spokesperson for the company remarked that Intel has no plan to add more employees in the U.S. until the economy “improves significantly.” Scott Montrey of the National Assn. of Manufacturers expressed the situation quite well. He stated “if you survived the last few years, you’ve done it by being really mean and lean. And once you get lean and mean, you don’t go back to being fat and lazy.” John Challenger remarked “my sense is that hiring and job creation will be meager. There are huge transformative forces at work, with technology and globalization forcing us in different directions. I think we’re in uncharted territory.” In sum, when you see the 150,000 jobs announced on Friday, please remember it’s the holiday season. Temporary workers are hired in the stores. We know that, between Circuit City and WalMart, over 25,000 were added to the payrolls for the holiday shopping season. Of course, we could go around the horn, so to speak, and visit with Target, Federated, Sears, etc. to see how many they hired for this holiday season. I am certain of one thing. More permanent workers are losing their jobs and/or having those jobs outsourced than are being hired on a permanent basis. More factories are being shut down than are being expanded or opened. In a speech to the Economic Club of Washington, the Snowman stated “there can’t be a jobless recovery. The nature of a recovery is to recover. You don’t recover if lots of people are looking for work and can’t find work.” When you look around, you’ll see over 15 million people searching for work. I don’t think you’ll be in need of that cold shower. Staying warm in the winter is a good thing.
Dr. Charles Cefalu is the president of the Louisiana Geriatric Society and a former board member of the American Geriatric Society. That makes him a maven on geriatrics. He stated that Medicare has cut reimbursement of primary care physicians who treat the elderly (I prefer the word ‘seasoned’) by 17% in the past three years. According to Dr. Cefalu, more than 60% of doctors who offer such care are threatening to end it, if the proposed 4.5% reduction in Medicare reimbursement goes through in fiscal 2004. Dr. Robert Butler, head of the International Longevity Center in New York, remarked “older people are very disadvantaged by the U.S. medical system. Only about 40% of their costs are covered by Medicare and Medicaid…care of older people needs to be dramatically improved.”
Senator John McCain: “Congress is now spending money like a drunken sailor, and I’ve never known a sailor, drunk or sober, with the imagination that this Congress has…the President cannot say, as he has many times, that ‘I’m going to tell Congress to enforce some spending discipline’ and then not veto bills…Any economist will tell you cannot have this level of debt of increasing deficits without eventually it affecting interest rates and inflation. Those are the greatest enemies of middle-income Americans and retired Americans.”
Last year’s holiday shopping season got off to a strong start. Over the last three days, stores had a sales gain of about 4%. It was a solid but not spectacular long weekend of shopping for the retailers. Last year’s holiday results were about unchanged from 2001. According to the International Council of Shopping Centers, a year ago 41% of holiday sales took place in the week before Christmas and the busiest shopping day over the last few years has been the Saturday before Christmas. We will need to wait a bit longer to see how this holiday shopping season will pan out.
Sunday, November 30, 2003
11/30/03 Outsourcing Overview
Not too many folks in the U.S. have heard of 24/7 Customer. It is a call center located in Bangalore, India. Ninety eight per cent of the employees have college degrees. They work nine-hour shifts sorting out bank card problems, ordering new phone services, and installing software on customers’ home computers. The annual pay for each employee ranges from $2,800 to $8,000. By comparison, most U.S. employees in call centers here do not have a college degree and receive annual remuneration of $30,000 to $45,000. Shortly, 24/7 will open a call center in Hyderabad with 350 employees. According to Stanford University, India’s call center industry has added nearly 200,000 workers since March 2002 and will reach employment of 350,000 by early next year. Gartner predicted information technology companies would move 1 in 10 jobs offshore by the end of 2004. Forrester Research predicted 3.3 tech and service jobs would leave the U.S. by 2015. UC Berkeley remarked that 14 million U.S. service jobs, including tech positions, were threatened. No one knows for certain how many and how quickly jobs will be outsourced. On the other hand, I think it is safe to predict that more jobs will be outsourced than employees added in the U.S. within the same time frame. Consequently, I would question any predictions of job growth in the U.S.
The Congressioanl Budget Office estimates that 23% of the nearly 12 million retirees with employer-provided drug coverage will lose it when the new Medicare program goes into effect in 2006. We know that government estimates are historically understated. In my view, the new Medicare legislation will go down as one of the worst bills in this nation’s history.
How many have heard of Quick, AM Journal Express, RedEye, Red Streak, Noise, or Thrive? They are free daily newspapers. They are giveaway publications. In 1982, 67% of Americans read the newspaper, according to the Newspaper Association of America. By 2002, that number was reduced to 55%. Only 17% of daily newspaper subscribers are between the ages of 18 and 34 while 43% are 55 and up. The large chains wanted to find a new way to offset declining circulation. Jim Moroney, publisher of The Dallas Morning News, expects Quick to be profitable in about three years.
Salem Abraham, head of Abraham Trading Co. and SAA Ventures: “I wondered why all markets behaved the same. It’s because they have one thing in common- people, human psychology…if you look back and see tat if something is done a thousand times and usually gets the same result, that tells you something…since its inception, 15 years and 10 months ago, we’ve had a 24.93% average return. We’ve never lost money for our investors.” Abraham Trading Co. has assets of about $20 million and buys and sells basic futures contracts in 51 markets, such as, grains, currencies, energy, and metals with an average holding period of 3 months. Salem formed SAA Ventures a couple of years ago with $2 million, and specializes in arbitraging the differences between the price of an index and the futures price of that index. He states he “hopes to make $3 on each trade, and makes 3,000 to 5,000 trades a day with an 80% success rate and an average holding time for each trade of two-tenths of a second.
Since the Iraq war began on March 20, November has proven to be the bloodiest month with 79 American soldiers killed. A total of 438 U.S. soldiers have died since the beginning of the war, according to the Pentagon.
My friend, Yale Hirsch, reports in his Stock Market Almanac that December is traditionally the best month of the year for investors with an average gain of 1.8% on the S&P 500 Index since 1950. I no longer a believer in Santa Claus, and therefore, I am skeptical about a possible Santa Claus rally. Then again, the last several months have proven my skepticism ill-founded. Time will tell whether history is on the side with the bulls.
Not too many folks in the U.S. have heard of 24/7 Customer. It is a call center located in Bangalore, India. Ninety eight per cent of the employees have college degrees. They work nine-hour shifts sorting out bank card problems, ordering new phone services, and installing software on customers’ home computers. The annual pay for each employee ranges from $2,800 to $8,000. By comparison, most U.S. employees in call centers here do not have a college degree and receive annual remuneration of $30,000 to $45,000. Shortly, 24/7 will open a call center in Hyderabad with 350 employees. According to Stanford University, India’s call center industry has added nearly 200,000 workers since March 2002 and will reach employment of 350,000 by early next year. Gartner predicted information technology companies would move 1 in 10 jobs offshore by the end of 2004. Forrester Research predicted 3.3 tech and service jobs would leave the U.S. by 2015. UC Berkeley remarked that 14 million U.S. service jobs, including tech positions, were threatened. No one knows for certain how many and how quickly jobs will be outsourced. On the other hand, I think it is safe to predict that more jobs will be outsourced than employees added in the U.S. within the same time frame. Consequently, I would question any predictions of job growth in the U.S.
The Congressioanl Budget Office estimates that 23% of the nearly 12 million retirees with employer-provided drug coverage will lose it when the new Medicare program goes into effect in 2006. We know that government estimates are historically understated. In my view, the new Medicare legislation will go down as one of the worst bills in this nation’s history.
How many have heard of Quick, AM Journal Express, RedEye, Red Streak, Noise, or Thrive? They are free daily newspapers. They are giveaway publications. In 1982, 67% of Americans read the newspaper, according to the Newspaper Association of America. By 2002, that number was reduced to 55%. Only 17% of daily newspaper subscribers are between the ages of 18 and 34 while 43% are 55 and up. The large chains wanted to find a new way to offset declining circulation. Jim Moroney, publisher of The Dallas Morning News, expects Quick to be profitable in about three years.
Salem Abraham, head of Abraham Trading Co. and SAA Ventures: “I wondered why all markets behaved the same. It’s because they have one thing in common- people, human psychology…if you look back and see tat if something is done a thousand times and usually gets the same result, that tells you something…since its inception, 15 years and 10 months ago, we’ve had a 24.93% average return. We’ve never lost money for our investors.” Abraham Trading Co. has assets of about $20 million and buys and sells basic futures contracts in 51 markets, such as, grains, currencies, energy, and metals with an average holding period of 3 months. Salem formed SAA Ventures a couple of years ago with $2 million, and specializes in arbitraging the differences between the price of an index and the futures price of that index. He states he “hopes to make $3 on each trade, and makes 3,000 to 5,000 trades a day with an 80% success rate and an average holding time for each trade of two-tenths of a second.
Since the Iraq war began on March 20, November has proven to be the bloodiest month with 79 American soldiers killed. A total of 438 U.S. soldiers have died since the beginning of the war, according to the Pentagon.
My friend, Yale Hirsch, reports in his Stock Market Almanac that December is traditionally the best month of the year for investors with an average gain of 1.8% on the S&P 500 Index since 1950. I no longer a believer in Santa Claus, and therefore, I am skeptical about a possible Santa Claus rally. Then again, the last several months have proven my skepticism ill-founded. Time will tell whether history is on the side with the bulls.
Saturday, November 29, 2003
11/29/03 Mission-Critical Incentives
Many Americans have trouble getting out of bed to go to work. It’s a drudge, a have to. Give them an incentive to wait in line at 5am, and they will come gladly. This year’s holiday season has 27 shopping days compared with last year’s 26. Last year the Thanksgiving shopping weekend started like a house on fire, and then dribbled into plain nothingness. The retailers are determined not to have the same experience. The problem is the stores don’t have enough of the main attractions to go the distance of 27 days. The lines formed all over the country for $19.99 DVD players, $50 seventeen inch monitors, $29.99 comforters, $169 twenty seven inch TVs, $88 digital cameras, and bargains on digital camcorders, desktop and laptop computers, Game Boy Advance SP systems, Hokey Pokey Elmo, HDTVs with flat screens, and Bratz Karaoke machines. The questions I have are can China make enough DVD players for the holidays and can they be sold for $19.99 at a profit or $29.99 for a profit? Main Street shops for the holidays at WalMart, Target, and Best Buy. Early bird specials are not found at Tiffany’s or Gucci’s.
Aside from the proposed $2.2 billion in penalties, Bush needs an additional incentive to remove the steel tariffs he imposed 20 months ago. He wants to win West Virginia, Ohio, and the other steel manufacturing states in 2004. He can gracefully eliminate the tariffs within the next week due to the fact that steel prices have firmed. The Nucors of the United States may not be overjoyed, but they were thrown a bone for almost two years.
Jack Welch was ahead of his time. He forged technology centers in India long before most CEOs knew India was on the map. His Sigma program revolves around efficiency, productivity, and cost reduction. GE Capital India President Pramod Bhasin stated “we are mission-critical to GE.” The 700 business processes accomplished in India produce annual savings of $340 million a year. That’s a lot of incentive for expanding service operations in India.
Sometimes incentives are required to avoid layoffs. Even workers at labor unions are not immune to a difficult job market. About 200 workers at the AFL-CIO are taking two days of unpaid leave to avoid layoffs. The days off were agreed to this past summer in contract negotiations between managers and the union representing about 200 workers at the AFL-CIO. Managers also have agreed to take unpaid time. Maybe the employment picture is not as upbeat as has been depicted by the Labor Department. For example, this month Raytheon, in an effort to cut costs, axed workers at an electrical panel assembly factory. One of those recently fired workers stated “it’s not getting better, it is getting worse. It is definitely getting worse. All three of the aircraft companies here in town (Wichita, Kansas) are still laying off, still sending work out of the country. It’s not good.” A temporary worker with the local Machinists Union remarked “every day, all my clients are laid-off aircraft workers, and there’s thousands of them. Probably after the first of the year, or maybe even before then, we’re going to have so many people we are not going to be able to take care of them.”
The Congressional Budget Office reported that non-defense spending rose 7% in the government’s fiscal year that ended Sept. 30, 75% above the 4% discretionary spending caps that President Bush insisted Congress honor. Since Bush took office in 2001, non-defense spending has increased 13%, and 21% if spending on the war on terrorism is included. Chris Edwards, director of fiscal policy at the Cato Institute, stated “my impression of Bush is that I’ve never seen him give a speech in which he says government is too big and we need to cut costs.” Brian M. Reidl, a budget analyst for the Heritage Foundation, stated mandatory government spending on entitlements, such as, Medicare will reach 11.1% of the nation’s GDP, and that the number will climb exponentially once seniors begin getting government-paid pharmaceuticals in 2006. Reidl remarked “Congress often underestimates entitlements by a lot. By our calculations, it will cost $2 trillion between now and 2030.” That assumes the program is not expanded. He went on to state that “the lawmakers who pushed for the Medicare drug bill never answered the question of how they would pay for it. Apparently, they are leaving the $2 trillion tax hike to future congresses to figure out.” The problem is there is not an incentive to restrain government spending. The American public is on the Atkins diet, and pork is in demand. When the public switches back to the Pritikin diet, maybe fiscal restraint will be in vogue. I won’t hold my breath.
The talents of our medical researchers constantly amaze me. Dr. Qing Wang is the director of The Cleveland Clinic’s Center for Cardiovascular Genetics. He and his colleagues noticed an MEF2A specific genetic deletion mutation. Dr. Wang discovered “the elements missing from this gene represent 21 base pairs of nucleotides and seven amino acids. This deletion affects coronary artery walls, making them less able to protect themselves from plaque buildup and heart disease.” This is the first gene confirmed as a cause of coronary heart disease in humans. Dr. Wang related that “finding the gene opens a new avenue through which scientists can track the pathway that leads to coronary heart disease and heart attack. Genes in that pathway then can be used as targets to design new drugs intended to prevent or treat heart disease. Finding the gene also will make it easier to definitively diagnose patients with highly significant family histories of heart disease. Despite all medical advances to date, heart disease remains the No. 1 killer in the developed world. Someone suffers a coronary event every 29 seconds, and someone dies every minute. Unlocking the genetic secrets of this disease is a first step in a new research avenue to help save countless lives.”
In a typical year in the United States, about 36,000 people die from the flu and 114,000 are hospitalized. This year the flu season has hit early and its impact has been quite severe in Texas, Nevada, Washington, Colorado, and other states. The last pandemic was the Hong Kong flu in 1968-1969.
In the past, I have written of WalMart’s expansion into mainland China in 1996. They employ 15,000 people in China in their 25 stores, and will open another five stores in 2004. Considering the company has over 1,200 stores worldwide, that number may appear insignificant, but not to WalMart. Joe Hatfield, president of the company’s Asian retail operations, states “what this place is going to look like 10 to 20 years from now- and what the consumer will be ready to buy- is hard to even think about. There are 800 million farmers out there who’ve never even tasted a Coke.”
According to the military, 2,401 U.S. troops were listed as wounded in action in Iraq since the war began in March. Updated through yesterday, 300 more have died, and accidents accounted for an additional 136 deaths. The military reported that, adding the number of sick or non-combat wounded, the total would total approximately 10,000. The figures include only those required transfer to medical facilities outside Iraq and not those whose injuries or illnesses were treated in Iraq.
Many Americans have trouble getting out of bed to go to work. It’s a drudge, a have to. Give them an incentive to wait in line at 5am, and they will come gladly. This year’s holiday season has 27 shopping days compared with last year’s 26. Last year the Thanksgiving shopping weekend started like a house on fire, and then dribbled into plain nothingness. The retailers are determined not to have the same experience. The problem is the stores don’t have enough of the main attractions to go the distance of 27 days. The lines formed all over the country for $19.99 DVD players, $50 seventeen inch monitors, $29.99 comforters, $169 twenty seven inch TVs, $88 digital cameras, and bargains on digital camcorders, desktop and laptop computers, Game Boy Advance SP systems, Hokey Pokey Elmo, HDTVs with flat screens, and Bratz Karaoke machines. The questions I have are can China make enough DVD players for the holidays and can they be sold for $19.99 at a profit or $29.99 for a profit? Main Street shops for the holidays at WalMart, Target, and Best Buy. Early bird specials are not found at Tiffany’s or Gucci’s.
Aside from the proposed $2.2 billion in penalties, Bush needs an additional incentive to remove the steel tariffs he imposed 20 months ago. He wants to win West Virginia, Ohio, and the other steel manufacturing states in 2004. He can gracefully eliminate the tariffs within the next week due to the fact that steel prices have firmed. The Nucors of the United States may not be overjoyed, but they were thrown a bone for almost two years.
Jack Welch was ahead of his time. He forged technology centers in India long before most CEOs knew India was on the map. His Sigma program revolves around efficiency, productivity, and cost reduction. GE Capital India President Pramod Bhasin stated “we are mission-critical to GE.” The 700 business processes accomplished in India produce annual savings of $340 million a year. That’s a lot of incentive for expanding service operations in India.
Sometimes incentives are required to avoid layoffs. Even workers at labor unions are not immune to a difficult job market. About 200 workers at the AFL-CIO are taking two days of unpaid leave to avoid layoffs. The days off were agreed to this past summer in contract negotiations between managers and the union representing about 200 workers at the AFL-CIO. Managers also have agreed to take unpaid time. Maybe the employment picture is not as upbeat as has been depicted by the Labor Department. For example, this month Raytheon, in an effort to cut costs, axed workers at an electrical panel assembly factory. One of those recently fired workers stated “it’s not getting better, it is getting worse. It is definitely getting worse. All three of the aircraft companies here in town (Wichita, Kansas) are still laying off, still sending work out of the country. It’s not good.” A temporary worker with the local Machinists Union remarked “every day, all my clients are laid-off aircraft workers, and there’s thousands of them. Probably after the first of the year, or maybe even before then, we’re going to have so many people we are not going to be able to take care of them.”
The Congressional Budget Office reported that non-defense spending rose 7% in the government’s fiscal year that ended Sept. 30, 75% above the 4% discretionary spending caps that President Bush insisted Congress honor. Since Bush took office in 2001, non-defense spending has increased 13%, and 21% if spending on the war on terrorism is included. Chris Edwards, director of fiscal policy at the Cato Institute, stated “my impression of Bush is that I’ve never seen him give a speech in which he says government is too big and we need to cut costs.” Brian M. Reidl, a budget analyst for the Heritage Foundation, stated mandatory government spending on entitlements, such as, Medicare will reach 11.1% of the nation’s GDP, and that the number will climb exponentially once seniors begin getting government-paid pharmaceuticals in 2006. Reidl remarked “Congress often underestimates entitlements by a lot. By our calculations, it will cost $2 trillion between now and 2030.” That assumes the program is not expanded. He went on to state that “the lawmakers who pushed for the Medicare drug bill never answered the question of how they would pay for it. Apparently, they are leaving the $2 trillion tax hike to future congresses to figure out.” The problem is there is not an incentive to restrain government spending. The American public is on the Atkins diet, and pork is in demand. When the public switches back to the Pritikin diet, maybe fiscal restraint will be in vogue. I won’t hold my breath.
The talents of our medical researchers constantly amaze me. Dr. Qing Wang is the director of The Cleveland Clinic’s Center for Cardiovascular Genetics. He and his colleagues noticed an MEF2A specific genetic deletion mutation. Dr. Wang discovered “the elements missing from this gene represent 21 base pairs of nucleotides and seven amino acids. This deletion affects coronary artery walls, making them less able to protect themselves from plaque buildup and heart disease.” This is the first gene confirmed as a cause of coronary heart disease in humans. Dr. Wang related that “finding the gene opens a new avenue through which scientists can track the pathway that leads to coronary heart disease and heart attack. Genes in that pathway then can be used as targets to design new drugs intended to prevent or treat heart disease. Finding the gene also will make it easier to definitively diagnose patients with highly significant family histories of heart disease. Despite all medical advances to date, heart disease remains the No. 1 killer in the developed world. Someone suffers a coronary event every 29 seconds, and someone dies every minute. Unlocking the genetic secrets of this disease is a first step in a new research avenue to help save countless lives.”
In a typical year in the United States, about 36,000 people die from the flu and 114,000 are hospitalized. This year the flu season has hit early and its impact has been quite severe in Texas, Nevada, Washington, Colorado, and other states. The last pandemic was the Hong Kong flu in 1968-1969.
In the past, I have written of WalMart’s expansion into mainland China in 1996. They employ 15,000 people in China in their 25 stores, and will open another five stores in 2004. Considering the company has over 1,200 stores worldwide, that number may appear insignificant, but not to WalMart. Joe Hatfield, president of the company’s Asian retail operations, states “what this place is going to look like 10 to 20 years from now- and what the consumer will be ready to buy- is hard to even think about. There are 800 million farmers out there who’ve never even tasted a Coke.”
According to the military, 2,401 U.S. troops were listed as wounded in action in Iraq since the war began in March. Updated through yesterday, 300 more have died, and accidents accounted for an additional 136 deaths. The military reported that, adding the number of sick or non-combat wounded, the total would total approximately 10,000. The figures include only those required transfer to medical facilities outside Iraq and not those whose injuries or illnesses were treated in Iraq.
Friday, November 28, 2003
11/28/03 Internet Commerce
Kenneth Stone, an Iowa State University economics professor, estimates that, nationwide, Internet sales will reach record levels this year, and that total holiday Internet sales could reach $10 billion, up from $8 billion a year ago. More than one-third of consumers stated they shall make at least some holiday purchases online, according to the National Retail Federation. Internet sales account for the fastest growing retail sales sector but make up only 1% or less of all retail sales.
You have been reading about the increases in employment in the United States. It would be advisable to look into the numbers. For example, Circuit City hired 12,000 holiday workers, and WalMart hired 14,000 seasonal employees. WalMart’s hiring decision is significant. Since last year’s holiday period, WalMart has been aggressive in opening new stores. At the same time, the company hired the same 14,000 workers when their store total was less. This confirms that WalMart really is not very optimistic about the growth prospects for this year’s holiday sales.
Layoffs are spreading outside the United States. HSBC is cutting 450 from their equities workforce in the investment banking area. Alitalia has announced the elimination of 2,700 jobs, and possibly more will be on the way due to the strike.
Japan’s October industrial production rose only 0.8% in October, and this was less than half the rate economists were expecting. This muted increase should limit the near-term rise of the yen versus the dollar. On the other hand, the pound reached a new 5-year high at 1.72 and the euro traded at a record level of 1.1994 versus the dollar. Trading in the dollar has not been helped by the deadline of nine days given by the WTO to abide by their ruling on the illegality of the U.S. steel import duties. If the duties are not removed, the U.S. will be hit with $2.2 billion in sanctions.
In a matter of a few days you will read about the increased U.S. sales of new cars and trucks for the month of November. The report will be released on Tuesday. Overall increases of about 5+% are anticipated. It would be well to remember that Edmunds.com stated the average incentive spending in the U.S. in November was 31% above the year-ago period. They remarked that December may bring even bigger incentives.
The most recent survey conducted by the Bureau of National Affairs’ Human Resources revealed that 67% of companies gave Thanksgiving and the following day as paid holidays, down from 69% a year earlier. Considering the focus on cost reduction, I guess the numbers could have been worse.
Farmers are paying the price for Bush learning on the job. China’s National Grain and Oils Information Center stated China has nixed a plan to buy U.S. wheat and may have blocked, according to Bloomberg News, a shipment of soybeans. The National Grain report remarked “because of reasons related to upcoming elections, the U.S. unilaterally decided to impose restrictions on Chinese textiles, causing a deadlock in China’s plans to buy more U.S. wheat. The Ministry of Commerce stated U.S. rulings against Chinese imports this year have affected $1.6 billion of goods. Canada, Australia, and the U.S. are China’s main wheat suppliers. I expect Australia will be the main beneficiary of increased wheat exports in 2004 to China.
Starting today, there is a two-day India-EU Business Summit in New Delhi. External Affairs Minister Yashwant Sinha told European businessmen they could make more money in India than in China. Sinha stated that India’s strength lay in its legal system, and remarked “there has been not a single complaint that justice has not been done. There has been not a single case that India has reneged on any agreement.” He went on to state “if you are smart, intelligent, enterprising, you will take advantage of this. But if you look for everything in place before deciding to come, you will miss the bus.” Sinha described the “all-around feel-good” factor in India and stated continuing economic reforms would further bring down tariff barriers. He said “we are on a glide path that will ensure that we have a soft landing, not a crash landing, as tariffs are reduced as the world wants us to do.” Over the past 12 years EU’s total trade with India has risen from 9.9 billion euros per year to 27 billion euros. Europe is the largest export market for Indian products as well as the largest source of imports for India. The United
Kenneth Stone, an Iowa State University economics professor, estimates that, nationwide, Internet sales will reach record levels this year, and that total holiday Internet sales could reach $10 billion, up from $8 billion a year ago. More than one-third of consumers stated they shall make at least some holiday purchases online, according to the National Retail Federation. Internet sales account for the fastest growing retail sales sector but make up only 1% or less of all retail sales.
You have been reading about the increases in employment in the United States. It would be advisable to look into the numbers. For example, Circuit City hired 12,000 holiday workers, and WalMart hired 14,000 seasonal employees. WalMart’s hiring decision is significant. Since last year’s holiday period, WalMart has been aggressive in opening new stores. At the same time, the company hired the same 14,000 workers when their store total was less. This confirms that WalMart really is not very optimistic about the growth prospects for this year’s holiday sales.
Layoffs are spreading outside the United States. HSBC is cutting 450 from their equities workforce in the investment banking area. Alitalia has announced the elimination of 2,700 jobs, and possibly more will be on the way due to the strike.
Japan’s October industrial production rose only 0.8% in October, and this was less than half the rate economists were expecting. This muted increase should limit the near-term rise of the yen versus the dollar. On the other hand, the pound reached a new 5-year high at 1.72 and the euro traded at a record level of 1.1994 versus the dollar. Trading in the dollar has not been helped by the deadline of nine days given by the WTO to abide by their ruling on the illegality of the U.S. steel import duties. If the duties are not removed, the U.S. will be hit with $2.2 billion in sanctions.
In a matter of a few days you will read about the increased U.S. sales of new cars and trucks for the month of November. The report will be released on Tuesday. Overall increases of about 5+% are anticipated. It would be well to remember that Edmunds.com stated the average incentive spending in the U.S. in November was 31% above the year-ago period. They remarked that December may bring even bigger incentives.
The most recent survey conducted by the Bureau of National Affairs’ Human Resources revealed that 67% of companies gave Thanksgiving and the following day as paid holidays, down from 69% a year earlier. Considering the focus on cost reduction, I guess the numbers could have been worse.
Farmers are paying the price for Bush learning on the job. China’s National Grain and Oils Information Center stated China has nixed a plan to buy U.S. wheat and may have blocked, according to Bloomberg News, a shipment of soybeans. The National Grain report remarked “because of reasons related to upcoming elections, the U.S. unilaterally decided to impose restrictions on Chinese textiles, causing a deadlock in China’s plans to buy more U.S. wheat. The Ministry of Commerce stated U.S. rulings against Chinese imports this year have affected $1.6 billion of goods. Canada, Australia, and the U.S. are China’s main wheat suppliers. I expect Australia will be the main beneficiary of increased wheat exports in 2004 to China.
Starting today, there is a two-day India-EU Business Summit in New Delhi. External Affairs Minister Yashwant Sinha told European businessmen they could make more money in India than in China. Sinha stated that India’s strength lay in its legal system, and remarked “there has been not a single complaint that justice has not been done. There has been not a single case that India has reneged on any agreement.” He went on to state “if you are smart, intelligent, enterprising, you will take advantage of this. But if you look for everything in place before deciding to come, you will miss the bus.” Sinha described the “all-around feel-good” factor in India and stated continuing economic reforms would further bring down tariff barriers. He said “we are on a glide path that will ensure that we have a soft landing, not a crash landing, as tariffs are reduced as the world wants us to do.” Over the past 12 years EU’s total trade with India has risen from 9.9 billion euros per year to 27 billion euros. Europe is the largest export market for Indian products as well as the largest source of imports for India. The United
Thursday, November 27, 2003
11/27/03 HAPPY THANKSGIVING
Abraham Lincoln’s Thanksgiving Proclamation of October 3, 1863: “We have forgotten the gracious hand which preserved us in peace and multiplied and enriched and strengthened us, and we have vainly imagined, in the deceitfulness of our hearts, that all these blessings were produced by some superior wisdom and virtue of their own. Intoxicated with unbroken success, we have become to self-sufficient to feel the necessity of redeeming and preserving grace, too proud to pray to the God that made us. It has seemed to me fit and proper that God should be solemnly, reverently, and gratefully acknowledged, as with one heart and one voice, by the whole American people. I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November as a day of Thanksgiving and praise to our beneficent Father Who dwelleth in the heavens.”
Mark Twain: “The observance of Thanksgiving Day- as a function- has become general of late years. The Thankfulness is not so general. This is natural. Two-thirds of the nation have always had hard luck and a hard time during the year, and this has a calming effect upon their enthusiasm.”
Stater Bros. Markets operates 157 supermarkets in Southern California, and employ over 14,000 people. They have been in business for 67 years. Each year on Thanksgiving Day they partner with local charities to help feed the needy. This year they shall be providing meals to more than 60,000 people.
The seniors in the state of Pennsylvania can be thankful for PACE (Pharmaceutical Assistance Contract for the Elderly) and a companion program called PACENET. The benefits are much better than the newly-passed Medicare legislation. The income eligibility limits for seniors are more favorable, PACE enrollees have no deductible, prescription co-payments are lower, and fewer drugs will be paid for under the Medicare plan.
Describing the economy in October and early November, the Federal Reserve remarked that “improvements seemed to be reasonably broad based…layoffs are slowing…demand is rising for temporary workers…retailers were optimistic about the upcoming holidays…residential housing continued to boom.” I was so thankful to read this glowing report. I should not have read anything more, and just stopped there. Unfortunately, I continued to read. Kurt Barnard is president of Retail Forecasting, and along with the management at WalMart, a leading expert on retailing. He stated “we project that this holiday shopping season will be modestly better than last year’s. That isn’t saying much.” He bases his cautious outlook on “5 million people in part-time jobs because they couldn’t find full-time jobs along with 9 million unemployed and 2 million who have been out of work for more than 6 months.” One in five Americans is employed in the retail sector. Seventy five percent of consumers, age 18 and over, will go shopping this Friday or this coming weekend. It appears the hot holiday gift ideas are J. Lo T-shirts, Eminem fleece-lined jackets, DVD players, and yes, making gifts.
Pepsi has been Subway’s supplier of the year for the past 7 years in a row. I guess being the best is not good enough. Yesterday, Subway announced it was switching its global beverage business from Pepsi to Coke. That must have been a costly persuasion, a little like the late night vote switching in favor of the Medicare bill. Subway is the biggest fast-food chain in the U.S. by sales outlets. McDonald’s is the largest in terms of total sales.
I was so thankful to read that the Chicago factory-sector index jumps to 64 in November. I was so excited at this comeback. Then I read that the Chicago employment index fell to 48 from 53. That brought me back to reality in a hurry. I was also disappointed that the Conference Board’s Help-wanted Advertising Index remained at 37 in October, unchanged from September, but down from 40 a year ago. In the last three months, help-wanted advertising declined in seven of the nine U.S. regions.
The housing market has been the strongest sector in the economy in 2003. The Commerce Department announced that sales of new single-family homes dropped 1.9% in September and 3.5% in October. Sales of previously owned homes fell by 4.9% in October. Sales were down in all regions, and, at the current sales pace, the inventory of homes on the market in October rose to 4 months worth. It is the highest level since April.
Many people give gift merchandise cards for the holidays. Until those gift cards are redeemed, retailers cannot count them as revenues. Many of the cards remain outstanding until January.
In 2004, there is a projected $160 billion social security surplus. The government will spend, and not save, those funds for future retirees. If the funds were saved, the projected Federal budget deficit for 2004 would reach $700 billion.
There is good news for which to be thankful. The average number of workers continuing to receive unemployment insurance over the past four weeks fell 42,500 to 3.45 million, the lowest reading since the week ended March 1. The bad news is the latest weekly figures don’t include some 820,000 workers receiving extended federal benefits. In October, about 8.8 million people were classified by the government as unemployed.
Yesterday we learned that the consumer continues to constrain spending. In October, real consumer spending (as opposed to unreal consumer spending!) was unchanged after declining 0.6% in September. There was a 1.9% drop in spending on durable goods in the latest month. The PCE core price rate only rose 1.2%, the smallest increase in 40 years. The Bureau of Economic Analysis plans to release the results of its 12th comprehensive (or benchmark) revision of the national income and product accounts (NIPAS) on Dec. 10, 2003. It could be the mother of all revisions. I might need to get them framed.
Do you remember the Great Atlantic & Pacific Tea Co? The old A&P grocery chain? It’s hard to believe that, at one time, they had five times the number of stores WalMart now has. I don’t think they would have fared too well competing with WalMart’s supercenters carrying similar grocery items.
Dell dismissed reports that it is shifting its technical support service for its business customers from Bangalore to the United States. A spokesperson stated “we are not shifting the work. Dell is committed to India and is growing.” Dell currently has over 2,000 people working at its customer support centers in Bangalore and Hyderabad.
Michael Roux, vice chairman (Australia) of Citigroup, said India could emerge as a major global player in the outsourcing of financial services. He remarked “India is not only doing things at cheaper cost but it is doing things better at cheaper cost. This is a major competitive edge the country has when it comes to outsourcing of financial services.” Swati Piramal, chief scientific officer of pharmaceutical firm Nicholas Piramal India, said India had all the advantages to become a back-office research hub for pharmaceutical companies as well. He stated “ we have all the ingredients in place. India has over 2,000 research institutes, robust IT backup, and vast educated manpower base, among many other things.”
The latest nationwide Harris poll on Iraq finds that there has been little change over the last month in public perceptions of events in Iraq. President Bush’s ratings on Iraq are still negative, 58% to 40%. The largest change was the increase in the majority who think that the level of U.S. casualties in Iraq is unacceptable. Fifty four per cent feel this way now compared to 51% in October and 47% in September.
Abraham Lincoln’s Thanksgiving Proclamation of October 3, 1863: “We have forgotten the gracious hand which preserved us in peace and multiplied and enriched and strengthened us, and we have vainly imagined, in the deceitfulness of our hearts, that all these blessings were produced by some superior wisdom and virtue of their own. Intoxicated with unbroken success, we have become to self-sufficient to feel the necessity of redeeming and preserving grace, too proud to pray to the God that made us. It has seemed to me fit and proper that God should be solemnly, reverently, and gratefully acknowledged, as with one heart and one voice, by the whole American people. I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November as a day of Thanksgiving and praise to our beneficent Father Who dwelleth in the heavens.”
Mark Twain: “The observance of Thanksgiving Day- as a function- has become general of late years. The Thankfulness is not so general. This is natural. Two-thirds of the nation have always had hard luck and a hard time during the year, and this has a calming effect upon their enthusiasm.”
Stater Bros. Markets operates 157 supermarkets in Southern California, and employ over 14,000 people. They have been in business for 67 years. Each year on Thanksgiving Day they partner with local charities to help feed the needy. This year they shall be providing meals to more than 60,000 people.
The seniors in the state of Pennsylvania can be thankful for PACE (Pharmaceutical Assistance Contract for the Elderly) and a companion program called PACENET. The benefits are much better than the newly-passed Medicare legislation. The income eligibility limits for seniors are more favorable, PACE enrollees have no deductible, prescription co-payments are lower, and fewer drugs will be paid for under the Medicare plan.
Describing the economy in October and early November, the Federal Reserve remarked that “improvements seemed to be reasonably broad based…layoffs are slowing…demand is rising for temporary workers…retailers were optimistic about the upcoming holidays…residential housing continued to boom.” I was so thankful to read this glowing report. I should not have read anything more, and just stopped there. Unfortunately, I continued to read. Kurt Barnard is president of Retail Forecasting, and along with the management at WalMart, a leading expert on retailing. He stated “we project that this holiday shopping season will be modestly better than last year’s. That isn’t saying much.” He bases his cautious outlook on “5 million people in part-time jobs because they couldn’t find full-time jobs along with 9 million unemployed and 2 million who have been out of work for more than 6 months.” One in five Americans is employed in the retail sector. Seventy five percent of consumers, age 18 and over, will go shopping this Friday or this coming weekend. It appears the hot holiday gift ideas are J. Lo T-shirts, Eminem fleece-lined jackets, DVD players, and yes, making gifts.
Pepsi has been Subway’s supplier of the year for the past 7 years in a row. I guess being the best is not good enough. Yesterday, Subway announced it was switching its global beverage business from Pepsi to Coke. That must have been a costly persuasion, a little like the late night vote switching in favor of the Medicare bill. Subway is the biggest fast-food chain in the U.S. by sales outlets. McDonald’s is the largest in terms of total sales.
I was so thankful to read that the Chicago factory-sector index jumps to 64 in November. I was so excited at this comeback. Then I read that the Chicago employment index fell to 48 from 53. That brought me back to reality in a hurry. I was also disappointed that the Conference Board’s Help-wanted Advertising Index remained at 37 in October, unchanged from September, but down from 40 a year ago. In the last three months, help-wanted advertising declined in seven of the nine U.S. regions.
The housing market has been the strongest sector in the economy in 2003. The Commerce Department announced that sales of new single-family homes dropped 1.9% in September and 3.5% in October. Sales of previously owned homes fell by 4.9% in October. Sales were down in all regions, and, at the current sales pace, the inventory of homes on the market in October rose to 4 months worth. It is the highest level since April.
Many people give gift merchandise cards for the holidays. Until those gift cards are redeemed, retailers cannot count them as revenues. Many of the cards remain outstanding until January.
In 2004, there is a projected $160 billion social security surplus. The government will spend, and not save, those funds for future retirees. If the funds were saved, the projected Federal budget deficit for 2004 would reach $700 billion.
There is good news for which to be thankful. The average number of workers continuing to receive unemployment insurance over the past four weeks fell 42,500 to 3.45 million, the lowest reading since the week ended March 1. The bad news is the latest weekly figures don’t include some 820,000 workers receiving extended federal benefits. In October, about 8.8 million people were classified by the government as unemployed.
Yesterday we learned that the consumer continues to constrain spending. In October, real consumer spending (as opposed to unreal consumer spending!) was unchanged after declining 0.6% in September. There was a 1.9% drop in spending on durable goods in the latest month. The PCE core price rate only rose 1.2%, the smallest increase in 40 years. The Bureau of Economic Analysis plans to release the results of its 12th comprehensive (or benchmark) revision of the national income and product accounts (NIPAS) on Dec. 10, 2003. It could be the mother of all revisions. I might need to get them framed.
Do you remember the Great Atlantic & Pacific Tea Co? The old A&P grocery chain? It’s hard to believe that, at one time, they had five times the number of stores WalMart now has. I don’t think they would have fared too well competing with WalMart’s supercenters carrying similar grocery items.
Dell dismissed reports that it is shifting its technical support service for its business customers from Bangalore to the United States. A spokesperson stated “we are not shifting the work. Dell is committed to India and is growing.” Dell currently has over 2,000 people working at its customer support centers in Bangalore and Hyderabad.
Michael Roux, vice chairman (Australia) of Citigroup, said India could emerge as a major global player in the outsourcing of financial services. He remarked “India is not only doing things at cheaper cost but it is doing things better at cheaper cost. This is a major competitive edge the country has when it comes to outsourcing of financial services.” Swati Piramal, chief scientific officer of pharmaceutical firm Nicholas Piramal India, said India had all the advantages to become a back-office research hub for pharmaceutical companies as well. He stated “ we have all the ingredients in place. India has over 2,000 research institutes, robust IT backup, and vast educated manpower base, among many other things.”
The latest nationwide Harris poll on Iraq finds that there has been little change over the last month in public perceptions of events in Iraq. President Bush’s ratings on Iraq are still negative, 58% to 40%. The largest change was the increase in the majority who think that the level of U.S. casualties in Iraq is unacceptable. Fifty four per cent feel this way now compared to 51% in October and 47% in September.
11/27/03 HAPPY THANKSGIVING
Abraham Lincoln’s Thanksgiving Proclamation of October 3, 1863: “We have forgotten the gracious hand which preserved us in peace and multiplied and enriched and strengthened us, and we have vainly imagined, in the deceitfulness of our hearts, that all these blessings were produced by some superior wisdom and virtue of their own. Intoxicated with unbroken success, we have become to self-sufficient to feel the necessity of redeeming and preserving grace, too proud to pray to the God that made us. It has seemed to me fit and proper that God should be solemnly, reverently, and gratefully acknowledged, as with one heart and one voice, by the whole American people. I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November as a day of Thanksgiving and praise to our beneficent Father Who dwelleth in the heavens.”
Mark Twain: “The observance of Thanksgiving Day- as a function- has become general of late years. The Thankfulness is not so general. This is natural. Two-thirds of the nation have always had hard luck and a hard time during the year, and this has a calming effect upon their enthusiasm.”
Stater Bros. Markets operates 157 supermarkets in Southern California, and employ over 14,000 people. They have been in business for 67 years. Each year on Thanksgiving Day they partner with local charities to help feed the needy. This year they shall be providing meals to more than 60,000 people.
The seniors in the state of Pennsylvania can be thankful for PACE (Pharmaceutical Assistance Contract for the Elderly) and a companion program called PACENET. The benefits are much better than the newly-passed Medicare legislation. The income eligibility limits for seniors are more favorable, PACE enrollees have no deductible, prescription co-payments are lower, and fewer drugs will be paid for under the Medicare plan.
Describing the economy in October and early November, the Federal Reserve remarked that “improvements seemed to be reasonably broad based…layoffs are slowing…demand is rising for temporary workers…retailers were optimistic about the upcoming holidays…residential housing continued to boom.” I was so thankful to read this glowing report. I should not have read anything more, and just stopped there. Unfortunately, I continued to read. Kurt Barnard is president of Retail Forecasting, and along with the management at WalMart, a leading expert on retailing. He stated “we project that this holiday shopping season will be modestly better than last year’s. That isn’t saying much.” He bases his cautious outlook on “5 million people in part-time jobs because they couldn’t find full-time jobs along with 9 million unemployed and 2 million who have been out of work for more than 6 months.” One in five Americans is employed in the retail sector. Seventy five percent of consumers, age 18 and over, will go shopping this Friday or this coming weekend. It appears the hot holiday gift ideas are J. Lo T-shirts, Eminem fleece-lined jackets, DVD players, and yes, making gifts.
Pepsi has been Subway’s supplier of the year for the past 7 years in a row. I guess being the best is not good enough. Yesterday, Subway announced it was switching its global beverage business from Pepsi to Coke. That must have been a costly persuasion, a little like the late night vote switching in favor of the Medicare bill. Subway is the biggest fast-food chain in the U.S. by sales outlets. McDonald’s is the largest in terms of total sales.
I was so thankful to read that the Chicago factory-sector index jumps to 64 in November. I was so excited at this comeback. Then I read that the Chicago employment index fell to 48 from 53. That brought me back to reality in a hurry. I was also disappointed that the Conference Board’s Help-wanted Advertising Index remained at 37 in October, unchanged from September, but down from 40 a year ago. In the last three months, help-wanted advertising declined in seven of the nine U.S. regions.
The housing market has been the strongest sector in the economy in 2003. The Commerce Department announced that sales of new single-family homes dropped 1.9% in September and 3.5% in October. Sales of previously owned homes fell by 4.9% in October. Sales were down in all regions, and, at the current sales pace, the inventory of homes on the market in October rose to 4 months worth. It is the highest level since April.
Many people give gift merchandise cards for the holidays. Until those gift cards are redeemed, retailers cannot count them as revenues. Many of the cards remain outstanding until January.
In 2004, there is a projected $160 billion social security surplus. The government will spend, and not save, those funds for future retirees. If the funds were saved, the projected Federal budget deficit for 2004 would reach $700 billion.
There is good news for which to be thankful. The average number of workers continuing to receive unemployment insurance over the past four weeks fell 42,500 to 3.45 million, the lowest reading since the week ended March 1. The bad news is the latest weekly figures don’t include some 820,000 workers receiving extended federal benefits. In October, about 8.8 million people were classified by the government as unemployed.
Yesterday we learned that the consumer continues to constrain spending. In October, real consumer spending (as opposed to unreal consumer spending!) was unchanged after declining 0.6% in September. There was a 1.9% drop in spending on durable goods in the latest month. The PCE core price rate only rose 1.2%, the smallest increase in 40 years. The Bureau of Economic Analysis plans to release the results of its 12th comprehensive (or benchmark) revision of the national income and product accounts (NIPAS) on Dec. 10, 2003. It could be the mother of all revisions. I might need to get them framed.
Do you remember the Great Atlantic & Pacific Tea Co? The old A&P grocery chain? It’s hard to believe that, at one time, they had five times the number of stores WalMart now has. I don’t think they would have fared too well competing with WalMart’s supercenters carrying similar grocery items.
Dell dismissed reports that it is shifting its technical support service for its business customers from Bangalore to the United States. A spokesperson stated “we are not shifting the work. Dell is committed to India and is growing.” Dell currently has over 2,000 people working at its customer support centers in Bangalore and Hyderabad.
Michael Roux, vice chairman (Australia) of Citigroup, said India could emerge as a major global player in the outsourcing of financial services. He remarked “India is not only doing things at cheaper cost but it is doing things better at cheaper cost. This is a major competitive edge the country has when it comes to outsourcing of financial services.” Swati Piramal, chief scientific officer of pharmaceutical firm Nicholas Piramal India, said India had all the advantages to become a back-office research hub for pharmaceutical companies as well. He stated “ we have all the ingredients in place. India has over 2,000 research institutes, robust IT backup, and vast educated manpower base, among many other things.”
The latest nationwide Harris poll on Iraq finds that there has been little change over the last month in public perceptions of events in Iraq. President Bush’s ratings on Iraq are still negative, 58% to 40%. The largest change was the increase in the majority who think that the level of U.S. casualties in Iraq is unacceptable. Fifty four per cent feel this way now compared to 51% in October and 47% in September.
Abraham Lincoln’s Thanksgiving Proclamation of October 3, 1863: “We have forgotten the gracious hand which preserved us in peace and multiplied and enriched and strengthened us, and we have vainly imagined, in the deceitfulness of our hearts, that all these blessings were produced by some superior wisdom and virtue of their own. Intoxicated with unbroken success, we have become to self-sufficient to feel the necessity of redeeming and preserving grace, too proud to pray to the God that made us. It has seemed to me fit and proper that God should be solemnly, reverently, and gratefully acknowledged, as with one heart and one voice, by the whole American people. I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November as a day of Thanksgiving and praise to our beneficent Father Who dwelleth in the heavens.”
Mark Twain: “The observance of Thanksgiving Day- as a function- has become general of late years. The Thankfulness is not so general. This is natural. Two-thirds of the nation have always had hard luck and a hard time during the year, and this has a calming effect upon their enthusiasm.”
Stater Bros. Markets operates 157 supermarkets in Southern California, and employ over 14,000 people. They have been in business for 67 years. Each year on Thanksgiving Day they partner with local charities to help feed the needy. This year they shall be providing meals to more than 60,000 people.
The seniors in the state of Pennsylvania can be thankful for PACE (Pharmaceutical Assistance Contract for the Elderly) and a companion program called PACENET. The benefits are much better than the newly-passed Medicare legislation. The income eligibility limits for seniors are more favorable, PACE enrollees have no deductible, prescription co-payments are lower, and fewer drugs will be paid for under the Medicare plan.
Describing the economy in October and early November, the Federal Reserve remarked that “improvements seemed to be reasonably broad based…layoffs are slowing…demand is rising for temporary workers…retailers were optimistic about the upcoming holidays…residential housing continued to boom.” I was so thankful to read this glowing report. I should not have read anything more, and just stopped there. Unfortunately, I continued to read. Kurt Barnard is president of Retail Forecasting, and along with the management at WalMart, a leading expert on retailing. He stated “we project that this holiday shopping season will be modestly better than last year’s. That isn’t saying much.” He bases his cautious outlook on “5 million people in part-time jobs because they couldn’t find full-time jobs along with 9 million unemployed and 2 million who have been out of work for more than 6 months.” One in five Americans is employed in the retail sector. Seventy five percent of consumers, age 18 and over, will go shopping this Friday or this coming weekend. It appears the hot holiday gift ideas are J. Lo T-shirts, Eminem fleece-lined jackets, DVD players, and yes, making gifts.
Pepsi has been Subway’s supplier of the year for the past 7 years in a row. I guess being the best is not good enough. Yesterday, Subway announced it was switching its global beverage business from Pepsi to Coke. That must have been a costly persuasion, a little like the late night vote switching in favor of the Medicare bill. Subway is the biggest fast-food chain in the U.S. by sales outlets. McDonald’s is the largest in terms of total sales.
I was so thankful to read that the Chicago factory-sector index jumps to 64 in November. I was so excited at this comeback. Then I read that the Chicago employment index fell to 48 from 53. That brought me back to reality in a hurry. I was also disappointed that the Conference Board’s Help-wanted Advertising Index remained at 37 in October, unchanged from September, but down from 40 a year ago. In the last three months, help-wanted advertising declined in seven of the nine U.S. regions.
The housing market has been the strongest sector in the economy in 2003. The Commerce Department announced that sales of new single-family homes dropped 1.9% in September and 3.5% in October. Sales of previously owned homes fell by 4.9% in October. Sales were down in all regions, and, at the current sales pace, the inventory of homes on the market in October rose to 4 months worth. It is the highest level since April.
Many people give gift merchandise cards for the holidays. Until those gift cards are redeemed, retailers cannot count them as revenues. Many of the cards remain outstanding until January.
In 2004, there is a projected $160 billion social security surplus. The government will spend, and not save, those funds for future retirees. If the funds were saved, the projected Federal budget deficit for 2004 would reach $700 billion.
There is good news for which to be thankful. The average number of workers continuing to receive unemployment insurance over the past four weeks fell 42,500 to 3.45 million, the lowest reading since the week ended March 1. The bad news is the latest weekly figures don’t include some 820,000 workers receiving extended federal benefits. In October, about 8.8 million people were classified by the government as unemployed.
Yesterday we learned that the consumer continues to constrain spending. In October, real consumer spending (as opposed to unreal consumer spending!) was unchanged after declining 0.6% in September. There was a 1.9% drop in spending on durable goods in the latest month. The PCE core price rate only rose 1.2%, the smallest increase in 40 years. The Bureau of Economic Analysis plans to release the results of its 12th comprehensive (or benchmark) revision of the national income and product accounts (NIPAS) on Dec. 10, 2003. It could be the mother of all revisions. I might need to get them framed.
Do you remember the Great Atlantic & Pacific Tea Co? The old A&P grocery chain? It’s hard to believe that, at one time, they had five times the number of stores WalMart now has. I don’t think they would have fared too well competing with WalMart’s supercenters carrying similar grocery items.
Dell dismissed reports that it is shifting its technical support service for its business customers from Bangalore to the United States. A spokesperson stated “we are not shifting the work. Dell is committed to India and is growing.” Dell currently has over 2,000 people working at its customer support centers in Bangalore and Hyderabad.
Michael Roux, vice chairman (Australia) of Citigroup, said India could emerge as a major global player in the outsourcing of financial services. He remarked “India is not only doing things at cheaper cost but it is doing things better at cheaper cost. This is a major competitive edge the country has when it comes to outsourcing of financial services.” Swati Piramal, chief scientific officer of pharmaceutical firm Nicholas Piramal India, said India had all the advantages to become a back-office research hub for pharmaceutical companies as well. He stated “ we have all the ingredients in place. India has over 2,000 research institutes, robust IT backup, and vast educated manpower base, among many other things.”
The latest nationwide Harris poll on Iraq finds that there has been little change over the last month in public perceptions of events in Iraq. President Bush’s ratings on Iraq are still negative, 58% to 40%. The largest change was the increase in the majority who think that the level of U.S. casualties in Iraq is unacceptable. Fifty four per cent feel this way now compared to 51% in October and 47% in September.
Wednesday, November 26, 2003
11/26/03 Remembering This November
The memories will linger for decades. The yet-to-be conceived will listen to the stories. This country conceived millions of children in the era of the great Depression. I don’t know the name the scholars and the media will place on this period. I only hope our nation has the will and the strength to overcome the irresponsible and willful actions of our leaders.
I make a point of focusing on actions. This November the illegal steel tariffs have not been removed by the Bush administration. This has angered the WTO, the EU, and Japan. We have shown a total disregard for these trading partners. Bush would not stop there. He then angered China by placing trade restrictions on their exports of TVs, bras, and robes. All of these actions reflect a mentality that is limited in ability to conduct commerce. Promoting protectionism creates a landscape for economic destruction.
All Americans know there are significant problems in our healthcare system. Al Americans know our population is aging, and this fact will place burdens on all families. We will all remember this November. Your grandchildren might remember this November even better. They will be left with the brunt of this new Medicare legislation. They will know another meaning for the word ‘doughnut’. By now you all have read that, under this new law, the government pays 75% of the annual coverage (after the deductible) up to $2,250, but then nothing until costs reach $5,100. This out-of-pocket gap or doughnut is $3,600. There is more to this analysis. The average deductible will rise from $250 in 2006 to $415 in 2013, but the doughnut will rise from $5,100 to $9,066 in 2013. The fine print provides more information. There is an asset test for low-income beneficiaries. To qualify as low-income, an individual cannot have assets exceeding $6,000 or as a couple $9,000. A life-insurance policy, for example, exceeding those amounts would disqualify low-income applicants. As Gail Shearer, a health policy analyst at Consumers Union, remarked “I think these numbers will come as a shock to consumers and they are pretty optimistic projections based on what drug costs are going to do.” The AARP 35-million senior organization supported this legislation. Now, after passage, they have a different attitude. David Certner, an official of AARP, stated “one of our complaints has been that this benefit would become more unaffordable over time if pegged to drug costs. This bill does not do enough to hold down drug costs.” Mr. Certner is flying blind. He doesn’t know what the drug costs will be and he has no assurance on the initial monthly premiums. CBO Director Douglas Holtz-Eakin said there is not even an assurance that the initial monthly premium for the drug benefit will be $35. That number could change by 2006 depending on the many “moving pieces” on which the formula is based, he said. You can bet the initial monthly premium will be higher than $35. Have you ever seen government cost estimates go down instead of up? Wall Street will figure out the winners from this legislation. Wall Street will not tell you that the American people are the losers. The yet-to-be born shall be the biggest loser. Unfortunately, this Medicare bill was not aborted. This November you witnessed the dismantling, not the reform, of the Medicare system. The 3-million member Alliance for Retired Americans wrote “Shame on the House and Senate for not taking the time to do the work to give seniors a comprehensive prescription drug benefit.”
Many missed an historic Commerce Department revision. Yesterday the department sharply revised its estimate of inventory reductions. They said stocks of unsold goods had fallen by $14.1 billion in the latest quarter instead of by $35.8 billion as it originally reported. This difference is very significant. Despite the data released on consumer spending, the actual results show the consumer is slowing down on spending, and confirms the caution expressed by WalMart and Target. In fact, consumer demand is waning. Retail sales in October declined. Yesterday the Consumer Federation of America and the Credit Union National Association stated U.S. holiday shopping may not live up to expectations, and that consumers are concerned about the economy, their jobs, and their ability to meet household debt payments. In this survey, 34% said they would spend less during the holidays than they did in 2002, and only 15% stated they would spend more. About 50% said they would spend the same amount. The chief economist for the Credit Union National Association remarked “this is a surprising result.” Severe price cutting will mark this holiday shopping season. Additionally, Edmunds.com reported yesterday that 2004 model year vehicles are selling at a slower pace even as incentives remain high for year-end clearings. They predict “an oversupply of model year 2004 vehicles throughout next year and, subsequently, generate incentives that will help them sell.”
We know that up to 40% of a retailer’s annual sales take place during this holiday period. Mall traffic has fallen significantly in the past years, from 39% of retail dollars in 1995 to 19% in 2002, according to the nation'’ 40 largest retailers and data supplied by Customer Growth Partners. You will remember this November. It will be the last time several shopping centers remain in business. At present, there are about 46,000 shopping centers and 1,250 enclosed malls. Unfortunately, there isn’t enough business to keep them all in business on a profitable basis.
This November there have been thousands and thousands of job cuts announced. Yesterday there were more layoffs, 650 at Autodesk, 100 at Washington Mutual, 90 at the Copeland division of Emerson, and 3,500 at the business tech division of Siemens. This Thanksgiving millions of families will be thankful for the jobs they have. Unfortunately, at least 15 million people are either unemployed or without a full-time job. As a result, tomorrow this country’s soup kitchens will provide a record number of Thanksgiving meals. Thank goodness for the depressed price for turkeys.
This November you will remember that the Mexican peso fell to an all-time low of 11.3867 versus the U.S. dollar. Mexico has also been hurt this year as China replaced them as the second-largest seller of foreign goods to the U.S. Very few currencies have declined against the dollar this year, but the peso has fallen 8.4% in 2003. There is a loud noise on the borders separating Mexico and the United States. It is the banging of throngs of Mexicans attempting to cross into the U.S.
November will be remembered by all as the 300th U.S. soldier was killed by hostile fire in Iraq this month. Since March 20, at least 432 U.S. soldiers have been killed in the Iraq war. Since May 1, at least 290 troops have died and at least 185 from hostile fire.
The memories will linger for decades. The yet-to-be conceived will listen to the stories. This country conceived millions of children in the era of the great Depression. I don’t know the name the scholars and the media will place on this period. I only hope our nation has the will and the strength to overcome the irresponsible and willful actions of our leaders.
I make a point of focusing on actions. This November the illegal steel tariffs have not been removed by the Bush administration. This has angered the WTO, the EU, and Japan. We have shown a total disregard for these trading partners. Bush would not stop there. He then angered China by placing trade restrictions on their exports of TVs, bras, and robes. All of these actions reflect a mentality that is limited in ability to conduct commerce. Promoting protectionism creates a landscape for economic destruction.
All Americans know there are significant problems in our healthcare system. Al Americans know our population is aging, and this fact will place burdens on all families. We will all remember this November. Your grandchildren might remember this November even better. They will be left with the brunt of this new Medicare legislation. They will know another meaning for the word ‘doughnut’. By now you all have read that, under this new law, the government pays 75% of the annual coverage (after the deductible) up to $2,250, but then nothing until costs reach $5,100. This out-of-pocket gap or doughnut is $3,600. There is more to this analysis. The average deductible will rise from $250 in 2006 to $415 in 2013, but the doughnut will rise from $5,100 to $9,066 in 2013. The fine print provides more information. There is an asset test for low-income beneficiaries. To qualify as low-income, an individual cannot have assets exceeding $6,000 or as a couple $9,000. A life-insurance policy, for example, exceeding those amounts would disqualify low-income applicants. As Gail Shearer, a health policy analyst at Consumers Union, remarked “I think these numbers will come as a shock to consumers and they are pretty optimistic projections based on what drug costs are going to do.” The AARP 35-million senior organization supported this legislation. Now, after passage, they have a different attitude. David Certner, an official of AARP, stated “one of our complaints has been that this benefit would become more unaffordable over time if pegged to drug costs. This bill does not do enough to hold down drug costs.” Mr. Certner is flying blind. He doesn’t know what the drug costs will be and he has no assurance on the initial monthly premiums. CBO Director Douglas Holtz-Eakin said there is not even an assurance that the initial monthly premium for the drug benefit will be $35. That number could change by 2006 depending on the many “moving pieces” on which the formula is based, he said. You can bet the initial monthly premium will be higher than $35. Have you ever seen government cost estimates go down instead of up? Wall Street will figure out the winners from this legislation. Wall Street will not tell you that the American people are the losers. The yet-to-be born shall be the biggest loser. Unfortunately, this Medicare bill was not aborted. This November you witnessed the dismantling, not the reform, of the Medicare system. The 3-million member Alliance for Retired Americans wrote “Shame on the House and Senate for not taking the time to do the work to give seniors a comprehensive prescription drug benefit.”
Many missed an historic Commerce Department revision. Yesterday the department sharply revised its estimate of inventory reductions. They said stocks of unsold goods had fallen by $14.1 billion in the latest quarter instead of by $35.8 billion as it originally reported. This difference is very significant. Despite the data released on consumer spending, the actual results show the consumer is slowing down on spending, and confirms the caution expressed by WalMart and Target. In fact, consumer demand is waning. Retail sales in October declined. Yesterday the Consumer Federation of America and the Credit Union National Association stated U.S. holiday shopping may not live up to expectations, and that consumers are concerned about the economy, their jobs, and their ability to meet household debt payments. In this survey, 34% said they would spend less during the holidays than they did in 2002, and only 15% stated they would spend more. About 50% said they would spend the same amount. The chief economist for the Credit Union National Association remarked “this is a surprising result.” Severe price cutting will mark this holiday shopping season. Additionally, Edmunds.com reported yesterday that 2004 model year vehicles are selling at a slower pace even as incentives remain high for year-end clearings. They predict “an oversupply of model year 2004 vehicles throughout next year and, subsequently, generate incentives that will help them sell.”
We know that up to 40% of a retailer’s annual sales take place during this holiday period. Mall traffic has fallen significantly in the past years, from 39% of retail dollars in 1995 to 19% in 2002, according to the nation'’ 40 largest retailers and data supplied by Customer Growth Partners. You will remember this November. It will be the last time several shopping centers remain in business. At present, there are about 46,000 shopping centers and 1,250 enclosed malls. Unfortunately, there isn’t enough business to keep them all in business on a profitable basis.
This November there have been thousands and thousands of job cuts announced. Yesterday there were more layoffs, 650 at Autodesk, 100 at Washington Mutual, 90 at the Copeland division of Emerson, and 3,500 at the business tech division of Siemens. This Thanksgiving millions of families will be thankful for the jobs they have. Unfortunately, at least 15 million people are either unemployed or without a full-time job. As a result, tomorrow this country’s soup kitchens will provide a record number of Thanksgiving meals. Thank goodness for the depressed price for turkeys.
This November you will remember that the Mexican peso fell to an all-time low of 11.3867 versus the U.S. dollar. Mexico has also been hurt this year as China replaced them as the second-largest seller of foreign goods to the U.S. Very few currencies have declined against the dollar this year, but the peso has fallen 8.4% in 2003. There is a loud noise on the borders separating Mexico and the United States. It is the banging of throngs of Mexicans attempting to cross into the U.S.
November will be remembered by all as the 300th U.S. soldier was killed by hostile fire in Iraq this month. Since March 20, at least 432 U.S. soldiers have been killed in the Iraq war. Since May 1, at least 290 troops have died and at least 185 from hostile fire.
Tuesday, November 25, 2003
11/25/03 Consumer Cash Flow
In only a few days ‘Black Friday’ will arrive. This is the name given to the day after Thanksgiving. It describes how retailers are in the ‘red’ all year until ‘Black Friday’ arrives, and then their books turn profitable and they are in the ‘black.’ According to the International Council of Shopping Centers, the day after Thanksgiving usually ranks about fourth or fifth among the 10 busiest shopping days of the year. Last year, 10% of holiday sales were done during the Thanksgiving weekend. The biggest share or 41% was done the week before Christmas as shoppers waited for better bargains. It is interesting to note that, in their Christmas 2003 survey, America’s Research Group found that the number of people planning to shop on ‘Black Friday’ is at the lowest point since 1997. Many serious bargain hunters comb the early morning sales items listed at www.fatwallet.com and www.dealcatcher.com prior to venturing into the stores on ‘Black Friday.’
The fact is that consumers do not have fat wallets right about now. According to a recently issued Deutsche Bank report, “the consumer’s liquidity crisis is the worst that WalMart has seen and is the most pronounced in the last five to seven years. The immediate future is not bright either. According to compliance publisher, BLR, employers are planning their smallest pay increases of the past two decades. A record 1,438 employers participated in this year’s nationwide survey. The average pay raises for 2004 for exempt and non-exempt white-collar employees and unionized and non-unionized plant employees will range from 2.8% to 3.5% with the median close to 3.3%. After deductions, and accounting for inflation, the raises do not fatten the consumers’ wallets. Between now and year end, Fitch Ratings remarks “as consumers remain financially burdened due to the economic landscape, performance is expected to remain challenged over the near term and worsen later in the fourth quarter of 2003.”
Families on Main Street continue to focus on jobs and layoffs. Yesterday Sprint Corp. said it would cut about 2,000 jobs, or about 3% of its workforce, as it attempts to cut costs to offset shrinking revenues and weak demand. Additional layoffs can be expected in 2004. Merck will be meeting with analysts on December 9. Recently, I noted their employee cutbacks. The CEO may describe further cost cutting measures for 2004. Home Depot is consolidating its smaller Northwest division into its Western division. Yesterday the company announced it shall close its Seattle Store Support Center office and cut about 100 jobs.
The U.S. Commerce Department said it shall levy duties of as much as 46% on color televisions imported from China. There is only one television manufacturer left in the U.S., Greenville, Tenn.-based Five Rivers Electronic Innovations LLC. This company and its labor unions alleged that China and Malaysia were “dumping” products in the U.S. at prices below their fair value and sought duties of as much as 80%. The U.S., upon investigation, ruled that the sets were priced 28% to 46% below market value. The Commerce Department did not find any violations from Malaysia. The duties will take effect on December 1.This is but one more act of stupidity brought to you by the Bush Administration. Bush has argued for free trade, and yet, he has violated international trade agreements by imposing steel tariffs, and thus, jeopardize our trade with foreign countries. Now he is taking on China in an attempt to win more votes for 2004. I guess electoral votes mean more to the financial well being of American citizens.
The Austin American Statesman reported that Dell is shifting a call center from Bangalore to call centers in Texas, Idaho, and Tennessee. Dell Spokesman Jon Weisblatt stated “customers weren’t satisfied with the level of support they were receiving, so we’re moving some calls around to make sure they don’t feel that way anymore.”
HealthPartners is a family of nonprofit Minnesota health care organizations focused on improving the health of its 670,000 members. They are offering a new plan to allow Seniors more health plan options that includes an unlimited generic prescription drug package and an open access network. There is an optional add-on solution allows Seniors to have an all-inclusive generic prescription benefit package for the cost of only $29 per month, and after the initial cost of $29, Seniors only have a low co-payment for each prescription.
The University of Pennsylvania’s non-partisan National Annenberg Election Survey released results yesterday that show 49% of seniors polled didn’t want the proposed Medicare legislation to pass. On eof the items causing concern is that, if seniors don’t sign up when they become eligible at age 65, they could face penalties if they enroll later. The drug-coverage plan is billed as voluntary; however, in reality, it is coercive.
In only a few days ‘Black Friday’ will arrive. This is the name given to the day after Thanksgiving. It describes how retailers are in the ‘red’ all year until ‘Black Friday’ arrives, and then their books turn profitable and they are in the ‘black.’ According to the International Council of Shopping Centers, the day after Thanksgiving usually ranks about fourth or fifth among the 10 busiest shopping days of the year. Last year, 10% of holiday sales were done during the Thanksgiving weekend. The biggest share or 41% was done the week before Christmas as shoppers waited for better bargains. It is interesting to note that, in their Christmas 2003 survey, America’s Research Group found that the number of people planning to shop on ‘Black Friday’ is at the lowest point since 1997. Many serious bargain hunters comb the early morning sales items listed at www.fatwallet.com and www.dealcatcher.com prior to venturing into the stores on ‘Black Friday.’
The fact is that consumers do not have fat wallets right about now. According to a recently issued Deutsche Bank report, “the consumer’s liquidity crisis is the worst that WalMart has seen and is the most pronounced in the last five to seven years. The immediate future is not bright either. According to compliance publisher, BLR, employers are planning their smallest pay increases of the past two decades. A record 1,438 employers participated in this year’s nationwide survey. The average pay raises for 2004 for exempt and non-exempt white-collar employees and unionized and non-unionized plant employees will range from 2.8% to 3.5% with the median close to 3.3%. After deductions, and accounting for inflation, the raises do not fatten the consumers’ wallets. Between now and year end, Fitch Ratings remarks “as consumers remain financially burdened due to the economic landscape, performance is expected to remain challenged over the near term and worsen later in the fourth quarter of 2003.”
Families on Main Street continue to focus on jobs and layoffs. Yesterday Sprint Corp. said it would cut about 2,000 jobs, or about 3% of its workforce, as it attempts to cut costs to offset shrinking revenues and weak demand. Additional layoffs can be expected in 2004. Merck will be meeting with analysts on December 9. Recently, I noted their employee cutbacks. The CEO may describe further cost cutting measures for 2004. Home Depot is consolidating its smaller Northwest division into its Western division. Yesterday the company announced it shall close its Seattle Store Support Center office and cut about 100 jobs.
The U.S. Commerce Department said it shall levy duties of as much as 46% on color televisions imported from China. There is only one television manufacturer left in the U.S., Greenville, Tenn.-based Five Rivers Electronic Innovations LLC. This company and its labor unions alleged that China and Malaysia were “dumping” products in the U.S. at prices below their fair value and sought duties of as much as 80%. The U.S., upon investigation, ruled that the sets were priced 28% to 46% below market value. The Commerce Department did not find any violations from Malaysia. The duties will take effect on December 1.This is but one more act of stupidity brought to you by the Bush Administration. Bush has argued for free trade, and yet, he has violated international trade agreements by imposing steel tariffs, and thus, jeopardize our trade with foreign countries. Now he is taking on China in an attempt to win more votes for 2004. I guess electoral votes mean more to the financial well being of American citizens.
The Austin American Statesman reported that Dell is shifting a call center from Bangalore to call centers in Texas, Idaho, and Tennessee. Dell Spokesman Jon Weisblatt stated “customers weren’t satisfied with the level of support they were receiving, so we’re moving some calls around to make sure they don’t feel that way anymore.”
HealthPartners is a family of nonprofit Minnesota health care organizations focused on improving the health of its 670,000 members. They are offering a new plan to allow Seniors more health plan options that includes an unlimited generic prescription drug package and an open access network. There is an optional add-on solution allows Seniors to have an all-inclusive generic prescription benefit package for the cost of only $29 per month, and after the initial cost of $29, Seniors only have a low co-payment for each prescription.
The University of Pennsylvania’s non-partisan National Annenberg Election Survey released results yesterday that show 49% of seniors polled didn’t want the proposed Medicare legislation to pass. On eof the items causing concern is that, if seniors don’t sign up when they become eligible at age 65, they could face penalties if they enroll later. The drug-coverage plan is billed as voluntary; however, in reality, it is coercive.
Monday, November 24, 2003
11/24/03 Payments For Promises Made
Arnold promised to eliminate the unpopular hike in the California car tax. He made good on his promise. He then proposed a $15 billion state bond measure to pay for California’s bills. Timing is a large part of good decision making. Starting on December 10, cities and counties will begin to see reduced revenues from the cut in the car tax. The full impact will be felt in January. The result is “we’re out of money. There is no money for us to provide to local government,” said state Sen. Wes Chesbro, D-Arcata, chairman of the Senate Budget Committee. Berkeley Mayor Tom Bates remarked “we’ve hit the wall.” As such, his city is facing the prospect of laying off police officers and firefighters. Alameda County would raise the county’s sales tax from 8.75% from the current 8.25%. Monterey County will propose a half-cent sales tax increase and so will Santa Cruz County. Contra Costa County said there would need to be cutbacks in local law enforcement. The city of Oakland would have to cut at least 180 jobs. San Jose has an $85 million budget shortfall, and that will rise as the revenues are reduced from cuts in the car tax. More job and service cuts will be forthcoming. Before one makes a promise, it is wise to know how to fund the promise.
President Bush promised to produce a Medicare reform bill. The proposed legislation has an estimated price tag of $400 billion over 10 years. Sen. Don Nickles, R-Okla., told fellow House-Senate negotiators “I predict right now it will come out double that.” That’s a pretty easy prediction to make. Seventy six million baby boomers begin to retire in 2012. Who will address the problem that the large number of employers who currently provide prescription-drug benefits for retirees will drop coverage? Kenneth Thorpe, a health-policy expert at Emory University, anticipates that some 2.1 million private-sector retirees would probably lose their retirement benefits if the GOP bill becomes law. Ross Baker, a political scientist at Rutgers University, remarked “this is the group that can be most easily ignited, if there is any sense that companies are beginning to shut down plans for retirees. Hell hath no fury like seniors inflamed.” Perhaps Stephen Moore of the Club for Growth, an anti-tax group, describes it best in remarking that “the Medicare bill fits into a broader theme, which is that Republicans have lost their fiscal conscience.” How does Senator Kennedy describe this modernized Medicare system with a prescription drug benefit? He stated “you are going to lose seven million that are on Medicaid today, that now are being covered by the states, that are going to lose it with this bill. You are going to have millions that currently have adequate retirement programs that are going to be dropped by this bill. And you are going to see the premiums- the amount that are going to be expended by seniors- your are going to find their premiums are going to go through the roof. And you begin the dismantling of Medicare.” Before one makes a promise, it is wise to have a full comprehension of the impact of the promise.
Joseph Stiglitz won the Nobel Prize in economics in 2001. For a good part of the 1990s, he was the head of President Clinton’s Council of Economic Advisors. Stiglitz, in a recent interview, stated that, in the last quarter, the number of hours worked was down by almost 1%, and that in a jobless recovery, the typical pattern is that hours worked go up because jobs aren’t being created. He observed “this is a recovery in which hours worked aren’t going up. This suggests it may not be recovery. You’re getting firms trying to squeeze more and more work out of workers, working fewer and fewer hours.”
There are many times I feel pretty stupid. Yesterday was one of them. I read the following release: ArvinMeritor terminates tender offer for Dana (ARM, DCN) by Anne Stanley SAN FRANCISCO (CBS.MW) -- Automotive parts maker ArvinMeritor (ARM) announced Sunday it is ending its tender bid of $18 a share for Ohio-based Dana Corp. (DCN) following a decision by Dana's board of directors to reject the latest offer. ArvinMeritor, based in Troy, Mich., started its bid for Dana in July. On Friday, ArvinMeritor stock added 8 cents to close at $18.43. Shares of Dana gained 2 cents to end at $15. I apologize for doing such a poor job of analyzing this potential merger. I am still not certain why Arvin-Meritor chose to drop its tender. The acquisition was well-conceived, and there were benefits for shareholders, customers, and the combined enterprise.
Thomas G. Donlan writes in the Barron’s Editorial Commentary describes the proposed energy legislation as “all the things that had to be assembled to attract 60 votes in the Senate and 218 in the House so that a bill could pass. What’s missing is anything that would justify passing the bill.”
It was only a few weeks ago that I provided the data on the enormous insider selling that had take place in October alongside the puny insider buying. This ration has carried over into November. When the final tally is made, I believe November’s insider selling will dwarf even October’s numbers. November insider buying will continue to be on the puny side.
Arnold promised to eliminate the unpopular hike in the California car tax. He made good on his promise. He then proposed a $15 billion state bond measure to pay for California’s bills. Timing is a large part of good decision making. Starting on December 10, cities and counties will begin to see reduced revenues from the cut in the car tax. The full impact will be felt in January. The result is “we’re out of money. There is no money for us to provide to local government,” said state Sen. Wes Chesbro, D-Arcata, chairman of the Senate Budget Committee. Berkeley Mayor Tom Bates remarked “we’ve hit the wall.” As such, his city is facing the prospect of laying off police officers and firefighters. Alameda County would raise the county’s sales tax from 8.75% from the current 8.25%. Monterey County will propose a half-cent sales tax increase and so will Santa Cruz County. Contra Costa County said there would need to be cutbacks in local law enforcement. The city of Oakland would have to cut at least 180 jobs. San Jose has an $85 million budget shortfall, and that will rise as the revenues are reduced from cuts in the car tax. More job and service cuts will be forthcoming. Before one makes a promise, it is wise to know how to fund the promise.
President Bush promised to produce a Medicare reform bill. The proposed legislation has an estimated price tag of $400 billion over 10 years. Sen. Don Nickles, R-Okla., told fellow House-Senate negotiators “I predict right now it will come out double that.” That’s a pretty easy prediction to make. Seventy six million baby boomers begin to retire in 2012. Who will address the problem that the large number of employers who currently provide prescription-drug benefits for retirees will drop coverage? Kenneth Thorpe, a health-policy expert at Emory University, anticipates that some 2.1 million private-sector retirees would probably lose their retirement benefits if the GOP bill becomes law. Ross Baker, a political scientist at Rutgers University, remarked “this is the group that can be most easily ignited, if there is any sense that companies are beginning to shut down plans for retirees. Hell hath no fury like seniors inflamed.” Perhaps Stephen Moore of the Club for Growth, an anti-tax group, describes it best in remarking that “the Medicare bill fits into a broader theme, which is that Republicans have lost their fiscal conscience.” How does Senator Kennedy describe this modernized Medicare system with a prescription drug benefit? He stated “you are going to lose seven million that are on Medicaid today, that now are being covered by the states, that are going to lose it with this bill. You are going to have millions that currently have adequate retirement programs that are going to be dropped by this bill. And you are going to see the premiums- the amount that are going to be expended by seniors- your are going to find their premiums are going to go through the roof. And you begin the dismantling of Medicare.” Before one makes a promise, it is wise to have a full comprehension of the impact of the promise.
Joseph Stiglitz won the Nobel Prize in economics in 2001. For a good part of the 1990s, he was the head of President Clinton’s Council of Economic Advisors. Stiglitz, in a recent interview, stated that, in the last quarter, the number of hours worked was down by almost 1%, and that in a jobless recovery, the typical pattern is that hours worked go up because jobs aren’t being created. He observed “this is a recovery in which hours worked aren’t going up. This suggests it may not be recovery. You’re getting firms trying to squeeze more and more work out of workers, working fewer and fewer hours.”
There are many times I feel pretty stupid. Yesterday was one of them. I read the following release: ArvinMeritor terminates tender offer for Dana (ARM, DCN) by Anne Stanley SAN FRANCISCO (CBS.MW) -- Automotive parts maker ArvinMeritor (ARM) announced Sunday it is ending its tender bid of $18 a share for Ohio-based Dana Corp. (DCN) following a decision by Dana's board of directors to reject the latest offer. ArvinMeritor, based in Troy, Mich., started its bid for Dana in July. On Friday, ArvinMeritor stock added 8 cents to close at $18.43. Shares of Dana gained 2 cents to end at $15. I apologize for doing such a poor job of analyzing this potential merger. I am still not certain why Arvin-Meritor chose to drop its tender. The acquisition was well-conceived, and there were benefits for shareholders, customers, and the combined enterprise.
Thomas G. Donlan writes in the Barron’s Editorial Commentary describes the proposed energy legislation as “all the things that had to be assembled to attract 60 votes in the Senate and 218 in the House so that a bill could pass. What’s missing is anything that would justify passing the bill.”
It was only a few weeks ago that I provided the data on the enormous insider selling that had take place in October alongside the puny insider buying. This ration has carried over into November. When the final tally is made, I believe November’s insider selling will dwarf even October’s numbers. November insider buying will continue to be on the puny side.
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