8/6/04 The Two Surveys
This week has been a new experience for me. Mike and I have been the closest of friends for 35 years. He called me early Monday morning and asked if I would ghost write his daily blog. Being a publisher, this was a new role. I also knew the blog is important to Mike, and the serious family illness was all he could handle. All he said was "don't read the newspapers or magazines or listen to the radio or watch TV for the info. Just present the facts. Stay the course. The facts are quite clear. The keys are temp help and services."
Everyone could see that crude was making new highs and that consumer spending was being impacted. Not everyone paid attention to the large percentage drop in those hiring in the ISM report--from 27 to 18%. That should have been a good starting point for the July non-farm payroll number. It was not surprising to see the usual suspects do well in July- employment in healthcare and social assistance increased 20,000 and employment in professional and financial services rose by 42,000 in July; however, employment in temporary help was little changed in the month of July and services only added 14,000 jobs, helping to explain why non-farm payrolls only rose by 32,000. It should be noted that May and June's numbers were revised lower by a cumulative 61,000.
Bush supporters will point to the household survey's gain in employment of 434,000. The BLS has studied the differences in both surveys and they are summarized at http://www.bls.gov/cps/ces_cps_trends.pdf.
The Fed prefers to rely on the non-farm payroll survey with a base of information quite different from the household survey. Speaking of the Fed, they have a dilemma. Do they swallow their pride and stand pat on interest rates next week? With 10 year treasuries yielding 4.19%, it would appear that the Fed is being largely ignored. The Fed might remember Kodak. They recently announced closing 9 processing labs in 7 states. About 1,000 jobs will be lost- most by the end of August. Next month's non-farm payroll number may look worse than July's.
Please excuse me rushing off. I need to return to my day job.
Thursday, August 05, 2004
8/5/04 Hiring Trends Continued
The services sector accounts for almost 80% of our economy. Yesterday, the ISM Services Survey on employment dropped to 50 from 57.4. This was the sharpest one-month decline in the history of the survey. To pooh pooh such a decline would indeed be foolhardy.
The Monster Employment Index collects data from over 1,500 web sites. Its July index declined from 136 to 134, still a strong number when compared with the start of 2004.
In the week ended July 31, U.S. jobless claims fell by 11,000 to 336,000; however, the 4-week moving average rose by 6,750 to 343,500.
In sum, the latest hiring trends for the manufacturing and services sectors were weak in July. Balancing that, in part, was the feeling expressed by many in employer-owned businesses that hiring has continued during this period. This mixed picture will create a non-farm payroll figure that could disappoint many.
Once again, Wal-Mart had its pulse on the paycheck-to-paycheck crowd. July same-store sales for the Wal-Mart stores division rose by 2.4% vs the 4.5% gain in the year earlier period; however, its Sam’s Club same-store sales rose 7.7% this July vs 5.1% last year. Overall company results improved by 3.2% in the U.S. and management forecasts a 2 to 4% gain for August. Meanwhile, Target’s July same-store sales increased by 3.8% and Nordstrom’s by 6.1%. On the other hand, results were disappointing for Sears, Kohl’s, Gap, May’s, T J Maxx, Foot Locker, Dollar Tree, Limited, Pier I, Ross, and others.
Wal-Mart is experimenting at five locations with having their pharmacy operating on a 24-hour basis, just like Walgreen’s.
The Bank of England raised its lending rate by a quarter point to 4.25%
Bankrate.com stated that the average 30-year fixed rate mortgage of 6.02% is the lowest since April 14.
Nanosys withdrew its IPO.
Chrysler recalled more than 830,00 minivans.
The services sector accounts for almost 80% of our economy. Yesterday, the ISM Services Survey on employment dropped to 50 from 57.4. This was the sharpest one-month decline in the history of the survey. To pooh pooh such a decline would indeed be foolhardy.
The Monster Employment Index collects data from over 1,500 web sites. Its July index declined from 136 to 134, still a strong number when compared with the start of 2004.
In the week ended July 31, U.S. jobless claims fell by 11,000 to 336,000; however, the 4-week moving average rose by 6,750 to 343,500.
In sum, the latest hiring trends for the manufacturing and services sectors were weak in July. Balancing that, in part, was the feeling expressed by many in employer-owned businesses that hiring has continued during this period. This mixed picture will create a non-farm payroll figure that could disappoint many.
Once again, Wal-Mart had its pulse on the paycheck-to-paycheck crowd. July same-store sales for the Wal-Mart stores division rose by 2.4% vs the 4.5% gain in the year earlier period; however, its Sam’s Club same-store sales rose 7.7% this July vs 5.1% last year. Overall company results improved by 3.2% in the U.S. and management forecasts a 2 to 4% gain for August. Meanwhile, Target’s July same-store sales increased by 3.8% and Nordstrom’s by 6.1%. On the other hand, results were disappointing for Sears, Kohl’s, Gap, May’s, T J Maxx, Foot Locker, Dollar Tree, Limited, Pier I, Ross, and others.
Wal-Mart is experimenting at five locations with having their pharmacy operating on a 24-hour basis, just like Walgreen’s.
The Bank of England raised its lending rate by a quarter point to 4.25%
Bankrate.com stated that the average 30-year fixed rate mortgage of 6.02% is the lowest since April 14.
Nanosys withdrew its IPO.
Chrysler recalled more than 830,00 minivans.
Wednesday, August 04, 2004
8/4/04 Recent Hiring Trends
In the July Hudson Employment Index, the percentage of workers reporting hiring at their companies fell one point from June to33%, the same percentage reached in March. The percentage of managers who say their companies are hiring fell two points to 34% from last month’s reading, and was one point below the March and April reading. Private-sector employees report that 39% of their companies are hiring, and that level ahs remained unchanged for the past four months.
Challenger, Gray, & Christmas stated employers announced 69,572 job cuts in July, up 8% from June but down 18% from July 2003. Hiring announcements also declined to 26,880, a 30% drop from June’s level, which was down 31% from May.
The other day we learned that there was a decline in the latest ISM Mfg Employment Index. Many might wonder how that could be with factory orders remaining at a robust level. One might consider that, stripping out transportation, June factory orders advanced only 0.1%. In the transportation sector, Boeing has only delivered four more planes than the year earlier period, and GM and Ford are building vehicles at a 17 million annual rate. You might think their business is vibrant. In fact, GM July sales were down 3.4% and Ford’s declined 3.7%. In an effort to reduce near-record inventories, GM raised incentives on some cars and trucks to $6,000. As of yesterday, GM is offering a $2,500 rebate on many 2005 models! It should be remembered that auto sales represent about 20% of total retail sales. The auto business is beginning to hurt in China too. Overcapacity, falling prices, and a tightening of credit availability are taking its toll on Chinese automakers, and that includes GM.
We are approaching Friday, and the release of July’s non-farm payrolls. The most recent Bloomberg poll of economists has been reduced from last week’s forecast from a gain of 250,000 jobs to 228,000. There is little question that, as crude prices rose to $40 a barrel and higher, consumer spending dropped, and with it, business activity and the pace of permanent hiring. We know that there has been a recent uptick in plant closings, such as this month’s call center in North Dakota, which resulted in about 260 layoffs. Hiring announcements have slowed. It will be difficult to generate the anticipated payroll gain of 228,000 non-farm jobs. In fact, one might expect a downward revision in the disappointing June number. Importantly, gains in wages and benefits will, once again, not keep pace with inflation. The bond market is poised for a disappointing July number. Will the stock market adjust to reduced payroll numbers without producing a slew of mutual fund redemptions? Rather than just focusing on July’s numbers, a better view might take in the August picture. With crude at $44 per barrel, consumer spending will be constrained and business activity will slow materially. Hiring will be impacted. It would not be surprising to see little or no job gains in August. Preparing for this strong possibility might help to preserve your investment capital.
In the July Hudson Employment Index, the percentage of workers reporting hiring at their companies fell one point from June to33%, the same percentage reached in March. The percentage of managers who say their companies are hiring fell two points to 34% from last month’s reading, and was one point below the March and April reading. Private-sector employees report that 39% of their companies are hiring, and that level ahs remained unchanged for the past four months.
Challenger, Gray, & Christmas stated employers announced 69,572 job cuts in July, up 8% from June but down 18% from July 2003. Hiring announcements also declined to 26,880, a 30% drop from June’s level, which was down 31% from May.
The other day we learned that there was a decline in the latest ISM Mfg Employment Index. Many might wonder how that could be with factory orders remaining at a robust level. One might consider that, stripping out transportation, June factory orders advanced only 0.1%. In the transportation sector, Boeing has only delivered four more planes than the year earlier period, and GM and Ford are building vehicles at a 17 million annual rate. You might think their business is vibrant. In fact, GM July sales were down 3.4% and Ford’s declined 3.7%. In an effort to reduce near-record inventories, GM raised incentives on some cars and trucks to $6,000. As of yesterday, GM is offering a $2,500 rebate on many 2005 models! It should be remembered that auto sales represent about 20% of total retail sales. The auto business is beginning to hurt in China too. Overcapacity, falling prices, and a tightening of credit availability are taking its toll on Chinese automakers, and that includes GM.
We are approaching Friday, and the release of July’s non-farm payrolls. The most recent Bloomberg poll of economists has been reduced from last week’s forecast from a gain of 250,000 jobs to 228,000. There is little question that, as crude prices rose to $40 a barrel and higher, consumer spending dropped, and with it, business activity and the pace of permanent hiring. We know that there has been a recent uptick in plant closings, such as this month’s call center in North Dakota, which resulted in about 260 layoffs. Hiring announcements have slowed. It will be difficult to generate the anticipated payroll gain of 228,000 non-farm jobs. In fact, one might expect a downward revision in the disappointing June number. Importantly, gains in wages and benefits will, once again, not keep pace with inflation. The bond market is poised for a disappointing July number. Will the stock market adjust to reduced payroll numbers without producing a slew of mutual fund redemptions? Rather than just focusing on July’s numbers, a better view might take in the August picture. With crude at $44 per barrel, consumer spending will be constrained and business activity will slow materially. Hiring will be impacted. It would not be surprising to see little or no job gains in August. Preparing for this strong possibility might help to preserve your investment capital.
Tuesday, August 03, 2004
8/3/04 A Day For Puking
This blog is late being posted. I have been too busy puking. Yesterday, the Snowman asked Congress to raise the debt limit from its current level of $7.38 trillion. He stated this debt limit would be reached somewhere in late September or early October. It's the third time the debt ceiling would be increased during Bush's four years in office. This is unprecedented, irresponsible, and dangerous to the economic well being of our country. The debt ceiling should not be raised. Spending must be cut. Bush has not vetoed one spending bill. He would not know what the word "conservative" means. Rallying the NRA and churchgoers does not make you a conservative. It means you pack a weapon to church. If left in office for another term, this Administration will grease the rails towards our country's insolvency.
Construction spending fell 0.3% in June. Spending on housing dropped for the first time in 16 months. Residential construction fell 0.6% in June. The ISM Employment Index dropped to 57.3 from the prior month's 59.7. Consumer spending dropped 0.7% in June, the biggest decline since September 2001. Wages were unchanged in June. The Core Personal Consumption Expenditure Price Index rose only 0.1% in June. This is the index the Fed watches so closely. The personal savings rate rose to 2%. I have been predicting for some time that the savings rate would rise and consumer spending would slow dramatically.
Crude has risen above $44 per barrel.
As we know, this Administration did "misspeak" about the WMD. On Sunday, Homeland Security issued a terror alert for NYC, NJ, and DC. We now know it was based on pre-9/11 information and not recent information. How many times does the American public want to put up with this "missspeaking" and well-timed terror card? By the close of yesterday's trading, the stock market had seen through this mockery. Unfortunately, many innocent people had been agitated in the process. It's enough to make any American puke.
This blog is late being posted. I have been too busy puking. Yesterday, the Snowman asked Congress to raise the debt limit from its current level of $7.38 trillion. He stated this debt limit would be reached somewhere in late September or early October. It's the third time the debt ceiling would be increased during Bush's four years in office. This is unprecedented, irresponsible, and dangerous to the economic well being of our country. The debt ceiling should not be raised. Spending must be cut. Bush has not vetoed one spending bill. He would not know what the word "conservative" means. Rallying the NRA and churchgoers does not make you a conservative. It means you pack a weapon to church. If left in office for another term, this Administration will grease the rails towards our country's insolvency.
Construction spending fell 0.3% in June. Spending on housing dropped for the first time in 16 months. Residential construction fell 0.6% in June. The ISM Employment Index dropped to 57.3 from the prior month's 59.7. Consumer spending dropped 0.7% in June, the biggest decline since September 2001. Wages were unchanged in June. The Core Personal Consumption Expenditure Price Index rose only 0.1% in June. This is the index the Fed watches so closely. The personal savings rate rose to 2%. I have been predicting for some time that the savings rate would rise and consumer spending would slow dramatically.
Crude has risen above $44 per barrel.
As we know, this Administration did "misspeak" about the WMD. On Sunday, Homeland Security issued a terror alert for NYC, NJ, and DC. We now know it was based on pre-9/11 information and not recent information. How many times does the American public want to put up with this "missspeaking" and well-timed terror card? By the close of yesterday's trading, the stock market had seen through this mockery. Unfortunately, many innocent people had been agitated in the process. It's enough to make any American puke.
Monday, August 02, 2004
8/2/04 Paycheck To Paycheck
WalMart refers to their customers as living paycheck to paycheck. Putting that into perspective, Joe Gillen, Pinnacle Financial Strategies CEO, stated "some 70% of our working population lives paycheck to paycheck. They pay the minimum on their credit cards, if they have them. And if they miss a week of work, all their payments get behind." This is the main economic theme on Main Street.
Ten year Treasury bonds yield 4.43%, only modestly higher than the recent low yield of 4.36%. Whether it's a terror alert or an alert from slowing economic conditions, the recent trend in U.S. gov't bonds is down.
Speaking of terror alert, our intelligence gathering has been able to ferret out from a Pakistani al-Qaeda prisoner that the NYSE, World Bank, IMF, Prudential, and Citigroup may be bombing targets. Fortunately, Bush will be revamping our intelligence gathering. I wonder if that includes increasing our knowledge of speaking and understanding Pakastani citizens.
This week there are contrasting economic forecasts. Economists predict 250,000 new non-farm payroll jobs in July with rising hourly earnings but earnings that still trail the inflation rate. Construction spending is anticipated to drop from the prior month as are prices for manufactured goods; however, supposedly orders for the month will be on the upswing. What does this all mean? I'm not an economist and didn't make the forecasts. Thanks God. I am certain of one fact. Temporary job creation does not lead to sustainable economic growth.
WalMart refers to their customers as living paycheck to paycheck. Putting that into perspective, Joe Gillen, Pinnacle Financial Strategies CEO, stated "some 70% of our working population lives paycheck to paycheck. They pay the minimum on their credit cards, if they have them. And if they miss a week of work, all their payments get behind." This is the main economic theme on Main Street.
Ten year Treasury bonds yield 4.43%, only modestly higher than the recent low yield of 4.36%. Whether it's a terror alert or an alert from slowing economic conditions, the recent trend in U.S. gov't bonds is down.
Speaking of terror alert, our intelligence gathering has been able to ferret out from a Pakistani al-Qaeda prisoner that the NYSE, World Bank, IMF, Prudential, and Citigroup may be bombing targets. Fortunately, Bush will be revamping our intelligence gathering. I wonder if that includes increasing our knowledge of speaking and understanding Pakastani citizens.
This week there are contrasting economic forecasts. Economists predict 250,000 new non-farm payroll jobs in July with rising hourly earnings but earnings that still trail the inflation rate. Construction spending is anticipated to drop from the prior month as are prices for manufactured goods; however, supposedly orders for the month will be on the upswing. What does this all mean? I'm not an economist and didn't make the forecasts. Thanks God. I am certain of one fact. Temporary job creation does not lead to sustainable economic growth.
Sunday, August 01, 2004
8/1/04 Present Dangers
Bush speaking yesterday in Canton, Ohio: "We'll help American families keep something they never have enough of, and that is time, time to be with your kids, time to go to Little League games or Girl Scout meetings." He certainly has provided more time, and it's not flex-time. It's a shorter work week, it's more temporary work, its less people working, and its less factories operating. If you want another four more years of more time, then vote for this man.
Bush continues speaking in Canton, Ohio: "After four more years, there will be better paying jobs in America. There will be more jobs in America." The facts speak in quite a different direction. After almost four years, wages and benefits, after adjusting for inflation, have declined each year since Bush took office. The BLS and the IRS confirm this statement. There have been less jobs in America, and that too is confirmed by the BLS. Americans cannot afford another four more of the Bush years. He has earned the right to be sent down to the Bush League.
According to a study of annual reports by RateFinancials Inc, among 120 of the major companies in the S&P 500 Index, long-term debt rose by a median of 30% when operating leases and other financial arrangements were added to the balance sheet. An example would be FedEx which has legally binding off-balance sheet debt that, in present value, may be more than double the amount of debt appearing on the balance sheet.
Bush speaking yesterday in Canton, Ohio: "We'll help American families keep something they never have enough of, and that is time, time to be with your kids, time to go to Little League games or Girl Scout meetings." He certainly has provided more time, and it's not flex-time. It's a shorter work week, it's more temporary work, its less people working, and its less factories operating. If you want another four more years of more time, then vote for this man.
Bush continues speaking in Canton, Ohio: "After four more years, there will be better paying jobs in America. There will be more jobs in America." The facts speak in quite a different direction. After almost four years, wages and benefits, after adjusting for inflation, have declined each year since Bush took office. The BLS and the IRS confirm this statement. There have been less jobs in America, and that too is confirmed by the BLS. Americans cannot afford another four more of the Bush years. He has earned the right to be sent down to the Bush League.
According to a study of annual reports by RateFinancials Inc, among 120 of the major companies in the S&P 500 Index, long-term debt rose by a median of 30% when operating leases and other financial arrangements were added to the balance sheet. An example would be FedEx which has legally binding off-balance sheet debt that, in present value, may be more than double the amount of debt appearing on the balance sheet.
Saturday, July 31, 2004
7/31/04 This Is For Vic
The Commerce Dept released numbers for the second quarter. If you get your news from the media, economists, and the Fed, then it was news that second quarter GDP growth was only 3% and that consumer spending rose at a paltry 1%. The bond market had sniffed out the lower growth, the stock market has been sputtering, and WalMart and Target told you the paycheck-to-paycheck consumer on Main Street was choking on the fumes from high gas prices. The second quarter is history. We're already one-third through the third quarter. Visit a GM or Ford dealer. Look at their inventory levels. It doesn't paint a pretty picture. Look at gas prices. They've come down in the past month but will rise in August as crude rose to $43 a barrel.
With high crude prices, retail sales for August will suck. Don't you think high crude prices reduce the chances of a big SUV being sold even with a large buyer's incentive? There will be plant shutdowns announced any day. The climate is changing. It's not about outsourcing. It's about less hiring, more layoffs, less benefits, and pay that trails the rate of inflation. You can listen to all the buzz on the campaign junkets. Talk is cheap. Permanent hiring is expensive. Training is time consuming. With revenues in this country growing modestly at best, there are few reasons to take on more staff. Most of the improving profits have been the result of cost cutting. The fun and games are in the late innings. The days are getting shorter. I suggest you turn on the lights a bit earlier. It makes it easier to see through the dusk of the economy.
Halliburton announced in November that the company would stop providing health insurance for its retirees who are eligible for Medicare. The change goes into effect Jan.1. Three retirees wrote Halliburton and complained. Halliburton sued them. No retiree left behind!
Now, I wrote this was Vic. I'm your friend. Today is a good day for testing data. When doing so, please leave a bit of time for a visit to Main Street.
The Commerce Dept released numbers for the second quarter. If you get your news from the media, economists, and the Fed, then it was news that second quarter GDP growth was only 3% and that consumer spending rose at a paltry 1%. The bond market had sniffed out the lower growth, the stock market has been sputtering, and WalMart and Target told you the paycheck-to-paycheck consumer on Main Street was choking on the fumes from high gas prices. The second quarter is history. We're already one-third through the third quarter. Visit a GM or Ford dealer. Look at their inventory levels. It doesn't paint a pretty picture. Look at gas prices. They've come down in the past month but will rise in August as crude rose to $43 a barrel.
With high crude prices, retail sales for August will suck. Don't you think high crude prices reduce the chances of a big SUV being sold even with a large buyer's incentive? There will be plant shutdowns announced any day. The climate is changing. It's not about outsourcing. It's about less hiring, more layoffs, less benefits, and pay that trails the rate of inflation. You can listen to all the buzz on the campaign junkets. Talk is cheap. Permanent hiring is expensive. Training is time consuming. With revenues in this country growing modestly at best, there are few reasons to take on more staff. Most of the improving profits have been the result of cost cutting. The fun and games are in the late innings. The days are getting shorter. I suggest you turn on the lights a bit earlier. It makes it easier to see through the dusk of the economy.
Halliburton announced in November that the company would stop providing health insurance for its retirees who are eligible for Medicare. The change goes into effect Jan.1. Three retirees wrote Halliburton and complained. Halliburton sued them. No retiree left behind!
Now, I wrote this was Vic. I'm your friend. Today is a good day for testing data. When doing so, please leave a bit of time for a visit to Main Street.
Friday, July 30, 2004
7/30/04 Fortunately Help Is On The Way
"The decision by Union Pacific to limit the number of rock and aggregate carloads in Texas will have a severe impact on the economic viability of the entire state, especially Houston, " stated Marianne Gooch, director of communications for Cemex Inc.
The Conference Board's Help-Wanted Advertising Index dipped one point in June to 38. The Index was 38 one year ago. For the past four months the Index has been virtually flat.
Total compensation costs for civilian workers increased 0.9% during the June quarter, seasonally adjusted. In the March quarter there was a 1.1% gain. In the latest period wage and salary costs increased 0.6% and benefit costs rose 1.8%. Wages and salries for both civilian and private workers advanced 0.6% during the June quarter, identical to the March 2004 quarter.
In the latest week auto plant shutdowns contributed to the unemployment rolls rising. There will be plenty more shutdowns in the near future.
Schwab will close more offices and cut 186 workers.
AT&T's debt was downgraded to junk level by Moody's.
State Farm will cut up to 900 jobs.
Washington Mutual announced the closing of an additional fifty three branches and this will create 850 layoffs.
"The decision by Union Pacific to limit the number of rock and aggregate carloads in Texas will have a severe impact on the economic viability of the entire state, especially Houston, " stated Marianne Gooch, director of communications for Cemex Inc.
The Conference Board's Help-Wanted Advertising Index dipped one point in June to 38. The Index was 38 one year ago. For the past four months the Index has been virtually flat.
Total compensation costs for civilian workers increased 0.9% during the June quarter, seasonally adjusted. In the March quarter there was a 1.1% gain. In the latest period wage and salary costs increased 0.6% and benefit costs rose 1.8%. Wages and salries for both civilian and private workers advanced 0.6% during the June quarter, identical to the March 2004 quarter.
In the latest week auto plant shutdowns contributed to the unemployment rolls rising. There will be plenty more shutdowns in the near future.
Schwab will close more offices and cut 186 workers.
AT&T's debt was downgraded to junk level by Moody's.
State Farm will cut up to 900 jobs.
Washington Mutual announced the closing of an additional fifty three branches and this will create 850 layoffs.
Thursday, July 29, 2004
7/29/04 Going Concerns
Excluding transportation, June’s durable orders fell 0.6%. U.S. auto production has kept pace with the year earlier period; however, despite increasing incentives, the inventory of unsold vehicles continues to mount. As for the delivery of commercial aircraft, Boeing anticipates 285 plane deliveries for 2004 or four planes more than the number delivered in 2003. Much of Boeing’s improved earnings for the second quarter can be attributed to a 23 cents per share Federal tax refund, lower than expected pension and retiree medical expenses, and cost savings from monthly employee firings.
Gina Martin, economist at Wachovia, stated "it’s somewhat disappointing; clearly the soft patch continued in June.."
Yukos pumps more oil than five of the OPEC countries. With their production halted by the court, it was not surprising that crude reached $43 a barrel, a 21-year high.
According to the Defense Department, 908 U.S. service members have died since the beginning of military operations in March 2003. Our troops have been stationed there for 16 months.
According to Cutting Edge Information, a business intelligence firm, pharmaceutical companies spend over 25% of their clinical budget outsourcing to CROs. They stated "outsourcing is a great way for lots of pharmas to get the number of trial participants they need in a shorter amount of time…Outsourcing overseas can quickly cut cost and time."
State Farm to cut 900 jobs. About 1,200 jobs will be lost as part of the consolidation of Wella with Proctor & Gamble. About 200 cuts will be in Germany, and the remainder in the U.S., Mexico, South Korea, Indonesia, and other nations. About 300 P&G workers will be affected as well.
Beth Shulman, a D.C.-based labor consultant who wrote "The Betrayal of Work: How Low-Wage Jobs Fail 30 Million Americans and Their Families," stated that one-quarter of workers make less than $8.70 per hour and that "wage inequality translates into a vicious cycle where people get stuck. It’s not just that people aren’t making enough money. That’s bad enough. But the normal means of righting itself is not in place. The political and education system are working to the detriment of moving these people up." Maybe that’s why John Edwards emphasized that "hope is on the way."
Michael Peroutka, Constitution Party presidential nominee, stated "George Bush has given us the most un-Constitutional, most powerful, biggest, far-reaching, fiscally irresponsible, intrusive, debt-ridden Federal government in the history of the universe! If there was, in the ‘Guiness Book of World Records,’ such a category, Mr. Bush, Big Government wise, would be Flip-Flopper Number One.’
Excluding transportation, June’s durable orders fell 0.6%. U.S. auto production has kept pace with the year earlier period; however, despite increasing incentives, the inventory of unsold vehicles continues to mount. As for the delivery of commercial aircraft, Boeing anticipates 285 plane deliveries for 2004 or four planes more than the number delivered in 2003. Much of Boeing’s improved earnings for the second quarter can be attributed to a 23 cents per share Federal tax refund, lower than expected pension and retiree medical expenses, and cost savings from monthly employee firings.
Gina Martin, economist at Wachovia, stated "it’s somewhat disappointing; clearly the soft patch continued in June.."
Yukos pumps more oil than five of the OPEC countries. With their production halted by the court, it was not surprising that crude reached $43 a barrel, a 21-year high.
According to the Defense Department, 908 U.S. service members have died since the beginning of military operations in March 2003. Our troops have been stationed there for 16 months.
According to Cutting Edge Information, a business intelligence firm, pharmaceutical companies spend over 25% of their clinical budget outsourcing to CROs. They stated "outsourcing is a great way for lots of pharmas to get the number of trial participants they need in a shorter amount of time…Outsourcing overseas can quickly cut cost and time."
State Farm to cut 900 jobs. About 1,200 jobs will be lost as part of the consolidation of Wella with Proctor & Gamble. About 200 cuts will be in Germany, and the remainder in the U.S., Mexico, South Korea, Indonesia, and other nations. About 300 P&G workers will be affected as well.
Beth Shulman, a D.C.-based labor consultant who wrote "The Betrayal of Work: How Low-Wage Jobs Fail 30 Million Americans and Their Families," stated that one-quarter of workers make less than $8.70 per hour and that "wage inequality translates into a vicious cycle where people get stuck. It’s not just that people aren’t making enough money. That’s bad enough. But the normal means of righting itself is not in place. The political and education system are working to the detriment of moving these people up." Maybe that’s why John Edwards emphasized that "hope is on the way."
Michael Peroutka, Constitution Party presidential nominee, stated "George Bush has given us the most un-Constitutional, most powerful, biggest, far-reaching, fiscally irresponsible, intrusive, debt-ridden Federal government in the history of the universe! If there was, in the ‘Guiness Book of World Records,’ such a category, Mr. Bush, Big Government wise, would be Flip-Flopper Number One.’
Wednesday, July 28, 2004
7/28/04 Pivotal Issues
Yesterday the Conference Board stated that U.S. consumer confidence rose in July to a two-year high. They also mentioned that the percentage of consumers that see business conditions in the current month as "good" was little changed, falling to 25.6 from 25.8 in June. It’s difficult to reconcile those two statements and with the UBS Index which dropped seven points in July.
Maybe it would be helpful to take a closer look at some numbers. Avery Shenfeld, an economist with CIBC World Markets, stated that, in this year’s first quarter, wages and salaries had the smallest share of total national income than at any time since WW II. After adjusting for inflation, average hourly wages in May of $15.64 were at the same level as in November 2001, the month when the last recession ended. In June, real average weekly earnings were down 1.3% from June 2003. It’s not surprising that only 25% of those polled believe business conditions are "good." When analysts look back, this will be one of the primary reasons why Bush will have lost re-election. For 80% of Americans who rely primarily on wages and salaries, they are not better off than four years ago.
According to a survey done for staffing services provider Hudson, 52% of African-Americans and 57% of Hispanics state their pay is not equal to what others in similar positions are paid; 38% of male workers and 36% of female workers state their pay does not equal others in similar positions; and 34% of white workers stated similar complaints. According to BLS statistics, white workers earn a median income of $636 a week, while African-Americans earn about $100 less and Hispanics about $200 less. According to the Hudson survey, only 36% of workers overall said better performance leads to higher pay, while about 60% stated that longevity in a job leads to better pay.
In another survey by Robert Half Management Resources, top complaints were long hours and unfair pay. In the second quarter, 6% of workers stated they quit their jobs voluntarily, up from 5.3% in the first quarter and 3.8% a year ago. Surveys show the primary reasons for leaving were to seek an alternative to long workdays and unfair pay.
Jeff Anderson, senior vice president at Hudson, remarked "we have found that workers’ perceptions are directly linked to reality." In my opinion, Bush will find in November that voters’ perceptions are directly linked to reality.
In a recent Bloomberg survey, it is thought that non-farm payrolls increased by 233,000 jobs in July. Whatever the number, how many jobs are not temporary? How many jobs pay a wage, adjusted for inflation, that exceed the level reached in November 2001? How many unemployed workers lost their benefits in July and were not counted as unemployed? Could that number exceed 233,000? The estimate is 320,000. Are we gaining or losing jobs each month? The numbers tell the story. The numbers will help determine the election.
Every once in a generation, the real deal graces us. Barack Obama is the real deal.
Yesterday the Conference Board stated that U.S. consumer confidence rose in July to a two-year high. They also mentioned that the percentage of consumers that see business conditions in the current month as "good" was little changed, falling to 25.6 from 25.8 in June. It’s difficult to reconcile those two statements and with the UBS Index which dropped seven points in July.
Maybe it would be helpful to take a closer look at some numbers. Avery Shenfeld, an economist with CIBC World Markets, stated that, in this year’s first quarter, wages and salaries had the smallest share of total national income than at any time since WW II. After adjusting for inflation, average hourly wages in May of $15.64 were at the same level as in November 2001, the month when the last recession ended. In June, real average weekly earnings were down 1.3% from June 2003. It’s not surprising that only 25% of those polled believe business conditions are "good." When analysts look back, this will be one of the primary reasons why Bush will have lost re-election. For 80% of Americans who rely primarily on wages and salaries, they are not better off than four years ago.
According to a survey done for staffing services provider Hudson, 52% of African-Americans and 57% of Hispanics state their pay is not equal to what others in similar positions are paid; 38% of male workers and 36% of female workers state their pay does not equal others in similar positions; and 34% of white workers stated similar complaints. According to BLS statistics, white workers earn a median income of $636 a week, while African-Americans earn about $100 less and Hispanics about $200 less. According to the Hudson survey, only 36% of workers overall said better performance leads to higher pay, while about 60% stated that longevity in a job leads to better pay.
In another survey by Robert Half Management Resources, top complaints were long hours and unfair pay. In the second quarter, 6% of workers stated they quit their jobs voluntarily, up from 5.3% in the first quarter and 3.8% a year ago. Surveys show the primary reasons for leaving were to seek an alternative to long workdays and unfair pay.
Jeff Anderson, senior vice president at Hudson, remarked "we have found that workers’ perceptions are directly linked to reality." In my opinion, Bush will find in November that voters’ perceptions are directly linked to reality.
In a recent Bloomberg survey, it is thought that non-farm payrolls increased by 233,000 jobs in July. Whatever the number, how many jobs are not temporary? How many jobs pay a wage, adjusted for inflation, that exceed the level reached in November 2001? How many unemployed workers lost their benefits in July and were not counted as unemployed? Could that number exceed 233,000? The estimate is 320,000. Are we gaining or losing jobs each month? The numbers tell the story. The numbers will help determine the election.
Every once in a generation, the real deal graces us. Barack Obama is the real deal.
Tuesday, July 27, 2004
7/27/04 Decline In Optimism
According to the UBS Index of Investor Optimism, a joint effort of UBS and the Gallup Organization, the overall index decreased by 7 points in July to 88, down from June’s level of 95. The decline can be attributed to a 4-point decrease in the Index’s personal dimension, which measures investors’ confidence in their ability to reach investment targets and maintain income. It is also driven by a 3-point decrease in the Index’s economic dimension, which measures investors’ sentiment on economic growth, unemployment, stock market performance, and inflation.
Alcoa will lay off 400 workers at an idle aluminum smelter in Wenatchee, Washington this fall after its union rejected a contract proposal. The company stated that health care costs were the sticking point in the contract negotiations.
With a 65% decline in revenue, Cray will lay off 100 workers.
According to the Department of Energy, the nationwide average price for on-highway diesel fuel is about $1.75 a gallon, just shy of the $1.77 record set in March 2003, and it is more than 21% higher than at this time last year. According to a trucking association, the tonnage of freight hauled by trucks nationally hit a record in this April. The tonnage was off a bit in May. Year-to-date truck tonnage is up 6.4% and growth in demand for diesel is up 4.8% this year. By comparison, there has been a 2.5% demand growth for gasoline.
Existing home sales rose 2.1% in June, another new record.
A coalition of health experts called Partnership for Essential Nutrition make the claim that low-carb, high protein diets lead to kidney stress, liver disorders, gout, higher risk o heart disease, stroke, diabetes, assorted types of cancer, and even worse, severe constipation, nausea, headaches, and even bad breath.
DuPont's second quarter revenue rose only 2%.
According to the UBS Index of Investor Optimism, a joint effort of UBS and the Gallup Organization, the overall index decreased by 7 points in July to 88, down from June’s level of 95. The decline can be attributed to a 4-point decrease in the Index’s personal dimension, which measures investors’ confidence in their ability to reach investment targets and maintain income. It is also driven by a 3-point decrease in the Index’s economic dimension, which measures investors’ sentiment on economic growth, unemployment, stock market performance, and inflation.
Alcoa will lay off 400 workers at an idle aluminum smelter in Wenatchee, Washington this fall after its union rejected a contract proposal. The company stated that health care costs were the sticking point in the contract negotiations.
With a 65% decline in revenue, Cray will lay off 100 workers.
According to the Department of Energy, the nationwide average price for on-highway diesel fuel is about $1.75 a gallon, just shy of the $1.77 record set in March 2003, and it is more than 21% higher than at this time last year. According to a trucking association, the tonnage of freight hauled by trucks nationally hit a record in this April. The tonnage was off a bit in May. Year-to-date truck tonnage is up 6.4% and growth in demand for diesel is up 4.8% this year. By comparison, there has been a 2.5% demand growth for gasoline.
Existing home sales rose 2.1% in June, another new record.
A coalition of health experts called Partnership for Essential Nutrition make the claim that low-carb, high protein diets lead to kidney stress, liver disorders, gout, higher risk o heart disease, stroke, diabetes, assorted types of cancer, and even worse, severe constipation, nausea, headaches, and even bad breath.
DuPont's second quarter revenue rose only 2%.
Monday, July 26, 2004
7/26/04 Inventories And GDP Growth
This week there will be a report on the latest inventory statistics. Contributing to the 3.7% GDP growth rate in the second quarter has been the growth in inventories. That information can be misleading. As the Detroit Free Press recently stated, inventories of 3.5 million vehicles are so bloated at Ford and GM that, even if the companies shut their plants between now and the presidential election, some of the better selling models would still have vehicles remaining after the votes are tallied.
Social Security trustees state that OASDI (old age security and disability income programs) has unfunded liabilities of $3.7 trillion, and that actual cash to make payments may be in trouble as early as 2010. With an aging population, that news is not very comforting.
ETL represents the software market for data extract, transform, and load. Oracle and Microsoft are adding ETL capabilities in their database offerings. PowerCenter 7.0 is the latest ETL version offered by Informatica. PC7 has many capabilities not offered by others in this space. Its strengths in data warehousing and business intelligence make it a compelling alternative in the growing ETL arena. It also can be quite appealing to those looking to make an acquisition in the world of open architecture.
This week there will be a report on the latest inventory statistics. Contributing to the 3.7% GDP growth rate in the second quarter has been the growth in inventories. That information can be misleading. As the Detroit Free Press recently stated, inventories of 3.5 million vehicles are so bloated at Ford and GM that, even if the companies shut their plants between now and the presidential election, some of the better selling models would still have vehicles remaining after the votes are tallied.
Social Security trustees state that OASDI (old age security and disability income programs) has unfunded liabilities of $3.7 trillion, and that actual cash to make payments may be in trouble as early as 2010. With an aging population, that news is not very comforting.
ETL represents the software market for data extract, transform, and load. Oracle and Microsoft are adding ETL capabilities in their database offerings. PowerCenter 7.0 is the latest ETL version offered by Informatica. PC7 has many capabilities not offered by others in this space. Its strengths in data warehousing and business intelligence make it a compelling alternative in the growing ETL arena. It also can be quite appealing to those looking to make an acquisition in the world of open architecture.
Sunday, July 25, 2004
7/25/04 Supremacy
"Microsoft's CFO John Connor: "We'll take a little bit of a dip this year. If we execute well, we might improve on that; 06', we should be able to accelerate a little bit from 05'." Barron's suggests that Microsoft "has impressive growth prospects." Maybe they do. I have no reason to doubt Connors' statement about the near-term challenges to growth. A slowdown is in the cards. He should know better than Barron's. From his perch, his knowledge reins supreme. On a side note, Microsoft had projected 2004 job growth at 4,000 to 5,000. Actual job growth was 2,000. The company has a strong focus on cost cutting. For fiscal 2005, the forecast is for hiring 6,000 to 7,000 people. Don't bet on it.
As long as hourly wages, adjusted for inflation, remain stagnant or decline, Bush will have trouble at the polls. Main Street contains more votes than Bush's high income base. Without the extension of tax cuts, real disposable income will prove disappointing to voters. That disappointment will also be felt at the retail level. One can hear the grinding noise from the slowing economic gears. The sparks are flying. In this heat the sparks can cause a big conflagration.
It would be a big mistake to miss the Bourne Supremacy. Matt Damon is the real deal. He just keeps getting better.
"Microsoft's CFO John Connor: "We'll take a little bit of a dip this year. If we execute well, we might improve on that; 06', we should be able to accelerate a little bit from 05'." Barron's suggests that Microsoft "has impressive growth prospects." Maybe they do. I have no reason to doubt Connors' statement about the near-term challenges to growth. A slowdown is in the cards. He should know better than Barron's. From his perch, his knowledge reins supreme. On a side note, Microsoft had projected 2004 job growth at 4,000 to 5,000. Actual job growth was 2,000. The company has a strong focus on cost cutting. For fiscal 2005, the forecast is for hiring 6,000 to 7,000 people. Don't bet on it.
As long as hourly wages, adjusted for inflation, remain stagnant or decline, Bush will have trouble at the polls. Main Street contains more votes than Bush's high income base. Without the extension of tax cuts, real disposable income will prove disappointing to voters. That disappointment will also be felt at the retail level. One can hear the grinding noise from the slowing economic gears. The sparks are flying. In this heat the sparks can cause a big conflagration.
It would be a big mistake to miss the Bourne Supremacy. Matt Damon is the real deal. He just keeps getting better.
Saturday, July 24, 2004
7/24/04 The Gauges Are There
For the holders of U.S. equities, yesterday was discouraging. The Dow, the S&P 500, and the Nasdaq fell below their 200-day moving averages, an important support level for many money managers. Another sign for me is the strength in the bond market. Ten year treasury bonds closed at 4.43%, or very close to their recent low yield of 4.36%. In other words, despite the repeated warnings by Greenspan of future measured rate hikes, the bond market is quite sanguine that. at the very least, growth is slowing in our economy. Looking back, investors will blame Kerry for this malaise. The seeds were planted long before Kerry.
Besides stocks, gold had a bad week and dropped over $15 to $392.50. The long term dynamics for gold seem more promising than equities. There is increasing demand by India for gold jewelry, and the twin deficits in the U.S. are not diminishing. The deficits help to account for the diminishing value of the dollar.
After lying to protect his boss and after accepting a payoff, Douglas Faneuil was fined $2,000. Under sentencing guidelines, he faced up to six months in prison. He was an assistant to Peter Bacanovic, Martha Stewart's stockbroker. There are a million stories in our "justice system."
As long as it remains in bankruptcy, United Airlines stated that it would cease making payments to employee pension funds. Half of United's slated cost cuts of $5 billion in 2005 will be taken from workers' wages and benefits. I wonder if the company's top management will have their salaries and perks cut in the same relationship as the union workers.
For the holders of U.S. equities, yesterday was discouraging. The Dow, the S&P 500, and the Nasdaq fell below their 200-day moving averages, an important support level for many money managers. Another sign for me is the strength in the bond market. Ten year treasury bonds closed at 4.43%, or very close to their recent low yield of 4.36%. In other words, despite the repeated warnings by Greenspan of future measured rate hikes, the bond market is quite sanguine that. at the very least, growth is slowing in our economy. Looking back, investors will blame Kerry for this malaise. The seeds were planted long before Kerry.
Besides stocks, gold had a bad week and dropped over $15 to $392.50. The long term dynamics for gold seem more promising than equities. There is increasing demand by India for gold jewelry, and the twin deficits in the U.S. are not diminishing. The deficits help to account for the diminishing value of the dollar.
After lying to protect his boss and after accepting a payoff, Douglas Faneuil was fined $2,000. Under sentencing guidelines, he faced up to six months in prison. He was an assistant to Peter Bacanovic, Martha Stewart's stockbroker. There are a million stories in our "justice system."
As long as it remains in bankruptcy, United Airlines stated that it would cease making payments to employee pension funds. Half of United's slated cost cuts of $5 billion in 2005 will be taken from workers' wages and benefits. I wonder if the company's top management will have their salaries and perks cut in the same relationship as the union workers.
Thursday, July 22, 2004
7/23/04 What Is The Color Of The Flashing Signal?
The Conference Board's index of leading economic indicators fell 0.2% in June, the first decline since March 2003. May's rise was adjusted downward slightly.
S&P recommended investors reduce their exposure to U.S. equities to only 45% of their portfolios and to increase the cash portion to 30%.
Washington Mutual will close mortgage operations in as many as 10 states . The company is cutting 2,500 jobs.
From January through June 2004, the total number of events (mass layoffs), at 8,114, and of initial claims, at 795,612 were lower than in January through June 2003 (9,860 and 959,589 respectively.) Given the large number of non-farm payrolls created in the first six months of 2004, one might have thought the difference in mass layoffs with 2003 would have been larger. Maybe the rise in payrolls will be adjusted downward again.
Sears stated "we experienced weak demand in June." They provided a disappointing forecast for the third quarter.
I have been meaning to provide a look into conditions in the Napa Valley. The annual wine auction, which raises money for charity, collected less revenue for the third consecutive year. Old-time merchants report that store traffic is down slightly; however, the average purchase is down about 10%. In restaurants there is a trend for diners to order somewhat lower priced wines than in 2003. In sum, even the wealthier individuals are parting reluctantly with their money.
The Conference Board's index of leading economic indicators fell 0.2% in June, the first decline since March 2003. May's rise was adjusted downward slightly.
S&P recommended investors reduce their exposure to U.S. equities to only 45% of their portfolios and to increase the cash portion to 30%.
Washington Mutual will close mortgage operations in as many as 10 states . The company is cutting 2,500 jobs.
From January through June 2004, the total number of events (mass layoffs), at 8,114, and of initial claims, at 795,612 were lower than in January through June 2003 (9,860 and 959,589 respectively.) Given the large number of non-farm payrolls created in the first six months of 2004, one might have thought the difference in mass layoffs with 2003 would have been larger. Maybe the rise in payrolls will be adjusted downward again.
Sears stated "we experienced weak demand in June." They provided a disappointing forecast for the third quarter.
I have been meaning to provide a look into conditions in the Napa Valley. The annual wine auction, which raises money for charity, collected less revenue for the third consecutive year. Old-time merchants report that store traffic is down slightly; however, the average purchase is down about 10%. In restaurants there is a trend for diners to order somewhat lower priced wines than in 2003. In sum, even the wealthier individuals are parting reluctantly with their money.
7/22/04 What's Going On?
When the doors are closed, no outsider knows what goes on between a husband and a wife. When the doors are shut to an investor's psyche, no one truly knows why that individual is buying or selling. (Margin calls are an exception.)
There are so many factors behind decision making. Yesterday can be viewed as particularly disappointing. The Dow had quickly risen right out of the shoot. Before you could adjust your chair, it was up 85 points. The Nasdaq never caught the same frenzy. When the day was offer, the indices were badly in the red. I'm not in the mind of investors. I can only provide many possible scenarios, and some or all could have played a part.
This is not a latte market. You cannot expect Starbucks to carry the entire market on its shoulders. Same-store sales in the quarter rose 11% and profits increased by 43%. Projections were raised for the second time. The stock has been hitting new all-time highs. Earning 95 cents per share and selling at $46 per share, where would you like the stock to go? The price of a latte may rise next year, but at this rich P/E, this great one needs a rest. The same can be said for eBay, which did tank yesterday. These have been your most relaible high growth stocks for some time.
We know that the earnings growth for companies is slowing. The question is how much, and will that growth turn to flat numbers or even decline. Office Depot said sales had been below expectations for the last few weeks and they "approach the second half with a mixture of caution and optimism." Right now the market is focusing more on the caution and less on the optimism.
Demand for gasoline is slowing and inventories rose 2.5 million barrels last week, up 600,000 barrels from a year ago and the highest since mid-January. While the world is looking at gasoline, heating oil futures are trading at $1.0827 and natural gas at $5.931 per thousand cubic feet. If the winter is exceptionally cold, heating bills will be exceptionally high. You can cut back on driving, but you can reduce your thermostats just so much.
Getting back to yesterday, there were suggestions that the S&P could not hold the 1104 level and that inspired selling pressure. Another factor could be the deadlock on tax cut extensions. For me, there is dwindling demand for goods and services, and that includes equities. Right now supply exceeds demand and there is a lack of equilibrium. The pricing power is, at least temporarily, in decline for equities. This is not a new phenomenon. Unfortunately, it is new for those who make their living buying on weakness. That modus operandi is not working.
Eckerd is cutting 1,200 jobs and Mitsubishi 1,400 workers and reducing capacity by 22%. Santomero may think this economy is having its "usual fits and starts." He's a government worker and on salary. His money is not at risk in this economy. He is not a risk taker. He feeds off tax dollars. He gets paid even with record government deficits. In the business world, he might have lost his job. He creates no revenue. He is expendable. He is strictly a cost item. Businesses are still focusing on cutting costs. Why? Generating revenue continues to be a daunting task. Profit margins have made headway over the past year but the workers on Main Street are not seeing the fruits of their labors. The economy is feeling the impact of the paycheck to paycheck worker's cash flow dilemma.
When the doors are closed, no outsider knows what goes on between a husband and a wife. When the doors are shut to an investor's psyche, no one truly knows why that individual is buying or selling. (Margin calls are an exception.)
There are so many factors behind decision making. Yesterday can be viewed as particularly disappointing. The Dow had quickly risen right out of the shoot. Before you could adjust your chair, it was up 85 points. The Nasdaq never caught the same frenzy. When the day was offer, the indices were badly in the red. I'm not in the mind of investors. I can only provide many possible scenarios, and some or all could have played a part.
This is not a latte market. You cannot expect Starbucks to carry the entire market on its shoulders. Same-store sales in the quarter rose 11% and profits increased by 43%. Projections were raised for the second time. The stock has been hitting new all-time highs. Earning 95 cents per share and selling at $46 per share, where would you like the stock to go? The price of a latte may rise next year, but at this rich P/E, this great one needs a rest. The same can be said for eBay, which did tank yesterday. These have been your most relaible high growth stocks for some time.
We know that the earnings growth for companies is slowing. The question is how much, and will that growth turn to flat numbers or even decline. Office Depot said sales had been below expectations for the last few weeks and they "approach the second half with a mixture of caution and optimism." Right now the market is focusing more on the caution and less on the optimism.
Demand for gasoline is slowing and inventories rose 2.5 million barrels last week, up 600,000 barrels from a year ago and the highest since mid-January. While the world is looking at gasoline, heating oil futures are trading at $1.0827 and natural gas at $5.931 per thousand cubic feet. If the winter is exceptionally cold, heating bills will be exceptionally high. You can cut back on driving, but you can reduce your thermostats just so much.
Getting back to yesterday, there were suggestions that the S&P could not hold the 1104 level and that inspired selling pressure. Another factor could be the deadlock on tax cut extensions. For me, there is dwindling demand for goods and services, and that includes equities. Right now supply exceeds demand and there is a lack of equilibrium. The pricing power is, at least temporarily, in decline for equities. This is not a new phenomenon. Unfortunately, it is new for those who make their living buying on weakness. That modus operandi is not working.
Eckerd is cutting 1,200 jobs and Mitsubishi 1,400 workers and reducing capacity by 22%. Santomero may think this economy is having its "usual fits and starts." He's a government worker and on salary. His money is not at risk in this economy. He is not a risk taker. He feeds off tax dollars. He gets paid even with record government deficits. In the business world, he might have lost his job. He creates no revenue. He is expendable. He is strictly a cost item. Businesses are still focusing on cutting costs. Why? Generating revenue continues to be a daunting task. Profit margins have made headway over the past year but the workers on Main Street are not seeing the fruits of their labors. The economy is feeling the impact of the paycheck to paycheck worker's cash flow dilemma.
Wednesday, July 21, 2004
7/21/04 You Gotta Believe! Right?
Greenspan: "I think the effect of increasing concentration of incomes is not desirable in a democratic society."
The BLS: "Median weekly earnings of the nation's 101.3 million full-time wage and salary workers were $639 in the second quarter of 2004 or 3.7% higher than a year ago while the CPI gained 2.8% over the same period. " Information was taken from the Current Population Survey of 60,000 households covering all our 50 states and DC. Income excluded the self-employment sector.
Greenspan: "Business caution remains a feature of the economic landscape. Temporary hires relative to total employment continue to rise, and investment spending is still below cash flows inside U.S. companies."
The BLS: "Compared with May, June's unemployment rates were higher in 20 states , lower in 18 states and DC, and unchanged in 12 states."
Philly Fed's Santomero described our economy as having the "usual fits and starts" with "ample positive momentum" and with "inflation well contained." He has all the right answers.
GMAC posted record quarterly earnings driven by financing and insurance. GMAC earned $860 million. GM's sales in China rose 58%. GM Asia earned $236 million in the quarter. Unfortunately, the remaining auto operations only produced $529 million and GM's market share in North America dropped even though the company offered record incentives. Inventories rose. Prospects for the third quarter will be less than analysts had been expecting.
Next to the Federal Reserve, Microsoft is the greatest consistent generator of cash in our nation. The company has been on close to a 30 year run. To top it off, they will distribute a special dividend of $3 per share or $32 billion. This represents 2 year's cash flow. In addition, over a four year period, they intend to repurchase $30 billion in stock. In case you think this is an income stock, Microsoft announced they will file for more than 3,000 patents this year. The company spends about $7 billion a year on research. You can see that you are getting a lot of patent for your buck. I never thought of Microsoft as a think tank. Hopefully they won't turn into another Xerox PARC. It's most unfortunate that a special dividend and a stock buyback were the best ideas promoted by management. A sequel to Windows would have been nice. Maybe one of those 3,000 patents will turn into gold. You gotta believe. Right?
Greenspan: "I think the effect of increasing concentration of incomes is not desirable in a democratic society."
The BLS: "Median weekly earnings of the nation's 101.3 million full-time wage and salary workers were $639 in the second quarter of 2004 or 3.7% higher than a year ago while the CPI gained 2.8% over the same period. " Information was taken from the Current Population Survey of 60,000 households covering all our 50 states and DC. Income excluded the self-employment sector.
Greenspan: "Business caution remains a feature of the economic landscape. Temporary hires relative to total employment continue to rise, and investment spending is still below cash flows inside U.S. companies."
The BLS: "Compared with May, June's unemployment rates were higher in 20 states , lower in 18 states and DC, and unchanged in 12 states."
Philly Fed's Santomero described our economy as having the "usual fits and starts" with "ample positive momentum" and with "inflation well contained." He has all the right answers.
GMAC posted record quarterly earnings driven by financing and insurance. GMAC earned $860 million. GM's sales in China rose 58%. GM Asia earned $236 million in the quarter. Unfortunately, the remaining auto operations only produced $529 million and GM's market share in North America dropped even though the company offered record incentives. Inventories rose. Prospects for the third quarter will be less than analysts had been expecting.
Next to the Federal Reserve, Microsoft is the greatest consistent generator of cash in our nation. The company has been on close to a 30 year run. To top it off, they will distribute a special dividend of $3 per share or $32 billion. This represents 2 year's cash flow. In addition, over a four year period, they intend to repurchase $30 billion in stock. In case you think this is an income stock, Microsoft announced they will file for more than 3,000 patents this year. The company spends about $7 billion a year on research. You can see that you are getting a lot of patent for your buck. I never thought of Microsoft as a think tank. Hopefully they won't turn into another Xerox PARC. It's most unfortunate that a special dividend and a stock buyback were the best ideas promoted by management. A sequel to Windows would have been nice. Maybe one of those 3,000 patents will turn into gold. You gotta believe. Right?
Tuesday, July 20, 2004
7/20/04 Storm Clouds
Ford's financial services sector recorded a June quarter pre-tax profit of $1.6 billion, up from $800 million a year ago. On a pre-tax basis, Ford's worldwide automotive sector reported a loss of $57 million. Vehicle sales dropped 5.2% and their market share fell to 19.7% from 20.9%. Management was pleased with the results. Third quarter forecasts were provided, and they are below analyst projections.
OPEC forecasts demand for crude will rise by 340,000 bpd in 2005 to an average 27.36 million bpd after an increase of 590,000 bpd in 2004. Petrologistics estimated OPEC production ex Iraq at 27.81 million bpd in July.
Peoples Energy offers buyouts to 1,200 workers.
AT&T Wireless to launch its 3G service in 4 markets. It will offer a high-speed data network.
June housing starts dropped 8.5%. Building permits also fell sharply. These declines spell trouble for the economic growth numbers and will assist in bond rates dropping further.
August crude futures are bumping close to $42 pb once again.
According to CardWeb.com, the average credit card debt in the U.S. is $8,400.
We account for 21% of the world's GDP but only 5% of the population. I have a feeling that ratio is about to change.
Ford's financial services sector recorded a June quarter pre-tax profit of $1.6 billion, up from $800 million a year ago. On a pre-tax basis, Ford's worldwide automotive sector reported a loss of $57 million. Vehicle sales dropped 5.2% and their market share fell to 19.7% from 20.9%. Management was pleased with the results. Third quarter forecasts were provided, and they are below analyst projections.
OPEC forecasts demand for crude will rise by 340,000 bpd in 2005 to an average 27.36 million bpd after an increase of 590,000 bpd in 2004. Petrologistics estimated OPEC production ex Iraq at 27.81 million bpd in July.
Peoples Energy offers buyouts to 1,200 workers.
AT&T Wireless to launch its 3G service in 4 markets. It will offer a high-speed data network.
June housing starts dropped 8.5%. Building permits also fell sharply. These declines spell trouble for the economic growth numbers and will assist in bond rates dropping further.
August crude futures are bumping close to $42 pb once again.
According to CardWeb.com, the average credit card debt in the U.S. is $8,400.
We account for 21% of the world's GDP but only 5% of the population. I have a feeling that ratio is about to change.
Monday, July 19, 2004
7/19/04 Automaker Woes
Rising gasoline prices and rising sales incentives on new vehicles are driving down the wholesale price of large used SUVs. The decline could signal trouble for profitable sales of new full-sized SUVs.
There has been abrupt slowdown in sales of passenger cars in China. Automakers have begun cutting production plans. GM's major profit sector will still make money, but not as much.
A 1992 agreement permits Boeing to have a level of indirect subsidies through R&D programs of the FAA, NASA, and the Defense Department. That alone will not offset the onslaught of Airbus. The latter's CEO suggested his company's A380 would kill the aging 747 and leave Boeing competing in just two parts of the commercial jet market. Judging from recent orders, the Airbus executive seems to have the facts to support that viewpoint.
Rising gasoline prices and rising sales incentives on new vehicles are driving down the wholesale price of large used SUVs. The decline could signal trouble for profitable sales of new full-sized SUVs.
There has been abrupt slowdown in sales of passenger cars in China. Automakers have begun cutting production plans. GM's major profit sector will still make money, but not as much.
A 1992 agreement permits Boeing to have a level of indirect subsidies through R&D programs of the FAA, NASA, and the Defense Department. That alone will not offset the onslaught of Airbus. The latter's CEO suggested his company's A380 would kill the aging 747 and leave Boeing competing in just two parts of the commercial jet market. Judging from recent orders, the Airbus executive seems to have the facts to support that viewpoint.
Sunday, July 18, 2004
7/18/04 Shelf Life
Another business spending incentive's shelf life is winding down. Bonus depreciation ends on December 31. If you place an asset in service in 2004, your business, regardless of size, can deduct 50% of the asset's cost this year. In addition, should the asset have a five-year life for depreciation purposes, then one can deduct one-fifth of the remaining depreciation. In sum, that would mean a 60% deduction for tax purposes in 2004, and would represent a big boost to cash flow. When forecasters predict strong business spending in the future, they often fail to acknowledge the importance of this bonus depreciation, which was created in 2002, and what it has recently meant. Unless extended, business spending will be impacted. Many are counting on business spending to compensate for the slowdown in consumer spending. It has not been lost on the stock market that such thinking is unrealistic.
In a recent interview with Kevin Rollins, Dell's CEO, he was asked about HP's price-cutting tactics for the last 18 months and whether Dell had anticipated the emergence of a competitor with this kind of a model. Rollins replied "well, they don't have a new model. I mean losing money is never a model." Dell continues to chip away at HP's main meal, the printer business. Dell will pressure the margins in HP's ink business. As Rollins observed, "that ink costs more than a Dom Perignon or a Chanel No. 5. It's the most expensive liquid on the planet."
The National Auctioneers Association documented that live auctions account for $203.2 billion a year in sales, and that more than 50% of Americans have attended live auctions.
Another business spending incentive's shelf life is winding down. Bonus depreciation ends on December 31. If you place an asset in service in 2004, your business, regardless of size, can deduct 50% of the asset's cost this year. In addition, should the asset have a five-year life for depreciation purposes, then one can deduct one-fifth of the remaining depreciation. In sum, that would mean a 60% deduction for tax purposes in 2004, and would represent a big boost to cash flow. When forecasters predict strong business spending in the future, they often fail to acknowledge the importance of this bonus depreciation, which was created in 2002, and what it has recently meant. Unless extended, business spending will be impacted. Many are counting on business spending to compensate for the slowdown in consumer spending. It has not been lost on the stock market that such thinking is unrealistic.
In a recent interview with Kevin Rollins, Dell's CEO, he was asked about HP's price-cutting tactics for the last 18 months and whether Dell had anticipated the emergence of a competitor with this kind of a model. Rollins replied "well, they don't have a new model. I mean losing money is never a model." Dell continues to chip away at HP's main meal, the printer business. Dell will pressure the margins in HP's ink business. As Rollins observed, "that ink costs more than a Dom Perignon or a Chanel No. 5. It's the most expensive liquid on the planet."
The National Auctioneers Association documented that live auctions account for $203.2 billion a year in sales, and that more than 50% of Americans have attended live auctions.
Saturday, July 17, 2004
7/17/04 A Funny Thing Happened
Without angst and worry the public might shy away from the media. It's quite possible there would be less reading of newspapers and magazines, less watching of TV news and financial stations, and decreased listening to talk radio. In addition, politicians would have smaller audiences. At the same time, with less angst it's possible there could be decreased discretionary federal spending. Now don't get me wrong. There are plenty of worries. Ford recalled 900,000 cars. Mine is too old to be recalled. Boston Scientific recalled 96,000 stent systems. I never had use for one, thanks God. There is worry with GM. According to Global Insight, North American vehicle production is running 4.5% behind last year's pace, and yet, inventories of unsold vehicles are rising despite ever increasing incentives. If you want to pace the halls at night, here is a fright. Funding the deficit has become more problematic. U.S. asset inflows declined in May to $56.4 billion from net inflows of $76 billion in April. Should that downward trend continue, you might be faced with a combination of less federal spending and increased taxes. The shortfall must be made up somehow. It may as well be your pocketbook. In spite of these worries, the University of Michigan told us that, in July, sentiment was slightly more positive than in June. In essence, even though your paychecks after inflation continue to dwindle, you are jumping for joy. A shrink might be in order.
A funny thing happened on the way to angstville. Those rising interest rates you've been worried about are not rising. Ten year treasuries are yielding 4.36% or essentially the same rate they were on April 13. All that Fed speak about increasing rates on a measured basis was just there to mislead the markets and sell newspapers. It was part of the war on terror-- to create more terror. Don't worry. The markets forgot more about forecasting than Greenspan and company ever knew. If you listen to a consultant, you are a schmuck of the first order.
My remedy is to burn your newspapers and magazines. Turn off the TV and radio. Start thinking for yourself. You might discover your brain, the one that hasn't been used in quite some time. If it's atrophied, don't worry. A funny thing happened. Dormant doesn't equate with dead.
Without angst and worry the public might shy away from the media. It's quite possible there would be less reading of newspapers and magazines, less watching of TV news and financial stations, and decreased listening to talk radio. In addition, politicians would have smaller audiences. At the same time, with less angst it's possible there could be decreased discretionary federal spending. Now don't get me wrong. There are plenty of worries. Ford recalled 900,000 cars. Mine is too old to be recalled. Boston Scientific recalled 96,000 stent systems. I never had use for one, thanks God. There is worry with GM. According to Global Insight, North American vehicle production is running 4.5% behind last year's pace, and yet, inventories of unsold vehicles are rising despite ever increasing incentives. If you want to pace the halls at night, here is a fright. Funding the deficit has become more problematic. U.S. asset inflows declined in May to $56.4 billion from net inflows of $76 billion in April. Should that downward trend continue, you might be faced with a combination of less federal spending and increased taxes. The shortfall must be made up somehow. It may as well be your pocketbook. In spite of these worries, the University of Michigan told us that, in July, sentiment was slightly more positive than in June. In essence, even though your paychecks after inflation continue to dwindle, you are jumping for joy. A shrink might be in order.
A funny thing happened on the way to angstville. Those rising interest rates you've been worried about are not rising. Ten year treasuries are yielding 4.36% or essentially the same rate they were on April 13. All that Fed speak about increasing rates on a measured basis was just there to mislead the markets and sell newspapers. It was part of the war on terror-- to create more terror. Don't worry. The markets forgot more about forecasting than Greenspan and company ever knew. If you listen to a consultant, you are a schmuck of the first order.
My remedy is to burn your newspapers and magazines. Turn off the TV and radio. Start thinking for yourself. You might discover your brain, the one that hasn't been used in quite some time. If it's atrophied, don't worry. A funny thing happened. Dormant doesn't equate with dead.
Friday, July 16, 2004
7/16/04 Why Bush Will Lose The Election
It's quite straightforward. The Labor Department provided the reason. The average weekly earnings of U.S. workers decreased 0.8% in June. The average American is going economically backwards.
The core CPI, excluding food and energy costs, rose only 0.1% in June, the lowest rate of increase since last December. Overall, this is good news for the bond market. It would be good news for stocks except for one thing-- top line growth is muted. Look at IBM. Their second quarter revenues rose only 4%, adjusted for currency, and this is only marginally better than the rate of inflation. Their gross margins declined from the year ago period. You'd never know this reading from the optimistic headlines. I don't trade with headlines. Dell raised their profit outlook for this quarter. They didn't raise revenue forecasts. The raise is due to a lower tax rate. I can't get excited over a lower tax rate.
UAL is deferring a $72.4 million pension fund payment. At the end of 2003, their pension plans were underfunded by $6.2 billion. That's not a misprint.
Breuners Furniture is going out of business and closing their 47 furniture stores. They operate in the Bay Area and Sacramento.
Michigan's factories shed another 10,000 jobs in June.
AMR will furlough 123 pilots.
San Jose University's recent study of California's consumer optimism indicates a drop of 2 points from the end of March and down 6 points from the end of December 2003.
Fed Governor Susan Schmidt Bies: "You cannot keep short term interest rates below the rate of inflation- it's too accomodative. We've got to get to what we call a neutral level." Don't look now in real time, Ms. Bies, but the rate of inflation is dropping, and quickly. That's what happens when demand hits a brick wall.
Elise Gould of the Economic Policy Institute stated "the idea of a preferred provider isn't necessarily based on quality of care. It's based on who's making the best deals."
When Krispy Kreme opened their first outlet in Northern California just before their IPO, the lines stretched and stretched and the police assisted with the traffic. The excitement has switched to chicken. Thousands were there in Corona, Queens for the opening of Pollo Campero, a Guatemalan chain founded 33 years ago. It operates in 6 countries and this was the first N.Y outlet. The next one will open in Brooklyn. They have locations in California and Washington. This is the real deal.
Sy Hersh relates that young Iraqi men were sodomized by U.S. troops at Abu Ghuraib. It's on film.
It's quite straightforward. The Labor Department provided the reason. The average weekly earnings of U.S. workers decreased 0.8% in June. The average American is going economically backwards.
The core CPI, excluding food and energy costs, rose only 0.1% in June, the lowest rate of increase since last December. Overall, this is good news for the bond market. It would be good news for stocks except for one thing-- top line growth is muted. Look at IBM. Their second quarter revenues rose only 4%, adjusted for currency, and this is only marginally better than the rate of inflation. Their gross margins declined from the year ago period. You'd never know this reading from the optimistic headlines. I don't trade with headlines. Dell raised their profit outlook for this quarter. They didn't raise revenue forecasts. The raise is due to a lower tax rate. I can't get excited over a lower tax rate.
UAL is deferring a $72.4 million pension fund payment. At the end of 2003, their pension plans were underfunded by $6.2 billion. That's not a misprint.
Breuners Furniture is going out of business and closing their 47 furniture stores. They operate in the Bay Area and Sacramento.
Michigan's factories shed another 10,000 jobs in June.
AMR will furlough 123 pilots.
San Jose University's recent study of California's consumer optimism indicates a drop of 2 points from the end of March and down 6 points from the end of December 2003.
Fed Governor Susan Schmidt Bies: "You cannot keep short term interest rates below the rate of inflation- it's too accomodative. We've got to get to what we call a neutral level." Don't look now in real time, Ms. Bies, but the rate of inflation is dropping, and quickly. That's what happens when demand hits a brick wall.
Elise Gould of the Economic Policy Institute stated "the idea of a preferred provider isn't necessarily based on quality of care. It's based on who's making the best deals."
When Krispy Kreme opened their first outlet in Northern California just before their IPO, the lines stretched and stretched and the police assisted with the traffic. The excitement has switched to chicken. Thousands were there in Corona, Queens for the opening of Pollo Campero, a Guatemalan chain founded 33 years ago. It operates in 6 countries and this was the first N.Y outlet. The next one will open in Brooklyn. They have locations in California and Washington. This is the real deal.
Sy Hersh relates that young Iraqi men were sodomized by U.S. troops at Abu Ghuraib. It's on film.
Thursday, July 15, 2004
7/15/04 Profit Margins And Market Share
As the forecast for Intel's gross profit margins declined from 62% to 60%, the stock plunged to an 11 month low of $23.25. Intel had company. Nokia, the leader in the mobile device market, provided a disappointing revenue and profit report and outlook. In an effort to reverse the decline in market share from 32% to 31%, Nokia cut prices and yet sales still declined 5% even as the market for mobile phones increased. The stock plunged 17% to the lowest price in about 6 years. Intel and Nokia are the leaders in their respective industries. The fact that industry leaders are trading at new lows is not good news, in my opinion, for the overall market. It provides increased reason for caution.
June import prices had the first decline in 9 months. Excluding petroleum, import prices were unchanged, the first time in 8 months. Export prices declined 0.6% in June as the price of agricultural goods dropped 4.3%. It was the first drop in 11 months and the largest drop since October 2001.
There was nothing surprising in the weekly U.S. initial jobless claims. They rose by 40,000 to 349,000, and have been at that number for three of the past 4 weeks. However, the number of Americans receiving state benefits rose by 12,000 to 2.97 million, a six week high.
U.S. wholesale prices fell 0.3% in June. The decline was the result of drops in energy and food prices. With the price of oil recently jumping to $41 per barrel, the bond market has ignored the core PPI rising only 0.2%. There is more to inflation or deflation than the price of petroleum and natural gas.
Total inventories have risen 4% since May 2003 due in large part to the increase in wholesale inventories rather than retail inventories. With the slowdown in various sectors of the economy, one should not be surprised if the growth in wholesale inventories is cut sharply in coming months.
As the forecast for Intel's gross profit margins declined from 62% to 60%, the stock plunged to an 11 month low of $23.25. Intel had company. Nokia, the leader in the mobile device market, provided a disappointing revenue and profit report and outlook. In an effort to reverse the decline in market share from 32% to 31%, Nokia cut prices and yet sales still declined 5% even as the market for mobile phones increased. The stock plunged 17% to the lowest price in about 6 years. Intel and Nokia are the leaders in their respective industries. The fact that industry leaders are trading at new lows is not good news, in my opinion, for the overall market. It provides increased reason for caution.
June import prices had the first decline in 9 months. Excluding petroleum, import prices were unchanged, the first time in 8 months. Export prices declined 0.6% in June as the price of agricultural goods dropped 4.3%. It was the first drop in 11 months and the largest drop since October 2001.
There was nothing surprising in the weekly U.S. initial jobless claims. They rose by 40,000 to 349,000, and have been at that number for three of the past 4 weeks. However, the number of Americans receiving state benefits rose by 12,000 to 2.97 million, a six week high.
U.S. wholesale prices fell 0.3% in June. The decline was the result of drops in energy and food prices. With the price of oil recently jumping to $41 per barrel, the bond market has ignored the core PPI rising only 0.2%. There is more to inflation or deflation than the price of petroleum and natural gas.
Total inventories have risen 4% since May 2003 due in large part to the increase in wholesale inventories rather than retail inventories. With the slowdown in various sectors of the economy, one should not be surprised if the growth in wholesale inventories is cut sharply in coming months.
Wednesday, July 14, 2004
7/14/04 Gas Tank To Gas Tank Forecasting
Last week the price of gas rose 2 cents on average per gallon nationally. That was after a few weeks of declines. Yesterday the price of gas rose once again and heating oil futures soared. I know it's summer, but supplies for the winter are viewed with suspicion. U.S. retail sales declined 1.1% in June, a big drop. Then we came to the July 4th weekend and Target stated they did better than expected. That gave hope to their July results improving over the disappointing June sales. My feelings are that the once again rising gasoline prices will put a damper on retail sales from mid-July through the end of the month. Therefore, July retail sales will not be anything too terrific. Importantly, as retail sales continue to be muted, new orders for manufactured goods will fall for the third straight month.
Capacity is outstripping supply and airline prices are dropping. American Air, Delta, and United are all under the gun. It's not a pretty picture.
Fixed investment comprises about 45% of China's economy.
Of the 44 million uninsured adults in the U.S., 41% are young, and since 1987, the number of uninsured young adults has grown at twice the rate of older adults, even though the demographics would suggest that group is shrinking in size.
After Intel reported their quarterly results, the stock got hammered by 5%. In my view, on further declines a long-term holder should consider adding to or initiating a position. Intel's move to nanometer process technology is around the corner, and significant positive results should be forthcoming.
Last week the price of gas rose 2 cents on average per gallon nationally. That was after a few weeks of declines. Yesterday the price of gas rose once again and heating oil futures soared. I know it's summer, but supplies for the winter are viewed with suspicion. U.S. retail sales declined 1.1% in June, a big drop. Then we came to the July 4th weekend and Target stated they did better than expected. That gave hope to their July results improving over the disappointing June sales. My feelings are that the once again rising gasoline prices will put a damper on retail sales from mid-July through the end of the month. Therefore, July retail sales will not be anything too terrific. Importantly, as retail sales continue to be muted, new orders for manufactured goods will fall for the third straight month.
Capacity is outstripping supply and airline prices are dropping. American Air, Delta, and United are all under the gun. It's not a pretty picture.
Fixed investment comprises about 45% of China's economy.
Of the 44 million uninsured adults in the U.S., 41% are young, and since 1987, the number of uninsured young adults has grown at twice the rate of older adults, even though the demographics would suggest that group is shrinking in size.
After Intel reported their quarterly results, the stock got hammered by 5%. In my view, on further declines a long-term holder should consider adding to or initiating a position. Intel's move to nanometer process technology is around the corner, and significant positive results should be forthcoming.
Tuesday, July 13, 2004
7/13/04 Plant Closings And The Trade Deficit
With all the talk about the strength in the economy it is surprising that the number of plant closings is, in fact, picking up from the lull in April and May. The industries are quite varied. Here are afew examples of recent announcements. Collins and Aikman will close its plant in Manchester, Michigan ands eliminate 500 jobs. Temple-Inland will close its Mishawaka, Indiana plant and cut 119 workers. Gerber Scientific will close its Muskogee, Oklahoma facility and cut 130 workers. Vaughn-Bassett Furniture is closing its Sumter, South Carolina facility and laying off 350 workers.
This morning there was an announcement that the trade deficit had narrowed for the first time in six months, and that the 4.5% decline was the largest since October 2002. The May deficit was $46 billion. There were two main reasons for the decline. Our exports rose above expectations with the delivery of 14 planes by Boeing up from the prior month's 8. Importantly, imports of consumer goods dropped 3%. The yields on treasuries increased as the market interpreted the numbers to reveal greater than anticipated economic strength. For Boeing, plane deliveries for the first six months have been only a few above the year before. It's just that April's deliveries were below average. However, the focus should have been oncom/w/hiphopper/serenity.jpg" width=225 height=295>
With all the talk about the strength in the economy it is surprising that the number of plant closings is, in fact, picking up from the lull in April and May. The industries are quite varied. Here are afew examples of recent announcements. Collins and Aikman will close its plant in Manchester, Michigan ands eliminate 500 jobs. Temple-Inland will close its Mishawaka, Indiana plant and cut 119 workers. Gerber Scientific will close its Muskogee, Oklahoma facility and cut 130 workers. Vaughn-Bassett Furniture is closing its Sumter, South Carolina facility and laying off 350 workers.
This morning there was an announcement that the trade deficit had narrowed for the first time in six months, and that the 4.5% decline was the largest since October 2002. The May deficit was $46 billion. There were two main reasons for the decline. Our exports rose above expectations with the delivery of 14 planes by Boeing up from the prior month's 8. Importantly, imports of consumer goods dropped 3%. The yields on treasuries increased as the market interpreted the numbers to reveal greater than anticipated economic strength. For Boeing, plane deliveries for the first six months have been only a few above the year before. It's just that April's deliveries were below average. However, the focus should have been oncom/w/hiphopper/serenity.jpg" width=225 height=295>
about us (someone write this!)
Monday, July 12, 2004
7/12/04 It's Wise To Focus On Wal-Mart
When the Fed checked in with Wal-Mart in June before the FOMC meeting, they were told that consumer spending was slowing and that higher gasoline prices were taking a toll. In fact, Wal-Mart was lowering its forecast for same-store sales growth for the month of June. Fed members had already made the rounds of the country making speeches and told the investing world that rates would be increased. They locked themselves in to a rate hike. They had better listen to Wal-Mart more closely this time. Wal-Mart is sticking to its present projection of a 2 to 4 percent same-store sales increase for July. My checks indicate that their business is not much different from the prior month. That would indicate a rise of only about 1 to 1 1/2 percent at the Wal-Mart stores and thus still lagging inflation. Management reiterates that high gasoline prices are hindering consumer spending. There are far more paycheck to paycheck consumers than those shopping at Tiffany's or Nordstrom's. The latter maybe Bush's base but that won't carry the day for the economy. Unless salaries and wages rise above inflation, the consumer will remain on the spending sidelines. There is no reason to raise rates. The dollar is going nowhere but down, and as an example, the pound just made a four-month high versus the dollar.
As of July 1, the inventory of light trucks in the U.S. hit the scales at 85 days, up from 75 days a month earlier. Keep in mind that incentives are increasing while inventories are rising, and that combination is a trainwreck for the light truck manufacturers.
There is another type of inventory rising and that's for seven figure homes in California. All of a sudden they have hit a brick wall. That spells trouble for the housing market. There still is stroing demand for condos in the $250,000 to $300,000 range.
When the Fed checked in with Wal-Mart in June before the FOMC meeting, they were told that consumer spending was slowing and that higher gasoline prices were taking a toll. In fact, Wal-Mart was lowering its forecast for same-store sales growth for the month of June. Fed members had already made the rounds of the country making speeches and told the investing world that rates would be increased. They locked themselves in to a rate hike. They had better listen to Wal-Mart more closely this time. Wal-Mart is sticking to its present projection of a 2 to 4 percent same-store sales increase for July. My checks indicate that their business is not much different from the prior month. That would indicate a rise of only about 1 to 1 1/2 percent at the Wal-Mart stores and thus still lagging inflation. Management reiterates that high gasoline prices are hindering consumer spending. There are far more paycheck to paycheck consumers than those shopping at Tiffany's or Nordstrom's. The latter maybe Bush's base but that won't carry the day for the economy. Unless salaries and wages rise above inflation, the consumer will remain on the spending sidelines. There is no reason to raise rates. The dollar is going nowhere but down, and as an example, the pound just made a four-month high versus the dollar.
As of July 1, the inventory of light trucks in the U.S. hit the scales at 85 days, up from 75 days a month earlier. Keep in mind that incentives are increasing while inventories are rising, and that combination is a trainwreck for the light truck manufacturers.
There is another type of inventory rising and that's for seven figure homes in California. All of a sudden they have hit a brick wall. That spells trouble for the housing market. There still is stroing demand for condos in the $250,000 to $300,000 range.
Sunday, July 11, 2004
7/11/04 Forced Productivity
It's not a picnic in Germany. Unemployment is averaging at least 10%. On the other hand, there is plenty of time to have a picnic with workers averaging 42 days off a year. That is not a misprint. Times are changing. In an effort to compete and lower overhead costs, Siemens, Daimler, Continental, Thomas Cook, the German railways, and others are demanding that workers discard their 35-hour workweek and extend it to 40 hours for no extra pay. The alternative is to see those jobs outsourced.
Economists and analysts have recently stated that the U.S. economy has hit a soft patch and that growth is slowing. Judging from the June retail as well as auto sales numbers, it would appear that the economy has done more than hit a soft patch. In all probability, the July hiring figures will not make for pleasant reading. The technology sector is, for the most part, struggling with sluggish customer demand, the auto companies are cutting back on production to offset bulging inventories, and the paycheck to paycheck Wal-Mart and Target customers have taken a respite from buying. One should not forget that Wal-Mart is the largest private sector employer in the U.S. Hiring in the retail sector is slowing. With slowing consumer demand for goods and services, it will not be just the auto companies offering larger concessions to make sales. The rate of inflation will moderate to acceptable levels. This is not stagflation. It is making do with what you have. It's not pretty but it's the price you pay for too many years of a zero down payment no interest payment economy. Too many free lunches cause overheating and eventual upchucking.
It's not a picnic in Germany. Unemployment is averaging at least 10%. On the other hand, there is plenty of time to have a picnic with workers averaging 42 days off a year. That is not a misprint. Times are changing. In an effort to compete and lower overhead costs, Siemens, Daimler, Continental, Thomas Cook, the German railways, and others are demanding that workers discard their 35-hour workweek and extend it to 40 hours for no extra pay. The alternative is to see those jobs outsourced.
Economists and analysts have recently stated that the U.S. economy has hit a soft patch and that growth is slowing. Judging from the June retail as well as auto sales numbers, it would appear that the economy has done more than hit a soft patch. In all probability, the July hiring figures will not make for pleasant reading. The technology sector is, for the most part, struggling with sluggish customer demand, the auto companies are cutting back on production to offset bulging inventories, and the paycheck to paycheck Wal-Mart and Target customers have taken a respite from buying. One should not forget that Wal-Mart is the largest private sector employer in the U.S. Hiring in the retail sector is slowing. With slowing consumer demand for goods and services, it will not be just the auto companies offering larger concessions to make sales. The rate of inflation will moderate to acceptable levels. This is not stagflation. It is making do with what you have. It's not pretty but it's the price you pay for too many years of a zero down payment no interest payment economy. Too many free lunches cause overheating and eventual upchucking.
Saturday, July 10, 2004
7/10/04 The Saga Of A Monopoly
In a July 8 letter to customers, Union Pacific writes "increased resources have been overshadowed by increases in volume- six months in a row- and have not proven to be sufficient to meet demand." In Houston, for example, Union Pacific is the only game in town. The lack of competition has enabled this company's less than adept management to increase shipping time to some customers from 10 to 18 days. As one customer remarked, "ultimately it makes us uncompetitive."
Thirty million customers visit the 8,000 Starbucksstores every week.
Storage Technology saw an unexpected drop in orders in the final two weeks of June. Meetings with CIOs in North America and Europe point to flat to limited growth in IT budgets.
According to Deloitte Research's Leading Index of Consumer Spending, consumer spending declined sharply in May as a result of declining real wages, waning tax cuts, and falling home prices. In addition, a boost in inflation from rising energy prices and hefty health benefit costs undermined consumer spending. Overall, the index fell to 5.3% in May from April's 5.84% and this sharp decline in the index points to adeceleration in consumer spending growth in the months ahead.
Wholesalers' inventories increased 1.2% in May but sales only rose 0.5%.
According to Ward's Automotive, U.S. auto production will decline 70% from one week ago. GM and Ford will produce no vehicles.
In yesterday's speech in Pennsylvania, Bush stated "my administration looked at intelligence, and we remembered the past of Saddam. We remembered he used weapons on his own people. And then we looked at further intelligence, and we saw a threat." Unfortunately, not one weapons inspector agreed with the "intelligence."
In a July 8 letter to customers, Union Pacific writes "increased resources have been overshadowed by increases in volume- six months in a row- and have not proven to be sufficient to meet demand." In Houston, for example, Union Pacific is the only game in town. The lack of competition has enabled this company's less than adept management to increase shipping time to some customers from 10 to 18 days. As one customer remarked, "ultimately it makes us uncompetitive."
Thirty million customers visit the 8,000 Starbucksstores every week.
Storage Technology saw an unexpected drop in orders in the final two weeks of June. Meetings with CIOs in North America and Europe point to flat to limited growth in IT budgets.
According to Deloitte Research's Leading Index of Consumer Spending, consumer spending declined sharply in May as a result of declining real wages, waning tax cuts, and falling home prices. In addition, a boost in inflation from rising energy prices and hefty health benefit costs undermined consumer spending. Overall, the index fell to 5.3% in May from April's 5.84% and this sharp decline in the index points to adeceleration in consumer spending growth in the months ahead.
Wholesalers' inventories increased 1.2% in May but sales only rose 0.5%.
According to Ward's Automotive, U.S. auto production will decline 70% from one week ago. GM and Ford will produce no vehicles.
In yesterday's speech in Pennsylvania, Bush stated "my administration looked at intelligence, and we remembered the past of Saddam. We remembered he used weapons on his own people. And then we looked at further intelligence, and we saw a threat." Unfortunately, not one weapons inspector agreed with the "intelligence."
Friday, July 09, 2004
Thursday, July 08, 2004
7/8/04 You Want More Volatility?
Be careful what you wish for. Same-store sales for Wal-Mart were up 2.2%; however, a closer peek is quite disturbing. Sales at the Wal-Mart division rose only 1.3%; Sam's Club was up 6.4%; and the International operations increased 14.4%. Weather can't be bad everywhere. Target was only up 2%. Sears, May, Kohl's, and Gap all had down same-store sales.
According to Ward's, the inventory of unsolf North American vehicles is 3.52 million or about 9% higher than one year ago. Had the announced factory closings for July been in the last week, there would not have been a decline in the unemployment roles.
Pfizer will offer discounts to uninsured families of u to 37% off retail prescription prices and will expand discounts for Medicare beneficiaries by charging them a flat fee of $15 per subscription. This will play a significant role in bringing down the yearly rise in health insurance premiums which have had three straight years of double-digit increases. With health care at 15% or more of the GDP, lowering of prescription prices should help to reduce the inflation rate.
Yahoo shares traded at a 52-week high of 36.50 on June 30. In after hours trading yesterday, the stock dropped to 27.72. Is that volatile enough for you? Profit once again doubled for the company. Investors were disappointed that sales did not exceed expectations. The CEO has done a great job at Yahoo. Management on Wall Street should be so good. Expectations lead to disappointment, and that is especially true in a gun-shy market. If you wait foer the other shoe to drop, you won't be disappointed. Alcoa missed their numbers, and there could be plenty of others to follow.
Australian employment in June fell for the second straight month and the unemployment rate rose to 5.6% from a 23-year low of 5.5%.
Be careful what you wish for. Same-store sales for Wal-Mart were up 2.2%; however, a closer peek is quite disturbing. Sales at the Wal-Mart division rose only 1.3%; Sam's Club was up 6.4%; and the International operations increased 14.4%. Weather can't be bad everywhere. Target was only up 2%. Sears, May, Kohl's, and Gap all had down same-store sales.
According to Ward's, the inventory of unsolf North American vehicles is 3.52 million or about 9% higher than one year ago. Had the announced factory closings for July been in the last week, there would not have been a decline in the unemployment roles.
Pfizer will offer discounts to uninsured families of u to 37% off retail prescription prices and will expand discounts for Medicare beneficiaries by charging them a flat fee of $15 per subscription. This will play a significant role in bringing down the yearly rise in health insurance premiums which have had three straight years of double-digit increases. With health care at 15% or more of the GDP, lowering of prescription prices should help to reduce the inflation rate.
Yahoo shares traded at a 52-week high of 36.50 on June 30. In after hours trading yesterday, the stock dropped to 27.72. Is that volatile enough for you? Profit once again doubled for the company. Investors were disappointed that sales did not exceed expectations. The CEO has done a great job at Yahoo. Management on Wall Street should be so good. Expectations lead to disappointment, and that is especially true in a gun-shy market. If you wait foer the other shoe to drop, you won't be disappointed. Alcoa missed their numbers, and there could be plenty of others to follow.
Australian employment in June fell for the second straight month and the unemployment rate rose to 5.6% from a 23-year low of 5.5%.
Wednesday, July 07, 2004
7/7/04 The Fun And Games Are Over
This is earnings season and that includes earning warnings. Yesterday, Veritas announced slowing business software license sales. Nothing serious. The stock only dropped 30% or so and clipped $4 billion in market value from the company's shares. In bull markets one does not see such a violent reaction. This morning PeopleSoft warned about their quarterly results. It's been one year since Oracle started their hostile tender for the company, and PeopleSoft's shares proceeded to rise over 50%. Guess what. Those shares have returned to the pre-tender levels. The lawyers made out brilliantly but the stockholders were left empty handed. What else is new? One more item to note was yesterday's warning by San Francisco-based Embarcadero Technologies. Smart investors paid much attention to that announcement.
Yesterday and today are good days for auto customers. Yesterday Ford increased incentives by $1,000 on some models and GM lowered lease payments by $1,500 on some models. Today GM will announce some more incentives on outright-purchase plans. Slowing sales have created bulging inventories at the dealer level. The deals will get better as the introduction of the new models get closer.
The June ISM non-manufacturing or services index fell to 59.9 from 65.2 in May, the largest monthly drop since October 2001. Should you be concerned? Services account for over 80% of our economy.
Challenger, Gray, and Christmas stated that corporate hirings fell to 38,377 workers, down 31% from May's 55,307. The Wall Street Journal mentioned today that hiring would be increasing. I don't see them adding workers to their staff.
According to Cutting Edge Information, fewer than 25% of all pharma companies conduct market research in pre-clinical development.
The International Council of Shopping Centers stated "the overall year over year sales remained somewhat subdued compared with earlier in June." They anticipate that June monthly sales will have risen about 3 to 31/2% compared to June 2003 and the May 2004 rise of 5.7%.
Over the past month I have mentioned that Microsoft is paying increased attention to cutting expenses. Today the company stated that recently "expenses have grown faster than revenues." In several newspapers there was reference to an internal company memo focusing on a cost reduction effort of $1 billion.
This is earnings season and that includes earning warnings. Yesterday, Veritas announced slowing business software license sales. Nothing serious. The stock only dropped 30% or so and clipped $4 billion in market value from the company's shares. In bull markets one does not see such a violent reaction. This morning PeopleSoft warned about their quarterly results. It's been one year since Oracle started their hostile tender for the company, and PeopleSoft's shares proceeded to rise over 50%. Guess what. Those shares have returned to the pre-tender levels. The lawyers made out brilliantly but the stockholders were left empty handed. What else is new? One more item to note was yesterday's warning by San Francisco-based Embarcadero Technologies. Smart investors paid much attention to that announcement.
Yesterday and today are good days for auto customers. Yesterday Ford increased incentives by $1,000 on some models and GM lowered lease payments by $1,500 on some models. Today GM will announce some more incentives on outright-purchase plans. Slowing sales have created bulging inventories at the dealer level. The deals will get better as the introduction of the new models get closer.
The June ISM non-manufacturing or services index fell to 59.9 from 65.2 in May, the largest monthly drop since October 2001. Should you be concerned? Services account for over 80% of our economy.
Challenger, Gray, and Christmas stated that corporate hirings fell to 38,377 workers, down 31% from May's 55,307. The Wall Street Journal mentioned today that hiring would be increasing. I don't see them adding workers to their staff.
According to Cutting Edge Information, fewer than 25% of all pharma companies conduct market research in pre-clinical development.
The International Council of Shopping Centers stated "the overall year over year sales remained somewhat subdued compared with earlier in June." They anticipate that June monthly sales will have risen about 3 to 31/2% compared to June 2003 and the May 2004 rise of 5.7%.
Over the past month I have mentioned that Microsoft is paying increased attention to cutting expenses. Today the company stated that recently "expenses have grown faster than revenues." In several newspapers there was reference to an internal company memo focusing on a cost reduction effort of $1 billion.
7/7/04 The Fun And Games Are Over
This is earnings season and that includes earning warnings. Yesterday, Veritas announced slowing business software license sales. Nothing serious. The stock only dropped 30% or so and clipped $4 billion in market value from the company's shares. In bull markets one does not see such a violent reaction. This morning PeopleSoft warned about their quarterly results. It's been one year since Oracle started their hostile tender for the company, and PeopleSoft's shares proceeded to rise over 50%. Guess what. Those shares have returned to the pre-tender levels. The lawyers made out brilliantly but the stockholders were left empty handed. What else is new? One more item to note was yesterday's warning by San Francisco-based Embarcadero Technologies. Smart investors paid much attention to that announcement.
Yesterday and today are good days for auto customers. Yesterday Ford increased incentives by $1,000 on some models and GM lowered lease payments by $1,500 on some models. Today GM will announce some more incentives on outright-purchase plans. Slowing sales have created bulging inventories at the dealer level. The deals will get better as the introduction of the new models get closer.
The June ISM non-manufacturing or services index fell to 59.9 from 65.2 in May, the largest monthly drop since October 2001. Should you be concerned? Services account for over 80% of our economy.
Challenger, Gray, and Christmas stated that corporate hirings fell to 38,377 workers, down 31% from May's 55,307. The Wall Street Journal mentioned today that hiring would be increasing. I don't see them adding workers to their staff.
According to Cutting Edge Information, fewer than 25% of all pharma companies conduct market research in pre-clinical development.
The International Council of Shopping Centers stated "the overall year over year sales remained somewhat subdued compared with earlier in June." They anticipate that June monthly sales will have risen about 3 to 31/2% compared to June 2003 and the May 2004 rise of 5.7%.
Over the past month I have mentioned that Microsoft is paying increased attention to cutting expenses. Today the company stated that recently "expenses have grown faster than revenues." In several newspapers there was reference to an internal company memo focusing on a cost reduction effort of $1 billion.
This is earnings season and that includes earning warnings. Yesterday, Veritas announced slowing business software license sales. Nothing serious. The stock only dropped 30% or so and clipped $4 billion in market value from the company's shares. In bull markets one does not see such a violent reaction. This morning PeopleSoft warned about their quarterly results. It's been one year since Oracle started their hostile tender for the company, and PeopleSoft's shares proceeded to rise over 50%. Guess what. Those shares have returned to the pre-tender levels. The lawyers made out brilliantly but the stockholders were left empty handed. What else is new? One more item to note was yesterday's warning by San Francisco-based Embarcadero Technologies. Smart investors paid much attention to that announcement.
Yesterday and today are good days for auto customers. Yesterday Ford increased incentives by $1,000 on some models and GM lowered lease payments by $1,500 on some models. Today GM will announce some more incentives on outright-purchase plans. Slowing sales have created bulging inventories at the dealer level. The deals will get better as the introduction of the new models get closer.
The June ISM non-manufacturing or services index fell to 59.9 from 65.2 in May, the largest monthly drop since October 2001. Should you be concerned? Services account for over 80% of our economy.
Challenger, Gray, and Christmas stated that corporate hirings fell to 38,377 workers, down 31% from May's 55,307. The Wall Street Journal mentioned today that hiring would be increasing. I don't see them adding workers to their staff.
According to Cutting Edge Information, fewer than 25% of all pharma companies conduct market research in pre-clinical development.
The International Council of Shopping Centers stated "the overall year over year sales remained somewhat subdued compared with earlier in June." They anticipate that June monthly sales will have risen about 3 to 31/2% compared to June 2003 and the May 2004 rise of 5.7%.
Over the past month I have mentioned that Microsoft is paying increased attention to cutting expenses. Today the company stated that recently "expenses have grown faster than revenues." In several newspapers there was reference to an internal company memo focusing on a cost reduction effort of $1 billion.
7/7/04 The Fun And Games Are Over
This is earnings season and that includes earning warnings. Yesterday, Veritas announced slowing business software license sales. Nothing serious. The stock only dropped 30% or so and clipped $4 billion in market value from the company's shares. In bull markets one does not see such a violent reaction. This morning PeopleSoft warned about their quarterly results. It's been one year since Oracle started their hostile tender for the company, and PeopleSoft's shares proceeded to rise over 50%. Guess what. Those shares have returned to the pre-tender levels. The lawyers made out brilliantly but the stockholders were left empty handed. What else is new? One more item to note was yesterday's warning by San Francisco-based Embarcadero Technologies. Smart investors paid much attention to that announcement.
Yesterday and today are good days for auto customers. Yesterday Ford increased incentives by $1,000 on some models and GM lowered lease payments by $1,500 on some models. Today GM will announce some more incentives on outright-purchase plans. Slowing sales have created bulging inventories at the dealer level. The deals will get better as the introduction of the new models get closer.
The June ISM non-manufacturing or services index fell to 59.9 from 65.2 in May, the largest monthly drop since October 2001. Should you be concerned? Services account for over 80% of our economy.
Challenger, Gray, and Christmas stated that corporate hirings fell to 38,377 workers, down 31% from May's 55,307. The Wall Street Journal mentioned today that hiring would be increasing. I don't see them adding workers to their staff.
According to Cutting Edge Information, fewer than 25% of all pharma companies conduct market research in pre-clinical development.
The International Council of Shopping Centers stated "the overall year over year sales remained somewhat subdued compared with earlier in June." They anticipate that June monthly sales will have risen about 3 to 31/2% compared to June 2003 and the May 2004 rise of 5.7%.
Over the past month I have mentioned that Microsoft is paying increased attention to cutting expenses. Today the company stated that recently "expenses have grown faster than revenues." In several newspapers there was reference to an internal company memo focusing on a cost reduction effort of $1 billion.
This is earnings season and that includes earning warnings. Yesterday, Veritas announced slowing business software license sales. Nothing serious. The stock only dropped 30% or so and clipped $4 billion in market value from the company's shares. In bull markets one does not see such a violent reaction. This morning PeopleSoft warned about their quarterly results. It's been one year since Oracle started their hostile tender for the company, and PeopleSoft's shares proceeded to rise over 50%. Guess what. Those shares have returned to the pre-tender levels. The lawyers made out brilliantly but the stockholders were left empty handed. What else is new? One more item to note was yesterday's warning by San Francisco-based Embarcadero Technologies. Smart investors paid much attention to that announcement.
Yesterday and today are good days for auto customers. Yesterday Ford increased incentives by $1,000 on some models and GM lowered lease payments by $1,500 on some models. Today GM will announce some more incentives on outright-purchase plans. Slowing sales have created bulging inventories at the dealer level. The deals will get better as the introduction of the new models get closer.
The June ISM non-manufacturing or services index fell to 59.9 from 65.2 in May, the largest monthly drop since October 2001. Should you be concerned? Services account for over 80% of our economy.
Challenger, Gray, and Christmas stated that corporate hirings fell to 38,377 workers, down 31% from May's 55,307. The Wall Street Journal mentioned today that hiring would be increasing. I don't see them adding workers to their staff.
According to Cutting Edge Information, fewer than 25% of all pharma companies conduct market research in pre-clinical development.
The International Council of Shopping Centers stated "the overall year over year sales remained somewhat subdued compared with earlier in June." They anticipate that June monthly sales will have risen about 3 to 31/2% compared to June 2003 and the May 2004 rise of 5.7%.
Over the past month I have mentioned that Microsoft is paying increased attention to cutting expenses. Today the company stated that recently "expenses have grown faster than revenues." In several newspapers there was reference to an internal company memo focusing on a cost reduction effort of $1 billion.
Tuesday, July 06, 2004
7/6/04 The Threat To Sustainability
To grasp this picture you don't need an MBA. It's simple. Too much inventory can lead to lower prices, lower employment, and an economic downturn. That's what's happening in our auto industry. Ford will expand its two-week summer shutdown at five North American assembly plants. GM states they will rely on incentives to boost sales and won't cut production. We'll see about that. Increased incentives have not done the trick for May and June. It should be noted that auto companies record a sale when a vehicle is shipped to the dealer. It can stand on the delaer's lot for months, but it is still recorded as a sale. No wonder GM does not want to cut production. Keep filling the dealer pipeline. Eventually, something has to give with the overloaded pipeline of unsold vehicles. It will mean plant shutdowns and lower prices and lower profits and more unemployment.
GM and Ford can't make a right decision. It reminds me of Bush. Dodge will build all of 100 diesel-electric 2005 Ram pickups. GM will build only 2,500 gasoline-electric hybrid versions of the 2005 Chevy Silverado and GMC Sierra pickups. Meanwhile, Toyota is considering building an additional U.S. plant to meet the demand for its hybrid vehicles.
Some analysts worry about stagflation. The latter looks good next to too much inventory and lower prices and lower employment. Wall Street will focus on second quarter earnings. Those results are for the history books. They won't be repeated any time soon.
Kerry picked Edwards. The latter will show Main Street what it's like to relate to the people. The haves and the have mores might be Bush's base; however, there are too many havenots in this country. The people realize that reduced working hours and lower wages after inflation and increased unemployment are not the answer to the American success story. Bush has proven to be the WMD.
To grasp this picture you don't need an MBA. It's simple. Too much inventory can lead to lower prices, lower employment, and an economic downturn. That's what's happening in our auto industry. Ford will expand its two-week summer shutdown at five North American assembly plants. GM states they will rely on incentives to boost sales and won't cut production. We'll see about that. Increased incentives have not done the trick for May and June. It should be noted that auto companies record a sale when a vehicle is shipped to the dealer. It can stand on the delaer's lot for months, but it is still recorded as a sale. No wonder GM does not want to cut production. Keep filling the dealer pipeline. Eventually, something has to give with the overloaded pipeline of unsold vehicles. It will mean plant shutdowns and lower prices and lower profits and more unemployment.
GM and Ford can't make a right decision. It reminds me of Bush. Dodge will build all of 100 diesel-electric 2005 Ram pickups. GM will build only 2,500 gasoline-electric hybrid versions of the 2005 Chevy Silverado and GMC Sierra pickups. Meanwhile, Toyota is considering building an additional U.S. plant to meet the demand for its hybrid vehicles.
Some analysts worry about stagflation. The latter looks good next to too much inventory and lower prices and lower employment. Wall Street will focus on second quarter earnings. Those results are for the history books. They won't be repeated any time soon.
Kerry picked Edwards. The latter will show Main Street what it's like to relate to the people. The haves and the have mores might be Bush's base; however, there are too many havenots in this country. The people realize that reduced working hours and lower wages after inflation and increased unemployment are not the answer to the American success story. Bush has proven to be the WMD.
Monday, July 05, 2004
7/5/04 Pursuit Of The Truth
I did not get lazy today. The software was down and I could not post. Consequently, being late in the afternoon, I will keep this short and to the point. On Friday Tom Ridge stated he would not raise the terror alert level this weekend. Yesterday he did just that, and by his own admission, there was no specific and/or credible reason to do so. If our country wants to believe in its leaders, then we need to hold members of the administration to a standard which pursues the truth and where they do not walk in the path of lies. That's it from the cheap seats.
I did not get lazy today. The software was down and I could not post. Consequently, being late in the afternoon, I will keep this short and to the point. On Friday Tom Ridge stated he would not raise the terror alert level this weekend. Yesterday he did just that, and by his own admission, there was no specific and/or credible reason to do so. If our country wants to believe in its leaders, then we need to hold members of the administration to a standard which pursues the truth and where they do not walk in the path of lies. That's it from the cheap seats.
7/5/04 The Pursuit Of The Truth
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
7/5/04 The Pursuit Of The Truth
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
7/5/04 The Pursuit Of The Truth
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
7/5/04 The Pursuit Of The Truth
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
7/5/04 The Pursuit Of The Truth
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
7/5/04 The Pursuit Of The Truth
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
7/5/04 The Pursuit Of The Truth
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
7/5/04 The Pursuit Of The Truth
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
7/5/04 The Pursuit Of The Truth
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
7/5/04 The Pursuit Of The Truth
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
7/5/04 The Pursuit Of The Truth
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
7/5/04 The Pursuit Of The Truth
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
On Friday I watched Tom Ridge state that he would not raise the terror alert level over this weekend. Yesterday he raised the terror alert level. Why? There was no specific or particular threat. He just did it. If we don't rid our country of administration members who tell lies, how can we feel good about our leadership? How can other countries respect the U.S.? The choice is up to the electorate. At the bare minimum, American citizens should be told the truth.
Sunday, July 04, 2004
7/4/04 Liberty
Mark Twain: “Irreverence is the champion of liberty and its only sure defense.”
Gunter Grass: “The job of a citizen is to keep his mouth open.”
According to Expedia.com, one in 10 Americans say vacations might be frowned upon by bosses. The World Tourism Organization statistics indicate that American workers take an average of 13 days off a year. This represents the fewest vacation days in the industrialized world. The Japanese take 25 days and the French 37 days. According to a survey by the Des Moines Register, 43% of the respondents stated they screwed up their vacation by not taking enough time. If the average workweek has been shortened, why aren’t Americans taking more vacation time? Could it also be a cash flow problem in addition to worrying about job security?
As we start the second half of the year, one might give additional consideration to new orders falling for six months in a row in the ISM survey. I am aware that the majority of our economy hinges on services; however, manufacturing does count.
This week marks the beginning of earnings releases for the second quarter. In most cases they will show smart gains. That is important. At the same time one might ask how confident the CEOs and CFOs are confident of this strength continuing in the short and long run. There are exceptions. Starbucks has been having double-digit monthly sales growth numbers for the past six to eight months. Their stock made a new all-time high on Friday. Starbucks is one of the few great companies in the U.S. Their management is top-notch. I don’t believe anyone can name without reservations another ten companies like Starbucks for the long-term. In other words, one should be cautious in an investment approach. To be over-confident and fully invested shall prove, in my view, to be an expensive mistake.
Infosys Technologies was founded in Bangalore in 1981. The company has 25,600 employees with annual revenues exceeding $1 billion. In an interview with the San Francisco Chronicle, the company’s president, CEO, and a founder Nandan Nilekani stated the following: “In 1991, the total revenue in the Indian economy from software exports was $50 million. Now it’s about $1 billion, and the whole industry is about $12 billion in revenue…India has the largest population of young people anywhere in the world. Ten million new people join the workforce every year…Globalization is really the best way to lift millions of people out of poverty because it increases trade; it increases job creation. It’s the same globalization that gives you a $40 DVD player…People believe the IT and business processing industries from India can go up to $50 billion…We graduate 350,000 engineers every year from all our colleges. At the Indian Institute of Technology 200,000 kids appear for the entrance exam and 2,000 or something get in.”
According to government housing and Census data, one in four families headed by someone 65 or older had a mortgage to pay in 2001. In 1989, only one in six still had mortgage payments to make. According to the Federal Reserve, debt levels of borrowers between 65 and 74 years of age doubled between 1992 and 2001 in comparison to 83% for the general population.
Mark Twain: “Irreverence is the champion of liberty and its only sure defense.”
Gunter Grass: “The job of a citizen is to keep his mouth open.”
According to Expedia.com, one in 10 Americans say vacations might be frowned upon by bosses. The World Tourism Organization statistics indicate that American workers take an average of 13 days off a year. This represents the fewest vacation days in the industrialized world. The Japanese take 25 days and the French 37 days. According to a survey by the Des Moines Register, 43% of the respondents stated they screwed up their vacation by not taking enough time. If the average workweek has been shortened, why aren’t Americans taking more vacation time? Could it also be a cash flow problem in addition to worrying about job security?
As we start the second half of the year, one might give additional consideration to new orders falling for six months in a row in the ISM survey. I am aware that the majority of our economy hinges on services; however, manufacturing does count.
This week marks the beginning of earnings releases for the second quarter. In most cases they will show smart gains. That is important. At the same time one might ask how confident the CEOs and CFOs are confident of this strength continuing in the short and long run. There are exceptions. Starbucks has been having double-digit monthly sales growth numbers for the past six to eight months. Their stock made a new all-time high on Friday. Starbucks is one of the few great companies in the U.S. Their management is top-notch. I don’t believe anyone can name without reservations another ten companies like Starbucks for the long-term. In other words, one should be cautious in an investment approach. To be over-confident and fully invested shall prove, in my view, to be an expensive mistake.
Infosys Technologies was founded in Bangalore in 1981. The company has 25,600 employees with annual revenues exceeding $1 billion. In an interview with the San Francisco Chronicle, the company’s president, CEO, and a founder Nandan Nilekani stated the following: “In 1991, the total revenue in the Indian economy from software exports was $50 million. Now it’s about $1 billion, and the whole industry is about $12 billion in revenue…India has the largest population of young people anywhere in the world. Ten million new people join the workforce every year…Globalization is really the best way to lift millions of people out of poverty because it increases trade; it increases job creation. It’s the same globalization that gives you a $40 DVD player…People believe the IT and business processing industries from India can go up to $50 billion…We graduate 350,000 engineers every year from all our colleges. At the Indian Institute of Technology 200,000 kids appear for the entrance exam and 2,000 or something get in.”
According to government housing and Census data, one in four families headed by someone 65 or older had a mortgage to pay in 2001. In 1989, only one in six still had mortgage payments to make. According to the Federal Reserve, debt levels of borrowers between 65 and 74 years of age doubled between 1992 and 2001 in comparison to 83% for the general population.
Saturday, July 03, 2004
7/3/04 Fireworks
Bush gave a speech yesterday in the East Room of the White House. He stated that “real after-tax incomes are up 11 percent since December of 2000… we want people to be able to come home and say, boy, how was work; it was great. I enjoy working.” Bush should have addressed some rather serious facts. The average workweek for production or non-supervisory workers on private nonfarm payrolls decreased by 0.2 hour in June to 33.6 hours, seasonally adjusted. How many people can make ends meet on 33.6 hours of work per week? The workweek in manufacturing fell by 0.3 hour to 40.8 hours, nearly offsetting the gain in May. Manufacturing overtime was unchanged at 4.6 hours. The index of aggregate weekly hours of production or non-supervisory workers on private nonfarm payrolls declined by 0.6 percent in June to 99.6, and the manufacturing index fell by 0.8 percent over the month to 94.6. Importantly, average hourly earnings of production or non-supervisory workers on private nonfarm payrolls increased by 2 cents in June to $15.65, seasonally adjusted; however, average weekly earnings declined by 0.5 percent over the month to $525.84 from May’s $528.29. Bush didn’t tell his audience those facts.
There is so much slack in this economy that the work week keeps getting shortened and earnings after inflation keep going down. The employment-population ratio was 62.3 percent in June and has been at or near that level since early 2003. The civilian labor force participation rate also was little changed at 66.0 percent. If the economy were on a growth plane, these ratios would be trending upward. There will always be strong spots. Employment in health care and social assistance continued to grow in June, and that should continue with a population that is aging. In the last month, professional and technical services, transportation and warehousing, courier and messenger services, trucking, and temporary help showed gains in employment. Of those, temporary help can be expected to continue with gains as companies seek to avoid paying benefits. In sum, the few bright spots get lost in the overall dismal employment picture. Working less and for less inflation-adjusted pay is a recipe for an economic shipwreck. You are witnessing the undoing of financial well-being and stability on Main Street. Those are the fireworks heard this weekend. It is little wonder that 52% of Americans recently polled disapprove of Bush’s handling of the economy. Michael Moore’s film won’t finish Bush. Bush will finish Bush.
On Wall Street, the disappointing June employment report brought forth the idea that the Fed would not need to aggressively raise interest rates. When the consumer slows spending at Wal-Mart and Target and walks past the Big Three showrooms while inventories of unsold cars swell, would you raise rates? As support for the dollar wanes, would you want to hold dollar-denominated assets? Only if you want a tax loss. The Snowman stated our economy is continuing its “strong, strong recovery.” He might have opined that some members of the administration are recovering.
Pimco’s Bill Gross: “Today’s report underscores the fragility of a levered economy that thrives on low interest rates and wilts as those rates go up.”
Since Bush took office in January 2001, the U.S. economy has lost about 1.1 million jobs. If one were to count those folks whose unemployment benefits ran out, the number would be closer to 3 million.
Maxtor is the second-largest hard drive manufacturer. The company stated tat it will eliminate as many as 500 jobs immediately. The staff reductions will save the company as much as $80 million a year. The CEO remarked “during the quarter, we took steps to control costs and expenses to partially offset the shortfall in volume and revenue. We will continue our efforts to cut costs and lower the break-even point of the company through a reduction in force, beginning this month.”
Bush gave a speech yesterday in the East Room of the White House. He stated that “real after-tax incomes are up 11 percent since December of 2000… we want people to be able to come home and say, boy, how was work; it was great. I enjoy working.” Bush should have addressed some rather serious facts. The average workweek for production or non-supervisory workers on private nonfarm payrolls decreased by 0.2 hour in June to 33.6 hours, seasonally adjusted. How many people can make ends meet on 33.6 hours of work per week? The workweek in manufacturing fell by 0.3 hour to 40.8 hours, nearly offsetting the gain in May. Manufacturing overtime was unchanged at 4.6 hours. The index of aggregate weekly hours of production or non-supervisory workers on private nonfarm payrolls declined by 0.6 percent in June to 99.6, and the manufacturing index fell by 0.8 percent over the month to 94.6. Importantly, average hourly earnings of production or non-supervisory workers on private nonfarm payrolls increased by 2 cents in June to $15.65, seasonally adjusted; however, average weekly earnings declined by 0.5 percent over the month to $525.84 from May’s $528.29. Bush didn’t tell his audience those facts.
There is so much slack in this economy that the work week keeps getting shortened and earnings after inflation keep going down. The employment-population ratio was 62.3 percent in June and has been at or near that level since early 2003. The civilian labor force participation rate also was little changed at 66.0 percent. If the economy were on a growth plane, these ratios would be trending upward. There will always be strong spots. Employment in health care and social assistance continued to grow in June, and that should continue with a population that is aging. In the last month, professional and technical services, transportation and warehousing, courier and messenger services, trucking, and temporary help showed gains in employment. Of those, temporary help can be expected to continue with gains as companies seek to avoid paying benefits. In sum, the few bright spots get lost in the overall dismal employment picture. Working less and for less inflation-adjusted pay is a recipe for an economic shipwreck. You are witnessing the undoing of financial well-being and stability on Main Street. Those are the fireworks heard this weekend. It is little wonder that 52% of Americans recently polled disapprove of Bush’s handling of the economy. Michael Moore’s film won’t finish Bush. Bush will finish Bush.
On Wall Street, the disappointing June employment report brought forth the idea that the Fed would not need to aggressively raise interest rates. When the consumer slows spending at Wal-Mart and Target and walks past the Big Three showrooms while inventories of unsold cars swell, would you raise rates? As support for the dollar wanes, would you want to hold dollar-denominated assets? Only if you want a tax loss. The Snowman stated our economy is continuing its “strong, strong recovery.” He might have opined that some members of the administration are recovering.
Pimco’s Bill Gross: “Today’s report underscores the fragility of a levered economy that thrives on low interest rates and wilts as those rates go up.”
Since Bush took office in January 2001, the U.S. economy has lost about 1.1 million jobs. If one were to count those folks whose unemployment benefits ran out, the number would be closer to 3 million.
Maxtor is the second-largest hard drive manufacturer. The company stated tat it will eliminate as many as 500 jobs immediately. The staff reductions will save the company as much as $80 million a year. The CEO remarked “during the quarter, we took steps to control costs and expenses to partially offset the shortfall in volume and revenue. We will continue our efforts to cut costs and lower the break-even point of the company through a reduction in force, beginning this month.”
Friday, July 02, 2004
7/2/04 Incentives And Inventories
Paul Ballew, GM’s director of market and industry analysis, stated that “quite simply. June was tough.” He might have elaborated and mentioned that GM offered record incentives and yet sales for the month dropped off a cliff by 15% compared with the year earlier period. Some analysts said that June was poor due to the big incentives in May. That’s a great theory except that June’s incentives were higher than May’s. Toyota didn’t have any trouble in either month. Their market share keeps rising. Ford’s sales were down by 7.7% for June. It was their 12th consecutive monthly drop. Chrysler managed a 1% rise in the month thanks to sales of its new 300C. As we move closer to the 2005 model year introduction, one should pay attention to the level of inventories at the Big Three. Some production lines may need to be shut down. Of course, those temporary layoffs will not show up in today’s employment report.
Federal Signal announced plans to close a plant and lay off 400 workers.
Eastman Kodak will close its Charlotte, NC film-processing lab, which employs 100 people. Kodak stated it is closing the lab to cut costs. I’m sure the surge in popularity of digital cameras might be the real reason.
The number of workers collecting state unemployment benefits rose by 13,000 to 2.966 million in the week ended June 19. The uninsured employment rate rose to 2.4 percent from 2.3 percent the previous week. How do you spin having more people working with the uninsured unemployment rate rising? I’m sure the administration will figure something out. They are pros at bullshit. I’ll tell you what they will say. It’s simple. They will report that the decline in continuing claims is the result of job creation, and that workers are exhausting their benefits prior to finding work. This excludes two facts: since December 23, 2004, each week at least 80,000 workers exhaust their benefits and are no longer counted on the unemployment rolls; secondly, the rate of hiring is declining and most of the hiring is in low-paying, little or no benefit jobs.
Shell Oil misled investors about their oil reserves. Verizon overstated its subscriber base in the first quarter. What company is next on the list?
The ECB held interest rates at 2%. Germany’s retail sales fell 5.2% in May.
I feel really good this morning. In the most recent Wall Street Journal survey of 55 forecasters, the expectation is for steady expansion for the rest of this year. I guess I can take off for the beach.
In a survey of 362 companies by Treasury Strategies, the average U.S. company generated a return of 2.8% or less in 2003 on their cash and investments. Over the last three years, Microsoft generated a 7.3% average annual return. In their fiscal year which ended June 30, 2004, Microsoft’s CFO, John Connor, expects the investments to return as much as 6%. Investors want Microsoft to return some of that $57 billion to them in the form of a dividend. Considering Microsoft’s return on investments and the tax considerations, maybe that idea has little merit.
Paul Ballew, GM’s director of market and industry analysis, stated that “quite simply. June was tough.” He might have elaborated and mentioned that GM offered record incentives and yet sales for the month dropped off a cliff by 15% compared with the year earlier period. Some analysts said that June was poor due to the big incentives in May. That’s a great theory except that June’s incentives were higher than May’s. Toyota didn’t have any trouble in either month. Their market share keeps rising. Ford’s sales were down by 7.7% for June. It was their 12th consecutive monthly drop. Chrysler managed a 1% rise in the month thanks to sales of its new 300C. As we move closer to the 2005 model year introduction, one should pay attention to the level of inventories at the Big Three. Some production lines may need to be shut down. Of course, those temporary layoffs will not show up in today’s employment report.
Federal Signal announced plans to close a plant and lay off 400 workers.
Eastman Kodak will close its Charlotte, NC film-processing lab, which employs 100 people. Kodak stated it is closing the lab to cut costs. I’m sure the surge in popularity of digital cameras might be the real reason.
The number of workers collecting state unemployment benefits rose by 13,000 to 2.966 million in the week ended June 19. The uninsured employment rate rose to 2.4 percent from 2.3 percent the previous week. How do you spin having more people working with the uninsured unemployment rate rising? I’m sure the administration will figure something out. They are pros at bullshit. I’ll tell you what they will say. It’s simple. They will report that the decline in continuing claims is the result of job creation, and that workers are exhausting their benefits prior to finding work. This excludes two facts: since December 23, 2004, each week at least 80,000 workers exhaust their benefits and are no longer counted on the unemployment rolls; secondly, the rate of hiring is declining and most of the hiring is in low-paying, little or no benefit jobs.
Shell Oil misled investors about their oil reserves. Verizon overstated its subscriber base in the first quarter. What company is next on the list?
The ECB held interest rates at 2%. Germany’s retail sales fell 5.2% in May.
I feel really good this morning. In the most recent Wall Street Journal survey of 55 forecasters, the expectation is for steady expansion for the rest of this year. I guess I can take off for the beach.
In a survey of 362 companies by Treasury Strategies, the average U.S. company generated a return of 2.8% or less in 2003 on their cash and investments. Over the last three years, Microsoft generated a 7.3% average annual return. In their fiscal year which ended June 30, 2004, Microsoft’s CFO, John Connor, expects the investments to return as much as 6%. Investors want Microsoft to return some of that $57 billion to them in the form of a dividend. Considering Microsoft’s return on investments and the tax considerations, maybe that idea has little merit.
Thursday, July 01, 2004
7/1/04 The Next Six Months
Yesterday marked the first increase in interest rates by the Fed in more than four years. The cost of money maybe a bit more dear, but the Fed will remain accommodative in their monetary policy. Do not be fooled though. This is not a fairy tale economy. With so many barely making ends meet, with consumer debt at rising levels, with twin tower government deficits, and with real estate values looking more like those in Japan in the late 1980s, it is certain that the landing will not be soft for many. You may believe in Superman. I would never want to burst your bubble.
According to a new report from the U.S. Army, one in five of our soldiers returning from Iraq suffer serious mental health problems associated with post-traumatic stress disorder. The headlines cover Saddam’s trial. I care about our fighting men and women. In addition to Saddam, maybe others in this country should be on trial.
It took one year for Boeing to sell its Irving, Texas commercial electronics division, and they never disclosed the price. BAE hopes to retain all of the 600 workers at the Boeing unit; however, Boeing stated about 200 Puget Sound workers in the division will lose their current positions. Boeing hopes to find other spots for them. I’m sure they mean well when that is said. Unfortunately, well-meaning does not pay the bills.
For the last quarter and all of their 2004 fiscal year, India’s GDP grew at an 8.2% rate.
All eyes are on inflation. China and India want to keep a lid on prices. The ability to attract foreign investment hinges on their ability to keep prices from rising. It’s not a perfect world, and many commodities soared over the past 12 months as China’s demand clearly outstripped near-term supply. China does not want to kill the potential golden goose. Their foot will gently come off the pedal.
Starting today, California will become the nation’s first state where workers can receive part of their pay while they take time to be with a new baby or to care for a severely ill relative. This is called the Paid Family Leave Insurance Program, and is funded by employees through the state’s disability insurance program.
Robert LaBudde, a food industry consultant who has served on the faculties of the University of Wisconsin-Madison and MIT, stated “there is no question that we will be seeing a dozen or more-possibly 100 or more- cases of BSE-positive cattle in our national herd.” LaBudde’s clients include the meat industry.
The Treasury Department will announce the size of their TIPS offering that will be sold next week. There is a sucker born every day.
Carustar Industries will close its Charlotte, NC folding carton plant and its Georgetown, KY plastics plant. The company did not state how many employees would be impacted.
Diane Swonk, Banc One’s economist, stated “I don’t think we’ll see another rate hike until September.” That is a minority viewpoint.
In an agreement possibly taking effect late next year, once approved by Congress and Mexico, about 50,000 workers in the U.S. and Mexico would become eligible for some retirement benefits under either country’s system after the first five years of the agreement, the Social Security Administration estimated. The agreement would cost the retirement system about $105 million a year. To qualify, workers must have 10 years or 40 quarters of work history.
The Northern Kentucky Chamber announced that the decision by DHL Express to relocate much of its Northern Kentucky sorting operation to its hub in Wilmington, Ohio would mean the loss of more than 2,900 jobs and a loss of $250 million in overall business output, including wages and retail sales. Offsetting a portion of that loss will be a new FedEx distribution center planned for the area.
James Chessen, chief economist of the ABA, stated “the rise in interest rates is one-quarter of a percentage point… the actual cost to consumers would be $2.50 more per year on $1,000 of debt--- less than the cost of a latte.” It’s too bad that the debt level for consumers is significantly larger than $1,000. Economists sometimes ignore reality.
The Chicago Purchasers Index declined to 56.4 in June from May’s reading of 68. It was the biggest drop since 1974. The production index dropped to 53.9 from 71.1.
Yesterday marked the first increase in interest rates by the Fed in more than four years. The cost of money maybe a bit more dear, but the Fed will remain accommodative in their monetary policy. Do not be fooled though. This is not a fairy tale economy. With so many barely making ends meet, with consumer debt at rising levels, with twin tower government deficits, and with real estate values looking more like those in Japan in the late 1980s, it is certain that the landing will not be soft for many. You may believe in Superman. I would never want to burst your bubble.
According to a new report from the U.S. Army, one in five of our soldiers returning from Iraq suffer serious mental health problems associated with post-traumatic stress disorder. The headlines cover Saddam’s trial. I care about our fighting men and women. In addition to Saddam, maybe others in this country should be on trial.
It took one year for Boeing to sell its Irving, Texas commercial electronics division, and they never disclosed the price. BAE hopes to retain all of the 600 workers at the Boeing unit; however, Boeing stated about 200 Puget Sound workers in the division will lose their current positions. Boeing hopes to find other spots for them. I’m sure they mean well when that is said. Unfortunately, well-meaning does not pay the bills.
For the last quarter and all of their 2004 fiscal year, India’s GDP grew at an 8.2% rate.
All eyes are on inflation. China and India want to keep a lid on prices. The ability to attract foreign investment hinges on their ability to keep prices from rising. It’s not a perfect world, and many commodities soared over the past 12 months as China’s demand clearly outstripped near-term supply. China does not want to kill the potential golden goose. Their foot will gently come off the pedal.
Starting today, California will become the nation’s first state where workers can receive part of their pay while they take time to be with a new baby or to care for a severely ill relative. This is called the Paid Family Leave Insurance Program, and is funded by employees through the state’s disability insurance program.
Robert LaBudde, a food industry consultant who has served on the faculties of the University of Wisconsin-Madison and MIT, stated “there is no question that we will be seeing a dozen or more-possibly 100 or more- cases of BSE-positive cattle in our national herd.” LaBudde’s clients include the meat industry.
The Treasury Department will announce the size of their TIPS offering that will be sold next week. There is a sucker born every day.
Carustar Industries will close its Charlotte, NC folding carton plant and its Georgetown, KY plastics plant. The company did not state how many employees would be impacted.
Diane Swonk, Banc One’s economist, stated “I don’t think we’ll see another rate hike until September.” That is a minority viewpoint.
In an agreement possibly taking effect late next year, once approved by Congress and Mexico, about 50,000 workers in the U.S. and Mexico would become eligible for some retirement benefits under either country’s system after the first five years of the agreement, the Social Security Administration estimated. The agreement would cost the retirement system about $105 million a year. To qualify, workers must have 10 years or 40 quarters of work history.
The Northern Kentucky Chamber announced that the decision by DHL Express to relocate much of its Northern Kentucky sorting operation to its hub in Wilmington, Ohio would mean the loss of more than 2,900 jobs and a loss of $250 million in overall business output, including wages and retail sales. Offsetting a portion of that loss will be a new FedEx distribution center planned for the area.
James Chessen, chief economist of the ABA, stated “the rise in interest rates is one-quarter of a percentage point… the actual cost to consumers would be $2.50 more per year on $1,000 of debt--- less than the cost of a latte.” It’s too bad that the debt level for consumers is significantly larger than $1,000. Economists sometimes ignore reality.
The Chicago Purchasers Index declined to 56.4 in June from May’s reading of 68. It was the biggest drop since 1974. The production index dropped to 53.9 from 71.1.
Wednesday, June 30, 2004
6/30/04 News Can Matter
The recent bad news at Wal-Mart helped send the stock trading to 6-month lows. Having announced that June sales are “well below plan,” Target’s stock traded at a 4-month low. Not to be outdone, Washington Mutual felt the impact of the poor performance at their mortgage unit, and its stock traded yesterday at a 9-month low.
Robert Lutz, GM Vice Chairman, said the “young tiger” domestic China auto makers such as Geely, Great Wall, and Chery will soon start exporting to the west. He said that China is like “a freight train driving down on us.”
The Conference Board’s Consumer Confidence Index increased sharply in June, and reached their highest levels in 2 years. Confidence, however, does not produce an increase in one’s cash flow. According to yesterday’s survey by Visa USA, spending will be tight for summer vacations. Most travelers will be taking low-cost trips to visit family this summer. Other popular destinations for the budget traveler were beach and camping trips. Four out of five respondents stated they have travel budgets to keep an eye on the household bottom line.
Private construction in California in May was down 5.2% from April, according to the Construction Industry Research Board. Public works construction was down 8.8% from April and down 12.1% from May 2003.
The Bond Market Association forecasts that the yield on 10-year treasury bonds will rise to 5% by September and to 5.5% by this time next year.
For the first time in six years, Paccar has added a night shift at their Renton, WA plant, where Kenworth trucks are built. A total of 225 workers were added.
The recent bad news at Wal-Mart helped send the stock trading to 6-month lows. Having announced that June sales are “well below plan,” Target’s stock traded at a 4-month low. Not to be outdone, Washington Mutual felt the impact of the poor performance at their mortgage unit, and its stock traded yesterday at a 9-month low.
Robert Lutz, GM Vice Chairman, said the “young tiger” domestic China auto makers such as Geely, Great Wall, and Chery will soon start exporting to the west. He said that China is like “a freight train driving down on us.”
The Conference Board’s Consumer Confidence Index increased sharply in June, and reached their highest levels in 2 years. Confidence, however, does not produce an increase in one’s cash flow. According to yesterday’s survey by Visa USA, spending will be tight for summer vacations. Most travelers will be taking low-cost trips to visit family this summer. Other popular destinations for the budget traveler were beach and camping trips. Four out of five respondents stated they have travel budgets to keep an eye on the household bottom line.
Private construction in California in May was down 5.2% from April, according to the Construction Industry Research Board. Public works construction was down 8.8% from April and down 12.1% from May 2003.
The Bond Market Association forecasts that the yield on 10-year treasury bonds will rise to 5% by September and to 5.5% by this time next year.
For the first time in six years, Paccar has added a night shift at their Renton, WA plant, where Kenworth trucks are built. A total of 225 workers were added.
Tuesday, June 29, 2004
6/29/04 Yesterday It Was Wal-Mart And Today GM
In an effort to spur sales, in May, GM increased incentives to $5,000. Yesterday, the company forecast surprisingly weak sales for the month of June. Sales could be down 5% and Ford’s even more. They will lose market share to Toyota as the latter records double-digit sales growth. With the early introduction of new models, results for Chrysler could to be flat to modestly higher. Will larger incentives and weak sales be business as usual for the U.S. auto industry?
According to the International Council of Shopping Centers and UBS, sales at U.S. retail chain stores fell 1.2% last week. It was the largest decline in six months. Discount stores were hit the hardest. I guess well-heeled shoppers don’t mind cooler temperatures and wetter conditions.
May’s savings rate was 2.2%, down from April’s 2.6%. Adjusted for rising prices, spending increased 0.45 in May after no change in April.
Edward N. Wolff, an economist at NYU, analyzed 18 years of household financial data collected by the Federal Reserve. From 1983 to 2001, the net worth of the median older household- the one at the midpoint of the economic ladder- declined 2.2% or $4,000, during the period to $199,900. Wolff stated that, based on economic growth and market conditions over those 18 years, their wealth “should be up around 30 or 40 percent.” Countless American workers have relinquished part of a pension by moving from one job to another over the past two decades, and many plans have been eliminated due to cost cutting measures. In 1985, about 115,000 American companies had traditional pension plans. As of last year, only about 31,000 did.
Washington Mutual stated its mortgage business might lose money in 2004. The company cut its earnings forecasts for this year and remarked that more job cuts can be anticipated.
In an effort to spur sales, in May, GM increased incentives to $5,000. Yesterday, the company forecast surprisingly weak sales for the month of June. Sales could be down 5% and Ford’s even more. They will lose market share to Toyota as the latter records double-digit sales growth. With the early introduction of new models, results for Chrysler could to be flat to modestly higher. Will larger incentives and weak sales be business as usual for the U.S. auto industry?
According to the International Council of Shopping Centers and UBS, sales at U.S. retail chain stores fell 1.2% last week. It was the largest decline in six months. Discount stores were hit the hardest. I guess well-heeled shoppers don’t mind cooler temperatures and wetter conditions.
May’s savings rate was 2.2%, down from April’s 2.6%. Adjusted for rising prices, spending increased 0.45 in May after no change in April.
Edward N. Wolff, an economist at NYU, analyzed 18 years of household financial data collected by the Federal Reserve. From 1983 to 2001, the net worth of the median older household- the one at the midpoint of the economic ladder- declined 2.2% or $4,000, during the period to $199,900. Wolff stated that, based on economic growth and market conditions over those 18 years, their wealth “should be up around 30 or 40 percent.” Countless American workers have relinquished part of a pension by moving from one job to another over the past two decades, and many plans have been eliminated due to cost cutting measures. In 1985, about 115,000 American companies had traditional pension plans. As of last year, only about 31,000 did.
Washington Mutual stated its mortgage business might lose money in 2004. The company cut its earnings forecasts for this year and remarked that more job cuts can be anticipated.
Monday, June 28, 2004
6/28/04 Looting
Allen W. Smith, author of "The Looting of Social Security: How The Government Is Draining American's Retirement Account," states the looting continues on a daily basis, and every cent of the $1.5 trillion in Social Security surpluses generated by the 1983 Social Security tax, has been used up on non-Social Security purposes.
Most of the financial sector will be focused on the Fed meeting. As I have often stated, the Fed looks to Wal-Mart for information about the consumer. Wal-Mart reduced their same-store sales forecast for June from a 4 to 6% rise to a 2 to 4% increase. When you are talking about annual sales approaching $300 billion, a 2 percent monthly reduction amounts to a great deal of money. The company said again that results for Father's Day were disappointing. Predictions had been made that a decline in sales for the entire nation would be down from the prior year's Father's day. Wal-Mart is far and away the best indicator for the consumer on Main Street. Wall Street is not paying very close attention. They will regret their non-concern. This is not business as usual.
Japan's retail sales declined 2.5% in May.
For the first time, in 2003, the OECD stated China received more foreign direct investment than the U.S. It won't be the last time.
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Allen W. Smith, author of "The Looting of Social Security: How The Government Is Draining American's Retirement Account," states the looting continues on a daily basis, and every cent of the $1.5 trillion in Social Security surpluses generated by the 1983 Social Security tax, has been used up on non-Social Security purposes.
Most of the financial sector will be focused on the Fed meeting. As I have often stated, the Fed looks to Wal-Mart for information about the consumer. Wal-Mart reduced their same-store sales forecast for June from a 4 to 6% rise to a 2 to 4% increase. When you are talking about annual sales approaching $300 billion, a 2 percent monthly reduction amounts to a great deal of money. The company said again that results for Father's Day were disappointing. Predictions had been made that a decline in sales for the entire nation would be down from the prior year's Father's day. Wal-Mart is far and away the best indicator for the consumer on Main Street. Wall Street is not paying very close attention. They will regret their non-concern. This is not business as usual.
Japan's retail sales declined 2.5% in May.
For the first time, in 2003, the OECD stated China received more foreign direct investment than the U.S. It won't be the last time.
Machiavelli: "Ne�������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������
6/28/04 Looting
Allen W. Smith, author of "The Looting of Social Security: How The Government Is Draining American's Retirement Account," states the looting continues on a daily basis, and every cent of the $1.5 trillion in Social Security surpluses generated by the 1983 Social Security tax, has been used up on non-Social Security purposes.
Most of the financial sector will be focused on the Fed meeting. As I have often stated, the Fed looks to Wal-Mart for information about the consumer. Wal-Mart reduced their same-store sales forecast for June from a 4 to 6% rise to a 2 to 4% increase. When you are talking about annual sales approaching $300 billion, a 2 percent monthly reduction amounts to a great deal of money. The company said again that results for Father's Day were disappointing. Predictions had been made that a decline in sales for the entire nation would be down from the prior year's Father's day. Wal-Mart is far and away the best indicator for the consumer on Main Street. Wall Street is not paying very close attention. They will regret their non-concern. This is not business as usual.
Japan's retail sales declined 2.5% in May.
For the first time, in 2003, the OECD stated China received more foreign direct investment than the U.S. It won't be the last time.
Machiavelli: "Never do an enemy a small injury."
The U.S. has turned sovereignty over to the Iraqi government. Yesterday, another soldier was killed and one Marine is held hostage. In 15 months over 800 U.S. service people were killed, thousands injured, and thousands of Iraqis killed and injured. Anyone who voted for this war has blood on his/her hands.
Anyone who voted for the Patriot Act should be voted out of office. How can you vote for legislation without reading it first?
Allen W. Smith, author of "The Looting of Social Security: How The Government Is Draining American's Retirement Account," states the looting continues on a daily basis, and every cent of the $1.5 trillion in Social Security surpluses generated by the 1983 Social Security tax, has been used up on non-Social Security purposes.
Most of the financial sector will be focused on the Fed meeting. As I have often stated, the Fed looks to Wal-Mart for information about the consumer. Wal-Mart reduced their same-store sales forecast for June from a 4 to 6% rise to a 2 to 4% increase. When you are talking about annual sales approaching $300 billion, a 2 percent monthly reduction amounts to a great deal of money. The company said again that results for Father's Day were disappointing. Predictions had been made that a decline in sales for the entire nation would be down from the prior year's Father's day. Wal-Mart is far and away the best indicator for the consumer on Main Street. Wall Street is not paying very close attention. They will regret their non-concern. This is not business as usual.
Japan's retail sales declined 2.5% in May.
For the first time, in 2003, the OECD stated China received more foreign direct investment than the U.S. It won't be the last time.
Machiavelli: "Never do an enemy a small injury."
The U.S. has turned sovereignty over to the Iraqi government. Yesterday, another soldier was killed and one Marine is held hostage. In 15 months over 800 U.S. service people were killed, thousands injured, and thousands of Iraqis killed and injured. Anyone who voted for this war has blood on his/her hands.
Anyone who voted for the Patriot Act should be voted out of office. How can you vote for legislation without reading it first?
Sunday, June 27, 2004
6/27/04 Some Miscellaneous Thoughts
According to government figures, 45% of employees had medical coverage through employers, down from 63% 10 years ago.
Ron Williams, president of Aetna: "It's fair to sya that a lot of jobs that are being created may not be the jobs that come with benefits."
Safra Catz, president of Oracle, stated that 76% of PeopleSoft's employees or 6,000 would lose their jobs should Oracle's takeover succeed.
Greyhound will close 260 stops between Chicago and Seattle and this will result in about 150 layoffs.
Rafael Sale, founder and president of National Wire Corp: "My cost for buying materials has gone up more than 130% in the last six months, but I can't pass it on to my customers because they won't buy from me if I raise the prices."
According to government figures, 45% of employees had medical coverage through employers, down from 63% 10 years ago.
Ron Williams, president of Aetna: "It's fair to sya that a lot of jobs that are being created may not be the jobs that come with benefits."
Safra Catz, president of Oracle, stated that 76% of PeopleSoft's employees or 6,000 would lose their jobs should Oracle's takeover succeed.
Greyhound will close 260 stops between Chicago and Seattle and this will result in about 150 layoffs.
Rafael Sale, founder and president of National Wire Corp: "My cost for buying materials has gone up more than 130% in the last six months, but I can't pass it on to my customers because they won't buy from me if I raise the prices."
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