4/3/04 Jorge Luis Borges: “Democracy Is An Abuse Of Statistics”
Kelvin Throop: “If people behaved like governments, you’d call the cops.”
Margaret Thatcher: “We should back the workers, not the shirkers.”
Edward Langley: “What this country needs is more unemployed politicians.”
Yesterday was a disappointing day for our country. I realize few are willing to pay the price to pursue the truth. There is even a greater revelation—when the truth is uncovered, millions turn from it. The United States went to war over weapons of mass destruction that existed- not in March 2003 but in March 1991. In the past year, 600 American soldiers have died, thousands have been injured, and many wait in hospitals for medical treatment. I have received many nasty (greatly understated) phone calls and emails complaining about my writings of one year ago, and the suggestion that the administration was not telling the truth about WMD. The point is not that I was right. There are some who see a statement of vindication as a form of gloating. Maybe those thoughts better reflect images closer to the observation deck. The core of our minds is to search for the truth. The truth can and does have predictive value for the present and future. To turn from the truth is to turn into a loser.
I started by stating that yesterday was a disappointing day for our country. A reader might ask how that could be possible when 308,000 nonfarm payroll jobs were created in March. The disappointment lies in the errors of omission. Just as WMD existed in 1991, the 308,000 were created in March 2004. Unfortunately, that job creation is but a small part of the story. Yesterday, Bush stated “the policies are working.” Let’s take a closer look. There were 182,000 more American workers stated by the BLS as unemployed in March than in February. There were 514,000 discouraged workers in March, the highest monthly number since September 1994. Those workers are not included as unemployed. The 320,000 unemployed Americans who lost their unemployment benefits in March were not included in the unemployment numbers. They were dropped into a black hole. As far as the government statistics indicate, they don’t exist. Nearly one in four unemployed workers has been out of work for more than a half-year. That is the highest level of long-term unemployment in two decades, and the number was greater in March than in February. There were about 4.7 million Americans working part-time in March because they could not find full-time employment, and this number was up from the prior month. Economists point out that the unemployment rate rose to 5.7% in March because an additional 179,000 people entered the workforce and began looking for employment. That 179,000 was dwarfed by the 514,000 discouraged workers and the 320,000 who lost their benefits. The fact is the jobless rate for blacks rose to 10.2% from 9.8%, for whites to 5.1% from 4.9%, and for Hispanics the number was unchanged at 7.4%. You think the policies are working? As Sung Won Sohn, chief economist at Wells Fargo Bank, observed “the average duration of unemployment has been lengthening, persuading unemployed workers to accept part-time jobs.”
It is time that Americans began to question the headlines. In March, according to the BLS, the number of Americans employed remained unchanged. According to the BLS, the civilian labor force remained unchanged, and that’s not counting the 514,000 discouraged workers and the 320,000 who lost their unemployment benefits. The hours worked in the month fell. The average workweek fell. Average weekly earnings dropped. Michael Donihue, professor and forecaster at Maine’s Colby College stated “employers don’t feel like they have to pay a lot to keep people on board.”
Yesterday the BLS statistics indicated that total unemployed, plus all marginally attached workers, plus total employed part-time for economic reasons, as a percentage of the civilian labor force, plus all marginally attached workers was 10.4% in March, up from the prior month’s 10.3%, and unchanged from a year ago. However, this March did not include the 1.1 million unemployed Americans who lost their benefits between 12/21/03 and 3/31/04. In the latest BLS report, almost 76 million Americans were indicated as not in the labor force, up slightly from February and up about 600,000 from January. In other words, the labor participation rate has continued to trend downward. It is the labor participation rate and the unit labor costs the Fed will focus on and not the unemployment rate. Since the end of the recession in November 2001, the labor participation rate has fallen 0.8%, and presently, the rate is at its lowest point since November 2001. In this economic cycle, the labor participation rate has been exceptionally weak. As was pointed out by Haseeb Ahmed of Economy.com, “this marked drop in the labor participation rate compares quite unfavorably with the average 0.3 point increase by the 27th month of the previous five expansions.” The unit labor costs have had the weakest two years in a post-war period. Companies have been able to meet rising demand outside our borders mainly through gains in productivity.
One should further question the need to hire permanent workers. If the hours worked are declining and the benefit costs are rising, there is little incentive to hire full-time employees. In analyzing the net hires in March, a fair percentage were part-timers, about 15,000 were accounted for by supermarket workers returning from a strike, and 71,000 were added construction workers due in part to warmer weather. From experience, we know that many construction workers are laid off during the year as the weather becomes more inclement. The remaining hires were the usual suspects in retail, government, leisure, healthcare, etc. In other words, it marked a continuation of the growth in lower wage-paying jobs. There was one small item for the buyers of tech stocks. March employment in the IT sector dropped by 1,000 jobs. That decline is inconsistent with the forecast for near-term expansion at Nasdaq 100 companies.
There has been one area of the economy helping the employment picture during the Bush years. Since winning a Pentagon contract in 2001 to build the F-35, Lockheed has added more than 5,000 employees to its payroll. The company’s Lockheed Martin Aeronautics Co. division has about 16,300 workers and more than 600 contract workers. Lockheed has about 5,700 workers on the F-16 program. Lockheed is about to reverse its three-year hiring boom. The F-35 joint strike fighter is behind schedule and unable to absorb a large number of jobs. A spokesperson for Lockheed stated “a substantial number of workers will be taken off the F-16 program before midyear.” This will lead to job losses.
Friday, April 02, 2004
4/2/04 The Numbers Game
In a little over two hours the BLS will release their March jobs report. When they revise their February numbers downward, it will no longer be the case that February was the first month in two and a half years where employment was positive compared to the same month in the prior year. The estimate for today is the creation of 140,000+ new jobs and the unemployment rate holding steady at 5.6%. There will be scant mention of the number attempting to enter the labor market in March or the latest labor participation rate. I guarantee that no one else will mention the devastating number of job losses announced in the last two days. Because of huge funding shortfalls, Detroit Public Schools will lay off 900 teachers and 2,300 other employees by July 1. The positions represent 13% of the 23,800 employees in the district, Wayne County’s second-largest employer. In Clay County, Florida auto finance company AmeriCredit shuttered its call center yesterday and 225 employees lost their jobs. The day before Household International shut its Jacksonville call center and put 119 people out of work. Terra Industries cut 65 to 70 jobs. Everyone by now read that Gateway is closing its 188 company-operated retail stores on April 9 and that 2,500 retail positions will be eliminated. DHL Express announced that 1,000 former Airborne Express workers will lose their jobs in Seattle over the next 12 months. Sun Micro will cut 3,300 jobs. Yesterday, the Labor Department reported that the number continuing to receive state jobless benefits rose by 32,000 to 3.06 million in the week ending March 20. Not everyone was so lucky to receive jobless benefits. In Iowa, 8,300 workers lost unemployment benefits in the first three months of 2004. Another 8,800 could lose their benefits over the next three months if benefits are not extended, and that looks improbable at this time.
Yesterday, it was reported that the price of basic raw materials rose a record 5.5% and that February intermediate goods rose 0.9%, the biggest gain in 9 years. There was a piece of news on the inflation front that did not make Wall Street headlines. At Broad and Wall traders have champagne tastes. They ignore the basics, such as, milk. Between now and May 1, the government will adjust milk prices to reflect a worldwide shortage of dairy products. It has been suggested that the price of a gallon of milk is likely to rise by at least 70 cents in Colorado and neighboring states in the next 30 days. Shoppers will also pay more for cheese, ice cream, and other dairy items. Australia and New Zealand, two of the world’s biggest milk-product exporters, have experienced an on-going drought. Colorado is in its fifth year of drought. The statewide snowpack measured just 65% of average yesterday. March was the driest in Denver since 1908. One thing is certain. The rise in dairy prices, particularly milk, will inflate grocery bills. Last year consumers were faced with rising egg prices. The one plus in basics is the falling price of bread due to slack demand.
Donald Kohn: “Some households and firms probably harbor unrealistic expectations about the future based on extrapolations of recent interest rates or trends in asset prices, and they run the risk of experiencing serious difficulties as a result.”
Xu Zhongbo, head of Beijing Metal Consulting: “A lot of projects in Beijing have not got under way as scheduled and steel inventory is building up in the warehouses.” As the Chinese central banks pulls back from lending, growth in that nation has begun to fall sharply. In future quarters the change will be apparent. The sudden shift will be an unpleasant surprise to many sectors of our nation. Economists and Wall Street are not prepared for this eventuality.
Precious metals continue their multi-year rise. Gold, silver, platinum, and palladium advance to new price levels not seen in some time.
Yesterday, the EU boosted tariffs on $4 billion of U.S. products from 5% to 6%. They have vowed to raise the tariffs by one percent a month. As Winston Churchill once said, the U.S. does the right thing after exhausting all other possibilities.
The growth in our GDP has been helped by the auto industry’s high vehicle output. Yesterday GM, Ford, and Chrysler announced a new round of incentives. In the meantime, as profit margins decline, Toyota eats into their market share. The Big Three have three months’ supply of vehicles. Maybe they are attempting to achieve a new stockpiling record. Goodwill Industries could always use the cars.
In a little over two hours the BLS will release their March jobs report. When they revise their February numbers downward, it will no longer be the case that February was the first month in two and a half years where employment was positive compared to the same month in the prior year. The estimate for today is the creation of 140,000+ new jobs and the unemployment rate holding steady at 5.6%. There will be scant mention of the number attempting to enter the labor market in March or the latest labor participation rate. I guarantee that no one else will mention the devastating number of job losses announced in the last two days. Because of huge funding shortfalls, Detroit Public Schools will lay off 900 teachers and 2,300 other employees by July 1. The positions represent 13% of the 23,800 employees in the district, Wayne County’s second-largest employer. In Clay County, Florida auto finance company AmeriCredit shuttered its call center yesterday and 225 employees lost their jobs. The day before Household International shut its Jacksonville call center and put 119 people out of work. Terra Industries cut 65 to 70 jobs. Everyone by now read that Gateway is closing its 188 company-operated retail stores on April 9 and that 2,500 retail positions will be eliminated. DHL Express announced that 1,000 former Airborne Express workers will lose their jobs in Seattle over the next 12 months. Sun Micro will cut 3,300 jobs. Yesterday, the Labor Department reported that the number continuing to receive state jobless benefits rose by 32,000 to 3.06 million in the week ending March 20. Not everyone was so lucky to receive jobless benefits. In Iowa, 8,300 workers lost unemployment benefits in the first three months of 2004. Another 8,800 could lose their benefits over the next three months if benefits are not extended, and that looks improbable at this time.
Yesterday, it was reported that the price of basic raw materials rose a record 5.5% and that February intermediate goods rose 0.9%, the biggest gain in 9 years. There was a piece of news on the inflation front that did not make Wall Street headlines. At Broad and Wall traders have champagne tastes. They ignore the basics, such as, milk. Between now and May 1, the government will adjust milk prices to reflect a worldwide shortage of dairy products. It has been suggested that the price of a gallon of milk is likely to rise by at least 70 cents in Colorado and neighboring states in the next 30 days. Shoppers will also pay more for cheese, ice cream, and other dairy items. Australia and New Zealand, two of the world’s biggest milk-product exporters, have experienced an on-going drought. Colorado is in its fifth year of drought. The statewide snowpack measured just 65% of average yesterday. March was the driest in Denver since 1908. One thing is certain. The rise in dairy prices, particularly milk, will inflate grocery bills. Last year consumers were faced with rising egg prices. The one plus in basics is the falling price of bread due to slack demand.
Donald Kohn: “Some households and firms probably harbor unrealistic expectations about the future based on extrapolations of recent interest rates or trends in asset prices, and they run the risk of experiencing serious difficulties as a result.”
Xu Zhongbo, head of Beijing Metal Consulting: “A lot of projects in Beijing have not got under way as scheduled and steel inventory is building up in the warehouses.” As the Chinese central banks pulls back from lending, growth in that nation has begun to fall sharply. In future quarters the change will be apparent. The sudden shift will be an unpleasant surprise to many sectors of our nation. Economists and Wall Street are not prepared for this eventuality.
Precious metals continue their multi-year rise. Gold, silver, platinum, and palladium advance to new price levels not seen in some time.
Yesterday, the EU boosted tariffs on $4 billion of U.S. products from 5% to 6%. They have vowed to raise the tariffs by one percent a month. As Winston Churchill once said, the U.S. does the right thing after exhausting all other possibilities.
The growth in our GDP has been helped by the auto industry’s high vehicle output. Yesterday GM, Ford, and Chrysler announced a new round of incentives. In the meantime, as profit margins decline, Toyota eats into their market share. The Big Three have three months’ supply of vehicles. Maybe they are attempting to achieve a new stockpiling record. Goodwill Industries could always use the cars.
Thursday, April 01, 2004
4/1/04 Hiring Costs
The number of workers holding jobs approximates 138.3 million. Of that number, about 2.5 million are temporary workers, 15 million are in the retail sector, 14.3 million in manufacturing, and 6.85 million in construction. Although the average hourly earnings rose 1.6% year-on-year in 2003, benefits continue to rise at a significantly higher rate. According to the Labor Department, of the $22.92 per hour paid, on average, to workers, $6.43 per hour was expended on benefits. Health insurance alone cost $1.50 per hour and items comprised by social security, workers’ compensation, etc. another $1.96. Employers must think hard before hiring permanent workers. The added benefits can sting the bottom line. It is no wonder that private and public companies alike look to contract workers, temporary workers, and outsourcing for alternatives. With the average workweek under 34 hours, it is difficult to anticipate much near-term improvement in the labor participation rate.
The Washington State Employment Security Department stated yesterday that a 2003 law reducing to 26 from 30 the number of weeks a person may collect unemployment benefits will take effect April 4.
Wells Fargo Bank issued layoff notices to 84 employees in Oak Harbor, Washington that take effect April 28. The employees work at an operations center that Wells Fargo acquired along with Pacific Northwest Bank last year. Norcross, Georgia-based Novoste, a developer of advanced medical treatments for coronary and vascular diseases, will cut 86 employees or about 40% of its current work force. Radio Flyer, the 87-year-old company that makes red metal wagons for children, will close its Chicago plant and move production to China, eliminating about half of its 90 jobs. Textiles maker Dan River Inc. filed for Chapter 11 bankruptcy. Axciom announced cutting 230 jobs.
According to Challenger, Gray & Christmas, the number of service sector jobs shifted overseas is expected to reach 588,000 by 2005, up from 100,000 in 2000.
Wisconsin’s exports of medical equipment to China increased 60% in 2003 to $155.6 million This was the state’s single-biggest export business to the mainland, state figures show. GE Medical had $700 million in sales in China in 2003 and expects double-digit increases for years to come. It is estimated that 60 million Chinese have disabilities. There are 66,000 hospitals in China.
William Winkenwerder Jr., assistant secretary of defense for health affairs, stated that, through March 13, in the first year of war in Iraq, the military made 18,004 medical evacuations. He told a separate House panel on Feb. 25 that, as of Feb. 5, there were only 11,200 total medical evacuations. Spc. Timothy McMichael, who is on medical hold at Fort Knox, Ky., told the Congressional panel “I can only say that the uniform consensus is one of frustration, disappointment, and anger. I have had soldiers with 15, 20, even 25 years in the military tell me they are disgusted. The Army cannot afford to lose the number of senior non-commissioned officers it is losing every day.”
The NAPM-Chicago stated its manufacturing index dropped to 57.6 in March from 63.6 in February, the largest decline since March 2001. Excluding transportation equipment, orders fell 1.2%. The Federal Reserve Bank of Chicago stated this region produces 40% of the country’s motor vehicles, 35% of its steel, and approximately 50% of its farm equipment. In March, the survey’s employment index fell to 49.2 from February’s 54.8, a most disappointing result. In addition, the production index and the new orders index both dropped significantly. The Midwest continues to have difficult business conditions. Chris Low, chief economist at FTN Financial, remarked “this is not the first place we have seen indications the economy is slowing, but it is a report that is widely followed. It underscores the fact this slowdown is pretty wide-spread.”
Lynn Franco, director of the Conference Board’s Consumer Research Center: “The labor market not only continues to dampen consumers’ present day spirits, but it is also making them less optimistic about the short term outlook.”
Raghavan Mayur, president of TechnoMetrica Market Intelligence: “25 to 30 per cent of the households are ‘job sensitives’- those who have lost a job in the past 12 months or are afraid of losing one in the next 12.”
Starting today, OPEC agreed to reduce oil production quotas by 4.1% or by 1 million barrels to 23.5 million barrels a day. OPEC is the source of approximately one-third of the world’s oil.
The yen rose to a four-high high versus the dollar and traded up to 103.40, the third straight quarterly increase. In March, Japan sold $45.2 billion yen, a sharp slowing from the prior two months. Finance Minister Sadakazu Tanigaki stated “it’s desirable that foreign exchange rates move in a manner reflecting fundamentals of economies.”
Yesterday, J.C. Penney reduced the value of its Eckerd Drug division to $4.37 billion. It has been suggested that the Jean Coutu Group of Canada, current owner of Brooks Pharmacy, would purchase about 1,400 Eckerd locations in the Northeast and CVS the remaining 1,200 Eckerd stores in the Southeast.
The ECB decided to leave its benchmark lending rate at a six-decade low of 2%. With the unemployment rate in the euro region at a three-year high of 8.8% for the past year, a June rate cut of 50 basis points might provide a welcome psychological boost.
The number of workers holding jobs approximates 138.3 million. Of that number, about 2.5 million are temporary workers, 15 million are in the retail sector, 14.3 million in manufacturing, and 6.85 million in construction. Although the average hourly earnings rose 1.6% year-on-year in 2003, benefits continue to rise at a significantly higher rate. According to the Labor Department, of the $22.92 per hour paid, on average, to workers, $6.43 per hour was expended on benefits. Health insurance alone cost $1.50 per hour and items comprised by social security, workers’ compensation, etc. another $1.96. Employers must think hard before hiring permanent workers. The added benefits can sting the bottom line. It is no wonder that private and public companies alike look to contract workers, temporary workers, and outsourcing for alternatives. With the average workweek under 34 hours, it is difficult to anticipate much near-term improvement in the labor participation rate.
The Washington State Employment Security Department stated yesterday that a 2003 law reducing to 26 from 30 the number of weeks a person may collect unemployment benefits will take effect April 4.
Wells Fargo Bank issued layoff notices to 84 employees in Oak Harbor, Washington that take effect April 28. The employees work at an operations center that Wells Fargo acquired along with Pacific Northwest Bank last year. Norcross, Georgia-based Novoste, a developer of advanced medical treatments for coronary and vascular diseases, will cut 86 employees or about 40% of its current work force. Radio Flyer, the 87-year-old company that makes red metal wagons for children, will close its Chicago plant and move production to China, eliminating about half of its 90 jobs. Textiles maker Dan River Inc. filed for Chapter 11 bankruptcy. Axciom announced cutting 230 jobs.
According to Challenger, Gray & Christmas, the number of service sector jobs shifted overseas is expected to reach 588,000 by 2005, up from 100,000 in 2000.
Wisconsin’s exports of medical equipment to China increased 60% in 2003 to $155.6 million This was the state’s single-biggest export business to the mainland, state figures show. GE Medical had $700 million in sales in China in 2003 and expects double-digit increases for years to come. It is estimated that 60 million Chinese have disabilities. There are 66,000 hospitals in China.
William Winkenwerder Jr., assistant secretary of defense for health affairs, stated that, through March 13, in the first year of war in Iraq, the military made 18,004 medical evacuations. He told a separate House panel on Feb. 25 that, as of Feb. 5, there were only 11,200 total medical evacuations. Spc. Timothy McMichael, who is on medical hold at Fort Knox, Ky., told the Congressional panel “I can only say that the uniform consensus is one of frustration, disappointment, and anger. I have had soldiers with 15, 20, even 25 years in the military tell me they are disgusted. The Army cannot afford to lose the number of senior non-commissioned officers it is losing every day.”
The NAPM-Chicago stated its manufacturing index dropped to 57.6 in March from 63.6 in February, the largest decline since March 2001. Excluding transportation equipment, orders fell 1.2%. The Federal Reserve Bank of Chicago stated this region produces 40% of the country’s motor vehicles, 35% of its steel, and approximately 50% of its farm equipment. In March, the survey’s employment index fell to 49.2 from February’s 54.8, a most disappointing result. In addition, the production index and the new orders index both dropped significantly. The Midwest continues to have difficult business conditions. Chris Low, chief economist at FTN Financial, remarked “this is not the first place we have seen indications the economy is slowing, but it is a report that is widely followed. It underscores the fact this slowdown is pretty wide-spread.”
Lynn Franco, director of the Conference Board’s Consumer Research Center: “The labor market not only continues to dampen consumers’ present day spirits, but it is also making them less optimistic about the short term outlook.”
Raghavan Mayur, president of TechnoMetrica Market Intelligence: “25 to 30 per cent of the households are ‘job sensitives’- those who have lost a job in the past 12 months or are afraid of losing one in the next 12.”
Starting today, OPEC agreed to reduce oil production quotas by 4.1% or by 1 million barrels to 23.5 million barrels a day. OPEC is the source of approximately one-third of the world’s oil.
The yen rose to a four-high high versus the dollar and traded up to 103.40, the third straight quarterly increase. In March, Japan sold $45.2 billion yen, a sharp slowing from the prior two months. Finance Minister Sadakazu Tanigaki stated “it’s desirable that foreign exchange rates move in a manner reflecting fundamentals of economies.”
Yesterday, J.C. Penney reduced the value of its Eckerd Drug division to $4.37 billion. It has been suggested that the Jean Coutu Group of Canada, current owner of Brooks Pharmacy, would purchase about 1,400 Eckerd locations in the Northeast and CVS the remaining 1,200 Eckerd stores in the Southeast.
The ECB decided to leave its benchmark lending rate at a six-decade low of 2%. With the unemployment rate in the euro region at a three-year high of 8.8% for the past year, a June rate cut of 50 basis points might provide a welcome psychological boost.
Wednesday, March 31, 2004
3/31/04 Window Dressing And Japan’s Fiscal Year-end
Welcome to the end of the quarter and to the last day of window dressing- hopefully, for some time. I trust all the mutual funds engaged in this activity had a nice time. What a bunch of losers! Today is the fiscal year-end for Japan, and we will undo the hedge created exactly nine months ago. With the aging of the population, you might not remember. We went long the Nikkei and short the Nasdaq. The hotshots thought we were out of our minds. With Passover and Easter right around the corner, we can become consumers with our profits and buy some nice gifts. I think we’ll do a bit of that and keep the largest portion of the profits for a rainy day. It might even rain in Colorado. You can never tell.
In 2003, corporate income taxes dropped to 7.4% of total tax receipts. Something tells me this inequity is not long for this world.
The 447,000 bpd BP refinery in Texas City was hit by an explosion and a fire. It is the third-largest refinery in the United States. Tomorrow OPEC has its meeting. I’m sure it’s only a coincidence that the FBI had recently warned Texas oil refiners of possible terror attacks.
The March Conference Board’s Consumer Confidence Index reflected the continuation of near-term job worries. The survey certainly was right. Yesterday was not a good day for employment. Johnson Controls announced moving 885 jobs to Mexico. Worldcom continued their layoffs. This time it was 4,000 workers to be cut. Because of Iowa’s budget problems, 2,000 teachers could lose their jobs in that state. EMI announced cutting 1,500 jobs, and will exit manufacturing in Europe and the U.S.
Bill Gates: “Many of the holy grails of computing that have been worked on over the last 30 years will be solved within this 10-year period, with speech being in every device and having a device that’s like a tablet that you just carry around.” Gates is focusing on the power of the servers and their impact on the network not being a limiting factor. I believe servers will not be required for speech recognition. While Gates is headed towards the tablet, in my view the cell phone and the PDA will become your venue for text messaging via speech recognition, and it will arrive in your neighborhood shortly.
The new overtime-pay rules go into effect tomorrow. The U.S. Department of Labor has found another way to screw you—thanks to the efforts of the Administration and the Congress.
The EU told Germany it must scrap a law that protects Volkswagen from hostile takeovers or face court action.
Nissan, Japan’s third largest auto maker, stated it had not set profit forecasts for the coming year, partly due to volatility in the currency markets.
Toyota stated it expected its production of biodegradable plastics to grow into a $38 billion business by 2020 when the company hopes to control two-thirds of the world’s supply.
Elliott Janeway: “When the President is in trouble, the economy is in trouble.”
Bush’s remarks on the economy yesterday at the Fox Cities Performing Art Center in Appleton, Wisconsin: “Some in our Nation’s Capital respond a little differently than I will. They want to increase federal spending dramatically. The problem with that plan is somebody has to pay for it…it’s possible to grow our economy and not have people find new jobs. And that’s the problem we face today for some workers. This is called a period of transition. That’s an economist’s word for things aren’t going too well for you. And I understand that. I understand that people are worried about the job they have.”
Bush wants to blame others for the rise in federal spending. He wants to blame increases in productivity for the loss of jobs. While he’s laying blame, he might as well blame Saddam for not having the WMD. Losers fail to accept responsibility. The words ‘I was wrong’ never touch Bush’s lips.
Starbucks, on the other hand, has outstanding management. They are a credit to their stockholders, their employees, and to the communities they serve. Their global chain of more than 7,600 stores is growing at about 3.5 per day. Their CEO told the annual meeting that this rate would begin to increase probably around midsummer. The company is evaluating dozens of new drinks.
Charles Dow: “The one fact pertaining to all conditions is that they will change.”
Welcome to the end of the quarter and to the last day of window dressing- hopefully, for some time. I trust all the mutual funds engaged in this activity had a nice time. What a bunch of losers! Today is the fiscal year-end for Japan, and we will undo the hedge created exactly nine months ago. With the aging of the population, you might not remember. We went long the Nikkei and short the Nasdaq. The hotshots thought we were out of our minds. With Passover and Easter right around the corner, we can become consumers with our profits and buy some nice gifts. I think we’ll do a bit of that and keep the largest portion of the profits for a rainy day. It might even rain in Colorado. You can never tell.
In 2003, corporate income taxes dropped to 7.4% of total tax receipts. Something tells me this inequity is not long for this world.
The 447,000 bpd BP refinery in Texas City was hit by an explosion and a fire. It is the third-largest refinery in the United States. Tomorrow OPEC has its meeting. I’m sure it’s only a coincidence that the FBI had recently warned Texas oil refiners of possible terror attacks.
The March Conference Board’s Consumer Confidence Index reflected the continuation of near-term job worries. The survey certainly was right. Yesterday was not a good day for employment. Johnson Controls announced moving 885 jobs to Mexico. Worldcom continued their layoffs. This time it was 4,000 workers to be cut. Because of Iowa’s budget problems, 2,000 teachers could lose their jobs in that state. EMI announced cutting 1,500 jobs, and will exit manufacturing in Europe and the U.S.
Bill Gates: “Many of the holy grails of computing that have been worked on over the last 30 years will be solved within this 10-year period, with speech being in every device and having a device that’s like a tablet that you just carry around.” Gates is focusing on the power of the servers and their impact on the network not being a limiting factor. I believe servers will not be required for speech recognition. While Gates is headed towards the tablet, in my view the cell phone and the PDA will become your venue for text messaging via speech recognition, and it will arrive in your neighborhood shortly.
The new overtime-pay rules go into effect tomorrow. The U.S. Department of Labor has found another way to screw you—thanks to the efforts of the Administration and the Congress.
The EU told Germany it must scrap a law that protects Volkswagen from hostile takeovers or face court action.
Nissan, Japan’s third largest auto maker, stated it had not set profit forecasts for the coming year, partly due to volatility in the currency markets.
Toyota stated it expected its production of biodegradable plastics to grow into a $38 billion business by 2020 when the company hopes to control two-thirds of the world’s supply.
Elliott Janeway: “When the President is in trouble, the economy is in trouble.”
Bush’s remarks on the economy yesterday at the Fox Cities Performing Art Center in Appleton, Wisconsin: “Some in our Nation’s Capital respond a little differently than I will. They want to increase federal spending dramatically. The problem with that plan is somebody has to pay for it…it’s possible to grow our economy and not have people find new jobs. And that’s the problem we face today for some workers. This is called a period of transition. That’s an economist’s word for things aren’t going too well for you. And I understand that. I understand that people are worried about the job they have.”
Bush wants to blame others for the rise in federal spending. He wants to blame increases in productivity for the loss of jobs. While he’s laying blame, he might as well blame Saddam for not having the WMD. Losers fail to accept responsibility. The words ‘I was wrong’ never touch Bush’s lips.
Starbucks, on the other hand, has outstanding management. They are a credit to their stockholders, their employees, and to the communities they serve. Their global chain of more than 7,600 stores is growing at about 3.5 per day. Their CEO told the annual meeting that this rate would begin to increase probably around midsummer. The company is evaluating dozens of new drinks.
Charles Dow: “The one fact pertaining to all conditions is that they will change.”
Tuesday, March 30, 2004
3/30/04 Tomorrow’s Workforce
Mark Marsters is Cigna’s disability claims operations leader. Recently, he spoke at the national Disability Consulting Group Conference. He described tomorrow’s workforce as older, heavier, and unable to retire. Marsters stated “health care will continue to drive costs, a problem that will become even more urgent with the aging workforce. The aging workforce will drive greater incidences of disability. The economy may force companies to push their employees even further to boost productivity, which may in turn result in greater stress-related disability. All these trends will make integration of disability and health care more critical, as chronic disease management will become increasingly important along with programs that focus on lowering incidence and coordinating health, stress management and disability benefits.” It should be noted that, by 2008, 40% of the labor force will be 45 or older. Older workers are up to 5 times more likely to submit claims for short or long-term disability, and are absent longer than younger employees. A recent AARP study showed that nearly 70% of workers who have not yet retired report that they plan to work into their retirement years or never retire. One might also take note of a study by the Economic Policy Institute that found overtime costs industry as much as $300 billion in stress and fatigue-related problems.
In 2003, GM’s four joint-venture plants in China sold 386,710 vehicles for $875 million. One half of the profits went to GM. In sum, GM realized $2,267 per vehicle sold in China versus only $145 on each vehicle sold in North America. If you were running GM, would you expand in China or in the U.S.?
Kenneth Liebenthal is a University of Michigan professor and China expert who was senior director for Asian affairs on the National Security Council under Clinton. He observed “most of the jobs lost to Asia were lost years ago. Now they’re moving around Asia.”
The Navy canceled the overhaul of an aging supply ship. Todd Pacific Shipyards had anticipated that the work on the USS Sacramento would take about three months and hundreds of workers would be needed. Without the contract, Todd is temporarily laying off about 500 workers.
Saudi oil Minister Ali al-Naimi stated “as far as Saudi Arabia is concerned, April 1 has been implemented and I believe others have done so as well. Throwing more oil on the market, because of prices where they are today, would be destructive. That would make a glut and there is already a surplus on the market.” The fact is other countries, such as neighboring Mexico, will export more oil. It’s the least they can do. Mexico expropriated the oil properties from U.S. interests in 1937. They renamed the properties Pemex. We have earned the right to pay for what was once our interests and where not one penny was received in return. There are many robber baron countries out there in the world. Our government calls many “friends.” No one accused our government of being adept in the character evaluation department. Isn’t that right, Kenny Boy?
David Fyse of the International Energy Agency stated “Russia is a key component of OPEC’s problems over the next two to three years.”
Jeremy Siegel: “The bond is saying, Yes, I know that current GDP growth is quite good, but I don’t believe it will last.”
Mark Marsters is Cigna’s disability claims operations leader. Recently, he spoke at the national Disability Consulting Group Conference. He described tomorrow’s workforce as older, heavier, and unable to retire. Marsters stated “health care will continue to drive costs, a problem that will become even more urgent with the aging workforce. The aging workforce will drive greater incidences of disability. The economy may force companies to push their employees even further to boost productivity, which may in turn result in greater stress-related disability. All these trends will make integration of disability and health care more critical, as chronic disease management will become increasingly important along with programs that focus on lowering incidence and coordinating health, stress management and disability benefits.” It should be noted that, by 2008, 40% of the labor force will be 45 or older. Older workers are up to 5 times more likely to submit claims for short or long-term disability, and are absent longer than younger employees. A recent AARP study showed that nearly 70% of workers who have not yet retired report that they plan to work into their retirement years or never retire. One might also take note of a study by the Economic Policy Institute that found overtime costs industry as much as $300 billion in stress and fatigue-related problems.
In 2003, GM’s four joint-venture plants in China sold 386,710 vehicles for $875 million. One half of the profits went to GM. In sum, GM realized $2,267 per vehicle sold in China versus only $145 on each vehicle sold in North America. If you were running GM, would you expand in China or in the U.S.?
Kenneth Liebenthal is a University of Michigan professor and China expert who was senior director for Asian affairs on the National Security Council under Clinton. He observed “most of the jobs lost to Asia were lost years ago. Now they’re moving around Asia.”
The Navy canceled the overhaul of an aging supply ship. Todd Pacific Shipyards had anticipated that the work on the USS Sacramento would take about three months and hundreds of workers would be needed. Without the contract, Todd is temporarily laying off about 500 workers.
Saudi oil Minister Ali al-Naimi stated “as far as Saudi Arabia is concerned, April 1 has been implemented and I believe others have done so as well. Throwing more oil on the market, because of prices where they are today, would be destructive. That would make a glut and there is already a surplus on the market.” The fact is other countries, such as neighboring Mexico, will export more oil. It’s the least they can do. Mexico expropriated the oil properties from U.S. interests in 1937. They renamed the properties Pemex. We have earned the right to pay for what was once our interests and where not one penny was received in return. There are many robber baron countries out there in the world. Our government calls many “friends.” No one accused our government of being adept in the character evaluation department. Isn’t that right, Kenny Boy?
David Fyse of the International Energy Agency stated “Russia is a key component of OPEC’s problems over the next two to three years.”
Jeremy Siegel: “The bond is saying, Yes, I know that current GDP growth is quite good, but I don’t believe it will last.”
Monday, March 29, 2004
3/29/04 Extortion
Joshua Shapiro: “This is a different business cycle. To the extent that companies can squeeze another drop of blood out of their existing work force, they’re doing it. Eventually you reach the point where there’s no more blood to be given, but we haven’t reached it yet.”
For a few years I have written about the limited pricing power of companies. At the same time, as real wages have declined and work hours have been reduced, the American worker’s bargaining position with its employer weakened. A new low was recently reached. Not surprisingly, Boeing was the instigator. The incident occurred within the company’s Shared Services Group, which provides support to Boeing’s other business units. The division employs close to 16,000 and is based in Bellevue, Washington. The company’s desktop-computer support staff in Washington and Kansas was given an ultimatum—either at least match Dell’s bid to do their work or else be fired. An audit by Gartner Group indicated that Dell could provide computer support for 37% less than the current in-house cost. The 200 people impacted have until April 16 to at least match Dell’s proposals. Boeing spokesperson Bob Jorgenson stated “the Boeing group is outstanding. The quality of their service is equal to the best in the market that we can find externally. However, the cost of delivery is significantly higher.” The head of the Shared Services Group has ordered cost studies in every department. Jorgensen observed that the division’s performance would be judged against standards set by the marketplace. Ultimately, the in-house Boeing support group will provide more efficiencies; however, to compete against Dell, fewer people would be employed. Charles Bofferding, executive director of the Society of Professional Engineering Employees in Aerospace stated “absent a commitment to employees to retrain them and find them other jobs, this feels an awful like extortion.” It is necessary to realize that costs are important. Having run many companies, I fully realize this. On the other hand, loyalty, seniority, and sense of security play an important part in the workplace. The Boeing situation should have been handled entirely differently. The workers should have been made a strategic part of the decision-making process on how to best reduce costs. Often the workers themselves have better ideas than those in managerial positions. You don’t have to look for employment for 20 months to be a discouraged worker. You can work for Boeing and be given an ultimatum.
While we are on the subject of Boeing, let’s look at their participation in bidding on an Air Force contract for 100 aerial refueling tankers. An audit report of the bidding process will be released shortly. It will show that the Air Force had requested 26 capabilities for the refueling tankers. Boeing, during the negotiating process, eliminated 19 of the 26 capabilities. On the other hand, Airbus complied with 20 of the 26 capabilities. Air Force Undersecretary for Acquisitions Marvin Sambur stated “this was not a competitive process. The Air Force was ordered by Congress to work with Boeing on the new tanker program.” Bush’s chief of staff, Andrew Card, was the point man on the deal. Boeing emails indicate that Card was mainly interested in the jobs the contract would create. Boeing claimed 28,000 new jobs would be added to the payroll. Roche, the Air Force secretary, claimed the number would be 39,000. The audit indicated the negotiations reflected “unsound acquisition and procurement practices.” Maybe the Congress should give an ultimatum to Boeing—change your ways or be barred from bidding on future government contracts. We are talking about $23.5 billion of taxpayer money.
The Philadelphia Metro area has been hit by two plat closings. Gross-Given Manufacturing, a vending machine company, will close its plant this month and lay off 113 workers. Mail-Well Envelope Co. will close its doors in May and eliminate 125 jobs.
From July 2000 until August 2003, Maine lost 17,800 manufacturing jobs, a loss of 22.1% and a greater percentage reduction than any other state in the nation, stated Maine AFL-CIO President Edward Gorham. This loss does not take into account the hundreds of paper employees who lost their jobs through the recent closing of the Eastern Pulp and Paper mills in Brewer and Lincoln, Maine. These two mills employed more than 750 people. Over all, in the last two years, there has been a 3% decline in New England employment, including 150,000 jobs lost in manufacturing.
When viewing March’s employment numbers, at least one sector will not be mentioned. There are a growing number of “underemployed” workers, those that take any job they could get rather than risk unemployment. According to various studies, they have too much experience or education and receive wages often far below their previous employment. In addition, it would be wise to focus on the number of people participating in the work force. Over the past three years, there has been a 1% drop in the participation rate due to the weak labor market. That rate is understated with the 1million+ unemployed having lost their benefits since December 21. In sum, there are less people in the workplace. That is a fact.
James Chanos: “One of the biggest components of a car’s costs are the legacy healthcare and pension benefits for people who don’t even work there any more.”
Marc Faber: “In the past I have had the tendency to dismiss the deflationist views of some reputed economists and strategists as unlikely. I now feel the current universal asset inflation and overheated Chinese economy will be followed by a serious bust and asset deflation, which will kill consumption in the U.S. The only question is when.”
Personal savings increased to 1.9% of disposable income in February, up from January’s 1.8%.
Bruce Karatz, chairman and chief executive of KB Home: “Industry seems to have gotten very used to the idea of hiring slowly.”
Joshua Shapiro: “This is a different business cycle. To the extent that companies can squeeze another drop of blood out of their existing work force, they’re doing it. Eventually you reach the point where there’s no more blood to be given, but we haven’t reached it yet.”
For a few years I have written about the limited pricing power of companies. At the same time, as real wages have declined and work hours have been reduced, the American worker’s bargaining position with its employer weakened. A new low was recently reached. Not surprisingly, Boeing was the instigator. The incident occurred within the company’s Shared Services Group, which provides support to Boeing’s other business units. The division employs close to 16,000 and is based in Bellevue, Washington. The company’s desktop-computer support staff in Washington and Kansas was given an ultimatum—either at least match Dell’s bid to do their work or else be fired. An audit by Gartner Group indicated that Dell could provide computer support for 37% less than the current in-house cost. The 200 people impacted have until April 16 to at least match Dell’s proposals. Boeing spokesperson Bob Jorgenson stated “the Boeing group is outstanding. The quality of their service is equal to the best in the market that we can find externally. However, the cost of delivery is significantly higher.” The head of the Shared Services Group has ordered cost studies in every department. Jorgensen observed that the division’s performance would be judged against standards set by the marketplace. Ultimately, the in-house Boeing support group will provide more efficiencies; however, to compete against Dell, fewer people would be employed. Charles Bofferding, executive director of the Society of Professional Engineering Employees in Aerospace stated “absent a commitment to employees to retrain them and find them other jobs, this feels an awful like extortion.” It is necessary to realize that costs are important. Having run many companies, I fully realize this. On the other hand, loyalty, seniority, and sense of security play an important part in the workplace. The Boeing situation should have been handled entirely differently. The workers should have been made a strategic part of the decision-making process on how to best reduce costs. Often the workers themselves have better ideas than those in managerial positions. You don’t have to look for employment for 20 months to be a discouraged worker. You can work for Boeing and be given an ultimatum.
While we are on the subject of Boeing, let’s look at their participation in bidding on an Air Force contract for 100 aerial refueling tankers. An audit report of the bidding process will be released shortly. It will show that the Air Force had requested 26 capabilities for the refueling tankers. Boeing, during the negotiating process, eliminated 19 of the 26 capabilities. On the other hand, Airbus complied with 20 of the 26 capabilities. Air Force Undersecretary for Acquisitions Marvin Sambur stated “this was not a competitive process. The Air Force was ordered by Congress to work with Boeing on the new tanker program.” Bush’s chief of staff, Andrew Card, was the point man on the deal. Boeing emails indicate that Card was mainly interested in the jobs the contract would create. Boeing claimed 28,000 new jobs would be added to the payroll. Roche, the Air Force secretary, claimed the number would be 39,000. The audit indicated the negotiations reflected “unsound acquisition and procurement practices.” Maybe the Congress should give an ultimatum to Boeing—change your ways or be barred from bidding on future government contracts. We are talking about $23.5 billion of taxpayer money.
The Philadelphia Metro area has been hit by two plat closings. Gross-Given Manufacturing, a vending machine company, will close its plant this month and lay off 113 workers. Mail-Well Envelope Co. will close its doors in May and eliminate 125 jobs.
From July 2000 until August 2003, Maine lost 17,800 manufacturing jobs, a loss of 22.1% and a greater percentage reduction than any other state in the nation, stated Maine AFL-CIO President Edward Gorham. This loss does not take into account the hundreds of paper employees who lost their jobs through the recent closing of the Eastern Pulp and Paper mills in Brewer and Lincoln, Maine. These two mills employed more than 750 people. Over all, in the last two years, there has been a 3% decline in New England employment, including 150,000 jobs lost in manufacturing.
When viewing March’s employment numbers, at least one sector will not be mentioned. There are a growing number of “underemployed” workers, those that take any job they could get rather than risk unemployment. According to various studies, they have too much experience or education and receive wages often far below their previous employment. In addition, it would be wise to focus on the number of people participating in the work force. Over the past three years, there has been a 1% drop in the participation rate due to the weak labor market. That rate is understated with the 1million+ unemployed having lost their benefits since December 21. In sum, there are less people in the workplace. That is a fact.
James Chanos: “One of the biggest components of a car’s costs are the legacy healthcare and pension benefits for people who don’t even work there any more.”
Marc Faber: “In the past I have had the tendency to dismiss the deflationist views of some reputed economists and strategists as unlikely. I now feel the current universal asset inflation and overheated Chinese economy will be followed by a serious bust and asset deflation, which will kill consumption in the U.S. The only question is when.”
Personal savings increased to 1.9% of disposable income in February, up from January’s 1.8%.
Bruce Karatz, chairman and chief executive of KB Home: “Industry seems to have gotten very used to the idea of hiring slowly.”
Sunday, March 28, 2004
3/28/04 Surimi
For all you chefs, surimi is imitation crabmeat. Nichiro, a company based in Japan, employs about 700 people in Washington, Oregon, and Alaska. They process frozen seafood products under the Peter Pan Saefoods and SeaBlends labels. In May, the company is closing its Seattle facility and laying off 63 workers. Maybe the market for the imitation is waning. Maybe people want the real McCoy. That would prove to be a welcome change.
I know life on Wall Street rarely reflects the paycheck-to-paycheck life on Main Street. Money managers have almost no sense of reality when it comes to a life built around layoffs, fear of layoffs, strangling credit card debts, and the losing battle to make ends meet. Wall Street traders listen to the latest terrorist rumors and the whisper numbers making the rounds of the white shoe boiler rooms. I’ve been there. I’ve seen the rows of losers manning the phones with the latest gospel stories on the most closely watched stories. I’ve fired many of those soothsayers. Afterwards, my firms ran more efficiently and with greater honesty.
This week we will find out whether OPEC will reduce the production quota limit to 23.5 million barrels per day starting April 1. At the least, I expect that reduction to be delayed. However, there is the possibility that the quota could be increased. Much of the decision will focus on the global supply and demand situation, the price direction for the dollar, and the impact of higher crude prices on the world economy, particularly the U.S. economy. Just as Japan and China set our interest rates, OPEC’s oil pricing affects our growing trade deficit and the level of domestic inflation. OPEC cares about OPEC. Our nation’s financial well being is truly secondary. In dollar terms, the $38 per barrel price is not that encouraging to the producers. On the other hand, OPEC must keep a watchful eye on sources of oil from non-OPEC producing nations. Those with cash needs will settle for lower prices. Wal-Mart knows something about that. In the end, higher prices create more supply. Falsified supply and demand cannot fool every consumer on every street corner. Before you know it, more supply will bring layoffs. The OPEC nations may learn the world of paycheck-to-paycheck.
At the end of this week, you will read the headline that more jobs were added in March than at any time since December 2000. The jobs created are real. They are lower paying jobs that barely provide paychecks to cover week-to-week expenses. Many are contracting jobs. Many are part-time jobs. If you believe the labor market has turned the corner, then your brain has imitation gray matter. Every day I have provided examples of how the job market continues to exhibit weak knees. There is no stability and no substance. Keep your eye on the ball. Watch the ball’s rotation. Watch the spin. You’ll have a better chance to connect with the truth.
For all you chefs, surimi is imitation crabmeat. Nichiro, a company based in Japan, employs about 700 people in Washington, Oregon, and Alaska. They process frozen seafood products under the Peter Pan Saefoods and SeaBlends labels. In May, the company is closing its Seattle facility and laying off 63 workers. Maybe the market for the imitation is waning. Maybe people want the real McCoy. That would prove to be a welcome change.
I know life on Wall Street rarely reflects the paycheck-to-paycheck life on Main Street. Money managers have almost no sense of reality when it comes to a life built around layoffs, fear of layoffs, strangling credit card debts, and the losing battle to make ends meet. Wall Street traders listen to the latest terrorist rumors and the whisper numbers making the rounds of the white shoe boiler rooms. I’ve been there. I’ve seen the rows of losers manning the phones with the latest gospel stories on the most closely watched stories. I’ve fired many of those soothsayers. Afterwards, my firms ran more efficiently and with greater honesty.
This week we will find out whether OPEC will reduce the production quota limit to 23.5 million barrels per day starting April 1. At the least, I expect that reduction to be delayed. However, there is the possibility that the quota could be increased. Much of the decision will focus on the global supply and demand situation, the price direction for the dollar, and the impact of higher crude prices on the world economy, particularly the U.S. economy. Just as Japan and China set our interest rates, OPEC’s oil pricing affects our growing trade deficit and the level of domestic inflation. OPEC cares about OPEC. Our nation’s financial well being is truly secondary. In dollar terms, the $38 per barrel price is not that encouraging to the producers. On the other hand, OPEC must keep a watchful eye on sources of oil from non-OPEC producing nations. Those with cash needs will settle for lower prices. Wal-Mart knows something about that. In the end, higher prices create more supply. Falsified supply and demand cannot fool every consumer on every street corner. Before you know it, more supply will bring layoffs. The OPEC nations may learn the world of paycheck-to-paycheck.
At the end of this week, you will read the headline that more jobs were added in March than at any time since December 2000. The jobs created are real. They are lower paying jobs that barely provide paychecks to cover week-to-week expenses. Many are contracting jobs. Many are part-time jobs. If you believe the labor market has turned the corner, then your brain has imitation gray matter. Every day I have provided examples of how the job market continues to exhibit weak knees. There is no stability and no substance. Keep your eye on the ball. Watch the ball’s rotation. Watch the spin. You’ll have a better chance to connect with the truth.
3/27/04 The American Dream Down Payment Act
This is the beginning of a two-day posting focusing on Main Street. Since I am not running for political office, I have an advantage. I can and do tell the truth- not as I want you to see it, but the truth reflecting the facts. I doubt whether any of you have heard of the American Dream Down Payment Act. You will. Bush just signed it into law. The President is asking Congress to provide an annual $200 million for this program. Bush stated “that additional money would help an estimated $40,000 low-income families every year become first-time homeowners. I’m proposing that we make zero down payment loans available to first-time buyers whose mortgages are guaranteed by the FHA. And this will help about $150,000 families buy homes in the first year alone.”
The headlines will describe how compassionate the second coming of Bush as a president truly is. Rather than buy this bullshit on the Administration’s attempt to close the home ownership gap, one should pay close attention to those who talk out of both sides of their mouth and smile while doing it. The same person who gave you The American Dream Down Payment Act also gave you the nightmare on Main Street. On December 21 Bush made no attempt to extend the unemployment benefits for millions of Americans. This Friday you will read how more jobs were created in America. The headlines will ignore that hundreds of thousands of unemployed Americans who ceased to be counted as unemployed because they lost their benefits in March. I am not running for office. The American dream is in the voting booth. Pull the lever that provides reality.
This is the beginning of a two-day posting focusing on Main Street. Since I am not running for political office, I have an advantage. I can and do tell the truth- not as I want you to see it, but the truth reflecting the facts. I doubt whether any of you have heard of the American Dream Down Payment Act. You will. Bush just signed it into law. The President is asking Congress to provide an annual $200 million for this program. Bush stated “that additional money would help an estimated $40,000 low-income families every year become first-time homeowners. I’m proposing that we make zero down payment loans available to first-time buyers whose mortgages are guaranteed by the FHA. And this will help about $150,000 families buy homes in the first year alone.”
The headlines will describe how compassionate the second coming of Bush as a president truly is. Rather than buy this bullshit on the Administration’s attempt to close the home ownership gap, one should pay close attention to those who talk out of both sides of their mouth and smile while doing it. The same person who gave you The American Dream Down Payment Act also gave you the nightmare on Main Street. On December 21 Bush made no attempt to extend the unemployment benefits for millions of Americans. This Friday you will read how more jobs were created in America. The headlines will ignore that hundreds of thousands of unemployed Americans who ceased to be counted as unemployed because they lost their benefits in March. I am not running for office. The American dream is in the voting booth. Pull the lever that provides reality.
Thursday, March 25, 2004
2/26/04 Jobless Claims
As we know, a mass layoff is defined as 50 jobs lost from a single employer within 30 days. California reported the most initial claims for unemployment in February, with 29,895, followed by Ohio, Illinois, and Texas. These four states accounted for 50% of the nation’s initial claim for unemployment in February, according to the BLS. It is worthwhile noting that Ohio employers initiated 46 mass layoffs in February resulting in 4,142 initial claims. In the year earlier period, there were the same 46 mass layoffs with 4,097 lost jobs. Yesterday, we discussed that the employment picture in Illinois is stuck in neutral, and the same can be stated for Ohio.
It is also worth noting that the Conference Board’s Help-Wanted Index is also stuck in neutral. The Index registered 40 last month and in the year earlier period it was 41. As the Conference Board’s chief economist Ken Goldstein noted, “consumers have grown more concerned about why continued increases in industrial production and GDP have generated only meager job increases.
There needs to be an analysis focusing on the differentiation between job creation and the decline in jobless claims. As the Center on Budget and Policy Priorities observed, the decline in jobless claims is the result of unemployed workers exhausting their eligibility for benefits. This is a topic we have discussed since December 21. The Center’s report indicated that 1.1 million unemployed workers will have exhausted their benefits in the period from December 21 through the end of March. Therefore, they were dropped from the unemployment rolls. We know that 1.1 million jobs have not been created in this period. In sum, taking into account layoffs, mass layoffs, individuals losing their unemployment benefits, and discouraged workers leaving the labor force, there has been a net job loss at least since December 21. Whether the BLS states 1 employee, 100 employees, 1,000 employees, 100,000 employees, or even 1 million workers are added to the payrolls, the economy has still experienced rising unemployment. You can listen to the spins by members of the Administration, Congress, and the BLS. The numbers will not change with the bullshit. Isaac Shapiro of the Center on Budget and Policy Priorities stated “in no other comparable period on record have so many individuals exhausted their regular benefits and gone without additional aid.”
New York Federal Reserve President Timothy Geithner: “The current deterioration in the U.S. fiscal position and the acute decline in the net national savings rate represent risks to the financial system and the economy as a whole.”
For the fourth quarter, the personal consumption expenditure (PCE) price deflator was revised from 0.7% annual rate to 1%.
Forecasts for the gain in March payrolls range from a low of 100,000 to a high of 225,000. Of course, no one seems to be concerned by the hundreds of thousands dropping off the unemployment rolls in March due to the loss of benefits. This is worse than looking at the world through rose-colored glasses. It’s creating numbers that have no basis in fact. One could say they are on the order of the perceived threat from WMD that ceased to exist in the early 1990s. Jobs have been destroyed and eliminated and so were the WMD. Many will take issue with this analogy; however, those that do probably have a job and most likely don’t have a family member or a friend who’ve been killed in the war in Iraq.
Fed Governor Donald Kohn: “Slack in resource utilization will probably be eliminated only gradually, so competition for jobs and for market share should remain intense…I think policy action can await convincing evidence that labor market slack is on a declining trend and that inflation is no longer decreasing.”
As we know, a mass layoff is defined as 50 jobs lost from a single employer within 30 days. California reported the most initial claims for unemployment in February, with 29,895, followed by Ohio, Illinois, and Texas. These four states accounted for 50% of the nation’s initial claim for unemployment in February, according to the BLS. It is worthwhile noting that Ohio employers initiated 46 mass layoffs in February resulting in 4,142 initial claims. In the year earlier period, there were the same 46 mass layoffs with 4,097 lost jobs. Yesterday, we discussed that the employment picture in Illinois is stuck in neutral, and the same can be stated for Ohio.
It is also worth noting that the Conference Board’s Help-Wanted Index is also stuck in neutral. The Index registered 40 last month and in the year earlier period it was 41. As the Conference Board’s chief economist Ken Goldstein noted, “consumers have grown more concerned about why continued increases in industrial production and GDP have generated only meager job increases.
There needs to be an analysis focusing on the differentiation between job creation and the decline in jobless claims. As the Center on Budget and Policy Priorities observed, the decline in jobless claims is the result of unemployed workers exhausting their eligibility for benefits. This is a topic we have discussed since December 21. The Center’s report indicated that 1.1 million unemployed workers will have exhausted their benefits in the period from December 21 through the end of March. Therefore, they were dropped from the unemployment rolls. We know that 1.1 million jobs have not been created in this period. In sum, taking into account layoffs, mass layoffs, individuals losing their unemployment benefits, and discouraged workers leaving the labor force, there has been a net job loss at least since December 21. Whether the BLS states 1 employee, 100 employees, 1,000 employees, 100,000 employees, or even 1 million workers are added to the payrolls, the economy has still experienced rising unemployment. You can listen to the spins by members of the Administration, Congress, and the BLS. The numbers will not change with the bullshit. Isaac Shapiro of the Center on Budget and Policy Priorities stated “in no other comparable period on record have so many individuals exhausted their regular benefits and gone without additional aid.”
New York Federal Reserve President Timothy Geithner: “The current deterioration in the U.S. fiscal position and the acute decline in the net national savings rate represent risks to the financial system and the economy as a whole.”
For the fourth quarter, the personal consumption expenditure (PCE) price deflator was revised from 0.7% annual rate to 1%.
Forecasts for the gain in March payrolls range from a low of 100,000 to a high of 225,000. Of course, no one seems to be concerned by the hundreds of thousands dropping off the unemployment rolls in March due to the loss of benefits. This is worse than looking at the world through rose-colored glasses. It’s creating numbers that have no basis in fact. One could say they are on the order of the perceived threat from WMD that ceased to exist in the early 1990s. Jobs have been destroyed and eliminated and so were the WMD. Many will take issue with this analogy; however, those that do probably have a job and most likely don’t have a family member or a friend who’ve been killed in the war in Iraq.
Fed Governor Donald Kohn: “Slack in resource utilization will probably be eliminated only gradually, so competition for jobs and for market share should remain intense…I think policy action can await convincing evidence that labor market slack is on a declining trend and that inflation is no longer decreasing.”
3/25/04 Stuck In Neutral
Michigan’s 6.6% unemployment rate remained unchanged in February. In visiting with Bruce Weaver, acting director of the Michigan Department of Labor and Economic Growth’s Office of Labor Market Information, I quickly learned that Michigan’s labor market is stuck in neutral. Bruce stated “most of our indicators show the job market remains pretty flat and hasn’t shown any signs of accelerating. We haven’t had much change from this time a year ago. It’s clear that employers across most industries appear to still be remaining cautious about adding additional workers to their payrolls.” In the latest survey of companies, the number of payroll jobs in Michigan declined by 8,000 to about 4.37 million. Even when looking at the more optimistic household survey, the number of working people rose by just 1,000 in February. Peter Morici is a business professor at the University of Maryland and a former chief economist for the U.S. International Trade Commission. Morici observed “a lot of people are sitting at home. A lot of people have evaporated into the gray economy. We’ve had a decline in real wages last year. So I would say that the job market is kind of sick.”
According to the California State Employment Development Department, from January 2001 through January 2004, the Bay Area lost 391,000 jobs, nearly equal to the entire population of Oakland. That represents an 11% decline in the job totals for the nine-county region. By comparison, from January 1990 through January 1993, the Los Angeles area lost 408,000 jobs, a drop of 9.9% according to the EDD data. Dan Van Dyke, an economist with Berkeley-based Rosen Consulting Group, stated “the Bay Area is certainly having one of the worst regional declines anywhere in the United States since the end of World War II. It’s hard to really comprehend how severe the decline has been in the Bay Area.”
According to the latest UCLA Anderson Forecast, California’s payroll growth within the next two or three months should run around 100,000 to 200,000 new jobs a month. That would be welcome news. There has been a net outflow of people moving from California to other states. The weak job market has been the main reason for the exodus. I believe the California economy has begun to level out, and is now in the neutral zone. That improvement does not equate to a sharp upturn in employment. Bruce Weaver could probably tell UCLA economists a thing or two.
Fiesta Food is closing 4 Wisconsin grocery stores and laying off 194 people on April 1. Arista Records is being folded into RCA Records. About 110 staffers were let go yesterday. Manulife Financial’s acquisition of John Hancock Financial will close this Spring. After the merger, there will be about 2,000 job losses worldwide, and a great portion of Hancock’s flagship tower in Boston’s Copley Square will be leased. Boston attorney Jason Adkins stated “it’s going to mean a lot of professional jobs will be lost, and a primary financial institution will be lost. That hub of activity is gone.” Human Genome Sciences plans to lay off 200 workers, or 20% of its workforce.
Working America has 125,000 members. It is a recently formed advocacy group for non-union workers, and it is one of 64 affiliates with the AFL-CIO. They are co-sponsoring with the AFL-CIO a bus tour throughout the U.S. to highlight the plight of workers who have been passed over by the economic recovery. Karen Nussbaum, director of Working America, stated “life is getting harder for most working people and that part of the story just was not getting told.”
April 1 is traditionally April Fool’s Day. This April 1 will have another side to it. The organization called Democracy Means You announced that more than 100,000 Americans are projected to participate in the National “I’m Embarrassed By My President” Day on April 1. They will be wearing brown ribbons, arm bands , or clothing to protest the spin, lies, manipulations, misrepresentations, and mismanagement of the Bush administration, stated the founder of Democracy Means You.
According to a recent poll by the Cherenson Group, 85% of Americans are more concerned with trust and honesty than with political viewpoint when considering for whom to vote. In addition, they view trust as more important than price and quality when deciding with whom to do business or invest.
The ECB will consider an interest rate cut at their April 1 meeting.
The Bundesbank president stated the German economic recovery this year is “somewhat weaker” than expected.
The State Street Investor Confidence Index dropped 1.7 points to 92.2 in March. The high point was 109 in December. The Index has fallen for three consecutive months.
According to Consolidated Credit Counseling Services, household debt grew 10.4% in 2003, the biggest increase since 1987. Net savings in the economy fell 38%. According to this organization’s latest survey, 63% of the 5,000 respondents stated debts are making their home lives unhappy and 43% have a debt to income ratio of 50% or more. In addition, 58% state their credit cards are at or near their maximum credit limit, 62% do not have a savings account, 37% took cash advances from one card to make payments on another card, and 59% only pay the minimum amount due on credit cards each month.
In February, demand for military aircraft surged 61% and for civilian aircraft about 34% and for autos 5%. Excluding the transportation sector, durable goods orders declined 0.3% in February, the first decline in three months. Mat Johnson, chief economist at Quantit Economic Group, stated “business investment spending will be moderate this quarter.”
Residential construction accounts for 5% of domestic GDP. Purchases of new homes have exceeded an annual rate of 1 million for 18 of the past 19 months.
Michigan’s 6.6% unemployment rate remained unchanged in February. In visiting with Bruce Weaver, acting director of the Michigan Department of Labor and Economic Growth’s Office of Labor Market Information, I quickly learned that Michigan’s labor market is stuck in neutral. Bruce stated “most of our indicators show the job market remains pretty flat and hasn’t shown any signs of accelerating. We haven’t had much change from this time a year ago. It’s clear that employers across most industries appear to still be remaining cautious about adding additional workers to their payrolls.” In the latest survey of companies, the number of payroll jobs in Michigan declined by 8,000 to about 4.37 million. Even when looking at the more optimistic household survey, the number of working people rose by just 1,000 in February. Peter Morici is a business professor at the University of Maryland and a former chief economist for the U.S. International Trade Commission. Morici observed “a lot of people are sitting at home. A lot of people have evaporated into the gray economy. We’ve had a decline in real wages last year. So I would say that the job market is kind of sick.”
According to the California State Employment Development Department, from January 2001 through January 2004, the Bay Area lost 391,000 jobs, nearly equal to the entire population of Oakland. That represents an 11% decline in the job totals for the nine-county region. By comparison, from January 1990 through January 1993, the Los Angeles area lost 408,000 jobs, a drop of 9.9% according to the EDD data. Dan Van Dyke, an economist with Berkeley-based Rosen Consulting Group, stated “the Bay Area is certainly having one of the worst regional declines anywhere in the United States since the end of World War II. It’s hard to really comprehend how severe the decline has been in the Bay Area.”
According to the latest UCLA Anderson Forecast, California’s payroll growth within the next two or three months should run around 100,000 to 200,000 new jobs a month. That would be welcome news. There has been a net outflow of people moving from California to other states. The weak job market has been the main reason for the exodus. I believe the California economy has begun to level out, and is now in the neutral zone. That improvement does not equate to a sharp upturn in employment. Bruce Weaver could probably tell UCLA economists a thing or two.
Fiesta Food is closing 4 Wisconsin grocery stores and laying off 194 people on April 1. Arista Records is being folded into RCA Records. About 110 staffers were let go yesterday. Manulife Financial’s acquisition of John Hancock Financial will close this Spring. After the merger, there will be about 2,000 job losses worldwide, and a great portion of Hancock’s flagship tower in Boston’s Copley Square will be leased. Boston attorney Jason Adkins stated “it’s going to mean a lot of professional jobs will be lost, and a primary financial institution will be lost. That hub of activity is gone.” Human Genome Sciences plans to lay off 200 workers, or 20% of its workforce.
Working America has 125,000 members. It is a recently formed advocacy group for non-union workers, and it is one of 64 affiliates with the AFL-CIO. They are co-sponsoring with the AFL-CIO a bus tour throughout the U.S. to highlight the plight of workers who have been passed over by the economic recovery. Karen Nussbaum, director of Working America, stated “life is getting harder for most working people and that part of the story just was not getting told.”
April 1 is traditionally April Fool’s Day. This April 1 will have another side to it. The organization called Democracy Means You announced that more than 100,000 Americans are projected to participate in the National “I’m Embarrassed By My President” Day on April 1. They will be wearing brown ribbons, arm bands , or clothing to protest the spin, lies, manipulations, misrepresentations, and mismanagement of the Bush administration, stated the founder of Democracy Means You.
According to a recent poll by the Cherenson Group, 85% of Americans are more concerned with trust and honesty than with political viewpoint when considering for whom to vote. In addition, they view trust as more important than price and quality when deciding with whom to do business or invest.
The ECB will consider an interest rate cut at their April 1 meeting.
The Bundesbank president stated the German economic recovery this year is “somewhat weaker” than expected.
The State Street Investor Confidence Index dropped 1.7 points to 92.2 in March. The high point was 109 in December. The Index has fallen for three consecutive months.
According to Consolidated Credit Counseling Services, household debt grew 10.4% in 2003, the biggest increase since 1987. Net savings in the economy fell 38%. According to this organization’s latest survey, 63% of the 5,000 respondents stated debts are making their home lives unhappy and 43% have a debt to income ratio of 50% or more. In addition, 58% state their credit cards are at or near their maximum credit limit, 62% do not have a savings account, 37% took cash advances from one card to make payments on another card, and 59% only pay the minimum amount due on credit cards each month.
In February, demand for military aircraft surged 61% and for civilian aircraft about 34% and for autos 5%. Excluding the transportation sector, durable goods orders declined 0.3% in February, the first decline in three months. Mat Johnson, chief economist at Quantit Economic Group, stated “business investment spending will be moderate this quarter.”
Residential construction accounts for 5% of domestic GDP. Purchases of new homes have exceeded an annual rate of 1 million for 18 of the past 19 months.
Wednesday, March 24, 2004
3/24/04 Walking The Plank
Yesterday, the ABA announced that credit card delinquencies jumped to 4.43% in the fourth quarter of 2003, up from 4.09% in the third quarter. According to Federal Reserve data, consumers have built up about $745 billion in credit debt. A survey by Consumer Action indicated that time penalty fees are rising while minimum payment requirements are falling. In addition, the survey showed that consumers who only make the minimum payment end up paying more interest. About one month ago, Greenspan provided reassuring rhetoric to Americans about their increasing debt load. Unfortunately, those words reflected a lack of reality. One cannot focus on the decline in consumer lending delinquencies while ignoring the rise in credit card delinquencies. In addition, nearly one-third of households saw the debt ratio for renters rise to 29% of their fourth-quarter income in 2003 from 22% a year earlier. According to cardweb.com, average U.S. credit card debt is $9,205 and 42% of Americans are making minimum or no payments on their credit-card balances. Too many Americans are walking the plank. Fortunately, you won’t have to listen to Greenspan’s advice much longer. Last year about 9 million people sought help with debt. That number grows yearly.
In a February public opinion poll conducted by Harris Interactive and the Reputation Institute, 74% of those surveyed described the image of big companies as “not good” or “terrible.” Joy Marie Sever, senior vice president at Harris Interactive, stated “collectively and individually, corporate reputations are declining—a decline that stems from a lack of trust.” A growing number on Main Street see this as a very big problem.
According to the AFL-CIO, Colorado has lost 36,600 manufacturing jobs during the past three years. Steve Adams, president of the AFL-CIO in Colorado, stated “people are getting laid off and they can’t find work, and I think that’s a travesty.”
Washington, D.C.-based American Electronics Association represents 3,000 companies with 1.8 million workers. Their recent report concludes that companies are forced to outsource because of increased global competition. It stated “unfortunately, some workers will be hurt as they lose their jobs in the short run; however, offshore outsourcing is in the long-term competitive interest of the United States, increasing productivity, profits, and GDP.” On the other hand, state Sen. Terry Phillips of Colorado remarked “it’s easy to say it’s a short-term problem. But tell that to the worker who lost his job. Is it a short-term problem for someone who can’t make rent or pay the mortgage?”
Today, PriceWaterhouseCoopers will release its survey of 120 large investors. It will indicate that these investors have a raised concern about potential price drops for commercial buildings, in particular, office properties.
Lewis Platt, former HP CEO: “Formally successful companies did not make gigantic mistakes… the only real mistake they made was to keep doing whatever it was that made them successful for a little to long.”
Houston-based Reliant Resources has eliminated 277 jobs so far this year. In a letter sent this week to the Texas Workforce Commission, the company stated it planned to shut down its operations at a complex where various services are provided to power plants. Reliant expects 194 employees could expect to lose their jobs in late May.
Yesterday, the ABA announced that credit card delinquencies jumped to 4.43% in the fourth quarter of 2003, up from 4.09% in the third quarter. According to Federal Reserve data, consumers have built up about $745 billion in credit debt. A survey by Consumer Action indicated that time penalty fees are rising while minimum payment requirements are falling. In addition, the survey showed that consumers who only make the minimum payment end up paying more interest. About one month ago, Greenspan provided reassuring rhetoric to Americans about their increasing debt load. Unfortunately, those words reflected a lack of reality. One cannot focus on the decline in consumer lending delinquencies while ignoring the rise in credit card delinquencies. In addition, nearly one-third of households saw the debt ratio for renters rise to 29% of their fourth-quarter income in 2003 from 22% a year earlier. According to cardweb.com, average U.S. credit card debt is $9,205 and 42% of Americans are making minimum or no payments on their credit-card balances. Too many Americans are walking the plank. Fortunately, you won’t have to listen to Greenspan’s advice much longer. Last year about 9 million people sought help with debt. That number grows yearly.
In a February public opinion poll conducted by Harris Interactive and the Reputation Institute, 74% of those surveyed described the image of big companies as “not good” or “terrible.” Joy Marie Sever, senior vice president at Harris Interactive, stated “collectively and individually, corporate reputations are declining—a decline that stems from a lack of trust.” A growing number on Main Street see this as a very big problem.
According to the AFL-CIO, Colorado has lost 36,600 manufacturing jobs during the past three years. Steve Adams, president of the AFL-CIO in Colorado, stated “people are getting laid off and they can’t find work, and I think that’s a travesty.”
Washington, D.C.-based American Electronics Association represents 3,000 companies with 1.8 million workers. Their recent report concludes that companies are forced to outsource because of increased global competition. It stated “unfortunately, some workers will be hurt as they lose their jobs in the short run; however, offshore outsourcing is in the long-term competitive interest of the United States, increasing productivity, profits, and GDP.” On the other hand, state Sen. Terry Phillips of Colorado remarked “it’s easy to say it’s a short-term problem. But tell that to the worker who lost his job. Is it a short-term problem for someone who can’t make rent or pay the mortgage?”
Today, PriceWaterhouseCoopers will release its survey of 120 large investors. It will indicate that these investors have a raised concern about potential price drops for commercial buildings, in particular, office properties.
Lewis Platt, former HP CEO: “Formally successful companies did not make gigantic mistakes… the only real mistake they made was to keep doing whatever it was that made them successful for a little to long.”
Houston-based Reliant Resources has eliminated 277 jobs so far this year. In a letter sent this week to the Texas Workforce Commission, the company stated it planned to shut down its operations at a complex where various services are provided to power plants. Reliant expects 194 employees could expect to lose their jobs in late May.
Tuesday, March 23, 2004
3/23/04 Maintaining Balance
All investing eyes will be focused on this morning?s higher opening for equity prices. It is not for me to suggest what is important to each individual. At the same time, it might be appropriate to turn our attention to yesterday?s speech given by Michael Moskow, president to the Federal Reserve Bank of Chicago, to risk managers in the Windy City. He remarked that, while the dollar?s decline and increase in raw material costs may cause prices to rise, these forces would be offset by an ?elevated? unemployment level and spare capacity at factories. He stated ?we believe the effect of slack resources remains predominant at this time, and we expect inflation to remain low this year?inflation rates are unlikely to increase significantly.? He is not worried about higher fuel costs hurting companies or consumers because ?energy is a smaller and smaller percentage of our GDP each year.? In the past 7 weeks oil prices have increased 15%. That?s nothing to be ignored.
If flat-rolled and other types of steel have more than doubled in price in the past year, who is to pay for these increases? Delphi Corp., the world?s largest auto parts manufacturer, won a TRO this month against a major supplier from passing along increased steel costs. Not every company has this clout. Up to this point, manufacturers have absorbed most of the increased prices. This cannot continue forever. Richard Yamarone, director of economic research at Argus Rresearch, stated ultimately, cutting jobs and increasing productivity is the only way many companies can survive in the effort to offset rising costs.
In a recent report, Cutting Edge Information reported that more than 90% of U.S. companies outsource at least one activity, turning to trusted suppliers to reduce overhead and exposure-shifting spending from riskier internal divisions and capital budgets to external contracts.
Because of declining production rates in the 747 and 767 lines in Everett, Washington, Boeing sent out more than 300 layoff notices on Friday. The company had a workforce of 80,000 in Washington in 2001. That number is now just above the 53,000 level. Boeing is in for more labor trouble. By a 3 to 1 margin, the technical and professional workers at Boeing?s Wichita plant voted yesterday to turn down the company?s latest contract offer. About 3,450 union workers at the Wichita facility have been working under an extension since a 3-year contract expired Feb. 19.
Microsoft faces a $613 million fine from the EU plus additional remedies requiring the company to share more information, including intellectual property, and to curb anti-competitive practices in violation of EU law. This is not a black and white situation. There will be give and take and everyone will get their pound of flesh. Right now it?s fuel for the media. Microsoft stockholders have seen the value of their shares dip to new yearly lows. For long term holders, this is but one more buying opportunity. The company will be around long after the EU is emasculated.
Siemens reported yesterday that they are planning on shifting more than 10,000 jobs in Germany to lower-cost countries in Asia and Eastern Europe.
All investing eyes will be focused on this morning?s higher opening for equity prices. It is not for me to suggest what is important to each individual. At the same time, it might be appropriate to turn our attention to yesterday?s speech given by Michael Moskow, president to the Federal Reserve Bank of Chicago, to risk managers in the Windy City. He remarked that, while the dollar?s decline and increase in raw material costs may cause prices to rise, these forces would be offset by an ?elevated? unemployment level and spare capacity at factories. He stated ?we believe the effect of slack resources remains predominant at this time, and we expect inflation to remain low this year?inflation rates are unlikely to increase significantly.? He is not worried about higher fuel costs hurting companies or consumers because ?energy is a smaller and smaller percentage of our GDP each year.? In the past 7 weeks oil prices have increased 15%. That?s nothing to be ignored.
If flat-rolled and other types of steel have more than doubled in price in the past year, who is to pay for these increases? Delphi Corp., the world?s largest auto parts manufacturer, won a TRO this month against a major supplier from passing along increased steel costs. Not every company has this clout. Up to this point, manufacturers have absorbed most of the increased prices. This cannot continue forever. Richard Yamarone, director of economic research at Argus Rresearch, stated ultimately, cutting jobs and increasing productivity is the only way many companies can survive in the effort to offset rising costs.
In a recent report, Cutting Edge Information reported that more than 90% of U.S. companies outsource at least one activity, turning to trusted suppliers to reduce overhead and exposure-shifting spending from riskier internal divisions and capital budgets to external contracts.
Because of declining production rates in the 747 and 767 lines in Everett, Washington, Boeing sent out more than 300 layoff notices on Friday. The company had a workforce of 80,000 in Washington in 2001. That number is now just above the 53,000 level. Boeing is in for more labor trouble. By a 3 to 1 margin, the technical and professional workers at Boeing?s Wichita plant voted yesterday to turn down the company?s latest contract offer. About 3,450 union workers at the Wichita facility have been working under an extension since a 3-year contract expired Feb. 19.
Microsoft faces a $613 million fine from the EU plus additional remedies requiring the company to share more information, including intellectual property, and to curb anti-competitive practices in violation of EU law. This is not a black and white situation. There will be give and take and everyone will get their pound of flesh. Right now it?s fuel for the media. Microsoft stockholders have seen the value of their shares dip to new yearly lows. For long term holders, this is but one more buying opportunity. The company will be around long after the EU is emasculated.
Siemens reported yesterday that they are planning on shifting more than 10,000 jobs in Germany to lower-cost countries in Asia and Eastern Europe.
3/23/04 Maintaining Balance
All investing eyes will be focused on this morning’s higher opening for equity prices. It is not for me to suggest what is important to each individual. At the same time, it might be appropriate to turn our attention to yesterday’s speech given by Michael Moskow, president to the Federal Reserve Bank of Chicago, to risk managers in the Windy City. He remarked that, while the dollar’s decline and increase in raw material costs may cause prices to rise, these forces would be offset by an “elevated” unemployment level and spare capacity at factories. He stated “we believe the effect of slack resources remains predominant at this time, and we expect inflation to remain low this year…inflation rates are unlikely to increase significantly.” He is not worried about higher fuel costs hurting companies or consumers because “energy is a smaller and smaller percentage of our GDP each year.” In the past 7 weeks oil prices have increased 15%. That’s nothing to be ignored.
If flat-rolled and other types of steel have more than doubled in price in the past year, who is to pay for these increases? Delphi Corp., the world’s largest auto parts manufacturer, won a TRO this month against a major supplier from passing along increased steel costs. Not every company has this clout. Up to this point, manufacturers have absorbed most of the increased prices. This cannot continue forever. Richard Yamarone, director of economic research at Argus Rresearch, stated ultimately, cutting jobs and increasing productivity is the only way many companies can survive in the effort to offset rising costs.
In a recent report, Cutting Edge Information reported that more than 90% of U.S. companies outsource at least one activity, turning to trusted suppliers to reduce overhead and exposure-shifting spending from riskier internal divisions and capital budgets to external contracts.
Because of declining production rates in the 747 and 767 lines in Everett, Washington, Boeing sent out more than 300 layoff notices on Friday. The company had a workforce of 80,000 in Washington in 2001. That number is now just above the 53,000 level. Boeing is in for more labor trouble. By a 3 to 1 margin, the technical and professional workers at Boeing’s Wichita plant voted yesterday to turn down the company’s latest contract offer. About 3,450 union workers at the Wichita facility have been working under an extension since a 3-year contract expired Feb. 19.
Microsoft faces a $613 million fine from the EU plus additional remedies requiring the company to share more information, including intellectual property, and to curb anti-competitive practices in violation of EU law. This is not a black and white situation. There will be give and take and everyone will get their pound of flesh. Right now it’s fuel for the media. Microsoft stockholders have seen the value of their shares dip to new yearly lows. For long term holders, this is but one more buying opportunity. The company will be around long after the EU is emasculated.
Siemens reported yesterday that they are planning on shifting more than 10,000 jobs in Germany to lower-cost countries in Asia and Eastern Europe.
All investing eyes will be focused on this morning’s higher opening for equity prices. It is not for me to suggest what is important to each individual. At the same time, it might be appropriate to turn our attention to yesterday’s speech given by Michael Moskow, president to the Federal Reserve Bank of Chicago, to risk managers in the Windy City. He remarked that, while the dollar’s decline and increase in raw material costs may cause prices to rise, these forces would be offset by an “elevated” unemployment level and spare capacity at factories. He stated “we believe the effect of slack resources remains predominant at this time, and we expect inflation to remain low this year…inflation rates are unlikely to increase significantly.” He is not worried about higher fuel costs hurting companies or consumers because “energy is a smaller and smaller percentage of our GDP each year.” In the past 7 weeks oil prices have increased 15%. That’s nothing to be ignored.
If flat-rolled and other types of steel have more than doubled in price in the past year, who is to pay for these increases? Delphi Corp., the world’s largest auto parts manufacturer, won a TRO this month against a major supplier from passing along increased steel costs. Not every company has this clout. Up to this point, manufacturers have absorbed most of the increased prices. This cannot continue forever. Richard Yamarone, director of economic research at Argus Rresearch, stated ultimately, cutting jobs and increasing productivity is the only way many companies can survive in the effort to offset rising costs.
In a recent report, Cutting Edge Information reported that more than 90% of U.S. companies outsource at least one activity, turning to trusted suppliers to reduce overhead and exposure-shifting spending from riskier internal divisions and capital budgets to external contracts.
Because of declining production rates in the 747 and 767 lines in Everett, Washington, Boeing sent out more than 300 layoff notices on Friday. The company had a workforce of 80,000 in Washington in 2001. That number is now just above the 53,000 level. Boeing is in for more labor trouble. By a 3 to 1 margin, the technical and professional workers at Boeing’s Wichita plant voted yesterday to turn down the company’s latest contract offer. About 3,450 union workers at the Wichita facility have been working under an extension since a 3-year contract expired Feb. 19.
Microsoft faces a $613 million fine from the EU plus additional remedies requiring the company to share more information, including intellectual property, and to curb anti-competitive practices in violation of EU law. This is not a black and white situation. There will be give and take and everyone will get their pound of flesh. Right now it’s fuel for the media. Microsoft stockholders have seen the value of their shares dip to new yearly lows. For long term holders, this is but one more buying opportunity. The company will be around long after the EU is emasculated.
Siemens reported yesterday that they are planning on shifting more than 10,000 jobs in Germany to lower-cost countries in Asia and Eastern Europe.
Monday, March 22, 2004
3/22/04 Houston, We Have A Problem
The world is consuming 80 million barrels of oil a day. The average monthly price of crude oil, now $38+ per barrel, is the highest since oil futures started trading 21 years ago. You would think that people in Texas would be as happy as a wallowing pig without a care in the world. A recent Texas poll found 65% in the state had a gloomy outlook. The Houston economy is highly dependent on the energy industry; however, energy companies are reluctant to expand exploration and production because many worry the high prices may not be sustainable. Hence, John Markson, managing director of Towers Perrin, a Houston HR consulting firm, stated “there’s still a lot of uncertainty in the air- like the war in Iraq.” A 52-year-old Houston industrial engineer, who has been unemployed for 16 months, remarked “the jobs have just disappeared. They’ve just dried up.” Only 35% of those polled reported that they’re better off today than a year ago. I wonder if the man who lives on a ranch in Crawford, Texas is aware of that.
Today, Michigan Governor Jennifer Granholm will sign a pair of executive directives to prohibit the state from contracting with businesses that would do the work in foreign countries. In addition, companies now doing business with the state would be required to say who is doing the contracted work and where it is being done. Since 2000, 300,000 jobs have been lost in Michigan, with 170,000 of them manufacturing positions.
Matters are coming to a dicey head in Maryland. The state’s House Speaker Michael Busch will ask Democrats to endorse an increase in the state sales tax from 5 to 6% and the creation of a higher tax bracket for those earning more than $200,000 yearly. Gov. Ehrlich has already proposed and/or enacted $700 million in new taxes and fees since taking office, including the $187 million property tax increase, a $150 million vehicle registration fee increase, and a $60 million increase in corporate filing fees. In my view, Maryland lump crabmeat is not enough of an attraction to live in this state.
The CBOE volatility index is called the VIX, a math formula based on put and call option prices for the S&P 500 Index. Starting Friday, the CBOE will begin dealing in futures contracts on the VIX. In a couple of months, there will be futures tied to variance readings the S&P registers over one-and three-month intervals. Both are tools that should appeal to serious investors.
Last month, UC Berkeley economist Cynthia Kroll observed that 15.7% of the Silicon Valley employees were in vulnerable lines of work. It should be noted that Silicon Valley has already lost 18% of its jobs. This is not business as usual. The unemployed know this. The voters know this. The question you have to ask yourself as an investor is can you handle the truth? Telling me what it’s been like in the 20th century misses the mark. That and a buck and a quarter will get you on the bus—to palookaville.
The world is consuming 80 million barrels of oil a day. The average monthly price of crude oil, now $38+ per barrel, is the highest since oil futures started trading 21 years ago. You would think that people in Texas would be as happy as a wallowing pig without a care in the world. A recent Texas poll found 65% in the state had a gloomy outlook. The Houston economy is highly dependent on the energy industry; however, energy companies are reluctant to expand exploration and production because many worry the high prices may not be sustainable. Hence, John Markson, managing director of Towers Perrin, a Houston HR consulting firm, stated “there’s still a lot of uncertainty in the air- like the war in Iraq.” A 52-year-old Houston industrial engineer, who has been unemployed for 16 months, remarked “the jobs have just disappeared. They’ve just dried up.” Only 35% of those polled reported that they’re better off today than a year ago. I wonder if the man who lives on a ranch in Crawford, Texas is aware of that.
Today, Michigan Governor Jennifer Granholm will sign a pair of executive directives to prohibit the state from contracting with businesses that would do the work in foreign countries. In addition, companies now doing business with the state would be required to say who is doing the contracted work and where it is being done. Since 2000, 300,000 jobs have been lost in Michigan, with 170,000 of them manufacturing positions.
Matters are coming to a dicey head in Maryland. The state’s House Speaker Michael Busch will ask Democrats to endorse an increase in the state sales tax from 5 to 6% and the creation of a higher tax bracket for those earning more than $200,000 yearly. Gov. Ehrlich has already proposed and/or enacted $700 million in new taxes and fees since taking office, including the $187 million property tax increase, a $150 million vehicle registration fee increase, and a $60 million increase in corporate filing fees. In my view, Maryland lump crabmeat is not enough of an attraction to live in this state.
The CBOE volatility index is called the VIX, a math formula based on put and call option prices for the S&P 500 Index. Starting Friday, the CBOE will begin dealing in futures contracts on the VIX. In a couple of months, there will be futures tied to variance readings the S&P registers over one-and three-month intervals. Both are tools that should appeal to serious investors.
Last month, UC Berkeley economist Cynthia Kroll observed that 15.7% of the Silicon Valley employees were in vulnerable lines of work. It should be noted that Silicon Valley has already lost 18% of its jobs. This is not business as usual. The unemployed know this. The voters know this. The question you have to ask yourself as an investor is can you handle the truth? Telling me what it’s been like in the 20th century misses the mark. That and a buck and a quarter will get you on the bus—to palookaville.
Sunday, March 21, 2004
3/21/04 Michael Buble And The Real Deal
Michael’s last name is pronounced Bub-Lee. He is a crooner who comes from Vancouver, British Columbia. With only one album, Michael is not well known. On the other hand, he has been nominated for two Juno awards, for album of the year and new artist of the year. The Juno is Canada’s answer to the Grammy. He is the real deal and soon will be music to the ears of millions in the United States.
The real deal in the upcoming election is not about terror. It’s about loss of jobs. All the money spent on ads will not produce one job. In the 2000 election, Bush won Ohio and its 21 electoral votes by a margin of 165,000 votes. Since taking office, the BLS figures show Ohio has lost 265,000 votes. Bush won Missouri’s 11 electoral votes by 79,000 votes, roughly the same number of jobs lost during his presidency. Since Jan. 2001, New York has lost 286,000 jobs, Illinois has lost 165,000 jobs, California has lost 225,000 jobs, Michigan lost over 82,000 jobs just in the past year, and then there’s Pennsylvania etc. All the money spent on polling will not add one job. Kerry will win the electoral college vote. The popular vote is merely a distraction.
Wells Fargo is the nation’s largest agricultural lender. Michael Swanson is the bank’s chief economist responsible for analysis and forecasting on crops and livestock. He stated “I think we are in a good spot for row crops this year and next year in terms of prices being offered relative to costs. I’m bullish on supply structure, but I’m not bullish about prices moving higher.”
Richard Clarke was an advisor to four presidents during his 30 years in government service. Until February 2003, he was Bush’s top official on counter-terrorism and headed a cybersecurity board. Clarke told CBS that “I find it outrageous that the president is running for re-election on the grounds that he’s done such great things about terrorism. He ignored it. He ignored terrorism for months, when maybe we could have done something to stop 9/11.” Clarke maintains that, Bush’s decision to invade Iraq, strengthened terror groups.
Lao-tzu: “When the armies are mobilized and issues are joined, the man who is sorry over the fact will win.”
According to the BLS, the nation’s labor force grew at an average annual rate of 1.6% between 1950 and 2000 but is projected to grow at just 0.6% per year over the next 50 years. The annual labor growth rate will plummet to about 0.2% from 2015 to 2025 as the boomers begin to retire. According to the GAO, between 2008 and 2030, roughly 76 million baby boomers will leave the workforce but only 48 million workers in Generation X will available to replace them. Some economists opine that, other things being equal, lower growth in labor supply means less economic growth and lower standards of living. Some labor market analysts believe that, as the older age groups increase in size, and when people reach the age of 55, the rate at which they participate in the labor force begins to decline. Balancing that believe is the economic insecurity experienced by many seniors. Those on fixed income have been penalized by the record low interest rates, and this has contributed recently to more seniors in the labor force. To create a more advantageous structure, employers are finding that a smaller workforce requires less capital, even after accounting for increased investment in machinery. The net effect is to increase productivity by improving work processes so employers need fewer people to do the same amount of work. One worker nearing retirement age is Alan Greenspan. He remarked that “economists understand very little about how technological progress occurs, and research about the effects of aging populations on technological innovation has been sparse."
An economic recession is technically defined as two consecutive quarterly declines in the GDP. We had a third quarter GDP that was off the charts, and the fourth quarter results were very strong but they declined almost 50% from the prior period. If the first quarter GDP were less than 4.1%, then this would qualify as a recession. Naturally, this would be ridiculous. Therefore, statistics by themselves can be misleading. On the other hand, we need to more closely examine the job losses; the true unemployment rate; the hours worked in each week; the wage picture after the taxes paid at all levels of government; overproduction; loss of pricing power; deflationary pressures from outside the U.S. in both services provided and goods delivered; the impact from the twin tower deficits and the fallout on the dollar; tariffs; environmental standards; inflationary healthcare costs and their impact on Medicare, Medicaid, and hiring; the Social Security time bomb; and the increasing number of Americans without health insurance. As our examination continues, we might conclude that it is increasingly difficult to avoid a serious economic dislocation in the United States. That could be the real deal.
Michael’s last name is pronounced Bub-Lee. He is a crooner who comes from Vancouver, British Columbia. With only one album, Michael is not well known. On the other hand, he has been nominated for two Juno awards, for album of the year and new artist of the year. The Juno is Canada’s answer to the Grammy. He is the real deal and soon will be music to the ears of millions in the United States.
The real deal in the upcoming election is not about terror. It’s about loss of jobs. All the money spent on ads will not produce one job. In the 2000 election, Bush won Ohio and its 21 electoral votes by a margin of 165,000 votes. Since taking office, the BLS figures show Ohio has lost 265,000 votes. Bush won Missouri’s 11 electoral votes by 79,000 votes, roughly the same number of jobs lost during his presidency. Since Jan. 2001, New York has lost 286,000 jobs, Illinois has lost 165,000 jobs, California has lost 225,000 jobs, Michigan lost over 82,000 jobs just in the past year, and then there’s Pennsylvania etc. All the money spent on polling will not add one job. Kerry will win the electoral college vote. The popular vote is merely a distraction.
Wells Fargo is the nation’s largest agricultural lender. Michael Swanson is the bank’s chief economist responsible for analysis and forecasting on crops and livestock. He stated “I think we are in a good spot for row crops this year and next year in terms of prices being offered relative to costs. I’m bullish on supply structure, but I’m not bullish about prices moving higher.”
Richard Clarke was an advisor to four presidents during his 30 years in government service. Until February 2003, he was Bush’s top official on counter-terrorism and headed a cybersecurity board. Clarke told CBS that “I find it outrageous that the president is running for re-election on the grounds that he’s done such great things about terrorism. He ignored it. He ignored terrorism for months, when maybe we could have done something to stop 9/11.” Clarke maintains that, Bush’s decision to invade Iraq, strengthened terror groups.
Lao-tzu: “When the armies are mobilized and issues are joined, the man who is sorry over the fact will win.”
According to the BLS, the nation’s labor force grew at an average annual rate of 1.6% between 1950 and 2000 but is projected to grow at just 0.6% per year over the next 50 years. The annual labor growth rate will plummet to about 0.2% from 2015 to 2025 as the boomers begin to retire. According to the GAO, between 2008 and 2030, roughly 76 million baby boomers will leave the workforce but only 48 million workers in Generation X will available to replace them. Some economists opine that, other things being equal, lower growth in labor supply means less economic growth and lower standards of living. Some labor market analysts believe that, as the older age groups increase in size, and when people reach the age of 55, the rate at which they participate in the labor force begins to decline. Balancing that believe is the economic insecurity experienced by many seniors. Those on fixed income have been penalized by the record low interest rates, and this has contributed recently to more seniors in the labor force. To create a more advantageous structure, employers are finding that a smaller workforce requires less capital, even after accounting for increased investment in machinery. The net effect is to increase productivity by improving work processes so employers need fewer people to do the same amount of work. One worker nearing retirement age is Alan Greenspan. He remarked that “economists understand very little about how technological progress occurs, and research about the effects of aging populations on technological innovation has been sparse."
An economic recession is technically defined as two consecutive quarterly declines in the GDP. We had a third quarter GDP that was off the charts, and the fourth quarter results were very strong but they declined almost 50% from the prior period. If the first quarter GDP were less than 4.1%, then this would qualify as a recession. Naturally, this would be ridiculous. Therefore, statistics by themselves can be misleading. On the other hand, we need to more closely examine the job losses; the true unemployment rate; the hours worked in each week; the wage picture after the taxes paid at all levels of government; overproduction; loss of pricing power; deflationary pressures from outside the U.S. in both services provided and goods delivered; the impact from the twin tower deficits and the fallout on the dollar; tariffs; environmental standards; inflationary healthcare costs and their impact on Medicare, Medicaid, and hiring; the Social Security time bomb; and the increasing number of Americans without health insurance. As our examination continues, we might conclude that it is increasingly difficult to avoid a serious economic dislocation in the United States. That could be the real deal.
Saturday, March 20, 2004
3/20/04 High Value Target: The Dollar
Niccolo Machiavelli: “There is nothing more difficult to take in hand, more perilous to conduct or more uncertain in its success than to take the lead in the introduction of a new order of things.”
The Mainichi Shimbun reported in its Friday editions that Japanese monetary authorities have decided to scale back intervention in world currency markets. Officials in Tokyo have decided that massive yen-selling is no longer necessary, the paper stated, attributing this to “an international monetary source” believed to be someone at the Ministry of Finance. For almost two years I have strongly recommended diverting one’s dollar holdings into the New Zealand dollar and, secondarily, into the Swiss franc. Over this time frame, the dollar has depreciated in value against 15 of the world’s leading currencies, the lone exception being the Mexican peso. I believe this depreciation could accelerate in the future. The dollar has been, and will continue to be, the world’s high value target.
According to the Labor Department and Datastream, the spread between producer and consumer inflation is near a 28-year high. Russ Koesterich, State Street’s chief North American equity strategist, noted that, since 1948, when the CPI change has been below that of the PPI, earnings growth has slowed to an average of 2% the next 12 months. By comparison, whenever the CPI is above the PPI, earnings growth averages about 8% over the next year.
Charles Hill: “The visibility on the second half of this year is horrendous.”
The Massachusetts Division of Unemployment Assistance reported yesterday that Bay State employers shed another 9,500 payroll jobs in February, the most since February 2003. At the same time, the state’s jobless rate fell to 5.3% from 5.6% in January as thousands gave up looking for jobs and therefore were not counted as unemployed. David Pace, regional economist at Global Insight, stated “we were hoping to see at least a bottoming, and maybe a move forward, but we’re still seeing a deterioration.” Payroll employment in the state has declined in 10 consecutive months. Since February 2001, Massachusetts has lost nearly 220,000 jobs, a decline of 6.5%. Andre Mayer, senior vice president of Associated Industries of Massachusetts observed “we keep seeing signs that we’re going to be creating jobs. We keep hearing from our members that they plan to be adding jobs, but it doesn’t quite happen.”
Meanwhile, the report from Pennsylvania yesterday was that nonfarm jobs in February fell by 2,000 on a seasonally adjusted basis. Since February 2003, total jobs were down 32,500. On average, it took unemployed workers in Pennsylvania longer to find work in 2003. The average number of weeks Pennsylvanians collected unemployment benefits increased by 5.6 weeks from 13.2 weeks in 2001 to 18.8 weeks in 2003.
National City is Ohio’s largest bank. By buying Provident Financial, National City will become the 10th largest bank in the U.S., based on assets. Provident’s CEO told employees in a memo that some duplicate jobs will be eliminated as a result of the merger. The final number has not been determined but sources put the number at 400 to 800 job cuts.
When you think of outsourcing, a foreign country quickly comes to mind. With Duke University it is another story. They sold its 65,000-square-foot hospital laundry to Angelica Corp. That outsourcing move will cost 40 Duke laundry workers their jobs.
A cash crunch has hit a specialty pharmaceutical company, Women First Healthcare. They will eliminate their 44-member pharmaceutical sales force.
According to Ward’s Reports, including this week’s estimates, calendar year North American vehicle output is down 4.1% from like-2003’s pace.
Natasha Humphries, a former employee at Palm Computing, told a California state Senate hearing that “offshoring has created a devastating economic climate, not just among Silicon Valley technical workers, but nationwide. Free trade is not free. The middle class is paying the price.”
The federal Trade Adjustment Assistance (TAA) program funds retraining and health insurance tax credits. It is aimed at manufacturing workers who have lost jobs because of imports or production shifting overseas. There is growing bipartisan momentum to expand the TAA to include workers from service-related fields such as computer software.
Patrick Stafford Kelley, editorial editor page of The Emporia Gazette in Kansas, stated “there are fewer flags on the streets. The first flush of patriotism has ended. People are hunkered down…and wondering when it’s going to end.”
According to the Honolulu Board of Realtors, prices for single-family homes rose 13.4% in 2003 after climbing the year before 11.7%. Single-family homes sold on Oahu last month spent an average of just 23 days on the market, the shortest time since the Board of Realtors started keeping track in 1987. Oahu condos averaged 34 days before a sale last month. On the island of Hawaii, the number of building permits were 22% higher in 2003 compared with the prior year.
Niccolo Machiavelli: “There is nothing more difficult to take in hand, more perilous to conduct or more uncertain in its success than to take the lead in the introduction of a new order of things.”
The Mainichi Shimbun reported in its Friday editions that Japanese monetary authorities have decided to scale back intervention in world currency markets. Officials in Tokyo have decided that massive yen-selling is no longer necessary, the paper stated, attributing this to “an international monetary source” believed to be someone at the Ministry of Finance. For almost two years I have strongly recommended diverting one’s dollar holdings into the New Zealand dollar and, secondarily, into the Swiss franc. Over this time frame, the dollar has depreciated in value against 15 of the world’s leading currencies, the lone exception being the Mexican peso. I believe this depreciation could accelerate in the future. The dollar has been, and will continue to be, the world’s high value target.
According to the Labor Department and Datastream, the spread between producer and consumer inflation is near a 28-year high. Russ Koesterich, State Street’s chief North American equity strategist, noted that, since 1948, when the CPI change has been below that of the PPI, earnings growth has slowed to an average of 2% the next 12 months. By comparison, whenever the CPI is above the PPI, earnings growth averages about 8% over the next year.
Charles Hill: “The visibility on the second half of this year is horrendous.”
The Massachusetts Division of Unemployment Assistance reported yesterday that Bay State employers shed another 9,500 payroll jobs in February, the most since February 2003. At the same time, the state’s jobless rate fell to 5.3% from 5.6% in January as thousands gave up looking for jobs and therefore were not counted as unemployed. David Pace, regional economist at Global Insight, stated “we were hoping to see at least a bottoming, and maybe a move forward, but we’re still seeing a deterioration.” Payroll employment in the state has declined in 10 consecutive months. Since February 2001, Massachusetts has lost nearly 220,000 jobs, a decline of 6.5%. Andre Mayer, senior vice president of Associated Industries of Massachusetts observed “we keep seeing signs that we’re going to be creating jobs. We keep hearing from our members that they plan to be adding jobs, but it doesn’t quite happen.”
Meanwhile, the report from Pennsylvania yesterday was that nonfarm jobs in February fell by 2,000 on a seasonally adjusted basis. Since February 2003, total jobs were down 32,500. On average, it took unemployed workers in Pennsylvania longer to find work in 2003. The average number of weeks Pennsylvanians collected unemployment benefits increased by 5.6 weeks from 13.2 weeks in 2001 to 18.8 weeks in 2003.
National City is Ohio’s largest bank. By buying Provident Financial, National City will become the 10th largest bank in the U.S., based on assets. Provident’s CEO told employees in a memo that some duplicate jobs will be eliminated as a result of the merger. The final number has not been determined but sources put the number at 400 to 800 job cuts.
When you think of outsourcing, a foreign country quickly comes to mind. With Duke University it is another story. They sold its 65,000-square-foot hospital laundry to Angelica Corp. That outsourcing move will cost 40 Duke laundry workers their jobs.
A cash crunch has hit a specialty pharmaceutical company, Women First Healthcare. They will eliminate their 44-member pharmaceutical sales force.
According to Ward’s Reports, including this week’s estimates, calendar year North American vehicle output is down 4.1% from like-2003’s pace.
Natasha Humphries, a former employee at Palm Computing, told a California state Senate hearing that “offshoring has created a devastating economic climate, not just among Silicon Valley technical workers, but nationwide. Free trade is not free. The middle class is paying the price.”
The federal Trade Adjustment Assistance (TAA) program funds retraining and health insurance tax credits. It is aimed at manufacturing workers who have lost jobs because of imports or production shifting overseas. There is growing bipartisan momentum to expand the TAA to include workers from service-related fields such as computer software.
Patrick Stafford Kelley, editorial editor page of The Emporia Gazette in Kansas, stated “there are fewer flags on the streets. The first flush of patriotism has ended. People are hunkered down…and wondering when it’s going to end.”
According to the Honolulu Board of Realtors, prices for single-family homes rose 13.4% in 2003 after climbing the year before 11.7%. Single-family homes sold on Oahu last month spent an average of just 23 days on the market, the shortest time since the Board of Realtors started keeping track in 1987. Oahu condos averaged 34 days before a sale last month. On the island of Hawaii, the number of building permits were 22% higher in 2003 compared with the prior year.
Friday, March 19, 2004
3/19/04 Keeping It Real
Steve Ballmer, Microsoft CEO: “I believe we reached agreement on the issues of the case. But we were unable to agree on principles for new issues that could arise in the future.” The EU will rule that Microsoft is an illegal monopolist. How would they know? They’ve not had one in the EU. They only think they know one in Microsoft. Ballmer met a good deal of their demands. Obviously, that wasn’t good enough. I hope the EU has the patience and money for this battle. They’ll need it.
John Armbrust is a Florida consultant specializing in jet-fuel contracts for the airlines. He remarked “don’t underestimate the ability of the airlines to walk off a cliff together. Almost all of them are pretty vulnerable right now.” Southwest locked in 83% of its fuel purchases through March and hedged some purchases through 2008. The company has spent about $25 million on such hedges for this year. JetBlue probably has the second-best jet-fuel hedged position in the industry.
Yesterday Goldman Sachs economist Jan Hatzius stated “slow growth equals no jobs- perhaps it’s that simple.” Hatzius believes our government mistakenly exaggerated GDP. That’s mistakenly as in misspeak.
Meanwhile, Goldman Sachs told its clients yesterday that the firm expects national payrolls to grow by 160,000 this month. Other economists project a rise to 200,000. I don’t want to explode everyone’s bubble; however, on March 19, it is too early to know. At this time, the data is insufficient and incomplete to make an accurate analysis. There are a couple of thoughts though. In Georgia, for example, their state labor commissioner, Michael Thurmond, stated “you can’t just look at the unemployment rate and get a complete picture of the job market of the economy. While we’re encouraged by the decline in the unemployment rate, job creation remained anemic in February.” In Georgia, about 14.4% of the officially unemployed have been out of work for a half-year or more. For the nation as a whole, about 22% have been out of work for at least 27 weeks. Thurmond observed “I can envision job growth, but we don’t have any objective evidence that it has begun.”
Yesterday the Labor Department reported that U.S. initial jobless claims fell by 6,000 last week. That number was dwarfed by the increase of 47,000 in the number of people continuing to collect state jobless benefits. That number amounted to 3.064 million in the week ended March 6, and was understated by the thousands of workers being dropped weekly from the unemployment rolls due to their benefits not being extended. In addition, the Labor Department stated 33 states and territories reported an increase in new unemployment claims, while 20 reported a decrease. Again, much of the decrease is due to the unemployment benefits not being extended and not to job creation.
On Friday, March 12, Greenspan stated “employment will begin to increase more quickly before long.” On Tuesday, March 16, after the FOMC meeting, the Federal Reserve stated “new hiring was lagging.” What happened in those four days to create such a change in the tone? It’s possible they spoke to the National Federation of Independent Business. The 5.8 million small businesses in the U.S. employ about half of the U.S. workforce. The National Federation’s most recent survey indicated that only 13% of small businesses polled in February plan on hiring new workers, down from 17% in January. That is not too encouraging.
Maybe GDP growth is slowing. The Philadelphia Federal Reserve’s measure of business activity fell to 24.2 in March from 31.4 in February.
GM recalled more than 4 million pickup trucks to replace tailgate support cables that may corrode and fracture. GM remains prominently in the recall lead. With a full head of steam, I remain confident that they can retain their dominance in this category.
Beryl Sprinkel was chairman of the Council of Economic Advisors under former President Reagan. He stated Bush has “not done a good job” in restraining spending. “I’m disappointed.” Federal spending now amounts to about 20% of GDP. Federal receipts as a percent of GDP have fallen from 21% in 2000 to below 16% this year. The historical average ranges between 17 and 19 percent.
Steve Ballmer, Microsoft CEO: “I believe we reached agreement on the issues of the case. But we were unable to agree on principles for new issues that could arise in the future.” The EU will rule that Microsoft is an illegal monopolist. How would they know? They’ve not had one in the EU. They only think they know one in Microsoft. Ballmer met a good deal of their demands. Obviously, that wasn’t good enough. I hope the EU has the patience and money for this battle. They’ll need it.
John Armbrust is a Florida consultant specializing in jet-fuel contracts for the airlines. He remarked “don’t underestimate the ability of the airlines to walk off a cliff together. Almost all of them are pretty vulnerable right now.” Southwest locked in 83% of its fuel purchases through March and hedged some purchases through 2008. The company has spent about $25 million on such hedges for this year. JetBlue probably has the second-best jet-fuel hedged position in the industry.
Yesterday Goldman Sachs economist Jan Hatzius stated “slow growth equals no jobs- perhaps it’s that simple.” Hatzius believes our government mistakenly exaggerated GDP. That’s mistakenly as in misspeak.
Meanwhile, Goldman Sachs told its clients yesterday that the firm expects national payrolls to grow by 160,000 this month. Other economists project a rise to 200,000. I don’t want to explode everyone’s bubble; however, on March 19, it is too early to know. At this time, the data is insufficient and incomplete to make an accurate analysis. There are a couple of thoughts though. In Georgia, for example, their state labor commissioner, Michael Thurmond, stated “you can’t just look at the unemployment rate and get a complete picture of the job market of the economy. While we’re encouraged by the decline in the unemployment rate, job creation remained anemic in February.” In Georgia, about 14.4% of the officially unemployed have been out of work for a half-year or more. For the nation as a whole, about 22% have been out of work for at least 27 weeks. Thurmond observed “I can envision job growth, but we don’t have any objective evidence that it has begun.”
Yesterday the Labor Department reported that U.S. initial jobless claims fell by 6,000 last week. That number was dwarfed by the increase of 47,000 in the number of people continuing to collect state jobless benefits. That number amounted to 3.064 million in the week ended March 6, and was understated by the thousands of workers being dropped weekly from the unemployment rolls due to their benefits not being extended. In addition, the Labor Department stated 33 states and territories reported an increase in new unemployment claims, while 20 reported a decrease. Again, much of the decrease is due to the unemployment benefits not being extended and not to job creation.
On Friday, March 12, Greenspan stated “employment will begin to increase more quickly before long.” On Tuesday, March 16, after the FOMC meeting, the Federal Reserve stated “new hiring was lagging.” What happened in those four days to create such a change in the tone? It’s possible they spoke to the National Federation of Independent Business. The 5.8 million small businesses in the U.S. employ about half of the U.S. workforce. The National Federation’s most recent survey indicated that only 13% of small businesses polled in February plan on hiring new workers, down from 17% in January. That is not too encouraging.
Maybe GDP growth is slowing. The Philadelphia Federal Reserve’s measure of business activity fell to 24.2 in March from 31.4 in February.
GM recalled more than 4 million pickup trucks to replace tailgate support cables that may corrode and fracture. GM remains prominently in the recall lead. With a full head of steam, I remain confident that they can retain their dominance in this category.
Beryl Sprinkel was chairman of the Council of Economic Advisors under former President Reagan. He stated Bush has “not done a good job” in restraining spending. “I’m disappointed.” Federal spending now amounts to about 20% of GDP. Federal receipts as a percent of GDP have fallen from 21% in 2000 to below 16% this year. The historical average ranges between 17 and 19 percent.
Thursday, March 18, 2004
3/18/04 Budget Cuts Can Be Unwelcome
Kunji Okue, an economist at Dresdner Kleinwort Wasserstein in Tokyo: “Japan is hard at work importing the U.S. deficit. That could be dangerous, since it may be impossible to unwind.”
Alan Greenspan: “Considering the possibility of extending unemployment insurance is not a bad idea.” A friend pointed out that Bloomberg reported the rate at which unemployed U.S. workers exhausted their jobless benefits in 2002 and 2003 approached highs not seen since the program began in the 1930s as a response to the Great Depression.
A friend from Baltimore called and told me that, to balance the city’s $2.1 billion budget, it would have to eliminate 533 jobs, including police officers, firefighters, and trash collectors, as well as increasing the city’s property tax rate. The cuts are blamed on macroeconomic factors, such as, lost jobs that result in less revenue from income taxes.
Other communities are experiencing cutbacks. The Philadelphia Police Department is eliminating positions. Hospitals in Georgia, the state of Washington, and Colorado are cutting hundreds of positions. School districts and colleges in California, Florida, Kansas, Ohio, Missouri, and Kentucky have announced layoffs due to budget constraints.
According to the Kaiser Family Foundation, monthly insurance premiums for the nation’s employers rose almost 14% in 2003, the third straight year of double-digit increase. Costs for doctors’ services increased by 1.1% in February.
Mat Johnson, Quantit Economic Group’s chief economist: “The one thing that doesn’t adjust is wages and salaries. They don’t all of a sudden fall. The way to make them fall is to fire workers and try to raise productivity, and/or buy back workers at a later date at less of a cost.”
With the merger of Bank of America and Fleet Boston, 13,000 workers will lose their jobs. Bombardier, the world’s biggest maker of train equipment, will cut 6,600 jobs in its train business, or 19% of the division’s workforce, and close seven plants in Europe. It would appear that their 2001 acquisition of DaimlerChrysler AG’s Adtranz rail equipment unit was partially to blame for the cutbacks. About 990 jobs were eliminated by the closing of Thomson’s tv picture tube plant in Marion, Indiana. About 545 employees at a sister plant in Circleville, Ohio also will be cut.
A new report indicates that the percentage of prescriptions filled by generics in the U.S. has risen from 18.6% in 1984 to nearly 50% today. In 2002, filling an average generic prescription cost patients $16.85 vs. $72.20 for the average branded prescription.
Real average weekly earnings decreased by 0.1%from January to February after seasonal adjustment, according to preliminary data released yesterday by the BLS.
U.S. oil prices rose to their highest level since October 1990. There was a decline in gasoline stocks to about 200 million barrels. It is imperative that all Americans do their part and reduce their driving each week. There is little question that higher prices at the pump are a ball buster. We can’t just blame it on OPEC and higher consumption by Asian countries and/or price gauging by the big oil companies. As individuals, we must assume some responsibility for the lack of conservation.
U.S. treasury yields hit their lowest level in eight months. The yield curve is getting flatter, and this usually is a harbinger of lower economic activity. Less economic growth should be reflected in lower p/e ratios. As long as investors continue to guard against a pickup in inflation and rising treasury yields, they will see their investment accounts dwindle in size. Remaining on the wrong side of the market is a reflection of stubborn investors bearing big egos and/or sheep being led to slaughter by herding dogs and their ill-fated masters.
Kunji Okue, an economist at Dresdner Kleinwort Wasserstein in Tokyo: “Japan is hard at work importing the U.S. deficit. That could be dangerous, since it may be impossible to unwind.”
Alan Greenspan: “Considering the possibility of extending unemployment insurance is not a bad idea.” A friend pointed out that Bloomberg reported the rate at which unemployed U.S. workers exhausted their jobless benefits in 2002 and 2003 approached highs not seen since the program began in the 1930s as a response to the Great Depression.
A friend from Baltimore called and told me that, to balance the city’s $2.1 billion budget, it would have to eliminate 533 jobs, including police officers, firefighters, and trash collectors, as well as increasing the city’s property tax rate. The cuts are blamed on macroeconomic factors, such as, lost jobs that result in less revenue from income taxes.
Other communities are experiencing cutbacks. The Philadelphia Police Department is eliminating positions. Hospitals in Georgia, the state of Washington, and Colorado are cutting hundreds of positions. School districts and colleges in California, Florida, Kansas, Ohio, Missouri, and Kentucky have announced layoffs due to budget constraints.
According to the Kaiser Family Foundation, monthly insurance premiums for the nation’s employers rose almost 14% in 2003, the third straight year of double-digit increase. Costs for doctors’ services increased by 1.1% in February.
Mat Johnson, Quantit Economic Group’s chief economist: “The one thing that doesn’t adjust is wages and salaries. They don’t all of a sudden fall. The way to make them fall is to fire workers and try to raise productivity, and/or buy back workers at a later date at less of a cost.”
With the merger of Bank of America and Fleet Boston, 13,000 workers will lose their jobs. Bombardier, the world’s biggest maker of train equipment, will cut 6,600 jobs in its train business, or 19% of the division’s workforce, and close seven plants in Europe. It would appear that their 2001 acquisition of DaimlerChrysler AG’s Adtranz rail equipment unit was partially to blame for the cutbacks. About 990 jobs were eliminated by the closing of Thomson’s tv picture tube plant in Marion, Indiana. About 545 employees at a sister plant in Circleville, Ohio also will be cut.
A new report indicates that the percentage of prescriptions filled by generics in the U.S. has risen from 18.6% in 1984 to nearly 50% today. In 2002, filling an average generic prescription cost patients $16.85 vs. $72.20 for the average branded prescription.
Real average weekly earnings decreased by 0.1%from January to February after seasonal adjustment, according to preliminary data released yesterday by the BLS.
U.S. oil prices rose to their highest level since October 1990. There was a decline in gasoline stocks to about 200 million barrels. It is imperative that all Americans do their part and reduce their driving each week. There is little question that higher prices at the pump are a ball buster. We can’t just blame it on OPEC and higher consumption by Asian countries and/or price gauging by the big oil companies. As individuals, we must assume some responsibility for the lack of conservation.
U.S. treasury yields hit their lowest level in eight months. The yield curve is getting flatter, and this usually is a harbinger of lower economic activity. Less economic growth should be reflected in lower p/e ratios. As long as investors continue to guard against a pickup in inflation and rising treasury yields, they will see their investment accounts dwindle in size. Remaining on the wrong side of the market is a reflection of stubborn investors bearing big egos and/or sheep being led to slaughter by herding dogs and their ill-fated masters.
Wednesday, March 17, 2004
3/17/04 New Hiring Has Lagged
As Spring approaches, the weather should begin to turn sunnier and warmer. That means two things. One, more construction workers will be hired. Two, we are in the middle of tax season, and seasonal workers will be hired to assist in tax preparation. That’s the good news. The bad news is a bit more overwhelming. BASF will cut another 750 jobs in North America on top of the 1,000 already announced for the year. Demolition crews will tear down the 75-year old Flexsys chemical plant in Nitro, West Virginia. A total of 205 jobs will be eliminated. According to the American Chemical Council, about 100,000 chemical-related jobs, or 1 in every 10, have been cut in the past five years. As more chemical factories shut down due to rising energy costs and increased foreign competition, more workers will lose their jobs.
Did you know that the Atkins diet and mad cow disease have helped to create a slump in the french fry potato market by downsizing serving sizes at fast food outlets? JR Simplot, one of the world’s largest producers of french fries, will close its Hermiston, Oregon plant and eliminate 125 jobs by June, and another 500 by November. Lear Corp., the world’s third largest auto supplier, announced it will close one or both of its Walker, Michigan plants by May. There is a potential for 350 employees to lose their jobs. Avondale Mills will cease weaving operations at its yarn production facility in Monroe, Georgia and lay off half of its staff, or 158 people.
The House Committee on Government Reform reported yesterday that about 350,000 unemployed workers nationwide lost their benefits in January, and that an additional 2 million will do so by July 1 unless benefits are extended. When an individual loses benefits, they are no longer counted on the unemployment rolls. In other words, between December and January, 350,000 Americans were not counted as unemployed. The January unemployment number was reported in the first week of February. As such, in doing the math, it is plain to see unemployment rose in January and it did in February also for the same reason. There is not enough job creation to offset those being dropped from the rolls due to the loss of benefits. That does not take into account plant closings and other job losses from cutbacks. The Fed’s statement, “new hiring has lagged,” does not even begin to reflect the landscape on Main Street.
Let’s take a look at California. There are 59,634 who exhausted their unemployment benefits in January. As of January, there were 1.07 million unemployed workers in California.
The Walt Disney Company is exploring India as a production base for its animation and feature films. Electronic Arts will set up shop in Mumbai for some of its game creations. Gartner, the IT consultancy, predicts that up to 25% of traditional IT jobs will be outsourced by 2010 and that “global sourcing is becoming a mainstream delivery model.” They calculate the world will spend $128 billion this year for business process outsourcing contracts and more than double that amount in 2005. Do you think this might be another reason for a lag in new hiring?
Germany’s ZEW institute stated its gauge of economic expectations fell in March, for the third straight month, to its lowest level since last summer.
Yesterday, oil prices hit fresh one-year highs as U.S. light crude rose to $37.80 per barrel. As temperatures rise, the demand for heating oil should begin to decline. On the other hand, nicer weather makes weekend driving more inviting.
February home construction fell 4% to the lowest annual pace since August. However, it is anticipated that 2004 will be the second-best year ever for the sale of new homes.
According to a recent report from Cutting Edge Information, today’s generic drug market has zoomed to a $40 billion industry, almost doubling in size from 1998, and is expected to reach more than $60 billion by 2007.
Panacos Pharmaceuticals has begun Phase 1 clinical trial of its small molecule HIV drug candidate PA-457, which represents the first in the new class of antiretrovirals called Maturation Inhibitors that offer the promise of new treatment options for patients with HIV.
Vinod Khosla, General Partner at Klener Perkins Caufield & Byers: “Microcredit has the power to build the next entrepreneur out of the poorest society in India.”
K. Paul Singh, Chairman, President, and CEO of Primust Telecommunications: “People don’t come to work to fail. They are smart. We need to find a good fit for the people when we hire them. It takes time for a member to find his or her fit- at least a year. “
Last year, Toyota was the number one marketer of passenger cars in the Chicago area.
As Spring approaches, the weather should begin to turn sunnier and warmer. That means two things. One, more construction workers will be hired. Two, we are in the middle of tax season, and seasonal workers will be hired to assist in tax preparation. That’s the good news. The bad news is a bit more overwhelming. BASF will cut another 750 jobs in North America on top of the 1,000 already announced for the year. Demolition crews will tear down the 75-year old Flexsys chemical plant in Nitro, West Virginia. A total of 205 jobs will be eliminated. According to the American Chemical Council, about 100,000 chemical-related jobs, or 1 in every 10, have been cut in the past five years. As more chemical factories shut down due to rising energy costs and increased foreign competition, more workers will lose their jobs.
Did you know that the Atkins diet and mad cow disease have helped to create a slump in the french fry potato market by downsizing serving sizes at fast food outlets? JR Simplot, one of the world’s largest producers of french fries, will close its Hermiston, Oregon plant and eliminate 125 jobs by June, and another 500 by November. Lear Corp., the world’s third largest auto supplier, announced it will close one or both of its Walker, Michigan plants by May. There is a potential for 350 employees to lose their jobs. Avondale Mills will cease weaving operations at its yarn production facility in Monroe, Georgia and lay off half of its staff, or 158 people.
The House Committee on Government Reform reported yesterday that about 350,000 unemployed workers nationwide lost their benefits in January, and that an additional 2 million will do so by July 1 unless benefits are extended. When an individual loses benefits, they are no longer counted on the unemployment rolls. In other words, between December and January, 350,000 Americans were not counted as unemployed. The January unemployment number was reported in the first week of February. As such, in doing the math, it is plain to see unemployment rose in January and it did in February also for the same reason. There is not enough job creation to offset those being dropped from the rolls due to the loss of benefits. That does not take into account plant closings and other job losses from cutbacks. The Fed’s statement, “new hiring has lagged,” does not even begin to reflect the landscape on Main Street.
Let’s take a look at California. There are 59,634 who exhausted their unemployment benefits in January. As of January, there were 1.07 million unemployed workers in California.
The Walt Disney Company is exploring India as a production base for its animation and feature films. Electronic Arts will set up shop in Mumbai for some of its game creations. Gartner, the IT consultancy, predicts that up to 25% of traditional IT jobs will be outsourced by 2010 and that “global sourcing is becoming a mainstream delivery model.” They calculate the world will spend $128 billion this year for business process outsourcing contracts and more than double that amount in 2005. Do you think this might be another reason for a lag in new hiring?
Germany’s ZEW institute stated its gauge of economic expectations fell in March, for the third straight month, to its lowest level since last summer.
Yesterday, oil prices hit fresh one-year highs as U.S. light crude rose to $37.80 per barrel. As temperatures rise, the demand for heating oil should begin to decline. On the other hand, nicer weather makes weekend driving more inviting.
February home construction fell 4% to the lowest annual pace since August. However, it is anticipated that 2004 will be the second-best year ever for the sale of new homes.
According to a recent report from Cutting Edge Information, today’s generic drug market has zoomed to a $40 billion industry, almost doubling in size from 1998, and is expected to reach more than $60 billion by 2007.
Panacos Pharmaceuticals has begun Phase 1 clinical trial of its small molecule HIV drug candidate PA-457, which represents the first in the new class of antiretrovirals called Maturation Inhibitors that offer the promise of new treatment options for patients with HIV.
Vinod Khosla, General Partner at Klener Perkins Caufield & Byers: “Microcredit has the power to build the next entrepreneur out of the poorest society in India.”
K. Paul Singh, Chairman, President, and CEO of Primust Telecommunications: “People don’t come to work to fail. They are smart. We need to find a good fit for the people when we hire them. It takes time for a member to find his or her fit- at least a year. “
Last year, Toyota was the number one marketer of passenger cars in the Chicago area.
Tuesday, March 16, 2004
3/16/04 Surplus Employees
The Philippines has 84 million people. With a literacy rate in excess of 90%, universities graduate 350,000 students a year, including 50,000 engineers. The average household income is less than $3,000 per year. There is a sizable middle class. The government predicts that call centers will double over the next year thanks to Dell, P&G, American Express, Citigroup, and others. Accenture, the large consulting company, employs 2,000 Filipino software developers. An average software engineer is quite pleased with a $4,000 annual salary. A very talented programmer can make $1,000 a month. Medical transcription is another field with employment on the rise. Many have degrees in nursing and physical therapy. With excellent voice and data communications, a highly educated population with many possessing English speaking skills, and long-standing economic ties to the U.S., this country has a bright outsourcing future.
Zapatero: “My most immediate priority is to fight all forms of terrorism.”
The U.S. Department of Labor announced it is increasing benefits for Boeing workers who can qualify under its Trade Adjustment Assistance program. The changes included: an additional 26 weeks of unemployment checks for workers who are going through job training, bringing the total to 104 weeks. There will be a tax credit for up to 65% of what individuals pay in premiums to maintain their Boeing health insurance under COBRA. In addition, there is an increase in one-time payment for workers’ job-search and relocation costs, from $800 to $1,250. As previously noted, Boeing has had uninterrupted monthly layoffs for over two years.
Juan Cole: “The Afghanistan GDP is $5 billion a year; $2 billion of that comes from poppy cultivation for heroin production.”
BellSouth stated yesterday that it will eliminate 778 largely technical jobs in nine states in the second quarter. The company has cut nearly a fifth of its jobs in little more than three years. BellSouth describes the targeted workers as “surplused employees.” At the end of last year, the company employed 75,743 workers. I wonder how many top managers are surplus?
The Wall Street Journal, Investors Business Daily, and other publications have commented on the most recent Manpower hiring survey of 16,000 U.S. employers. I don’t write headlines for consumption. Therefore, I have an advantage. Briefly, 28% surveyed plan to increase hiring for the second quarter. However, the increase took place essentially in the South and, for the most part, mainly in construction. Elsewhere, the picture was mixed and, unfortunately, not particularly noteworthy except that the Northeast continued to have a poor hiring outlook. The latter should not be surprising given the bleak March Empire Manufacturing Survey from the Federal Reserve Bank of New York. The index fell to 25.33 from February’s 42.05. The gauge of new orders dropped to 23.52 in March from the prior month’s 34.94. The average employee workweek declined to 11.9 from 26.5 a month earlier. The index of inventories dropped to 3.9 in March from 8.6 in February, and unfilled orders decreased to 3.3 for the month from February’s 6.5.
Wal-Mart reported yesterday that its March sales at stores open at least one year were tracking near the high end of its forecast for a 4% to 6% increase as customers cashed tax refund checks. Money orders and consumables were among the most frequently purchased items when people cashed their refund checks.
Georgia Governor Sonny Perdue, a Republican: “Our theme this year is living within our means. The federal money from last year is gone. And we need to build up our rainy day fund, rather than drawing it down.”
Even though tax collections are up 5.8% in the first seven months of California’s budget year, and even though spending is down 0.6% during this period, the state still ran a $6 billion deficit during this time.
When people think of Kentucky, horses, tobacco, and bluegrass come to mind. Rarely does one mention the textile industry. Last week, Jockey International eliminated 440 jobs at three plants in Carlisle, Mount Sterling, and Maysville. In the last 13 years, the number of employees in apparel manufacturing in Kentucky has plummeted by 70% from 32,200 to 8,900. Arlen Sanders, director of economic development for Liberty and Casey counties, stated “unfortunately, they are continuing to export our jobs. In small, rural communities where we’ve had these jobs, it hurts.” Kentucky has plenty of company. Michael Wald, an economist with the U.S. Bureau of Labor Statistics, stated U.S. apparel makers cut 556,000 jobs- 65% of the industry- in the last decade. While average compensation costs in 2002 were $21.33 an hour in the U.S., Wald stated they were $2.38 in Mexico and $2.57 in Brazil. Jockey International is the largest manufacturing employer in Carlisle. The company contributed about $80,000 annually to Carlisle and Nicholas County in payroll taxes and accounted for about a third of the purchases from the gas and water utilities.
Asked on CNN’s “Late Edition” if the war in Iraq was worthwhile given that 564 U.S. soldiers have died there, Rumsfeld stated, “Oh, my goodness, yes. There’s no question…25 million people in Iraq are free.”
Today the Fed’s Open Market Committee meets. As always, there will be the Fed’s assessment on the economy. There is an opportunity for Greenspan to invite the Bank of Japan to offer the accompanying statement. After all, the B of J has been setting interest rates on our treasuries for some time. By their purchasing hundreds of billions of treasuries, our interest rates have been maintained at an artificially low level. The Fed governors are surplus employees. It’s a good thing they don’t work for BellSouth.
The Wall Street Journal’s lead article today focuses on rising healthcare costs for retired workers, company ceilings on the amount spent per retiree, and examples of companies actually cutting retirees’ health benefits, thus creating greater income for the company itself. In my view, it is worthwhile reading for retirees and investors. For example, IBM spent 5% less on retiree health benefits last year while IBM retiree healthcare premiums rose neatly 29%.
The Philippines has 84 million people. With a literacy rate in excess of 90%, universities graduate 350,000 students a year, including 50,000 engineers. The average household income is less than $3,000 per year. There is a sizable middle class. The government predicts that call centers will double over the next year thanks to Dell, P&G, American Express, Citigroup, and others. Accenture, the large consulting company, employs 2,000 Filipino software developers. An average software engineer is quite pleased with a $4,000 annual salary. A very talented programmer can make $1,000 a month. Medical transcription is another field with employment on the rise. Many have degrees in nursing and physical therapy. With excellent voice and data communications, a highly educated population with many possessing English speaking skills, and long-standing economic ties to the U.S., this country has a bright outsourcing future.
Zapatero: “My most immediate priority is to fight all forms of terrorism.”
The U.S. Department of Labor announced it is increasing benefits for Boeing workers who can qualify under its Trade Adjustment Assistance program. The changes included: an additional 26 weeks of unemployment checks for workers who are going through job training, bringing the total to 104 weeks. There will be a tax credit for up to 65% of what individuals pay in premiums to maintain their Boeing health insurance under COBRA. In addition, there is an increase in one-time payment for workers’ job-search and relocation costs, from $800 to $1,250. As previously noted, Boeing has had uninterrupted monthly layoffs for over two years.
Juan Cole: “The Afghanistan GDP is $5 billion a year; $2 billion of that comes from poppy cultivation for heroin production.”
BellSouth stated yesterday that it will eliminate 778 largely technical jobs in nine states in the second quarter. The company has cut nearly a fifth of its jobs in little more than three years. BellSouth describes the targeted workers as “surplused employees.” At the end of last year, the company employed 75,743 workers. I wonder how many top managers are surplus?
The Wall Street Journal, Investors Business Daily, and other publications have commented on the most recent Manpower hiring survey of 16,000 U.S. employers. I don’t write headlines for consumption. Therefore, I have an advantage. Briefly, 28% surveyed plan to increase hiring for the second quarter. However, the increase took place essentially in the South and, for the most part, mainly in construction. Elsewhere, the picture was mixed and, unfortunately, not particularly noteworthy except that the Northeast continued to have a poor hiring outlook. The latter should not be surprising given the bleak March Empire Manufacturing Survey from the Federal Reserve Bank of New York. The index fell to 25.33 from February’s 42.05. The gauge of new orders dropped to 23.52 in March from the prior month’s 34.94. The average employee workweek declined to 11.9 from 26.5 a month earlier. The index of inventories dropped to 3.9 in March from 8.6 in February, and unfilled orders decreased to 3.3 for the month from February’s 6.5.
Wal-Mart reported yesterday that its March sales at stores open at least one year were tracking near the high end of its forecast for a 4% to 6% increase as customers cashed tax refund checks. Money orders and consumables were among the most frequently purchased items when people cashed their refund checks.
Georgia Governor Sonny Perdue, a Republican: “Our theme this year is living within our means. The federal money from last year is gone. And we need to build up our rainy day fund, rather than drawing it down.”
Even though tax collections are up 5.8% in the first seven months of California’s budget year, and even though spending is down 0.6% during this period, the state still ran a $6 billion deficit during this time.
When people think of Kentucky, horses, tobacco, and bluegrass come to mind. Rarely does one mention the textile industry. Last week, Jockey International eliminated 440 jobs at three plants in Carlisle, Mount Sterling, and Maysville. In the last 13 years, the number of employees in apparel manufacturing in Kentucky has plummeted by 70% from 32,200 to 8,900. Arlen Sanders, director of economic development for Liberty and Casey counties, stated “unfortunately, they are continuing to export our jobs. In small, rural communities where we’ve had these jobs, it hurts.” Kentucky has plenty of company. Michael Wald, an economist with the U.S. Bureau of Labor Statistics, stated U.S. apparel makers cut 556,000 jobs- 65% of the industry- in the last decade. While average compensation costs in 2002 were $21.33 an hour in the U.S., Wald stated they were $2.38 in Mexico and $2.57 in Brazil. Jockey International is the largest manufacturing employer in Carlisle. The company contributed about $80,000 annually to Carlisle and Nicholas County in payroll taxes and accounted for about a third of the purchases from the gas and water utilities.
Asked on CNN’s “Late Edition” if the war in Iraq was worthwhile given that 564 U.S. soldiers have died there, Rumsfeld stated, “Oh, my goodness, yes. There’s no question…25 million people in Iraq are free.”
Today the Fed’s Open Market Committee meets. As always, there will be the Fed’s assessment on the economy. There is an opportunity for Greenspan to invite the Bank of Japan to offer the accompanying statement. After all, the B of J has been setting interest rates on our treasuries for some time. By their purchasing hundreds of billions of treasuries, our interest rates have been maintained at an artificially low level. The Fed governors are surplus employees. It’s a good thing they don’t work for BellSouth.
The Wall Street Journal’s lead article today focuses on rising healthcare costs for retired workers, company ceilings on the amount spent per retiree, and examples of companies actually cutting retirees’ health benefits, thus creating greater income for the company itself. In my view, it is worthwhile reading for retirees and investors. For example, IBM spent 5% less on retiree health benefits last year while IBM retiree healthcare premiums rose neatly 29%.
Monday, March 15, 2004
3/15/04 Existing In Hostile Territory
They got Mark Everson. He could not dodge the bullet. Who is he? Everson is the IRS Commissioner. For the first time he was forced to pay the AMT. He observed that, if the process isn’t simplified, people will be less willing to pay taxes. He remarked “it’s a matter of simplifying a tax system that’s far too complex. It’s got to be addressed.” The man sounds like his nose is out of joint. Now he knows how millions of Americans got screwed this year.
As I previously noted, this year’s H-1B cap of 65,000 has already been reached. In the India Post newspaper it was reported that Bush told Paresh Shah that he was unaware about the fact that H-1B cases filed in the year 2003 were being applied to the year 2004 H-1B cap. Bush stated that he was willing to review a proposal to recapture approximately 12,000 H-1B visas into the current H-1B cap. This would allow the H-1B category to reopen in this current fiscal year until the recaptured H-1B spots are exhausted.
Craig Barrett, Intel CEO: “People in China are capable of doing any engineering job, any software job, any managerial job that people in the United States are capable of doing. As CEO of Intel, my allegiance is to the shareholders of Intel and to the success of the company. We go after the most cost-effective resources around the world, no matter where they are. However, as an American citizen, I would have to be worried about whether jobs that are created are created outside the U.S…as a citizen, I see all these resources and I think this puts my country in danger.”
Intel’s initial data-storage chip assembling took place in Shanghai in 1998. A second testing and assembly plant will open this year in Chengdu at a cost of $675 million. Intel has sales offices in 14 Chinese cities. The company has invested in 30 start-ups in China. More than 10% of Intel’s sales come from China, the largest consuming nation for mobile phones. Intel’s facility in Shanghai employs 2,000. Intel China President Wee Theng Tan stated “the quality of the work here is equivalent to any of the work we do around the world.” It had better be and it had better say in top form. Down the road is Shanghai-based SMIC, founded in 2000 with investment from Singapore, the U.S., and the Shanghai government. It is China’s leading chip company. It wants to challenge Intel’s leadership. In six years, China is expected to surpass the U.S. as the biggest buyer of personal computers. Currently, SMIC manufactures chips designed by other companies. That too will change. China has 56 wafer-fabrication plants in operation and 12 more under construction. You can bet that chip prices will drop significantly as production increases. Prices for computers will continue to decline. On Friday, SMIC priced its shares to go public. Huann Min Tang, technical director of design services for SMIC, stated we’re probably just a couple of years behind the world leaders now.” And, in my opinion, closing fast. If I know that, so does Craig Barrett.
China’s retail sales rose 10.5% from a year earlier in the first two months of this year. China’s Prime Minister is concerned with growth rates that are too high and the potential dangers of inflationary pressures. He stated “it’s a test no less than the SARS epidemic. If we fail to manage the situation well, setbacks to the economy will be inevitable.”
Daniel Cain lives in Stark County, Ohio. He is a 70 year-old retired steelworker. In 2000 he voted for Bush. Cain stated “I voted for him because I belong to the National Rifle Association. Now, I just don’t trust him because of all the shipping of jobs out of the country.” NRA supporters voted Bush into office in 2000. It won’t happen in 2004. All the ads in the world cannot regain lost trust.
They got Mark Everson. He could not dodge the bullet. Who is he? Everson is the IRS Commissioner. For the first time he was forced to pay the AMT. He observed that, if the process isn’t simplified, people will be less willing to pay taxes. He remarked “it’s a matter of simplifying a tax system that’s far too complex. It’s got to be addressed.” The man sounds like his nose is out of joint. Now he knows how millions of Americans got screwed this year.
As I previously noted, this year’s H-1B cap of 65,000 has already been reached. In the India Post newspaper it was reported that Bush told Paresh Shah that he was unaware about the fact that H-1B cases filed in the year 2003 were being applied to the year 2004 H-1B cap. Bush stated that he was willing to review a proposal to recapture approximately 12,000 H-1B visas into the current H-1B cap. This would allow the H-1B category to reopen in this current fiscal year until the recaptured H-1B spots are exhausted.
Craig Barrett, Intel CEO: “People in China are capable of doing any engineering job, any software job, any managerial job that people in the United States are capable of doing. As CEO of Intel, my allegiance is to the shareholders of Intel and to the success of the company. We go after the most cost-effective resources around the world, no matter where they are. However, as an American citizen, I would have to be worried about whether jobs that are created are created outside the U.S…as a citizen, I see all these resources and I think this puts my country in danger.”
Intel’s initial data-storage chip assembling took place in Shanghai in 1998. A second testing and assembly plant will open this year in Chengdu at a cost of $675 million. Intel has sales offices in 14 Chinese cities. The company has invested in 30 start-ups in China. More than 10% of Intel’s sales come from China, the largest consuming nation for mobile phones. Intel’s facility in Shanghai employs 2,000. Intel China President Wee Theng Tan stated “the quality of the work here is equivalent to any of the work we do around the world.” It had better be and it had better say in top form. Down the road is Shanghai-based SMIC, founded in 2000 with investment from Singapore, the U.S., and the Shanghai government. It is China’s leading chip company. It wants to challenge Intel’s leadership. In six years, China is expected to surpass the U.S. as the biggest buyer of personal computers. Currently, SMIC manufactures chips designed by other companies. That too will change. China has 56 wafer-fabrication plants in operation and 12 more under construction. You can bet that chip prices will drop significantly as production increases. Prices for computers will continue to decline. On Friday, SMIC priced its shares to go public. Huann Min Tang, technical director of design services for SMIC, stated we’re probably just a couple of years behind the world leaders now.” And, in my opinion, closing fast. If I know that, so does Craig Barrett.
China’s retail sales rose 10.5% from a year earlier in the first two months of this year. China’s Prime Minister is concerned with growth rates that are too high and the potential dangers of inflationary pressures. He stated “it’s a test no less than the SARS epidemic. If we fail to manage the situation well, setbacks to the economy will be inevitable.”
Daniel Cain lives in Stark County, Ohio. He is a 70 year-old retired steelworker. In 2000 he voted for Bush. Cain stated “I voted for him because I belong to the National Rifle Association. Now, I just don’t trust him because of all the shipping of jobs out of the country.” NRA supporters voted Bush into office in 2000. It won’t happen in 2004. All the ads in the world cannot regain lost trust.
Sunday, March 14, 2004
3/14/04 An Oil And Gas Field Trip
Frequently, headlines can be misleading. According to Baker Hughes, the number of rigs exploring for oil and gas in Oklahoma reached an 18-year high of 161 at the end of February. Something about the headline did not sit right with my gut instinct. That’s why we are on U.S. 75 between Tulsa and McAlester. In 2003, natural gas prices exceeded $7 per thousand cubic feet and oil prices rose above $30 per barrel. Oil and gas is the second largest industry in Oklahoma. Would you be surprised to learn that oil and gas production in Oklahoma fell in the first 11 months of 2003 versus the same period in 2002 by 3% each, according to the latest Oklahoma Corporation Commission statistics? Denise Bode, commission chairman, stated “the last time energy prices were near these levels, Oklahoma had over 800 rigs actively exploring for oil and gas.” Why has this taken place? There are many reasons. Bruce Bell, chairman of Mid-Continent Oil and Gas Association of Oklahoma, remarked “we’re kind of seeing a combination of things. We’re seeing the reduction in prospects, the increase in the price of rigs and labor, and overall loss in first year production in natural gas.” It doesn’t help to have a six-month lag between drilling permit application and oil and gas production. The commission reported that producers filed more permit applications to drill new wells in 2003, a total of 5,119, than they did since 1989. Another problem is that of fewer rigs. There are less available today than there were prior to the oil bust in the 1980s. This explains waiting on available rigs. In actuality, rig usage is up 35% over a year ago. Larry Pinkton, president and COO for Unit Corp., has 66 rigs in Oklahoma. Larry stated “we just take care of the customers that we can.” In fact, rig companies have cut back their inventories, and laid-off field hands have left the business in search of more steady employment. The ups and downs of the oil and gas business have taken a toll on the operators and their workers. There are more problems. Another commissioner, Bob Anthony, observed “environmental concerns prohibit producers from drilling in many of the most promising areas.” The commissioners also remarked that Oklahoma’s oil and gas reserves are aging. Existing wells don’t produce as much as they used to and the gas that remains is deeper and harder and more expensive to find. You might state that the cream has been skimmed off the top. Mickey Thompson, president of the Oklahoma Independent Petroleum Association, stated “that doesn’t mean there’s not plenty of oil and gas to recover here. It’s just so expensive that there are not many companies out there willing to take the risk.” Chesapeake Energy is the largest producer in the state. Its production rose by 44% in 2003. They have 41 rigs drilling wells in Oklahoma. Tom Price of Chesapeake stated “it’s going to be more expensive and the reserves are going to be smaller.” The message from Bruce Bell was not promising. He remarked “we’re drilling more holes and, in general, drilling deeper and more deeper holes just to maintain the same output of the last year. That’s not a good sign long term in whether we’ll be able to fill the natural gas needs.” I may not like this picture, but now I’m comfortable we have the skinny. Headlines are for non-thinkers.
The news from the IRS Taxpayer Advocate on the AMT is not good. In 2002, 400,000 households were hit by the AMT and it is estimated that number rose to 2.5 million in 2003 and will climb this year to 3.2 million. Then it will jump to 12.1 million in 2005 and 14.9 million in 2006. By 2010, this WMD will soar to 30 million households! The Taxpayer Advocate tells us that most of this rise can be attributed to Bush’s tax cuts. You read it right. As effective ordinary tax rates decline due to the tax cuts, taxpayers drop below the AMT’s 26% and 28% threshold rates. Because of the AMT, it is estimated that as much as 35% of the Bush tax cuts have been eliminated. In addition, because of budget problems, many tax increases have taken place at local and state government levels. Combine the latter with the nation’s under-estimated unemployment levels, higher natural gas/heating costs, the increased price of gas at the pump, and the cash flow picture for most Americans has taken a step backwards. Why won’t the AMT be repealed? The Tax Policy Center stated full AMT repeal would exceed $1 trillion. Yesterday, in his radio address, Bush stated “with the right policies in Washington, we will maintain America’s economic leadership, we will create more jobs, and we’ll help our workers achieve a better life.” And would you be interested in purchasing the Brooklyn Bridge?
New York City’s unemployment rate increased from 8% in January to 8.4% in February. It has lost 230,000 jobs in the past three years. Mayor Bloomberg stated “our future has never looked brighter.” The same person who wrote Bush’s radio address must have provided Bloomberg with that uplifting statement wrapped in 100% pure bullshit. In the past 18 months the labor participation rate has declined from 65.6% to 57%. If you make it in NYC, you can make it anywhere.
United Airlines is approaching buzz saw time. This airline has 21,000 flight attendants. They have thousands of retirees. The attendants and the retirees will picket and leaflet at Sea-Tac and Washington Dulles airports tomorrow and LAX on Wednesday to protest United’s plan to break its agreement with flight attendant retirees and change their health benefits. Based on a May 2003 agreement, it was promised that flight attendants retiring before July 1, 2003 would have access to health benefits that were less costly and more comprehensive than those that would be in place for those who retire after that date. Based on that agreement, over 2,500 flight attendants retired before the July 1 deadline. An examiner appointed by the bankruptcy court is investigating and will present his findings in bankruptcy court in Chicago on Friday.
Today, another 4 U.S. soldiers were killed in Iraq. Over the past 51 weeks, 564 U.S. armed forces personnel have died in that country.
Richard S. Foster: “Certainly, Congress did not have all the information they might have wanted, or that we had.” Senate Finance Committee Chairman Charles E. Grassley of Iowa stated “government analysts with relevant information should never be muzzled.”
Reuters has reported that, on Monday, 15 EU states may recommend sanctions against Microsoft for breaking antitrust law. A decision is set for March 24. Microsoft will be handed a deadline to comply with the sanctions. The final chapter has not been written.
L.L. Bean has been in business for 92 years. In 2003, they had record sales of $1.2 billion, a 10% increase over 2002. Their president and CEO stated “all channels outperformed even our highest expectations… 2003 was a home run.” To show their appreciation, the company’s board of directors approved a cash award of 15% of annual pay to eligible workers, and cash gifts to recognize thousands of seasonal employees who did not meet the eligibility requirements for the larger payout. The total payout of $36 million is the largest year-end bonus in the company’s history. It is quite wonderful for a board of directors and top management to acknowledge the accomplishments of all team members. The economic welfare of Bean employees is important to those overseeing the running of this fine company. The team made it possible for L.L Bean to have its best December in its 92-year history and to ship 175,000 packages on its single busiest day during the holiday sales period.
Frequently, headlines can be misleading. According to Baker Hughes, the number of rigs exploring for oil and gas in Oklahoma reached an 18-year high of 161 at the end of February. Something about the headline did not sit right with my gut instinct. That’s why we are on U.S. 75 between Tulsa and McAlester. In 2003, natural gas prices exceeded $7 per thousand cubic feet and oil prices rose above $30 per barrel. Oil and gas is the second largest industry in Oklahoma. Would you be surprised to learn that oil and gas production in Oklahoma fell in the first 11 months of 2003 versus the same period in 2002 by 3% each, according to the latest Oklahoma Corporation Commission statistics? Denise Bode, commission chairman, stated “the last time energy prices were near these levels, Oklahoma had over 800 rigs actively exploring for oil and gas.” Why has this taken place? There are many reasons. Bruce Bell, chairman of Mid-Continent Oil and Gas Association of Oklahoma, remarked “we’re kind of seeing a combination of things. We’re seeing the reduction in prospects, the increase in the price of rigs and labor, and overall loss in first year production in natural gas.” It doesn’t help to have a six-month lag between drilling permit application and oil and gas production. The commission reported that producers filed more permit applications to drill new wells in 2003, a total of 5,119, than they did since 1989. Another problem is that of fewer rigs. There are less available today than there were prior to the oil bust in the 1980s. This explains waiting on available rigs. In actuality, rig usage is up 35% over a year ago. Larry Pinkton, president and COO for Unit Corp., has 66 rigs in Oklahoma. Larry stated “we just take care of the customers that we can.” In fact, rig companies have cut back their inventories, and laid-off field hands have left the business in search of more steady employment. The ups and downs of the oil and gas business have taken a toll on the operators and their workers. There are more problems. Another commissioner, Bob Anthony, observed “environmental concerns prohibit producers from drilling in many of the most promising areas.” The commissioners also remarked that Oklahoma’s oil and gas reserves are aging. Existing wells don’t produce as much as they used to and the gas that remains is deeper and harder and more expensive to find. You might state that the cream has been skimmed off the top. Mickey Thompson, president of the Oklahoma Independent Petroleum Association, stated “that doesn’t mean there’s not plenty of oil and gas to recover here. It’s just so expensive that there are not many companies out there willing to take the risk.” Chesapeake Energy is the largest producer in the state. Its production rose by 44% in 2003. They have 41 rigs drilling wells in Oklahoma. Tom Price of Chesapeake stated “it’s going to be more expensive and the reserves are going to be smaller.” The message from Bruce Bell was not promising. He remarked “we’re drilling more holes and, in general, drilling deeper and more deeper holes just to maintain the same output of the last year. That’s not a good sign long term in whether we’ll be able to fill the natural gas needs.” I may not like this picture, but now I’m comfortable we have the skinny. Headlines are for non-thinkers.
The news from the IRS Taxpayer Advocate on the AMT is not good. In 2002, 400,000 households were hit by the AMT and it is estimated that number rose to 2.5 million in 2003 and will climb this year to 3.2 million. Then it will jump to 12.1 million in 2005 and 14.9 million in 2006. By 2010, this WMD will soar to 30 million households! The Taxpayer Advocate tells us that most of this rise can be attributed to Bush’s tax cuts. You read it right. As effective ordinary tax rates decline due to the tax cuts, taxpayers drop below the AMT’s 26% and 28% threshold rates. Because of the AMT, it is estimated that as much as 35% of the Bush tax cuts have been eliminated. In addition, because of budget problems, many tax increases have taken place at local and state government levels. Combine the latter with the nation’s under-estimated unemployment levels, higher natural gas/heating costs, the increased price of gas at the pump, and the cash flow picture for most Americans has taken a step backwards. Why won’t the AMT be repealed? The Tax Policy Center stated full AMT repeal would exceed $1 trillion. Yesterday, in his radio address, Bush stated “with the right policies in Washington, we will maintain America’s economic leadership, we will create more jobs, and we’ll help our workers achieve a better life.” And would you be interested in purchasing the Brooklyn Bridge?
New York City’s unemployment rate increased from 8% in January to 8.4% in February. It has lost 230,000 jobs in the past three years. Mayor Bloomberg stated “our future has never looked brighter.” The same person who wrote Bush’s radio address must have provided Bloomberg with that uplifting statement wrapped in 100% pure bullshit. In the past 18 months the labor participation rate has declined from 65.6% to 57%. If you make it in NYC, you can make it anywhere.
United Airlines is approaching buzz saw time. This airline has 21,000 flight attendants. They have thousands of retirees. The attendants and the retirees will picket and leaflet at Sea-Tac and Washington Dulles airports tomorrow and LAX on Wednesday to protest United’s plan to break its agreement with flight attendant retirees and change their health benefits. Based on a May 2003 agreement, it was promised that flight attendants retiring before July 1, 2003 would have access to health benefits that were less costly and more comprehensive than those that would be in place for those who retire after that date. Based on that agreement, over 2,500 flight attendants retired before the July 1 deadline. An examiner appointed by the bankruptcy court is investigating and will present his findings in bankruptcy court in Chicago on Friday.
Today, another 4 U.S. soldiers were killed in Iraq. Over the past 51 weeks, 564 U.S. armed forces personnel have died in that country.
Richard S. Foster: “Certainly, Congress did not have all the information they might have wanted, or that we had.” Senate Finance Committee Chairman Charles E. Grassley of Iowa stated “government analysts with relevant information should never be muzzled.”
Reuters has reported that, on Monday, 15 EU states may recommend sanctions against Microsoft for breaking antitrust law. A decision is set for March 24. Microsoft will be handed a deadline to comply with the sanctions. The final chapter has not been written.
L.L. Bean has been in business for 92 years. In 2003, they had record sales of $1.2 billion, a 10% increase over 2002. Their president and CEO stated “all channels outperformed even our highest expectations… 2003 was a home run.” To show their appreciation, the company’s board of directors approved a cash award of 15% of annual pay to eligible workers, and cash gifts to recognize thousands of seasonal employees who did not meet the eligibility requirements for the larger payout. The total payout of $36 million is the largest year-end bonus in the company’s history. It is quite wonderful for a board of directors and top management to acknowledge the accomplishments of all team members. The economic welfare of Bean employees is important to those overseeing the running of this fine company. The team made it possible for L.L Bean to have its best December in its 92-year history and to ship 175,000 packages on its single busiest day during the holiday sales period.
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