3/12/05 Two Strikes
If you’re an Asian central bank and you are long billions of U.S. government bonds denominated in U.S. dollars, the hurt is not overbearing when only the dollar is declining in value. The banks have taken that first strike looking with the bat on their shoulder. However, over the past several weeks, the game has changed. Bond prices have declined as the yield on the 10-year Treasury rose from 4% to 4.54%. That’s strike two, and some of the banks have taken the bat off their shoulder, such as, South Korea. They have chosen to swing for diversity away from the U.S. dollar. Strike three is called when the foreign banks shun both our U.S. debt instruments and the dollar.
While U.S. bond and stock investors are fighting their respective markets, commodity investors are having a field day. The Goldman Sachs Commodities Index is up 20.4% year-to-date and the CRB is up 12.2% this year. Such increases can make the inflation rate build up a head of steam. This week, coffee prices rose to a 5-year high, and P&G announced a 12% increase for Folger’s.
At the beginning of the week, I mentioned the trade gap news being released on Friday. Once again, imports rose faster than exports. In January, oil prices slipped and they did not contribute to the near-record $58.3 billion trade gap for the month. That will not be the case for February’s numbers, which could exceed $59.5 billion. Why? Because excluding petroleum, the January U.S. trade gap grew 7.5% due to the increased imports of consumer goods. We have a most distressing situation in our country. While debt is growing faster than income, imports are expanding faster than exports. It’s no wonder the dollar is declining and bond yields are rising.
e. e. Cummings: "I'm living so far beyond my income that we may almost be said to be living apart."
Meanwhile, China’s exports continue to exceed their imports and India’s exports are expected to grow by 22% in the year that begins on April 1, 2005.
Japan Metal Daily reported that Nippon Steel will increase the price of steel by more than $96 a metric ton.
Our liquidity machine continues to crank it out. In the latest weekly figures, M3 rose $16 billion to a record $9.527 trillion. Bank credit increased by $5 billion to a record $6.975 trillion. Total commercial paper rose by $10.3 billion to $1.444 trillion, the highest level in over three years. Too many dollars and too much credit make for a deflating U.S. dollar and pave the way for higher inflation. Our federal indebtedness will not go away with smoke and mirrors. It will poison our economic stability.
Arthur Schopenhauer: "All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident."
With crude approaching $55 a barrel, many airlines increased their fares for the second consecutive week. The rise was $5 to $10 each way. Delta decided to take matters in their own hands. In addition to raising fares, they are removing pillows and food. That approach is hardly consumer friendly.
As mentioned previously, France issued 50-year bonds. On Tuesday, Telecom Italia issued the first 50-year corporate bond. The UK and Germany are expected to issue their 50-year bonds. Meanwhile, the average duration of U.S. government debt is 3 years. With bond yields on the rise, a short duration is a recipe for disaster.
Housing prices in California have risen to the point where only 18% of the state’s households could qualify to buy the state’s median priced home in January--- five percentage points lower than a year earlier. The January 2005 housing affordability rate was one percentage point below that of December 2004, according to the California Association of Realtors. In Contra Costa County only 10% of residents could afford a house in January, and in San Francisco, the percentage was even less. When it gets to zero, you’ll know the top was reached!
E. Wilson: “To sell something, tell a woman it's a bargain; tell a man it's deductible.”
Saturday, March 12, 2005
Two Strikes
3/12/05 Two Strikes
If you’re an Asian central bank and you are long billions of U.S. government bonds denominated in U.S. dollars, the hurt is not overbearing when only the dollar is declining in value. The banks have taken that first strike looking with the bat on their shoulder. However, over the past several weeks, the game has changed. Bond prices have declined as the yield on the 10-year Treasury rose from 4% to 4.54%. That’s strike two, and some of the banks have taken the bat off their shoulder, such as, South Korea. They have chosen to swing for diversity away from the U.S. dollar. Strike three is called when the foreign banks shun both our U.S. debt instruments and the dollar.
While U.S. bond and stock investors are fighting their respective markets, commodity investors are having a field day. The Goldman Sachs Commodities Index is up 20.4% year-to-date and the CRB is up 12.2% this year. Such increases can make the inflation rate build up a head of steam. This week, coffee prices rose to a 5-year high, and P&G announced a 12% increase for Folger’s.
At the beginning of the week, I mentioned the trade gap news being released on Friday. Once again, imports rose faster than exports. In January, oil prices slipped and they did not contribute to the near-record $58.3 billion trade gap for the month. That will not be the case for February’s numbers, which could exceed $59.5 billion. Why? Because excluding petroleum, the January U.S. trade gap grew 7.5% due to the increased imports of consumer goods. We have a most distressing situation in our country. While debt is growing faster than income, imports are expanding faster than exports. It’s no wonder the dollar is declining and bond yields are rising.
e. e. Cummings: "I'm living so far beyond my income that we may almost be said to be living apart."
Meanwhile, China’s exports continue to exceed their imports and India’s exports are expected to grow by 22% in the year that begins on April 1, 2005.
Japan Metal Daily reported that Nippon Steel will increase the price of steel by more than $96 a metric ton.
Our liquidity machine continues to crank it out. In the latest weekly figures, M3 rose $16 billion to a record $9.527 trillion. Bank credit increased by $5 billion to a record $6.975 trillion. Total commercial paper rose by $10.3 billion to $1.444 trillion, the highest level in over three years. Too many dollars and too much credit make for a deflating U.S. dollar and pave the way for higher inflation. Our federal indebtedness will not go away with smoke and mirrors. It will poison our economic stability.
Arthur Schopenhauer: "All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident."
With crude approaching $55 a barrel, many airlines increased their fares for the second consecutive week. The rise was $5 to $10 each way. Delta decided to take matters in their own hands. In addition to raising fares, they are removing pillows and food. That approach is hardly consumer friendly.
As mentioned previously, France issued 50-year bonds. On Tuesday, Telecom Italia issued the first 50-year corporate bond. The UK and Germany are expected to issue their 50-year bonds. Meanwhile, the average duration of U.S. government debt is 3 years. With bond yields on the rise, a short duration is a recipe for disaster.
Housing prices in California have risen to the point where only 18% of the state’s households could qualify to buy the state’s median priced home in January--- five percentage points lower than a year earlier. The January 2005 housing affordability rate was one percentage point below that of December 2004, according to the California Association of Realtors. In Contra Costa County only 10% of residents could afford a house in January, and in San Francisco, the percentage was even less. When it gets to zero, you’ll know the top was reached!
E. Wilson: “To sell something, tell a woman it's a bargain; tell a man it's deductible.”
If you’re an Asian central bank and you are long billions of U.S. government bonds denominated in U.S. dollars, the hurt is not overbearing when only the dollar is declining in value. The banks have taken that first strike looking with the bat on their shoulder. However, over the past several weeks, the game has changed. Bond prices have declined as the yield on the 10-year Treasury rose from 4% to 4.54%. That’s strike two, and some of the banks have taken the bat off their shoulder, such as, South Korea. They have chosen to swing for diversity away from the U.S. dollar. Strike three is called when the foreign banks shun both our U.S. debt instruments and the dollar.
While U.S. bond and stock investors are fighting their respective markets, commodity investors are having a field day. The Goldman Sachs Commodities Index is up 20.4% year-to-date and the CRB is up 12.2% this year. Such increases can make the inflation rate build up a head of steam. This week, coffee prices rose to a 5-year high, and P&G announced a 12% increase for Folger’s.
At the beginning of the week, I mentioned the trade gap news being released on Friday. Once again, imports rose faster than exports. In January, oil prices slipped and they did not contribute to the near-record $58.3 billion trade gap for the month. That will not be the case for February’s numbers, which could exceed $59.5 billion. Why? Because excluding petroleum, the January U.S. trade gap grew 7.5% due to the increased imports of consumer goods. We have a most distressing situation in our country. While debt is growing faster than income, imports are expanding faster than exports. It’s no wonder the dollar is declining and bond yields are rising.
e. e. Cummings: "I'm living so far beyond my income that we may almost be said to be living apart."
Meanwhile, China’s exports continue to exceed their imports and India’s exports are expected to grow by 22% in the year that begins on April 1, 2005.
Japan Metal Daily reported that Nippon Steel will increase the price of steel by more than $96 a metric ton.
Our liquidity machine continues to crank it out. In the latest weekly figures, M3 rose $16 billion to a record $9.527 trillion. Bank credit increased by $5 billion to a record $6.975 trillion. Total commercial paper rose by $10.3 billion to $1.444 trillion, the highest level in over three years. Too many dollars and too much credit make for a deflating U.S. dollar and pave the way for higher inflation. Our federal indebtedness will not go away with smoke and mirrors. It will poison our economic stability.
Arthur Schopenhauer: "All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident."
With crude approaching $55 a barrel, many airlines increased their fares for the second consecutive week. The rise was $5 to $10 each way. Delta decided to take matters in their own hands. In addition to raising fares, they are removing pillows and food. That approach is hardly consumer friendly.
As mentioned previously, France issued 50-year bonds. On Tuesday, Telecom Italia issued the first 50-year corporate bond. The UK and Germany are expected to issue their 50-year bonds. Meanwhile, the average duration of U.S. government debt is 3 years. With bond yields on the rise, a short duration is a recipe for disaster.
Housing prices in California have risen to the point where only 18% of the state’s households could qualify to buy the state’s median priced home in January--- five percentage points lower than a year earlier. The January 2005 housing affordability rate was one percentage point below that of December 2004, according to the California Association of Realtors. In Contra Costa County only 10% of residents could afford a house in January, and in San Francisco, the percentage was even less. When it gets to zero, you’ll know the top was reached!
E. Wilson: “To sell something, tell a woman it's a bargain; tell a man it's deductible.”
Friday, March 11, 2005
Life-changing Trauma?
3/11/05 Life-changing Trauma?
In the state of California, a median single-family home costs $485,700. Nineteen of the 25 cities with the least affordable housing are in California. The median price for a home in the San Francisco Bay Area is $666,740, and it ranks as the least affordable place in the state. On the other hand, judging from comparable single-family home statistics, buying a house in the Midwest is not a life-changing trauma. Maybe conditions in California are about to change. The state Senate majority leader and the Governor have proposed easing a landmark California environmental law in order to increase house construction. If passed, the supply and demand for houses in California will be altered, and with it, prices too may be altered.
According to Claudio Borio and William White, economists at the Bank for International Settlements, "indicators of risk perception tend to be lowest closest to the peak of the boom."
Yesterday, we were treated to a retreat in the price for crude. There was a decline of about $1.25 a barrel. Today, the International Energy Agency upped its 2005 forecast for oil demand by 330,000 barrels per day to 84.3 million barrels per day. The Agency raised its forecast for China’s oil demand. It should be noted that China’s crude oil imports in the months of January and February dropped year-on-year by 13%.
Our Fed Governor is most concerned by our fiscal deficit. Yesterday, it was reported that our Federal government deficit in February rose to $113.9 billion, up from $96.7 billion in February 2004. So far in 2005, the deficit amounts to $223.4 billion, and that does not include the increased expenditures for Iraq and Afghanistan.
Late in the day yesterday, there was good news from Intel. They upped their forecast for quarterly revenues, and due to lower costs, margins can be expected to improve by about two percentage points.
The news from Linen ‘n Things was not so good. Due to a decline in same-store sales, the company expects a first quarter loss of 8 to 9 cents rather than a 6 to 8 cent profit.
In the first two months of this year, China reported an $11.1 billion trade surplus and also stated that inflation rose by 2.9%. During this period, trade with the U.S., China’s largest export market, rose 22% to $26.6 billion. It should be noted that China’s overall imports dropped 5% in February, the first decline in more than three years. That alone should provide a further clue to our growing trade account deficit. The figures will be released this morning.
Yesterday, the Labor Department reported weekly jobless claims rose 17,000 to 327,000 to their highest level since January 8. The 4-week average rose by 5,750 to 312,000, and the continuing jobless claims increased by 39,000 to 2.70 million.
Edward Chancellor: “Speculative bubbles are invariably associated with the rapid growth of credit. Credit inflates the value of assets, providing collateral for further borrowing and enabling people to spend more and save less. Credit creates an illusion of prosperity without its substance.”
In the state of California, a median single-family home costs $485,700. Nineteen of the 25 cities with the least affordable housing are in California. The median price for a home in the San Francisco Bay Area is $666,740, and it ranks as the least affordable place in the state. On the other hand, judging from comparable single-family home statistics, buying a house in the Midwest is not a life-changing trauma. Maybe conditions in California are about to change. The state Senate majority leader and the Governor have proposed easing a landmark California environmental law in order to increase house construction. If passed, the supply and demand for houses in California will be altered, and with it, prices too may be altered.
According to Claudio Borio and William White, economists at the Bank for International Settlements, "indicators of risk perception tend to be lowest closest to the peak of the boom."
Yesterday, we were treated to a retreat in the price for crude. There was a decline of about $1.25 a barrel. Today, the International Energy Agency upped its 2005 forecast for oil demand by 330,000 barrels per day to 84.3 million barrels per day. The Agency raised its forecast for China’s oil demand. It should be noted that China’s crude oil imports in the months of January and February dropped year-on-year by 13%.
Our Fed Governor is most concerned by our fiscal deficit. Yesterday, it was reported that our Federal government deficit in February rose to $113.9 billion, up from $96.7 billion in February 2004. So far in 2005, the deficit amounts to $223.4 billion, and that does not include the increased expenditures for Iraq and Afghanistan.
Late in the day yesterday, there was good news from Intel. They upped their forecast for quarterly revenues, and due to lower costs, margins can be expected to improve by about two percentage points.
The news from Linen ‘n Things was not so good. Due to a decline in same-store sales, the company expects a first quarter loss of 8 to 9 cents rather than a 6 to 8 cent profit.
In the first two months of this year, China reported an $11.1 billion trade surplus and also stated that inflation rose by 2.9%. During this period, trade with the U.S., China’s largest export market, rose 22% to $26.6 billion. It should be noted that China’s overall imports dropped 5% in February, the first decline in more than three years. That alone should provide a further clue to our growing trade account deficit. The figures will be released this morning.
Yesterday, the Labor Department reported weekly jobless claims rose 17,000 to 327,000 to their highest level since January 8. The 4-week average rose by 5,750 to 312,000, and the continuing jobless claims increased by 39,000 to 2.70 million.
Edward Chancellor: “Speculative bubbles are invariably associated with the rapid growth of credit. Credit inflates the value of assets, providing collateral for further borrowing and enabling people to spend more and save less. Credit creates an illusion of prosperity without its substance.”
Thursday, March 10, 2005
Champagne That's Been Defizzed
3/10/05 Champagne That’s Been Defizzed
At approximately 5:35PST on Tuesday, the Mt. St. Helens volcano exploded and ash burst 7 miles into the air. It was a clear evening and the many picture takers got a good view of the blast. Even with four scientific instruments within the crater, there was no advance warning and no seismologist is sure why the blast occurred. The biggest puzzle was the absence of a vent in the new lava dome, which is taller than a 55-story building. Hence, the question remains. Where did the ash and rocks come from without a vent? Ash was found on cars over 100 miles away. Still, seismologists insist the molten rock had lost most of its gas content. The description was “it’s sort of like champagne that’s been defizzed.” The USGS Geologist Jon Major insists the volcano poses no threat outside the immediate vicinity of its crater. How can they be so sure when they couldn’t predict Tuesday’s blast and thought everything was calm and normal?
How can you tell when the bond and stock markets have been defizzed? It’s not tough after the fact. Just look at a chart of the Nasdaq for the past five years. The idea is to avoid the cork from popping and letting the air out of your portfolio. It’s tough to predict. Bear markets don’t come along every day but tops to markets are much more frequent. Now that 10-year Treasury bonds yield 4.51% do you believe that 4% yields will not be with us any time soon? They were with us less than two months ago. Put another way, maybe the easy money has been made in bonds over the past several years, and possibly crumbs are left on the table. That’s not enough for a meal in my book.
The economy doesn’t like inflation. Yesterday, the CRB Index rose again and to the highest level since January 1981. Everyone is talking about oil, metals, wheat, soybeans, etc. All of a sudden, inflation worries even appear in the Fed Beige Book. Where has everyone been for the past 12 to 24 months? There have been signs that inflation was about to erupt. You didn’t need a seismologist’s instrument.
The dollar has been declining for over two years. The decline has cost Japan a bundle. Yesterday, Japan’s Prime Minister Junichiro Koizumi stated his country “in general” needs to consider diversifying the investment of its foreign reserves. He didn’t make that remark for his health. It was a soft kick to the groin area. Diversification will take place. It’s already happening at other central banks. The trend is in the early stages. The lower dollar will bring forth higher oil prices, reduced consumer buying power, and a lower standard of living for Americans. The Fed cannot get us out of this morass by simply printing money. The dollar has been defizzed.
Forbes ranked Forest Laboratories as the best managed company in the Drug and Biotechnology industry for 2004. The company is 50 years old and employs 5,000 people on a global scale. Forest Labs has grown organically, and continues to do so with the exceptional talent of 700 scientists and researchers and a salesforce of 2,800. Over the years, I have added to my stock position. Now is one of those times. The company’s fiscal year will end this month. Annual revenues exceed $3 billion and pre-tax income is approaching $1 billion. With a market cap of $14 billion, the stock is selling for a p/e of roughly 15 on the year that begins next month. The company is about one-half through its plan to repurchase 30 million shares of stock. The 52-week range is approximately 36 to 77. Forest is well positioned with new treatments for ischemic stroke, pain, and asthma in addition to their established antidepressant, Alzheimer’s, hypertension, and anxiety products. In sum, the company’s strengths can be found in the central nervous system, cardiovascular, respiratory, and endocrinology areas. At $41 this stock is not for everyone. It should be viewed as a long-term investment only. However, I believe it offers unusual potential for those wanting to participate in the ethical pharmaceutical industry.
Lucent plans to close a research and development site in Westford, Mass. and move its 40 jobs to India. The company will close a Landover, MD. plant that also works on the PacketStar PSAX device, which is used to bundle voice, data, and video for transmission, and lay off 110 workers. The work done at the two sites will be sent to Lucent’s Bangalore, India facility. Since 2002, Lucent has shaved about $1 billion in general and administrative expenses. In my view, the market for Lucent shares does not reflect its potential.
At approximately 5:35PST on Tuesday, the Mt. St. Helens volcano exploded and ash burst 7 miles into the air. It was a clear evening and the many picture takers got a good view of the blast. Even with four scientific instruments within the crater, there was no advance warning and no seismologist is sure why the blast occurred. The biggest puzzle was the absence of a vent in the new lava dome, which is taller than a 55-story building. Hence, the question remains. Where did the ash and rocks come from without a vent? Ash was found on cars over 100 miles away. Still, seismologists insist the molten rock had lost most of its gas content. The description was “it’s sort of like champagne that’s been defizzed.” The USGS Geologist Jon Major insists the volcano poses no threat outside the immediate vicinity of its crater. How can they be so sure when they couldn’t predict Tuesday’s blast and thought everything was calm and normal?
How can you tell when the bond and stock markets have been defizzed? It’s not tough after the fact. Just look at a chart of the Nasdaq for the past five years. The idea is to avoid the cork from popping and letting the air out of your portfolio. It’s tough to predict. Bear markets don’t come along every day but tops to markets are much more frequent. Now that 10-year Treasury bonds yield 4.51% do you believe that 4% yields will not be with us any time soon? They were with us less than two months ago. Put another way, maybe the easy money has been made in bonds over the past several years, and possibly crumbs are left on the table. That’s not enough for a meal in my book.
The economy doesn’t like inflation. Yesterday, the CRB Index rose again and to the highest level since January 1981. Everyone is talking about oil, metals, wheat, soybeans, etc. All of a sudden, inflation worries even appear in the Fed Beige Book. Where has everyone been for the past 12 to 24 months? There have been signs that inflation was about to erupt. You didn’t need a seismologist’s instrument.
The dollar has been declining for over two years. The decline has cost Japan a bundle. Yesterday, Japan’s Prime Minister Junichiro Koizumi stated his country “in general” needs to consider diversifying the investment of its foreign reserves. He didn’t make that remark for his health. It was a soft kick to the groin area. Diversification will take place. It’s already happening at other central banks. The trend is in the early stages. The lower dollar will bring forth higher oil prices, reduced consumer buying power, and a lower standard of living for Americans. The Fed cannot get us out of this morass by simply printing money. The dollar has been defizzed.
Forbes ranked Forest Laboratories as the best managed company in the Drug and Biotechnology industry for 2004. The company is 50 years old and employs 5,000 people on a global scale. Forest Labs has grown organically, and continues to do so with the exceptional talent of 700 scientists and researchers and a salesforce of 2,800. Over the years, I have added to my stock position. Now is one of those times. The company’s fiscal year will end this month. Annual revenues exceed $3 billion and pre-tax income is approaching $1 billion. With a market cap of $14 billion, the stock is selling for a p/e of roughly 15 on the year that begins next month. The company is about one-half through its plan to repurchase 30 million shares of stock. The 52-week range is approximately 36 to 77. Forest is well positioned with new treatments for ischemic stroke, pain, and asthma in addition to their established antidepressant, Alzheimer’s, hypertension, and anxiety products. In sum, the company’s strengths can be found in the central nervous system, cardiovascular, respiratory, and endocrinology areas. At $41 this stock is not for everyone. It should be viewed as a long-term investment only. However, I believe it offers unusual potential for those wanting to participate in the ethical pharmaceutical industry.
Lucent plans to close a research and development site in Westford, Mass. and move its 40 jobs to India. The company will close a Landover, MD. plant that also works on the PacketStar PSAX device, which is used to bundle voice, data, and video for transmission, and lay off 110 workers. The work done at the two sites will be sent to Lucent’s Bangalore, India facility. Since 2002, Lucent has shaved about $1 billion in general and administrative expenses. In my view, the market for Lucent shares does not reflect its potential.
Wednesday, March 09, 2005
You Be The Judge
3/9/05 You Be The Judge
Yesterday, Fed Governor Bernanke stated he was optimistic that core PCE inflation would stay in his “comfort zone” of 1 to 2% this year. William Poole, Fed Bank of St. Louis President, stated that inflation expectations were well contained. Meanwhile, yesterday the CRB Index rose for the eighth straight day and surged to a new 24-year high. March’s gains were on top of the 7.1% rise in February, the most in any month since August 1983. Commodity prices are up 15% this year. Crude is near $55 a barrel. Gold topped $440 an ounce. Copper reached a 16-year high. Aluminum, nickel, zinc, lead, and tin joined in the rise yesterday. Many believe the increase in commodity prices will be with us for some time. Lehman Bros. stated crude will average $43.25 a barrel this year before rising to $46 in 2008. The U.S Energy Department stated yesterday that crude prices are likely to remain in the high to mid-40’s through 2005 and 2006. Meanwhile, mergers are taking place in the metals field. Melbourne-based BHP Billton, the owner of the world’s largest copper mine, offered to buy WMC Resources Ltd. for $7.3 billion. Noranda announced an agreement to acquire Falconbridge and exchange 1.77 of its shares for each Falconbridge, a large nickel producer.
With commodity prices reaching new multi-decade highs, it is not surprising that the dollar is trading at a two-month low against the euro, and it comes as no surprise that longer-term U.S. Treasury yields are beginning to rise. In early morning trading today, the yield on 10-year Treasury bonds rose to a high of 4.45%, the highest yield since last August. Today and tomorrow there will be auctions of 5-year and 10-year Treasuries. It would be wise to make note of the reception for these issues. Will the bidding indicate any lost confidence on the part of Asian central banks in our dollar? We should remember that the U.S. must attract $2 billion a day in capital to cover its current account deficit.
There appears to be a disconnect with the consumer. The Federal Reserve announced that consumer debt rose at an annual rate of 6.6% in January, the fastest pace in three months. In December, borrowing increased by $8.7 billion and in January the increase was $11.5 billion. At the same time, the IBD/TIPP Economic Optimism Index fell to a nine-month low of 53 in March. The six-month outlook declined t0 48.6, a 24-month low, and confidence in Federal Economic Policies dropped to 48.6. Raghavan Mayur, president of TIPP, observed that “Americans’ concerns about the general economy have yet to spill over into their own personal finances.” It’s only a matter of time until the rising consumer debt load capsizes our economic vessel, which appears less globally seaworthy each and every day. The Economic Optimism Index’s March decline was marked by 18 of 21 demographic groups falling.
Presently, 47.7 million Americans who are retired, disabled, orphaned, or widowed, are on Social Security or roughly one-sixth of our population.
Alcoa announced cutting 20% of their salaried staff in its Quad Cities facility. Connors Bros. merged with Bumble Bee Seafood in March 2004. A year later, they are closing a sardine-canning factory in Bath, Maine, and 50 employees will lose their jobs. Fifty-five years ago there were 46 canneries in the state. Now there will be just one. Yakima Resources will close its sawmill and plywood plant in Yakima and lay off 118 workers. Great Batch Technologies will close its Carson City, Nevada pacemaker battery plant and move the operations to Tijuana, Mexico. The move will affect about 125 employees.
SAP agreed to acquire Retek for $496 million; however, the bid was topped by Oracle’s $525 million offer.
Less than two weeks ago, I mentioned that Great Lakes Chemical offered, in my view, good long-range potential. I was wrong. It offered short-term potential. Specialty chemicals group Crompton Corp. (CK) said it has an agreement to buy Great Lakes Chemical Corp. (GLK) in a stock-based deal valued at $1.8 billion. Terms set Great Lakes shareholders to receive 2.2232 shares of Crompton for each share of Great Lakes they hold, a 10.1% premium to the Tuesday close. Combined, the companies had 2004 revenues of more than $4.1 billion. The deal price includes $250 million of Great Lakes net debt and minority interest. The new company will be owned 51 percent by Crompton shareholders.
Worldwide prescription drug industry sales grew 7% in 2004 to $550 billion, their slowest rate of growth since 1998. In 2003, sales grew 10%. Meanwhile, China was the fastest-growing market, up 28% to $9.5 billion.
With rising bond yields, rising commodity prices, rising consumer debt levels, rising current account deficits, and rising values for many foreign currencies, investors might do well to acknowledge the rising risks for their equity and debt portfolios.
Charles Tremper: "The first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning."
Yesterday, Fed Governor Bernanke stated he was optimistic that core PCE inflation would stay in his “comfort zone” of 1 to 2% this year. William Poole, Fed Bank of St. Louis President, stated that inflation expectations were well contained. Meanwhile, yesterday the CRB Index rose for the eighth straight day and surged to a new 24-year high. March’s gains were on top of the 7.1% rise in February, the most in any month since August 1983. Commodity prices are up 15% this year. Crude is near $55 a barrel. Gold topped $440 an ounce. Copper reached a 16-year high. Aluminum, nickel, zinc, lead, and tin joined in the rise yesterday. Many believe the increase in commodity prices will be with us for some time. Lehman Bros. stated crude will average $43.25 a barrel this year before rising to $46 in 2008. The U.S Energy Department stated yesterday that crude prices are likely to remain in the high to mid-40’s through 2005 and 2006. Meanwhile, mergers are taking place in the metals field. Melbourne-based BHP Billton, the owner of the world’s largest copper mine, offered to buy WMC Resources Ltd. for $7.3 billion. Noranda announced an agreement to acquire Falconbridge and exchange 1.77 of its shares for each Falconbridge, a large nickel producer.
With commodity prices reaching new multi-decade highs, it is not surprising that the dollar is trading at a two-month low against the euro, and it comes as no surprise that longer-term U.S. Treasury yields are beginning to rise. In early morning trading today, the yield on 10-year Treasury bonds rose to a high of 4.45%, the highest yield since last August. Today and tomorrow there will be auctions of 5-year and 10-year Treasuries. It would be wise to make note of the reception for these issues. Will the bidding indicate any lost confidence on the part of Asian central banks in our dollar? We should remember that the U.S. must attract $2 billion a day in capital to cover its current account deficit.
There appears to be a disconnect with the consumer. The Federal Reserve announced that consumer debt rose at an annual rate of 6.6% in January, the fastest pace in three months. In December, borrowing increased by $8.7 billion and in January the increase was $11.5 billion. At the same time, the IBD/TIPP Economic Optimism Index fell to a nine-month low of 53 in March. The six-month outlook declined t0 48.6, a 24-month low, and confidence in Federal Economic Policies dropped to 48.6. Raghavan Mayur, president of TIPP, observed that “Americans’ concerns about the general economy have yet to spill over into their own personal finances.” It’s only a matter of time until the rising consumer debt load capsizes our economic vessel, which appears less globally seaworthy each and every day. The Economic Optimism Index’s March decline was marked by 18 of 21 demographic groups falling.
Presently, 47.7 million Americans who are retired, disabled, orphaned, or widowed, are on Social Security or roughly one-sixth of our population.
Alcoa announced cutting 20% of their salaried staff in its Quad Cities facility. Connors Bros. merged with Bumble Bee Seafood in March 2004. A year later, they are closing a sardine-canning factory in Bath, Maine, and 50 employees will lose their jobs. Fifty-five years ago there were 46 canneries in the state. Now there will be just one. Yakima Resources will close its sawmill and plywood plant in Yakima and lay off 118 workers. Great Batch Technologies will close its Carson City, Nevada pacemaker battery plant and move the operations to Tijuana, Mexico. The move will affect about 125 employees.
SAP agreed to acquire Retek for $496 million; however, the bid was topped by Oracle’s $525 million offer.
Less than two weeks ago, I mentioned that Great Lakes Chemical offered, in my view, good long-range potential. I was wrong. It offered short-term potential. Specialty chemicals group Crompton Corp. (CK) said it has an agreement to buy Great Lakes Chemical Corp. (GLK) in a stock-based deal valued at $1.8 billion. Terms set Great Lakes shareholders to receive 2.2232 shares of Crompton for each share of Great Lakes they hold, a 10.1% premium to the Tuesday close. Combined, the companies had 2004 revenues of more than $4.1 billion. The deal price includes $250 million of Great Lakes net debt and minority interest. The new company will be owned 51 percent by Crompton shareholders.
Worldwide prescription drug industry sales grew 7% in 2004 to $550 billion, their slowest rate of growth since 1998. In 2003, sales grew 10%. Meanwhile, China was the fastest-growing market, up 28% to $9.5 billion.
With rising bond yields, rising commodity prices, rising consumer debt levels, rising current account deficits, and rising values for many foreign currencies, investors might do well to acknowledge the rising risks for their equity and debt portfolios.
Charles Tremper: "The first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning."
You Be The Judge
3/9/05 You Be The Judge
Yesterday, Fed Governor Bernanke stated he was optimistic that core PCE inflation would stay in his “comfort zone” of 1 to 2% this year. William Poole, Fed Bank of St. Louis President, stated that inflation expectations were well contained. Meanwhile, yesterday the CRB Index rose for the eighth straight day and surged to a new 24-year high. March’s gains were on top of the 7.1% rise in February, the most in any month since August 1983. Commodity prices are up 15% this year. Crude is near $55 a barrel. Gold topped $440 an ounce. Copper reached a 16-year high. Aluminum, nickel, zinc, lead, and tin joined in the rise yesterday. Many believe the increase in commodity prices will be with us for some time. Lehman Bros. stated crude will average $43.25 a barrel this year before rising to $46 in 2008. The U.S Energy Department stated yesterday that crude prices are likely to remain in the high to mid-40’s through 2005 and 2006. Meanwhile, mergers are taking place in the metals field. Melbourne-based BHP Billton, the owner of the world’s largest copper mine, offered to buy WMC Resources Ltd. for $7.3 billion. Noranda announced an agreement to acquire Falconbridge and exchange 1.77 of its shares for each Falconbridge, a large nickel producer.
With commodity prices reaching new multi-decade highs, it is not surprising that the dollar is trading at a two-month low against the euro, and it comes as no surprise that longer-term U.S. Treasury yields are beginning to rise. In early morning trading today, the yield on 10-year Treasury bonds rose to a high of 4.45%, the highest yield since last August. Today and tomorrow there will be auctions of 5-year and 10-year Treasuries. It would be wise to make note of the reception for these issues. Will the bidding indicate any lost confidence on the part of Asian central banks in our dollar? We should remember that the U.S. must attract $2 billion a day in capital to cover its current account deficit.
There appears to be a disconnect with the consumer. The Federal Reserve announced that consumer debt rose at an annual rate of 6.6% in January, the fastest pace in three months. In December, borrowing increased by $8.7 billion and in January the increase was $11.5 billion. At the same time, the IBD/TIPP Economic Optimism Index fell to a nine-month low of 53 in March. The six-month outlook declined t0 48.6, a 24-month low, and confidence in Federal Economic Policies dropped to 48.6. Raghavan Mayur, president of TIPP, observed that “Americans’ concerns about the general economy have yet to spill over into their own personal finances.” It’s only a matter of time until the rising consumer debt load capsizes our economic vessel, which appears less globally seaworthy each and every day. The Economic Optimism Index’s March decline was marked by 18 of 21 demographic groups falling.
Presently, 47.7 million Americans who are retired, disabled, orphaned, or widowed, are on Social Security or roughly one-sixth of our population.
Alcoa announced cutting 20% of their salaried staff in its Quad Cities facility. Connors Bros. merged with Bumble Bee Seafood in March 2004. A year later, they are closing a sardine-canning factory in Bath, Maine, and 50 employees will lose their jobs. Fifty-five years ago there were 46 canneries in the state. Now there will be just one. Yakima Resources will close its sawmill and plywood plant in Yakima and lay off 118 workers. Great Batch Technologies will close its Carson City, Nevada pacemaker battery plant and move the operations to Tijuana, Mexico. The move will affect about 125 employees.
SAP agreed to acquire Retek for $496 million; however, the bid was topped by Oracle’s $525 million offer.
Less than two weeks ago, I mentioned that Great Lakes Chemical offered, in my view, good long-range potential. I was wrong. It offered short-term potential. Specialty chemicals group Crompton Corp. (CK) said it has an agreement to buy Great Lakes Chemical Corp. (GLK) in a stock-based deal valued at $1.8 billion. Terms set Great Lakes shareholders to receive 2.2232 shares of Crompton for each share of Great Lakes they hold, a 10.1% premium to the Tuesday close. Combined, the companies had 2004 revenues of more than $4.1 billion. The deal price includes $250 million of Great Lakes net debt and minority interest. The new company will be owned 51 percent by Crompton shareholders.
Worldwide prescription drug industry sales grew 7% in 2004 to $550 billion, their slowest rate of growth since 1998. In 2003, sales grew 10%. Meanwhile, China was the fastest-growing market, up 28% to $9.5 billion.
With rising bond yields, rising commodity prices, rising consumer debt levels, rising current account deficits, and rising values for many foreign currencies, investors might do well to acknowledge the rising risks for their equity and debt portfolios.
Charles Tremper: "The first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning."
Yesterday, Fed Governor Bernanke stated he was optimistic that core PCE inflation would stay in his “comfort zone” of 1 to 2% this year. William Poole, Fed Bank of St. Louis President, stated that inflation expectations were well contained. Meanwhile, yesterday the CRB Index rose for the eighth straight day and surged to a new 24-year high. March’s gains were on top of the 7.1% rise in February, the most in any month since August 1983. Commodity prices are up 15% this year. Crude is near $55 a barrel. Gold topped $440 an ounce. Copper reached a 16-year high. Aluminum, nickel, zinc, lead, and tin joined in the rise yesterday. Many believe the increase in commodity prices will be with us for some time. Lehman Bros. stated crude will average $43.25 a barrel this year before rising to $46 in 2008. The U.S Energy Department stated yesterday that crude prices are likely to remain in the high to mid-40’s through 2005 and 2006. Meanwhile, mergers are taking place in the metals field. Melbourne-based BHP Billton, the owner of the world’s largest copper mine, offered to buy WMC Resources Ltd. for $7.3 billion. Noranda announced an agreement to acquire Falconbridge and exchange 1.77 of its shares for each Falconbridge, a large nickel producer.
With commodity prices reaching new multi-decade highs, it is not surprising that the dollar is trading at a two-month low against the euro, and it comes as no surprise that longer-term U.S. Treasury yields are beginning to rise. In early morning trading today, the yield on 10-year Treasury bonds rose to a high of 4.45%, the highest yield since last August. Today and tomorrow there will be auctions of 5-year and 10-year Treasuries. It would be wise to make note of the reception for these issues. Will the bidding indicate any lost confidence on the part of Asian central banks in our dollar? We should remember that the U.S. must attract $2 billion a day in capital to cover its current account deficit.
There appears to be a disconnect with the consumer. The Federal Reserve announced that consumer debt rose at an annual rate of 6.6% in January, the fastest pace in three months. In December, borrowing increased by $8.7 billion and in January the increase was $11.5 billion. At the same time, the IBD/TIPP Economic Optimism Index fell to a nine-month low of 53 in March. The six-month outlook declined t0 48.6, a 24-month low, and confidence in Federal Economic Policies dropped to 48.6. Raghavan Mayur, president of TIPP, observed that “Americans’ concerns about the general economy have yet to spill over into their own personal finances.” It’s only a matter of time until the rising consumer debt load capsizes our economic vessel, which appears less globally seaworthy each and every day. The Economic Optimism Index’s March decline was marked by 18 of 21 demographic groups falling.
Presently, 47.7 million Americans who are retired, disabled, orphaned, or widowed, are on Social Security or roughly one-sixth of our population.
Alcoa announced cutting 20% of their salaried staff in its Quad Cities facility. Connors Bros. merged with Bumble Bee Seafood in March 2004. A year later, they are closing a sardine-canning factory in Bath, Maine, and 50 employees will lose their jobs. Fifty-five years ago there were 46 canneries in the state. Now there will be just one. Yakima Resources will close its sawmill and plywood plant in Yakima and lay off 118 workers. Great Batch Technologies will close its Carson City, Nevada pacemaker battery plant and move the operations to Tijuana, Mexico. The move will affect about 125 employees.
SAP agreed to acquire Retek for $496 million; however, the bid was topped by Oracle’s $525 million offer.
Less than two weeks ago, I mentioned that Great Lakes Chemical offered, in my view, good long-range potential. I was wrong. It offered short-term potential. Specialty chemicals group Crompton Corp. (CK) said it has an agreement to buy Great Lakes Chemical Corp. (GLK) in a stock-based deal valued at $1.8 billion. Terms set Great Lakes shareholders to receive 2.2232 shares of Crompton for each share of Great Lakes they hold, a 10.1% premium to the Tuesday close. Combined, the companies had 2004 revenues of more than $4.1 billion. The deal price includes $250 million of Great Lakes net debt and minority interest. The new company will be owned 51 percent by Crompton shareholders.
Worldwide prescription drug industry sales grew 7% in 2004 to $550 billion, their slowest rate of growth since 1998. In 2003, sales grew 10%. Meanwhile, China was the fastest-growing market, up 28% to $9.5 billion.
With rising bond yields, rising commodity prices, rising consumer debt levels, rising current account deficits, and rising values for many foreign currencies, investors might do well to acknowledge the rising risks for their equity and debt portfolios.
Charles Tremper: "The first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning."
You Be The Judge
3/9/05 You Be The Judge
Yesterday, Fed Governor Bernanke stated he was optimistic that core PCE inflation would stay in his “comfort zone” of 1 to 2% this year. William Poole, Fed Bank of St. Louis President, stated that inflation expectations were well contained. Meanwhile, yesterday the CRB Index rose for the eighth straight day and surged to a new 24-year high. March’s gains were on top of the 7.1% rise in February, the most in any month since August 1983. Commodity prices are up 15% this year. Crude is near $55 a barrel. Gold topped $440 an ounce. Copper reached a 16-year high. Aluminum, nickel, zinc, lead, and tin joined in the rise yesterday. Many believe the increase in commodity prices will be with us for some time. Lehman Bros. stated crude will average $43.25 a barrel this year before rising to $46 in 2008. The U.S Energy Department stated yesterday that crude prices are likely to remain in the high to mid-40’s through 2005 and 2006. Meanwhile, mergers are taking place in the metals field. Melbourne-based BHP Billton, the owner of the world’s largest copper mine, offered to buy WMC Resources Ltd. for $7.3 billion. Noranda announced an agreement to acquire Falconbridge and exchange 1.77 of its shares for each Falconbridge, a large nickel producer.
With commodity prices reaching new multi-decade highs, it is not surprising that the dollar is trading at a two-month low against the euro, and it comes as no surprise that longer-term U.S. Treasury yields are beginning to rise. In early morning trading today, the yield on 10-year Treasury bonds rose to a high of 4.45%, the highest yield since last August. Today and tomorrow there will be auctions of 5-year and 10-year Treasuries. It would be wise to make note of the reception for these issues. Will the bidding indicate any lost confidence on the part of Asian central banks in our dollar? We should remember that the U.S. must attract $2 billion a day in capital to cover its current account deficit.
There appears to be a disconnect with the consumer. The Federal Reserve announced that consumer debt rose at an annual rate of 6.6% in January, the fastest pace in three months. In December, borrowing increased by $8.7 billion and in January the increase was $11.5 billion. At the same time, the IBD/TIPP Economic Optimism Index fell to a nine-month low of 53 in March. The six-month outlook declined t0 48.6, a 24-month low, and confidence in Federal Economic Policies dropped to 48.6. Raghavan Mayur, president of TIPP, observed that “Americans’ concerns about the general economy have yet to spill over into their own personal finances.” It’s only a matter of time until the rising consumer debt load capsizes our economic vessel, which appears less globally seaworthy each and every day. The Economic Optimism Index’s March decline was marked by 18 of 21 demographic groups falling.
Presently, 47.7 million Americans who are retired, disabled, orphaned, or widowed, are on Social Security or roughly one-sixth of our population.
Alcoa announced cutting 20% of their salaried staff in its Quad Cities facility. Connors Bros. merged with Bumble Bee Seafood in March 2004. A year later, they are closing a sardine-canning factory in Bath, Maine, and 50 employees will lose their jobs. Fifty-five years ago there were 46 canneries in the state. Now there will be just one. Yakima Resources will close its sawmill and plywood plant in Yakima and lay off 118 workers. Great Batch Technologies will close its Carson City, Nevada pacemaker battery plant and move the operations to Tijuana, Mexico. The move will affect about 125 employees.
SAP agreed to acquire Retek for $496 million; however, the bid was topped by Oracle’s $525 million offer.
Less than two weeks ago, I mentioned that Great Lakes Chemical offered, in my view, good long-range potential. I was wrong. It offered short-term potential. Specialty chemicals group Crompton Corp. (CK) said it has an agreement to buy Great Lakes Chemical Corp. (GLK) in a stock-based deal valued at $1.8 billion. Terms set Great Lakes shareholders to receive 2.2232 shares of Crompton for each share of Great Lakes they hold, a 10.1% premium to the Tuesday close. Combined, the companies had 2004 revenues of more than $4.1 billion. The deal price includes $250 million of Great Lakes net debt and minority interest. The new company will be owned 51 percent by Crompton shareholders.
Worldwide prescription drug industry sales grew 7% in 2004 to $550 billion, their slowest rate of growth since 1998. In 2003, sales grew 10%. Meanwhile, China was the fastest-growing market, up 28% to $9.5 billion.
With rising bond yields, rising commodity prices, rising consumer debt levels, rising current account deficits, and rising values for many foreign currencies, investors might do well to acknowledge the rising risks for their equity and debt portfolios.
Charles Tremper: "The first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning."
Yesterday, Fed Governor Bernanke stated he was optimistic that core PCE inflation would stay in his “comfort zone” of 1 to 2% this year. William Poole, Fed Bank of St. Louis President, stated that inflation expectations were well contained. Meanwhile, yesterday the CRB Index rose for the eighth straight day and surged to a new 24-year high. March’s gains were on top of the 7.1% rise in February, the most in any month since August 1983. Commodity prices are up 15% this year. Crude is near $55 a barrel. Gold topped $440 an ounce. Copper reached a 16-year high. Aluminum, nickel, zinc, lead, and tin joined in the rise yesterday. Many believe the increase in commodity prices will be with us for some time. Lehman Bros. stated crude will average $43.25 a barrel this year before rising to $46 in 2008. The U.S Energy Department stated yesterday that crude prices are likely to remain in the high to mid-40’s through 2005 and 2006. Meanwhile, mergers are taking place in the metals field. Melbourne-based BHP Billton, the owner of the world’s largest copper mine, offered to buy WMC Resources Ltd. for $7.3 billion. Noranda announced an agreement to acquire Falconbridge and exchange 1.77 of its shares for each Falconbridge, a large nickel producer.
With commodity prices reaching new multi-decade highs, it is not surprising that the dollar is trading at a two-month low against the euro, and it comes as no surprise that longer-term U.S. Treasury yields are beginning to rise. In early morning trading today, the yield on 10-year Treasury bonds rose to a high of 4.45%, the highest yield since last August. Today and tomorrow there will be auctions of 5-year and 10-year Treasuries. It would be wise to make note of the reception for these issues. Will the bidding indicate any lost confidence on the part of Asian central banks in our dollar? We should remember that the U.S. must attract $2 billion a day in capital to cover its current account deficit.
There appears to be a disconnect with the consumer. The Federal Reserve announced that consumer debt rose at an annual rate of 6.6% in January, the fastest pace in three months. In December, borrowing increased by $8.7 billion and in January the increase was $11.5 billion. At the same time, the IBD/TIPP Economic Optimism Index fell to a nine-month low of 53 in March. The six-month outlook declined t0 48.6, a 24-month low, and confidence in Federal Economic Policies dropped to 48.6. Raghavan Mayur, president of TIPP, observed that “Americans’ concerns about the general economy have yet to spill over into their own personal finances.” It’s only a matter of time until the rising consumer debt load capsizes our economic vessel, which appears less globally seaworthy each and every day. The Economic Optimism Index’s March decline was marked by 18 of 21 demographic groups falling.
Presently, 47.7 million Americans who are retired, disabled, orphaned, or widowed, are on Social Security or roughly one-sixth of our population.
Alcoa announced cutting 20% of their salaried staff in its Quad Cities facility. Connors Bros. merged with Bumble Bee Seafood in March 2004. A year later, they are closing a sardine-canning factory in Bath, Maine, and 50 employees will lose their jobs. Fifty-five years ago there were 46 canneries in the state. Now there will be just one. Yakima Resources will close its sawmill and plywood plant in Yakima and lay off 118 workers. Great Batch Technologies will close its Carson City, Nevada pacemaker battery plant and move the operations to Tijuana, Mexico. The move will affect about 125 employees.
SAP agreed to acquire Retek for $496 million; however, the bid was topped by Oracle’s $525 million offer.
Less than two weeks ago, I mentioned that Great Lakes Chemical offered, in my view, good long-range potential. I was wrong. It offered short-term potential. Specialty chemicals group Crompton Corp. (CK) said it has an agreement to buy Great Lakes Chemical Corp. (GLK) in a stock-based deal valued at $1.8 billion. Terms set Great Lakes shareholders to receive 2.2232 shares of Crompton for each share of Great Lakes they hold, a 10.1% premium to the Tuesday close. Combined, the companies had 2004 revenues of more than $4.1 billion. The deal price includes $250 million of Great Lakes net debt and minority interest. The new company will be owned 51 percent by Crompton shareholders.
Worldwide prescription drug industry sales grew 7% in 2004 to $550 billion, their slowest rate of growth since 1998. In 2003, sales grew 10%. Meanwhile, China was the fastest-growing market, up 28% to $9.5 billion.
With rising bond yields, rising commodity prices, rising consumer debt levels, rising current account deficits, and rising values for many foreign currencies, investors might do well to acknowledge the rising risks for their equity and debt portfolios.
Charles Tremper: "The first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning."
Tuesday, March 08, 2005
The CRB
3/8/05 The CRB
On February 3, 1934 the CRB Futures Market Service made its debut. A futures contract on the CRB Futures Price Index was introduced in 1986.
The CRB Index was originally designed to provide a dynamic representation of broad trends in commodity prices and was more reflective of the overall price of exchange-traded commodities than was the Spot Commodity Index, then compiled by the Bureau of Labor Statistics. Although the BLS index was interesting, it covered only cash transactions and was not as timely as the one compiled by the Commodity Research Bureau. Eventually the government stopped working on their commodity index and turned it over to CRB to calculate.
In order to maintain the usefulness of the CRB Futures Price Index it has been periodically adjusted to reflect changes in market structure and activity. There have been nine modifications to the Index calculation and component commodities since its inception in 1956, the last change occurring in 1995.
Yesterday, the CRB closed at its highest level since 1981. It has risen 8.9% in 2005 to the present $301 level. In October 2001, the most recent low of approximately $183 was reached. It is important to note that the CRB is comprised of 17 component commodities with equal weighting. Naturally, most consumers are focused on the price of gas at their local station. In fact, the price of gasoline jumped 7.1 cents a gallon in the past week to a nationwide average of $2 a gallon. It was the biggest weekly gain since May. Additional prices rises are expected at the pump in the near term. Adjusted for inflation, gasoline would have to hit $2.973 a gallon to set a record.
Ron Paul: “The only question is whether history will properly reflect the destructive nature of Mr. Greenspan’s tenure.”
M3, a relatively broad definition of money supply, rose at an annual 6.6 percent in January, its fastest rate for more than a year and above the 4.5 percent level that the ECB considers non-inflationary.
When a government employee proclaims that the inflation rate is modest, please remember the rise in the CRB Index. In terms of U.S. citizens, currently we have two strikes against us. The decline in the dollar has reduced our purchasing power and the rise in inflation has placed a tax on our purchasing power. Our standard of living is declining in real time. On Friday, we will be provided with further reinforcement. January’s trade deficit will be released. It will be around $57 billion or $684 billion on an annualized basis or roughly 6% of our GDP. Government employees will tell us there is little reason for concern. Of course, most never had the responsibility of meeting a payroll and most never had to worry about a roof over their heads or putting food on the table. In fact, most have never walked along Main Street, and they only bleed revised economic governmental statistics.
David Lerach, economist for the NAR: “Real estate is no longer just a place to live. It’s a viable alternative to stocks and bonds.”
Physician leaders in hospitals, large group practices and academic health centers are deeply concerned about ethical violations and unethical business practices impacting
U.S. health care, according to results of a newly published survey conducted by the American College of Physician Executives (ACPE). The survey found high percentages of physician leaders are either "very concerned" or “moderately concerned” about:
- Physicians refusing to accept calls on patients who don't have
insurance (79%)
- Influence exerted by medical device manufacturers (79%)
- Over-treating patients to boost income (78%)
- Influence by pharmaceutical companies (76%)
- Board members with conflicts of interest (66%)
- Non-physician executive leaders with conflicts of interest (66%)
One of the most startling findings: nearly 54 percent of the survey
respondents said there was a health care organization in their community that
they believed to be involved in unethical business practices.
From Black Hawk, Sauk: “How smooth must be the language of the whites, when they can make right look wrong, and wrong like right.”
On February 3, 1934 the CRB Futures Market Service made its debut. A futures contract on the CRB Futures Price Index was introduced in 1986.
The CRB Index was originally designed to provide a dynamic representation of broad trends in commodity prices and was more reflective of the overall price of exchange-traded commodities than was the Spot Commodity Index, then compiled by the Bureau of Labor Statistics. Although the BLS index was interesting, it covered only cash transactions and was not as timely as the one compiled by the Commodity Research Bureau. Eventually the government stopped working on their commodity index and turned it over to CRB to calculate.
In order to maintain the usefulness of the CRB Futures Price Index it has been periodically adjusted to reflect changes in market structure and activity. There have been nine modifications to the Index calculation and component commodities since its inception in 1956, the last change occurring in 1995.
Yesterday, the CRB closed at its highest level since 1981. It has risen 8.9% in 2005 to the present $301 level. In October 2001, the most recent low of approximately $183 was reached. It is important to note that the CRB is comprised of 17 component commodities with equal weighting. Naturally, most consumers are focused on the price of gas at their local station. In fact, the price of gasoline jumped 7.1 cents a gallon in the past week to a nationwide average of $2 a gallon. It was the biggest weekly gain since May. Additional prices rises are expected at the pump in the near term. Adjusted for inflation, gasoline would have to hit $2.973 a gallon to set a record.
Ron Paul: “The only question is whether history will properly reflect the destructive nature of Mr. Greenspan’s tenure.”
M3, a relatively broad definition of money supply, rose at an annual 6.6 percent in January, its fastest rate for more than a year and above the 4.5 percent level that the ECB considers non-inflationary.
When a government employee proclaims that the inflation rate is modest, please remember the rise in the CRB Index. In terms of U.S. citizens, currently we have two strikes against us. The decline in the dollar has reduced our purchasing power and the rise in inflation has placed a tax on our purchasing power. Our standard of living is declining in real time. On Friday, we will be provided with further reinforcement. January’s trade deficit will be released. It will be around $57 billion or $684 billion on an annualized basis or roughly 6% of our GDP. Government employees will tell us there is little reason for concern. Of course, most never had the responsibility of meeting a payroll and most never had to worry about a roof over their heads or putting food on the table. In fact, most have never walked along Main Street, and they only bleed revised economic governmental statistics.
David Lerach, economist for the NAR: “Real estate is no longer just a place to live. It’s a viable alternative to stocks and bonds.”
Physician leaders in hospitals, large group practices and academic health centers are deeply concerned about ethical violations and unethical business practices impacting
U.S. health care, according to results of a newly published survey conducted by the American College of Physician Executives (ACPE). The survey found high percentages of physician leaders are either "very concerned" or “moderately concerned” about:
- Physicians refusing to accept calls on patients who don't have
insurance (79%)
- Influence exerted by medical device manufacturers (79%)
- Over-treating patients to boost income (78%)
- Influence by pharmaceutical companies (76%)
- Board members with conflicts of interest (66%)
- Non-physician executive leaders with conflicts of interest (66%)
One of the most startling findings: nearly 54 percent of the survey
respondents said there was a health care organization in their community that
they believed to be involved in unethical business practices.
From Black Hawk, Sauk: “How smooth must be the language of the whites, when they can make right look wrong, and wrong like right.”
Monday, March 07, 2005
fairy tales
3/7/05 Fairy Tales
After I wrote about the February payroll report on Saturday, something gnawed at me. The figures didn’t feel right. I must have done a poor job of analysis and missed something. It was a big miss, and had I looked carefully on the BLS website, I might not have felt like such a putz. Once every year the BLS performs “benchmark revisions.” An average revision is about 0.2% or in the case of today’s employment approximately 203,000. According to the BLS, they took 11/12ths of that number into the February payroll increase of 262,000. That leaves a net gain for February of 59,000. I would suggest that is most disappointing and cause for concern.
John P. Hussman, Ph.D: “It is usually a danger signal when investors extrapolate good economic news by pricing stocks to reflect ‘new era’ valuations. It’s even worse to accept ‘new ear’ stock valuations when the economic news isn’t that good to begin with…Investors really learned nothing from the 2000-2003 market decline…The memory of losses has faded enough for investors to once again take leave of their critical faculties. Suffice it to say that the historical record provides very few bases on which investors should expect the current market environment to end well.”
Bergen Evans: “We may be through with the past, but the past aint through with us.”
Today's Bloomberg Eurozone Retail Purchasing Managers' Index (PMI), a
monthly survey indicating economic conditions in the Eurozone retail sector
one month ahead of government figures, indicates that month-on-month sales at
Eurozone retailers continued to fall in February and that profits fell.
A further fall in Eurozone retailers' profit margins (gross margin) was
indicated by the survey in February (42.5). Firms reported having to offer
discounts and other promotions in an attempt to revive flagging sales,
undermining their margins in the process. Increased purchase prices were also
reported to have squeezed margins. Average purchase prices in the sector rose
at the sharpest rate for seven months in February (55.7), driven up by rising
raw material prices at suppliers and higher transport costs.
Remaining below the no-change mark of 50.0 for the second month running
in February (and for the sixth time in the past seven months), at 47.3 the
seasonally adjusted Bloomberg Eurozone Retail PMI signaled the sharpest pace
of contraction in monthly Eurozone retail sales since May 2004.
February's drop in sales was also more marked than the average rate of
decline for 2004 as a whole (48.9). Weak demand and low consumer confidence
(linked to depressed economic conditions) hampered sales in February. Some
retailers also mentioned the negative effect of especially poor weather
conditions that kept customers away from the shops.
All three of the principal Eurozone economies that make up the aggregate
figure - Germany, France and Italy - registered declining like- for-like
retail sales in February. Germany, France and Italy represent approximately
75% of total Eurozone retail sales.
Capital One signed a definitive agreement to acquire Hibernia in a stock and cash transaction valued at approximately $5.3 billion. The combined company will be one of the top 10 largest consumer lenders and one of the top 20 in terms of total deposits in the U.S.
BAE Systems will acquire United Defense Industries, maker of the Bradley Fighting Vehicle, for $3.97 billion.
They are fairies; he that speaks to them shall die.
I'll wink and couch; no man their works must eye.
- William Shakespeare, The Merry Wives of Windsor (Falstaff at V, v)
Boeing announced today that its Board of Directors asked for and received the resignation of President and CEO Harry Stonecipher on Sunday, March 6. Concurrently, the Board has appointed CFO James A. Bell, 56, as president and CEO on an interim
basis, with Board Chairman Lew Platt assuming an expanded role in his capacity
as non-executive chairman. Stonecipher will also leave the company's Board;
all changes are effective immediately.
The Board actions were taken following an investigation by internal and
external legal counsel of the facts and circumstances surrounding a personal
relationship between Stonecipher and a female executive of the company who did
not report directly to him. The Board determined that his actions were
inconsistent with Boeing's Code of Conduct.
"The Board concluded that the facts reflected poorly on Harry's judgment
and would impair his ability to lead the company," said Platt.
It’s difficult to carry on a relationship unless two people are in direct contact with one another. Maybe this is a case where fairy tales do come true.
After I wrote about the February payroll report on Saturday, something gnawed at me. The figures didn’t feel right. I must have done a poor job of analysis and missed something. It was a big miss, and had I looked carefully on the BLS website, I might not have felt like such a putz. Once every year the BLS performs “benchmark revisions.” An average revision is about 0.2% or in the case of today’s employment approximately 203,000. According to the BLS, they took 11/12ths of that number into the February payroll increase of 262,000. That leaves a net gain for February of 59,000. I would suggest that is most disappointing and cause for concern.
John P. Hussman, Ph.D: “It is usually a danger signal when investors extrapolate good economic news by pricing stocks to reflect ‘new era’ valuations. It’s even worse to accept ‘new ear’ stock valuations when the economic news isn’t that good to begin with…Investors really learned nothing from the 2000-2003 market decline…The memory of losses has faded enough for investors to once again take leave of their critical faculties. Suffice it to say that the historical record provides very few bases on which investors should expect the current market environment to end well.”
Bergen Evans: “We may be through with the past, but the past aint through with us.”
Today's Bloomberg Eurozone Retail Purchasing Managers' Index (PMI), a
monthly survey indicating economic conditions in the Eurozone retail sector
one month ahead of government figures, indicates that month-on-month sales at
Eurozone retailers continued to fall in February and that profits fell.
A further fall in Eurozone retailers' profit margins (gross margin) was
indicated by the survey in February (42.5). Firms reported having to offer
discounts and other promotions in an attempt to revive flagging sales,
undermining their margins in the process. Increased purchase prices were also
reported to have squeezed margins. Average purchase prices in the sector rose
at the sharpest rate for seven months in February (55.7), driven up by rising
raw material prices at suppliers and higher transport costs.
Remaining below the no-change mark of 50.0 for the second month running
in February (and for the sixth time in the past seven months), at 47.3 the
seasonally adjusted Bloomberg Eurozone Retail PMI signaled the sharpest pace
of contraction in monthly Eurozone retail sales since May 2004.
February's drop in sales was also more marked than the average rate of
decline for 2004 as a whole (48.9). Weak demand and low consumer confidence
(linked to depressed economic conditions) hampered sales in February. Some
retailers also mentioned the negative effect of especially poor weather
conditions that kept customers away from the shops.
All three of the principal Eurozone economies that make up the aggregate
figure - Germany, France and Italy - registered declining like- for-like
retail sales in February. Germany, France and Italy represent approximately
75% of total Eurozone retail sales.
Capital One signed a definitive agreement to acquire Hibernia in a stock and cash transaction valued at approximately $5.3 billion. The combined company will be one of the top 10 largest consumer lenders and one of the top 20 in terms of total deposits in the U.S.
BAE Systems will acquire United Defense Industries, maker of the Bradley Fighting Vehicle, for $3.97 billion.
They are fairies; he that speaks to them shall die.
I'll wink and couch; no man their works must eye.
- William Shakespeare, The Merry Wives of Windsor (Falstaff at V, v)
Boeing announced today that its Board of Directors asked for and received the resignation of President and CEO Harry Stonecipher on Sunday, March 6. Concurrently, the Board has appointed CFO James A. Bell, 56, as president and CEO on an interim
basis, with Board Chairman Lew Platt assuming an expanded role in his capacity
as non-executive chairman. Stonecipher will also leave the company's Board;
all changes are effective immediately.
The Board actions were taken following an investigation by internal and
external legal counsel of the facts and circumstances surrounding a personal
relationship between Stonecipher and a female executive of the company who did
not report directly to him. The Board determined that his actions were
inconsistent with Boeing's Code of Conduct.
"The Board concluded that the facts reflected poorly on Harry's judgment
and would impair his ability to lead the company," said Platt.
It’s difficult to carry on a relationship unless two people are in direct contact with one another. Maybe this is a case where fairy tales do come true.
fairy tales
3/7/05 Fairy Tales
After I wrote about the February payroll report on Saturday, something gnawed at me. The figures didn’t feel right. I must have done a poor job of analysis and missed something. It was a big miss, and had I looked carefully on the BLS website, I might not have felt like such a putz. Once every year the BLS performs “benchmark revisions.” An average revision is about 0.2% or in the case of today’s employment approximately 203,000. According to the BLS, they took 11/12ths of that number into the February payroll increase of 262,000. That leaves a net gain for February of 59,000. I would suggest that is most disappointing and cause for concern.
John P. Hussman, Ph.D: “It is usually a danger signal when investors extrapolate good economic news by pricing stocks to reflect ‘new era’ valuations. It’s even worse to accept ‘new ear’ stock valuations when the economic news isn’t that good to begin with…Investors really learned nothing from the 2000-2003 market decline…The memory of losses has faded enough for investors to once again take leave of their critical faculties. Suffice it to say that the historical record provides very few bases on which investors should expect the current market environment to end well.”
Bergen Evans: “We may be through with the past, but the past aint through with us.”
Today's Bloomberg Eurozone Retail Purchasing Managers' Index (PMI), a
monthly survey indicating economic conditions in the Eurozone retail sector
one month ahead of government figures, indicates that month-on-month sales at
Eurozone retailers continued to fall in February and that profits fell.
A further fall in Eurozone retailers' profit margins (gross margin) was
indicated by the survey in February (42.5). Firms reported having to offer
discounts and other promotions in an attempt to revive flagging sales,
undermining their margins in the process. Increased purchase prices were also
reported to have squeezed margins. Average purchase prices in the sector rose
at the sharpest rate for seven months in February (55.7), driven up by rising
raw material prices at suppliers and higher transport costs.
Remaining below the no-change mark of 50.0 for the second month running
in February (and for the sixth time in the past seven months), at 47.3 the
seasonally adjusted Bloomberg Eurozone Retail PMI signaled the sharpest pace
of contraction in monthly Eurozone retail sales since May 2004.
February's drop in sales was also more marked than the average rate of
decline for 2004 as a whole (48.9). Weak demand and low consumer confidence
(linked to depressed economic conditions) hampered sales in February. Some
retailers also mentioned the negative effect of especially poor weather
conditions that kept customers away from the shops.
All three of the principal Eurozone economies that make up the aggregate
figure - Germany, France and Italy - registered declining like- for-like
retail sales in February. Germany, France and Italy represent approximately
75% of total Eurozone retail sales.
Capital One signed a definitive agreement to acquire Hibernia in a stock and cash transaction valued at approximately $5.3 billion. The combined company will be one of the top 10 largest consumer lenders and one of the top 20 in terms of total deposits in the U.S.
BAE Systems will acquire United Defense Industries, maker of the Bradley Fighting Vehicle, for $3.97 billion.
They are fairies; he that speaks to them shall die.
I'll wink and couch; no man their works must eye.
- William Shakespeare, The Merry Wives of Windsor (Falstaff at V, v)
Boeing announced today that its Board of Directors asked for and received the resignation of President and CEO Harry Stonecipher on Sunday, March 6. Concurrently, the Board has appointed CFO James A. Bell, 56, as president and CEO on an interim
basis, with Board Chairman Lew Platt assuming an expanded role in his capacity
as non-executive chairman. Stonecipher will also leave the company's Board;
all changes are effective immediately.
The Board actions were taken following an investigation by internal and
external legal counsel of the facts and circumstances surrounding a personal
relationship between Stonecipher and a female executive of the company who did
not report directly to him. The Board determined that his actions were
inconsistent with Boeing's Code of Conduct.
"The Board concluded that the facts reflected poorly on Harry's judgment
and would impair his ability to lead the company," said Platt.
It’s difficult to carry on a relationship unless two people are in direct contact with one another. Maybe this is a case where fairy tales do come true.
After I wrote about the February payroll report on Saturday, something gnawed at me. The figures didn’t feel right. I must have done a poor job of analysis and missed something. It was a big miss, and had I looked carefully on the BLS website, I might not have felt like such a putz. Once every year the BLS performs “benchmark revisions.” An average revision is about 0.2% or in the case of today’s employment approximately 203,000. According to the BLS, they took 11/12ths of that number into the February payroll increase of 262,000. That leaves a net gain for February of 59,000. I would suggest that is most disappointing and cause for concern.
John P. Hussman, Ph.D: “It is usually a danger signal when investors extrapolate good economic news by pricing stocks to reflect ‘new era’ valuations. It’s even worse to accept ‘new ear’ stock valuations when the economic news isn’t that good to begin with…Investors really learned nothing from the 2000-2003 market decline…The memory of losses has faded enough for investors to once again take leave of their critical faculties. Suffice it to say that the historical record provides very few bases on which investors should expect the current market environment to end well.”
Bergen Evans: “We may be through with the past, but the past aint through with us.”
Today's Bloomberg Eurozone Retail Purchasing Managers' Index (PMI), a
monthly survey indicating economic conditions in the Eurozone retail sector
one month ahead of government figures, indicates that month-on-month sales at
Eurozone retailers continued to fall in February and that profits fell.
A further fall in Eurozone retailers' profit margins (gross margin) was
indicated by the survey in February (42.5). Firms reported having to offer
discounts and other promotions in an attempt to revive flagging sales,
undermining their margins in the process. Increased purchase prices were also
reported to have squeezed margins. Average purchase prices in the sector rose
at the sharpest rate for seven months in February (55.7), driven up by rising
raw material prices at suppliers and higher transport costs.
Remaining below the no-change mark of 50.0 for the second month running
in February (and for the sixth time in the past seven months), at 47.3 the
seasonally adjusted Bloomberg Eurozone Retail PMI signaled the sharpest pace
of contraction in monthly Eurozone retail sales since May 2004.
February's drop in sales was also more marked than the average rate of
decline for 2004 as a whole (48.9). Weak demand and low consumer confidence
(linked to depressed economic conditions) hampered sales in February. Some
retailers also mentioned the negative effect of especially poor weather
conditions that kept customers away from the shops.
All three of the principal Eurozone economies that make up the aggregate
figure - Germany, France and Italy - registered declining like- for-like
retail sales in February. Germany, France and Italy represent approximately
75% of total Eurozone retail sales.
Capital One signed a definitive agreement to acquire Hibernia in a stock and cash transaction valued at approximately $5.3 billion. The combined company will be one of the top 10 largest consumer lenders and one of the top 20 in terms of total deposits in the U.S.
BAE Systems will acquire United Defense Industries, maker of the Bradley Fighting Vehicle, for $3.97 billion.
They are fairies; he that speaks to them shall die.
I'll wink and couch; no man their works must eye.
- William Shakespeare, The Merry Wives of Windsor (Falstaff at V, v)
Boeing announced today that its Board of Directors asked for and received the resignation of President and CEO Harry Stonecipher on Sunday, March 6. Concurrently, the Board has appointed CFO James A. Bell, 56, as president and CEO on an interim
basis, with Board Chairman Lew Platt assuming an expanded role in his capacity
as non-executive chairman. Stonecipher will also leave the company's Board;
all changes are effective immediately.
The Board actions were taken following an investigation by internal and
external legal counsel of the facts and circumstances surrounding a personal
relationship between Stonecipher and a female executive of the company who did
not report directly to him. The Board determined that his actions were
inconsistent with Boeing's Code of Conduct.
"The Board concluded that the facts reflected poorly on Harry's judgment
and would impair his ability to lead the company," said Platt.
It’s difficult to carry on a relationship unless two people are in direct contact with one another. Maybe this is a case where fairy tales do come true.
Fairy Tales
3/7/05 Fairy Tales
After I wrote about the February payroll report on Saturday, something gnawed at me. The figures didn’t feel right. I must have done a poor job of analysis and missed something. It was a big miss, and had I looked carefully on the BLS website, I might not have felt like such a putz. Once every year the BLS performs “benchmark revisions.” An average revision is about 0.2% or in the case of today’s employment approximately 203,000. According to the BLS, they took 11/12ths of that number into the February payroll increase of 262,000. That leaves a net gain for February of 59,000. I would suggest that is most disappointing and cause for concern.
John P. Hussman, Ph.D: “It is usually a danger signal when investors extrapolate good economic news by pricing stocks to reflect ‘new era’ valuations. It’s even worse to accept ‘new ear’ stock valuations when the economic news isn’t that good to begin with…Investors really learned nothing from the 2000-2003 market decline…The memory of losses has faded enough for investors to once again take leave of their critical faculties. Suffice it to say that the historical record provides very few bases on which investors should expect the current market environment to end well.”
Bergen Evans: “We may be through with the past, but the past aint through with us.”
Today's Bloomberg Eurozone Retail Purchasing Managers' Index (PMI), a
monthly survey indicating economic conditions in the Eurozone retail sector
one month ahead of government figures, indicates that month-on-month sales at
Eurozone retailers continued to fall in February and that profits fell.
A further fall in Eurozone retailers' profit margins (gross margin) was
indicated by the survey in February (42.5). Firms reported having to offer
discounts and other promotions in an attempt to revive flagging sales,
undermining their margins in the process. Increased purchase prices were also
reported to have squeezed margins. Average purchase prices in the sector rose
at the sharpest rate for seven months in February (55.7), driven up by rising
raw material prices at suppliers and higher transport costs.
Remaining below the no-change mark of 50.0 for the second month running
in February (and for the sixth time in the past seven months), at 47.3 the
seasonally adjusted Bloomberg Eurozone Retail PMI signaled the sharpest pace
of contraction in monthly Eurozone retail sales since May 2004.
February's drop in sales was also more marked than the average rate of
decline for 2004 as a whole (48.9). Weak demand and low consumer confidence
(linked to depressed economic conditions) hampered sales in February. Some
retailers also mentioned the negative effect of especially poor weather
conditions that kept customers away from the shops.
All three of the principal Eurozone economies that make up the aggregate
figure - Germany, France and Italy - registered declining like- for-like
retail sales in February. Germany, France and Italy represent approximately
75% of total Eurozone retail sales.
Capital One signed a definitive agreement to acquire Hibernia in a stock and cash transaction valued at approximately $5.3 billion. The combined company will be one of the top 10 largest consumer lenders and one of the top 20 in terms of total deposits in the U.S.
BAE Systems will acquire United Defense Industries, maker of the Bradley Fighting Vehicle, for $3.97 billion.
They are fairies; he that speaks to them shall die.
I'll wink and couch; no man their works must eye.
- William Shakespeare, The Merry Wives of Windsor (Falstaff at V, v)
Boeing announced today that its Board of Directors asked for and received the resignation of President and CEO Harry Stonecipher on Sunday, March 6. Concurrently, the Board has appointed CFO James A. Bell, 56, as president and CEO on an interim
basis, with Board Chairman Lew Platt assuming an expanded role in his capacity
as non-executive chairman. Stonecipher will also leave the company's Board;
all changes are effective immediately.
The Board actions were taken following an investigation by internal and
external legal counsel of the facts and circumstances surrounding a personal
relationship between Stonecipher and a female executive of the company who did
not report directly to him. The Board determined that his actions were
inconsistent with Boeing's Code of Conduct.
"The Board concluded that the facts reflected poorly on Harry's judgment
and would impair his ability to lead the company," said Platt.
It’s difficult to carry on a relationship unless two people are in direct contact with one another. Maybe this is a case where fairy tales do come true.
After I wrote about the February payroll report on Saturday, something gnawed at me. The figures didn’t feel right. I must have done a poor job of analysis and missed something. It was a big miss, and had I looked carefully on the BLS website, I might not have felt like such a putz. Once every year the BLS performs “benchmark revisions.” An average revision is about 0.2% or in the case of today’s employment approximately 203,000. According to the BLS, they took 11/12ths of that number into the February payroll increase of 262,000. That leaves a net gain for February of 59,000. I would suggest that is most disappointing and cause for concern.
John P. Hussman, Ph.D: “It is usually a danger signal when investors extrapolate good economic news by pricing stocks to reflect ‘new era’ valuations. It’s even worse to accept ‘new ear’ stock valuations when the economic news isn’t that good to begin with…Investors really learned nothing from the 2000-2003 market decline…The memory of losses has faded enough for investors to once again take leave of their critical faculties. Suffice it to say that the historical record provides very few bases on which investors should expect the current market environment to end well.”
Bergen Evans: “We may be through with the past, but the past aint through with us.”
Today's Bloomberg Eurozone Retail Purchasing Managers' Index (PMI), a
monthly survey indicating economic conditions in the Eurozone retail sector
one month ahead of government figures, indicates that month-on-month sales at
Eurozone retailers continued to fall in February and that profits fell.
A further fall in Eurozone retailers' profit margins (gross margin) was
indicated by the survey in February (42.5). Firms reported having to offer
discounts and other promotions in an attempt to revive flagging sales,
undermining their margins in the process. Increased purchase prices were also
reported to have squeezed margins. Average purchase prices in the sector rose
at the sharpest rate for seven months in February (55.7), driven up by rising
raw material prices at suppliers and higher transport costs.
Remaining below the no-change mark of 50.0 for the second month running
in February (and for the sixth time in the past seven months), at 47.3 the
seasonally adjusted Bloomberg Eurozone Retail PMI signaled the sharpest pace
of contraction in monthly Eurozone retail sales since May 2004.
February's drop in sales was also more marked than the average rate of
decline for 2004 as a whole (48.9). Weak demand and low consumer confidence
(linked to depressed economic conditions) hampered sales in February. Some
retailers also mentioned the negative effect of especially poor weather
conditions that kept customers away from the shops.
All three of the principal Eurozone economies that make up the aggregate
figure - Germany, France and Italy - registered declining like- for-like
retail sales in February. Germany, France and Italy represent approximately
75% of total Eurozone retail sales.
Capital One signed a definitive agreement to acquire Hibernia in a stock and cash transaction valued at approximately $5.3 billion. The combined company will be one of the top 10 largest consumer lenders and one of the top 20 in terms of total deposits in the U.S.
BAE Systems will acquire United Defense Industries, maker of the Bradley Fighting Vehicle, for $3.97 billion.
They are fairies; he that speaks to them shall die.
I'll wink and couch; no man their works must eye.
- William Shakespeare, The Merry Wives of Windsor (Falstaff at V, v)
Boeing announced today that its Board of Directors asked for and received the resignation of President and CEO Harry Stonecipher on Sunday, March 6. Concurrently, the Board has appointed CFO James A. Bell, 56, as president and CEO on an interim
basis, with Board Chairman Lew Platt assuming an expanded role in his capacity
as non-executive chairman. Stonecipher will also leave the company's Board;
all changes are effective immediately.
The Board actions were taken following an investigation by internal and
external legal counsel of the facts and circumstances surrounding a personal
relationship between Stonecipher and a female executive of the company who did
not report directly to him. The Board determined that his actions were
inconsistent with Boeing's Code of Conduct.
"The Board concluded that the facts reflected poorly on Harry's judgment
and would impair his ability to lead the company," said Platt.
It’s difficult to carry on a relationship unless two people are in direct contact with one another. Maybe this is a case where fairy tales do come true.
Sunday, March 06, 2005
Warren Buffett's Letter To Berkshire Shareholders
3/6/05 Buffett’s Letter To Shareholders
Thousands of people wait every March to read Warren Buffett’s letter to Berkshire Hathaway shareholders. In 2004, Buffett believes he “struck out” because Berkshire’s net worth increased by 10.5%, short of the 10.9% return posted by the S&P 500 stock index. He observed “unless we achieve gains in per-share intrinsic value in the future that outdo the S&P, Charlie and I will be adding nothing to what you can accomplish on your own.” Additionally, he “found very few attractive securities to buy” and he was unable to “make several multi-billion dollar acquisitions that would add new and significant streams of earnings to the many we already have.” Berkshire ended its fiscal year with $21.4 billion in foreign exchange contracts in 12 currencies and $43.4 billion of cash, up 21% from the prior year end’s $36 billion. Describing the cash hoard, he stated it is “not a happy position.” I am quite confident that most any money manager would like to have that cash cushion.
George Burns: “Everything that goes up must come down. But there comes a time when not everything that’s down can come up.”
The letter discussed the United States becoming a “Sharecropper’s Society” rather than an “Ownership Society.” He was referring to our trade policies and our current account deficit. Specifically, me mentioned “as time passes, and as claims against us grow, we own less and less of what we produce. In effect, the rest of the world enjoys an ever-growing royalty on American output. Here, we are like a family that consistently overspends its income. As time passes, the family finds that it is working more and more for the ‘finance company’ and less for itself. There are deep-rooted structural problems that will cause America to continue to run a huge current-account deficit unless trade policies either change materially or the dollar declines by a degree that could prove unsettling to financial markets.”
As I have mentioned so often, increasing our savings and buying less foreign goods would go some ways to lessening the trade deficit with the rest of the world. Without less consumption and more savings, it will further cement, as Buffett described, “this force-feeding of American wealth to the rest of the world…proceeding at the rate of $1.8 billion daily, an increase of 20% since I wrote you last year.”
There was one comment I found particularly noteworthy. Buffett described his currency hedge, and stated if he were wrong in his assessment of the dollar, “our mistake will be very public. The irony is that if we chose the opposite course, leaving all of Berkshire’s assets in dollars even as they declined significantly in value, no one would notice our mistake.” Almost no one! When reading your year-end reports from your mutual and/or hedge funds, it might be wise to see whether the assets are all dollar-denominated. If so, your money manager has a pea brain. That could never be said of Buffett.
George Burns: “Too bad the only people who know how to run the country are busy driving cabs and cutting hair.”
Thousands of people wait every March to read Warren Buffett’s letter to Berkshire Hathaway shareholders. In 2004, Buffett believes he “struck out” because Berkshire’s net worth increased by 10.5%, short of the 10.9% return posted by the S&P 500 stock index. He observed “unless we achieve gains in per-share intrinsic value in the future that outdo the S&P, Charlie and I will be adding nothing to what you can accomplish on your own.” Additionally, he “found very few attractive securities to buy” and he was unable to “make several multi-billion dollar acquisitions that would add new and significant streams of earnings to the many we already have.” Berkshire ended its fiscal year with $21.4 billion in foreign exchange contracts in 12 currencies and $43.4 billion of cash, up 21% from the prior year end’s $36 billion. Describing the cash hoard, he stated it is “not a happy position.” I am quite confident that most any money manager would like to have that cash cushion.
George Burns: “Everything that goes up must come down. But there comes a time when not everything that’s down can come up.”
The letter discussed the United States becoming a “Sharecropper’s Society” rather than an “Ownership Society.” He was referring to our trade policies and our current account deficit. Specifically, me mentioned “as time passes, and as claims against us grow, we own less and less of what we produce. In effect, the rest of the world enjoys an ever-growing royalty on American output. Here, we are like a family that consistently overspends its income. As time passes, the family finds that it is working more and more for the ‘finance company’ and less for itself. There are deep-rooted structural problems that will cause America to continue to run a huge current-account deficit unless trade policies either change materially or the dollar declines by a degree that could prove unsettling to financial markets.”
As I have mentioned so often, increasing our savings and buying less foreign goods would go some ways to lessening the trade deficit with the rest of the world. Without less consumption and more savings, it will further cement, as Buffett described, “this force-feeding of American wealth to the rest of the world…proceeding at the rate of $1.8 billion daily, an increase of 20% since I wrote you last year.”
There was one comment I found particularly noteworthy. Buffett described his currency hedge, and stated if he were wrong in his assessment of the dollar, “our mistake will be very public. The irony is that if we chose the opposite course, leaving all of Berkshire’s assets in dollars even as they declined significantly in value, no one would notice our mistake.” Almost no one! When reading your year-end reports from your mutual and/or hedge funds, it might be wise to see whether the assets are all dollar-denominated. If so, your money manager has a pea brain. That could never be said of Buffett.
George Burns: “Too bad the only people who know how to run the country are busy driving cabs and cutting hair.”
Saturday, March 05, 2005
Step Right Up
3/5/05 Step Right Up
There’s plenty of room at the crap table. Step right up. Everyone goes home a winner. You’re playing with the house’s money. Heads you win. Tails you win. The only losers are the ones who sit on the sidelines watching the prices rise. There’s no ceiling. There aren’t any bubbles outside the bathroom.
David Walker, Comptroller General of the U.S.: “The United States of America’s public finances are a shambles and they’re getting rapidly worse.” What does he know? The CBO reported that, for the first five months of fiscal 2005, the U.S. government ran a budget deficit of about $225 billion, but it was about $4 billion less than the same period last year. Noam Neusner, spokesman for the OMB, stated “in the near-term we’re doing exactly what we should be doing---bringing the budget down steadily.” Things are looking up. Yesterday’s CBO report said cumulative deficits over the next decade will be $125 billion worse than it estimated only about one month ago. However, the good news is the deficit projected for 2005 would be about $394 billion and approximately $375 billion in 2006. That’s steady progress from the record deficit of $412 billion in fiscal 2004. I can’t wait to see the next revisions.
I really get ticked off when people say we’re losing our manufacturing base. There is a lack of appreciation for our manufacturing prowess. We manufacture liquidity. We print money, extend credit, assume debt, and save only 1% of earnings. That’s the American way! Just look at M3. Please! It’s up 6% year-over-year and rose $43.5 billion in the last week to $9.5 trillion. Meanwhile, bank credit exploded in the last week to just under $7 trillion, a rise of almost $42 billion. Fortunately, we invited foreigners to the party. We can’t exclude our friends. Their holdings of our government debt rose by $14 billion to $1.379 billion. Over the past two weeks those holdings jumped by $36.4 billion. I hear someone yelling “how about real estate?” I’m getting to it. This is the best part. The National Association of Realtors stated that together investors and second-home buyers bought more than one-third of all homes sold in the U.S. in 2004. That is such great news.
I really get angry when analysts take cheap shots at the non-farm payroll number. Who cares if the January number was revised downward from 146,000 to 132,000? Who cares if the unemployment rate rose in February from 5.2% to 5.4%? It’s been 5.4% for months and months. Big deal. I heard someone say it’s quality not quantity. That’s a cheap shot. In February, there were 30,000 more temp jobs. They need to eat too. There were 33,000 more government jobs. Thank goodness for big government. The weather improved and 30,000 construction workers were able to return to building those homes we so desperately need. The heavens looked kindly on us and those auto workers returned to work and helped manufacturing add 20,000 jobs. All of the aforementioned added 113,000 to the January payroll number of 132,000. And to think we were still able to create another 17,000 jobs, bringing the total in February to 262,000. It’s a miracle. The consumer came to the rescue as there was a net gain of 23,800 retail jobs from January to February. In addition, people are still eating. Food services employment rose by 27,000 in February. I guess that means more jobs were lost in other areas. It’s the bottom line that counts. But there is good news. Over the past year, the number of persons who held more than one job increased by 432,000 to 7.7 million, not seasonally adjusted, and this group represents 5.5% of total employment in February, up from 5.3% a year earlier. It means people can find jobs. They may not be with benefits, but they’re jobs.
There are too many negative people. There are always complaints. The manufacturing workweek fell by 12 minutes in February. Give me a break! Overtime increased by 6 minutes. The good news is that workers’ average hourly earnings and average weekly earnings were unchanged. That means labor costs will not contribute to inflation. That means the bond market can rally and yields can go down. That’s good for the housing investor.
Fortunately, Wall Street found time on Friday to turn its attention from real estate to stocks. The 1215 level on the S&P 500 was broken on the upside without a sweat, and both the Dow and the S&P 500 made new 3+ year highs. More impressive were the record highs recorded by the Dow Transports and the S&P Mid-Cap. It was a great day for creating wealth. Unfortunately, the dollar declined and inflation did rise as the Goldman Sachs Commodities Index is now up 17.6% year-to-date. Maybe inflation will take a rest. After all, the January orders for durable goods were revised down to 1.3% from 0.9%.
The Fed Chairman: “Down the road the impact of an ever-rising deficit, especially as a percent of GDP, creates significant weakness in the structure of the economy.”
Weston Foods is closing biscuit plants in Elizabeth, N.J. and Richmond, Va and 1,100 jobs will be cut.
China’s currency peg presently holds the yuan in a range of 8.276 to 8.28 per dollar. Guo Shuqing, head of the State Administration of Foreign Exchange, stated “we will continue to maintain a managed floating system based on market supply and demand and will gradually increase exchange rate flexibility.” Meanwhile, China’s Premier is forecasting their economy to grow 8% this year.
According to CattBoxx.com, in 2004, U.S. consumers spent $300 billion at online businesses. At the same time, consumers continue to voice security and privacy concerns.
Berkshire Hathaway Inc., the holding company run by Warren Buffett, said on Saturday that profits last year fell 10 percent from a year earlier, as earned insurance premiums and investment gains declined. This morning Buffett will release his 2005 letter to the company’s shareholders. I will include some quotes in tomorrow’s musings.
There’s plenty of room at the crap table. Step right up. Everyone goes home a winner. You’re playing with the house’s money. Heads you win. Tails you win. The only losers are the ones who sit on the sidelines watching the prices rise. There’s no ceiling. There aren’t any bubbles outside the bathroom.
David Walker, Comptroller General of the U.S.: “The United States of America’s public finances are a shambles and they’re getting rapidly worse.” What does he know? The CBO reported that, for the first five months of fiscal 2005, the U.S. government ran a budget deficit of about $225 billion, but it was about $4 billion less than the same period last year. Noam Neusner, spokesman for the OMB, stated “in the near-term we’re doing exactly what we should be doing---bringing the budget down steadily.” Things are looking up. Yesterday’s CBO report said cumulative deficits over the next decade will be $125 billion worse than it estimated only about one month ago. However, the good news is the deficit projected for 2005 would be about $394 billion and approximately $375 billion in 2006. That’s steady progress from the record deficit of $412 billion in fiscal 2004. I can’t wait to see the next revisions.
I really get ticked off when people say we’re losing our manufacturing base. There is a lack of appreciation for our manufacturing prowess. We manufacture liquidity. We print money, extend credit, assume debt, and save only 1% of earnings. That’s the American way! Just look at M3. Please! It’s up 6% year-over-year and rose $43.5 billion in the last week to $9.5 trillion. Meanwhile, bank credit exploded in the last week to just under $7 trillion, a rise of almost $42 billion. Fortunately, we invited foreigners to the party. We can’t exclude our friends. Their holdings of our government debt rose by $14 billion to $1.379 billion. Over the past two weeks those holdings jumped by $36.4 billion. I hear someone yelling “how about real estate?” I’m getting to it. This is the best part. The National Association of Realtors stated that together investors and second-home buyers bought more than one-third of all homes sold in the U.S. in 2004. That is such great news.
I really get angry when analysts take cheap shots at the non-farm payroll number. Who cares if the January number was revised downward from 146,000 to 132,000? Who cares if the unemployment rate rose in February from 5.2% to 5.4%? It’s been 5.4% for months and months. Big deal. I heard someone say it’s quality not quantity. That’s a cheap shot. In February, there were 30,000 more temp jobs. They need to eat too. There were 33,000 more government jobs. Thank goodness for big government. The weather improved and 30,000 construction workers were able to return to building those homes we so desperately need. The heavens looked kindly on us and those auto workers returned to work and helped manufacturing add 20,000 jobs. All of the aforementioned added 113,000 to the January payroll number of 132,000. And to think we were still able to create another 17,000 jobs, bringing the total in February to 262,000. It’s a miracle. The consumer came to the rescue as there was a net gain of 23,800 retail jobs from January to February. In addition, people are still eating. Food services employment rose by 27,000 in February. I guess that means more jobs were lost in other areas. It’s the bottom line that counts. But there is good news. Over the past year, the number of persons who held more than one job increased by 432,000 to 7.7 million, not seasonally adjusted, and this group represents 5.5% of total employment in February, up from 5.3% a year earlier. It means people can find jobs. They may not be with benefits, but they’re jobs.
There are too many negative people. There are always complaints. The manufacturing workweek fell by 12 minutes in February. Give me a break! Overtime increased by 6 minutes. The good news is that workers’ average hourly earnings and average weekly earnings were unchanged. That means labor costs will not contribute to inflation. That means the bond market can rally and yields can go down. That’s good for the housing investor.
Fortunately, Wall Street found time on Friday to turn its attention from real estate to stocks. The 1215 level on the S&P 500 was broken on the upside without a sweat, and both the Dow and the S&P 500 made new 3+ year highs. More impressive were the record highs recorded by the Dow Transports and the S&P Mid-Cap. It was a great day for creating wealth. Unfortunately, the dollar declined and inflation did rise as the Goldman Sachs Commodities Index is now up 17.6% year-to-date. Maybe inflation will take a rest. After all, the January orders for durable goods were revised down to 1.3% from 0.9%.
The Fed Chairman: “Down the road the impact of an ever-rising deficit, especially as a percent of GDP, creates significant weakness in the structure of the economy.”
Weston Foods is closing biscuit plants in Elizabeth, N.J. and Richmond, Va and 1,100 jobs will be cut.
China’s currency peg presently holds the yuan in a range of 8.276 to 8.28 per dollar. Guo Shuqing, head of the State Administration of Foreign Exchange, stated “we will continue to maintain a managed floating system based on market supply and demand and will gradually increase exchange rate flexibility.” Meanwhile, China’s Premier is forecasting their economy to grow 8% this year.
According to CattBoxx.com, in 2004, U.S. consumers spent $300 billion at online businesses. At the same time, consumers continue to voice security and privacy concerns.
Berkshire Hathaway Inc., the holding company run by Warren Buffett, said on Saturday that profits last year fell 10 percent from a year earlier, as earned insurance premiums and investment gains declined. This morning Buffett will release his 2005 letter to the company’s shareholders. I will include some quotes in tomorrow’s musings.
Friday, March 04, 2005
payrolls
3/4/05 Payrolls
The median estimate of 70 economists in a Bloomberg
News survey is for U.S. February payrolls to rise by
225,000, the biggest jump for any February since 1999.
This would follow a muted gain of 146,000 in the prior
month. Why the difference? The GDP is estimated to be
growing at roughly twice the productivity rate and
therefore more workers are required (despite the fact
that factory orders probably declined for the first
time since August in the past month). At the same
time, added employment has not lessened the slack in
the labor market (despite the stated unemployment rate
dropping to 5.2%) and therefore companies are not
pressured to raise wages. The gains in wages continue
to trail the rate of inflation. Rising employment
estimates are also relying on better weather when the
economic survey was taken. Citigroup stated 342,000
people could not work in January because of bad
weather or 85,000 more than the average. On the other
hand, all the surveys I read suggest that hiring will
continue to be moderate this year. In a few hours
we’ll see the numbers. Those are the pre-revised
numbers. There won’t be surprises in those getting
hired--- the same part-timers and the same service
jobs. Only the numbers will change to protect the
innocent.
The payroll numbers will not include the plant closure
of Ludlow Textiles. Employment was down to 104. Once
there were 4,000 workers in what was once described as
the largest jute factory in the world. The town of
Ludlow, Mass. got its name from the company.
Production will be moved overseas.
February 21, 2001 Bush stated “to make sure the
retirement savings of America’s seniors are not
diverted in any other program, my budget protects all
$2.6 trillion of the Social Security surplus for
Social Security, and for Social Security alone.” On
February 9, 2005 Bush stated “the money-payroll taxes
going into Social Security are spent. They’re spent on
benefits and they’re spent on government programs.
There is no trust.” He is absolutely correct. There is
no trust!
February same-store sales for Wal-Mart increased 4.1%.
In February 2004 they climbed 6.2%. For the March
five-week period, the company forecasts comparative
sales for the U.S. to be similar or better than
February of this year.
Since December, after more than quadrupling to a
record high, the Baltic dry freight index, a basket of
prices for charting vessels on 25 important shipping
routes, has dropped by more than 20%. It has been
estimated that roughly 90% of world trade by weighted
volume is via shipping routes. A new report by Celent
stated derivatives trading on shipping rates rose by
70% in 2004 to $30 billion.
I thought it might be interesting to construct two
portfolios and compare the results between today and
December 31, 2005. One will be comprised of stocks
selling for $100 and over and the other with stocks
selling for $5 and under. Each portfolio will be
weighted with 100 shares of 10 stocks. In the $100 and
over we have Goldman Sachs, Bear Stearns, Whole Foods,
ConocoPhillips, Berkshire Hathaway, Google, KB Home,
Beazer Homes. General Dynamics, and United
Technologies. The other portfolio consists of Blue
Martini Software, Ciena, Selectica, Lucent, Sun
Microsystems, Palatin Technologies, Atmel, Nortel
Networks, ArQule, and Delta Airlines.
Maxtor will cut up to 5,500 jobs in Singapore as it
shifts production to China.
There is trouble with Blogger publishing this morning. Hopefully, it will be cleared
up relatively quickly this morning.
payrolls
3/4/05 Payrolls
The median estimate of 70 economists in a Bloomberg
News survey is for U.S. February payrolls to rise by
225,000, the biggest jump for any February since 1999.
This would follow a muted gain of 146,000 in the prior
month. Why the difference? The GDP is estimated to be
growing at roughly twice the productivity rate and
therefore more workers are required (despite the fact
that factory orders probably declined for the first
time since August in the past month). At the same
time, added employment has not lessened the slack in
the labor market (despite the stated unemployment rate
dropping to 5.2%) and therefore companies are not
pressured to raise wages. The gains in wages continue
to trail the rate of inflation. Rising employment
estimates are also relying on better weather when the
economic survey was taken. Citigroup stated 342,000
people could not work in January because of bad
weather or 85,000 more than the average. On the other
hand, all the surveys I read suggest that hiring will
continue to be moderate this year. In a few hours
we’ll see the numbers. Those are the pre-revised
numbers. There won’t be surprises in those getting
hired--- the same part-timers and the same service
jobs. Only the numbers will change to protect the
innocent.
The payroll numbers will not include the plant closure
of Ludlow Textiles. Employment was down to 104. Once
there were 4,000 workers in what was once described as
the largest jute factory in the world. The town of
Ludlow, Mass. got its name from the company.
Production will be moved overseas.
February 21, 2001 Bush stated “to make sure the
retirement savings of America’s seniors are not
diverted in any other program, my budget protects all
$2.6 trillion of the Social Security surplus for
Social Security, and for Social Security alone.” On
February 9, 2005 Bush stated “the money-payroll taxes
going into Social Security are spent. They’re spent on
benefits and they’re spent on government programs.
There is no trust.” He is absolutely correct. There is
no trust!
February same-store sales for Wal-Mart increased 4.1%.
In February 2004 they climbed 6.2%. For the March
five-week period, the company forecasts comparative
sales for the U.S. to be similar or better than
February of this year.
Since December, after more than quadrupling to a
record high, the Baltic dry freight index, a basket of
prices for charting vessels on 25 important shipping
routes, has dropped by more than 20%. It has been
estimated that roughly 90% of world trade by weighted
volume is via shipping routes. A new report by Celent
stated derivatives trading on shipping rates rose by
70% in 2004 to $30 billion.
I thought it might be interesting to construct two
portfolios and compare the results between today and
December 31, 2005. One will be comprised of stocks
selling for $100 and over and the other with stocks
selling for $5 and under. Each portfolio will be
weighted with 100 shares of 10 stocks. In the $100 and
over we have Goldman Sachs, Bear Stearns, Whole Foods,
ConocoPhillips, Berkshire Hathaway, Google, KB Home,
Beazer Homes. General Dynamics, and United
Technologies. The other portfolio consists of Blue
Martini Software, Ciena, Selectica, Lucent, Sun
Microsystems, Palatin Technologies, Atmel, Nortel
Networks, ArQule, and Delta Airlines.
Maxtor will cut up to 5,500 jobs in Singapore as it
shifts production to China.
payrolls
3/4/05 Payrolls
The median estimate of 70 economists in a Bloomberg
News survey is for U.S. February payrolls to rise by
225,000, the biggest jump for any February since 1999.
This would follow a muted gain of 146,000 in the prior
month. Why the difference? The GDP is estimated to be
growing at roughly twice the productivity rate and
therefore more workers are required (despite the fact
that factory orders probably declined for the first
time since August in the past month). At the same
time, added employment has not lessened the slack in
the labor market (despite the stated unemployment rate
dropping to 5.2%) and therefore companies are not
pressured to raise wages. The gains in wages continue
to trail the rate of inflation. Rising employment
estimates are also relying on better weather when the
economic survey was taken. Citigroup stated 342,000
people could not work in January because of bad
weather or 85,000 more than the average. On the other
hand, all the surveys I read suggest that hiring will
continue to be moderate this year. In a few hours
we’ll see the numbers. Those are the pre-revised
numbers. There won’t be surprises in those getting
hired--- the same part-timers and the same service
jobs. Only the numbers will change to protect the
innocent.
The payroll numbers will not include the plant closure
of Ludlow Textiles. Employment was down to 104. Once
there were 4,000 workers in what was once described as
the largest jute factory in the world. The town of
Ludlow, Mass. got its name from the company.
Production will be moved overseas.
February 21, 2001 Bush stated “to make sure the
retirement savings of America’s seniors are not
diverted in any other program, my budget protects all
$2.6 trillion of the Social Security surplus for
Social Security, and for Social Security alone.” On
February 9, 2005 Bush stated “the money-payroll taxes
going into Social Security are spent. They’re spent on
benefits and they’re spent on government programs.
There is no trust.” He is absolutely correct. There is
no trust!
February same-store sales for Wal-Mart increased 4.1%.
In February 2004 they climbed 6.2%. For the March
five-week period, the company forecasts comparative
sales for the U.S. to be similar or better than
February of this year.
Since December, after more than quadrupling to a
record high, the Baltic dry freight index, a basket of
prices for charting vessels on 25 important shipping
routes, has dropped by more than 20%. It has been
estimated that roughly 90% of world trade by weighted
volume is via shipping routes. A new report by Celent
stated derivatives trading on shipping rates rose by
70% in 2004 to $30 billion.
I thought it might be interesting to construct two
portfolios and compare the results between today and
December 31, 2005. One will be comprised of stocks
selling for $100 and over and the other with stocks
selling for $5 and under. Each portfolio will be
weighted with 100 shares of 10 stocks. In the $100 and
over we have Goldman Sachs, Bear Stearns, Whole Foods,
ConocoPhillips, Berkshire Hathaway, Google, KB Home,
Beazer Homes. General Dynamics, and United
Technologies. The other portfolio consists of Blue
Martini Software, Ciena, Selectica, Lucent, Sun
Microsystems, Palatin Technologies, Atmel, Nortel
Networks, ArQule, and Delta Airlines.
Maxtor will cut up to 5,500 jobs in Singapore as it
shifts production to China.
payrolls
3/4/05 Payrolls
The median estimate of 70 economists in a Bloomberg
News survey is for U.S. February payrolls to rise by
225,000, the biggest jump for any February since 1999.
This would follow a muted gain of 146,000 in the prior
month. Why the difference? The GDP is estimated to be
growing at roughly twice the productivity rate and
therefore more workers are required (despite the fact
that factory orders probably declined for the first
time since August in the past month). At the same
time, added employment has not lessened the slack in
the labor market (despite the stated unemployment rate
dropping to 5.2%) and therefore companies are not
pressured to raise wages. The gains in wages continue
to trail the rate of inflation. Rising employment
estimates are also relying on better weather when the
economic survey was taken. Citigroup stated 342,000
people could not work in January because of bad
weather or 85,000 more than the average. On the other
hand, all the surveys I read suggest that hiring will
continue to be moderate this year. In a few hours
we’ll see the numbers. Those are the pre-revised
numbers. There won’t be surprises in those getting
hired--- the same part-timers and the same service
jobs. Only the numbers will change to protect the
innocent.
The payroll numbers will not include the plant closure
of Ludlow Textiles. Employment was down to 104. Once
there were 4,000 workers in what was once described as
the largest jute factory in the world. The town of
Ludlow, Mass. got its name from the company.
Production will be moved overseas.
February 21, 2001 Bush stated “to make sure the
retirement savings of America’s seniors are not
diverted in any other program, my budget protects all
$2.6 trillion of the Social Security surplus for
Social Security, and for Social Security alone.” On
February 9, 2005 Bush stated “the money-payroll taxes
going into Social Security are spent. They’re spent on
benefits and they’re spent on government programs.
There is no trust.” He is absolutely correct. There is
no trust!
February same-store sales for Wal-Mart increased 4.1%.
In February 2004 they climbed 6.2%. For the March
five-week period, the company forecasts comparative
sales for the U.S. to be similar or better than
February of this year.
Since December, after more than quadrupling to a
record high, the Baltic dry freight index, a basket of
prices for charting vessels on 25 important shipping
routes, has dropped by more than 20%. It has been
estimated that roughly 90% of world trade by weighted
volume is via shipping routes. A new report by Celent
stated derivatives trading on shipping rates rose by
70% in 2004 to $30 billion.
I thought it might be interesting to construct two
portfolios and compare the results between today and
December 31, 2005. One will be comprised of stocks
selling for $100 and over and the other with stocks
selling for $5 and under. Each portfolio will be
weighted with 100 shares of 10 stocks. In the $100 and
over we have Goldman Sachs, Bear Stearns, Whole Foods,
ConocoPhillips, Berkshire Hathaway, Google, KB Home,
Beazer Homes. General Dynamics, and United
Technologies. The other portfolio consists of Blue
Martini Software, Ciena, Selectica, Lucent, Sun
Microsystems, Palatin Technologies, Atmel, Nortel
Networks, ArQule, and Delta Airlines.
Maxtor will cut up to 5,500 jobs in Singapore as it
shifts production to China.
Payrolls
3/4/05 Payrolls
The median estimate of 70 economists in a Bloomberg
News survey is for U.S. February payrolls to rise by
225,000, the biggest jump for any February since 1999.
This would follow a muted gain of 146,000 in the prior
month. Why the difference? The GDP is estimated to be
growing at roughly twice the productivity rate and
therefore more workers are required (despite the fact
that factory orders probably declined for the first
time since August in the past month). At the same
time, added employment has not lessened the slack in
the labor market (despite the stated unemployment rate
dropping to 5.2%) and therefore companies are not
pressured to raise wages. The gains in wages continue
to trail the rate of inflation. Rising employment
estimates are also relying on better weather when the
economic survey was taken. Citigroup stated 342,000
people could not work in January because of bad
weather or 85,000 more than the average. On the other
hand, all the surveys I read suggest that hiring will
continue to be moderate this year. In a few hours
we’ll see the numbers. Those are the pre-revised
numbers. There won’t be surprises in those getting
hired--- the same part-timers and the same service
jobs. Only the numbers will change to protect the
innocent.
The payroll numbers will not include the plant closure
of Ludlow Textiles. Employment was down to 104. Once
there were 4,000 workers in what was once described as
the largest jute factory in the world. The town of
Ludlow, Mass. got its name from the company.
Production will be moved overseas.
February 21, 2001 Bush stated “to make sure the
retirement savings of America’s seniors are not
diverted in any other program, my budget protects all
$2.6 trillion of the Social Security surplus for
Social Security, and for Social Security alone.” On
February 9, 2005 Bush stated “the money-payroll taxes
going into Social Security are spent. They’re spent on
benefits and they’re spent on government programs.
There is no trust.” He is absolutely correct. There is
no trust!
February same-store sales for Wal-Mart increased 4.1%.
In February 2004 they climbed 6.2%. For the March
five-week period, the company forecasts comparative
sales for the U.S. to be similar or better than
February of this year.
Since December, after more than quadrupling to a
record high, the Baltic dry freight index, a basket of
prices for charting vessels on 25 important shipping
routes, has dropped by more than 20%. It has been
estimated that roughly 90% of world trade by weighted
volume is via shipping routes. A new report by Celent
stated derivatives trading on shipping rates rose by
70% in 2004 to $30 billion.
I thought it might be interesting to construct two
portfolios and compare the results between today and
December 31, 2005. One will be comprised of stocks
selling for $100 and over and the other with stocks
selling for $5 and under. Each portfolio will be
weighted with 100 shares of 10 stocks. In the $100 and
over we have Goldman Sachs, Bear Stearns, Whole Foods,
ConocoPhillips, Berkshire Hathaway, Google, KB Home,
Beazer Homes. General Dynamics, and United
Technologies. The other portfolio consists of Blue
Martini Software, Ciena, Selectica, Lucent, Sun
Microsystems, Palatin Technologies, Atmel, Nortel
Networks, ArQule, and Delta Airlines.
Maxtor will cut up to 5,500 jobs in Singapore as it
shifts production to China.
Thursday, March 03, 2005
Employment Surveys
3/3/05 Employment Surveys
In February, the Hudson Employment Index slid 5 points to 102, its lowest level in 12 months. Confidence among U.S. workers dropped reflecting heightened concerns about layoffs, job security, and personal finances. Twenty one percent of surveyed workers reported concern about losing his or her own job, compared to 19% of workers in January. This figure has risen above 19% only once before in December 2003, when it was 20%. Further, the number of workers expecting their firms to lay off staff in the coming months rose to 18% from 16% in January. Jeff Anderson, senior vice president of Hudson Global Resources stated "employment growth has been slower than expected and has been restricted to certain sectors such as services, making U.S. workers cautious and even pesimistic about the general overall job market."
According to the latest findings of the Duke University/CFO Business Outlook survey, chief financial officers are concerned about inflationary labor costs and the depreciating U.S. dollar hurting economic growth in the coming year. They are also concerned about the cost of health care, the U.S. budget deficit, high fuel costs and an increasingly competitive economic environment , all of which will slow earnings and capital spending growth in the coming year. John Graham, professor of finance at Duke's Fuqua School of Business and director of the survey, observed "while there are still more optimists than pessimists, this is the least optimistic that CFOs have been in the last two years." Campbell Harvey, professor of finance at Duke and founding director of the survey, stated that firms cite rising material costs on imported inputs as a major factor hurting their companies. He stated "many businesses cannot pass on the higher import costs and are being squeezed by the dollar. And to make things worse, our exporters are seeing little or no action even after a substantial depreciation." The survey revealed that fewer than half of CFOs expect employment to grow at their firms, in comparison to 60% expecting growth last quarter. Employment growth should average 1.7% domestically, down from 3.1% predicted last fall. This contrasts with expected 3% growth in outsourced employees. Capital spending should show modest growth of 5.4%; however, tech spending will increase just 2.4%. CFOs say advertising and marketing expenditures will rise by only 0.9%, which is less than one-third of the growth predicted in last fall's survey.
Babe Ruth: "Every strike brings me closer to the next home run."
In the February Challenger survey, employers announced plans for 108,387 job cuts, up 17% from January levels and up 43% from February 2004. Employers announced plans last month to hire 41,984 employees, up 41% from the prior month. Challenger stated that mergers have been a big driver of job cut announcements. That certainly is the case, but we should not forget about plant closings.
Casey Stengel: "The trouble is not that players have sex the night before a game. It's that they stay out all night looking for it."
Crude tops $53 a barrel, reaching a 4-month high.
The WSJ reports that ChevronTexaco is considering a bid for Unocal.
The Fed Chairman stated "our budget position is unlikely to improve substantially in the coming years unless major defciit-reducing actions are taken" and observed the record U.S budget deficit is "unsustainable." The problem is no one can identify the tipping point. It's somewhat akin to real estate in San Francisco. Unbelievable as it may sound, a house is on the market in SF for $45 million and a bid of $42 million was just rejected. This is not an office building or a hotel. It's a house--- in my view, an ugly one at that.
According to the National Conference of State Legislatures survey, eighty percent of employees miss work because of child-care problems. On average working mothers lose eight-and-a -half days per year, and fathers lose five.
Redd Foxx: "A girl's legs are her best friends, but the best of friends must part."
Transclick is a New York City privately-owned firm. The company announced the rollout of software that translates e-mail and text messaging with just one click. It can covert text into any of 18 languages. It will soon be available on most mobile devices. The cost is a modest $3 a month for basic service.
In February, the Hudson Employment Index slid 5 points to 102, its lowest level in 12 months. Confidence among U.S. workers dropped reflecting heightened concerns about layoffs, job security, and personal finances. Twenty one percent of surveyed workers reported concern about losing his or her own job, compared to 19% of workers in January. This figure has risen above 19% only once before in December 2003, when it was 20%. Further, the number of workers expecting their firms to lay off staff in the coming months rose to 18% from 16% in January. Jeff Anderson, senior vice president of Hudson Global Resources stated "employment growth has been slower than expected and has been restricted to certain sectors such as services, making U.S. workers cautious and even pesimistic about the general overall job market."
According to the latest findings of the Duke University/CFO Business Outlook survey, chief financial officers are concerned about inflationary labor costs and the depreciating U.S. dollar hurting economic growth in the coming year. They are also concerned about the cost of health care, the U.S. budget deficit, high fuel costs and an increasingly competitive economic environment , all of which will slow earnings and capital spending growth in the coming year. John Graham, professor of finance at Duke's Fuqua School of Business and director of the survey, observed "while there are still more optimists than pessimists, this is the least optimistic that CFOs have been in the last two years." Campbell Harvey, professor of finance at Duke and founding director of the survey, stated that firms cite rising material costs on imported inputs as a major factor hurting their companies. He stated "many businesses cannot pass on the higher import costs and are being squeezed by the dollar. And to make things worse, our exporters are seeing little or no action even after a substantial depreciation." The survey revealed that fewer than half of CFOs expect employment to grow at their firms, in comparison to 60% expecting growth last quarter. Employment growth should average 1.7% domestically, down from 3.1% predicted last fall. This contrasts with expected 3% growth in outsourced employees. Capital spending should show modest growth of 5.4%; however, tech spending will increase just 2.4%. CFOs say advertising and marketing expenditures will rise by only 0.9%, which is less than one-third of the growth predicted in last fall's survey.
Babe Ruth: "Every strike brings me closer to the next home run."
In the February Challenger survey, employers announced plans for 108,387 job cuts, up 17% from January levels and up 43% from February 2004. Employers announced plans last month to hire 41,984 employees, up 41% from the prior month. Challenger stated that mergers have been a big driver of job cut announcements. That certainly is the case, but we should not forget about plant closings.
Casey Stengel: "The trouble is not that players have sex the night before a game. It's that they stay out all night looking for it."
Crude tops $53 a barrel, reaching a 4-month high.
The WSJ reports that ChevronTexaco is considering a bid for Unocal.
The Fed Chairman stated "our budget position is unlikely to improve substantially in the coming years unless major defciit-reducing actions are taken" and observed the record U.S budget deficit is "unsustainable." The problem is no one can identify the tipping point. It's somewhat akin to real estate in San Francisco. Unbelievable as it may sound, a house is on the market in SF for $45 million and a bid of $42 million was just rejected. This is not an office building or a hotel. It's a house--- in my view, an ugly one at that.
According to the National Conference of State Legislatures survey, eighty percent of employees miss work because of child-care problems. On average working mothers lose eight-and-a -half days per year, and fathers lose five.
Redd Foxx: "A girl's legs are her best friends, but the best of friends must part."
Transclick is a New York City privately-owned firm. The company announced the rollout of software that translates e-mail and text messaging with just one click. It can covert text into any of 18 languages. It will soon be available on most mobile devices. The cost is a modest $3 a month for basic service.
Wednesday, March 02, 2005
As The Dow Approaches 11,000
3/2/05 As The Dow Approaches 11,000
Yesterday’s spin was that the nation’s factories expanded in February for the 21st consecutive month. As long as the ISM Manufacturing Index exceeds 50, then there is expansion. It doesn’t matter that the Index declined in February or that employment in our factories is going nowhere. The fact is the Index for February hit a 14-month low. New orders were at their lowest level since June 2003.
As one former comedian might have said, take GM. Please! For the year, GM sales are down 9.9%. Their share of the market has declined to 25.1%. The temporary plant shutdowns will impact 3,200 workers. Ford is not exactly a ball of fire. Their year-to-date sales are off 7.4% and its market share declined to 19.6%. Yesterday, they announced further incentives. They will need to announce further production cutbacks. They’re coming. Just wait. In addition, Ford stated they expect a tough market in Europe this year. DaimlerChrysler turned in a better performance with sales up 2.4% year-to-date.
Yesterday was not a good day for jobs. Wachovia is cutting 4,300 workers. Citigroup is laying off 1,400 employees. GM is closing its Lansing, Michigan plant and 3,200 workers will be cut from the payroll. Johnson Outdoors will layoff 70 workers.
ECB cut their forecast for eurozone growth in 2005 to 1.6% from 1.9%.
According to the recent CNN/USA Today/Gallup poll, only 38% of Americans feel major changes must be made in Social Security within the next two years, and that’s down from 49% in the previous poll. Social Security is not going bankrupt. Fixing it does not require major brains. A tweak on the “cap” and raising the retirement age by one year will do wonders. Of course, it would help if the excess funds were not used for budget purposes. Bush generated fear out of the WMD and now he is trying to generate fear by creating a bankruptcy story for Social Security. A leader does not lead through fear.
Paul Volcker: "Below the favorable surface [of the economy], there are as dangerous and intractable circumstances as I can remember.... Nothing in our experience is comparable…But no one is willing to understand [this] and do anything about it… We are consuming… about six per cent more than we are producing. What holds the world together is a massive flow of capital from abroad… it’s what feeds our consumption binge... the United States economy is growing on the savings of the poor… A big adjustment will inevitably become necessary, long before the social security surpluses disappear and the deficit explodes…We are skating on increasingly thin ice."
According to the Xinhua news agency, China’s central bank spent $195 billion buying foreign currency last year to maintain the yuan’s peg with the dollar, a rise of 40% over 2003. The state media reported last week that the Chinese government will permit more foreign currency to leave the country.
Walgreen’s February same-store sales rose 9.3%. The company is not flashy but just keeps ringing the cash register.
In a recent interview, Sir John Templeton observed that, in his entire money management career, this is the toughest time to find stocks to buy. Saying it a bit differently, there isn’t much value to be found.
Yesterday’s spin was that the nation’s factories expanded in February for the 21st consecutive month. As long as the ISM Manufacturing Index exceeds 50, then there is expansion. It doesn’t matter that the Index declined in February or that employment in our factories is going nowhere. The fact is the Index for February hit a 14-month low. New orders were at their lowest level since June 2003.
As one former comedian might have said, take GM. Please! For the year, GM sales are down 9.9%. Their share of the market has declined to 25.1%. The temporary plant shutdowns will impact 3,200 workers. Ford is not exactly a ball of fire. Their year-to-date sales are off 7.4% and its market share declined to 19.6%. Yesterday, they announced further incentives. They will need to announce further production cutbacks. They’re coming. Just wait. In addition, Ford stated they expect a tough market in Europe this year. DaimlerChrysler turned in a better performance with sales up 2.4% year-to-date.
Yesterday was not a good day for jobs. Wachovia is cutting 4,300 workers. Citigroup is laying off 1,400 employees. GM is closing its Lansing, Michigan plant and 3,200 workers will be cut from the payroll. Johnson Outdoors will layoff 70 workers.
ECB cut their forecast for eurozone growth in 2005 to 1.6% from 1.9%.
According to the recent CNN/USA Today/Gallup poll, only 38% of Americans feel major changes must be made in Social Security within the next two years, and that’s down from 49% in the previous poll. Social Security is not going bankrupt. Fixing it does not require major brains. A tweak on the “cap” and raising the retirement age by one year will do wonders. Of course, it would help if the excess funds were not used for budget purposes. Bush generated fear out of the WMD and now he is trying to generate fear by creating a bankruptcy story for Social Security. A leader does not lead through fear.
Paul Volcker: "Below the favorable surface [of the economy], there are as dangerous and intractable circumstances as I can remember.... Nothing in our experience is comparable…But no one is willing to understand [this] and do anything about it… We are consuming… about six per cent more than we are producing. What holds the world together is a massive flow of capital from abroad… it’s what feeds our consumption binge... the United States economy is growing on the savings of the poor… A big adjustment will inevitably become necessary, long before the social security surpluses disappear and the deficit explodes…We are skating on increasingly thin ice."
According to the Xinhua news agency, China’s central bank spent $195 billion buying foreign currency last year to maintain the yuan’s peg with the dollar, a rise of 40% over 2003. The state media reported last week that the Chinese government will permit more foreign currency to leave the country.
Walgreen’s February same-store sales rose 9.3%. The company is not flashy but just keeps ringing the cash register.
In a recent interview, Sir John Templeton observed that, in his entire money management career, this is the toughest time to find stocks to buy. Saying it a bit differently, there isn’t much value to be found.
Monday, February 28, 2005
Inflation & Interest Rates Rise But Incomes Fall
3/1/05 Inflation & Interest Rates Rise But Incomes Fall
That's not a promising recipe for a successful economy. The core PCE price index rose 0.3% in January, the biggest gain since October 2001. With the CRB making a new high yesterday at 305 and looking at February's higher prices for crude, heating oil, copper, cocoa, wheat, coffee, soybeans, cotton, sugar, and many other commodities, the core PCE price index should be higher than January's. Meanwhile, nominal incomes fell 2.3% in January, the largest decline in 11 years. In addition, interest rates moved to their highest level in two months with the 5-year Treasury at 4.01% and the 10-year at 4.37%. That means mortgage rates will move higher this week. To top it off, new home sales declined 9.2% during January and the median sales price dropped to 199,400 from the prior month's $229,700. It was the lowest median price since December 2003.
The bulls say there is nothing to fear because the Bloomberg survey anticipates that 225,000 jobs will have been created in February. No matter that many will be temp jobs and no matter that the jobs will reflect wage gains trailing the inflation rate. Maybe the bulls should have a bit more concern because U.S. consumer spending was flat in January, and it was the weakest showing since a 0.3% decline in June 2003. In 2004, consumer spending rose by 3.8%. That won't be the case this year. Why? Where's the money for spending? The savings rate was a puny 1% in January. Even debt has its limits for consumers. Only the government keeps raising the debt limit once a year. Then again, it's other people's money!
I highly recommend today's article on inflation and the CPI written by ContraryInvestor.com. The link is http://safehaven.com/article-2672.htm
Walgreens is the country's ninth-largest retailer. The company announced that it is one of 13 featured employers in the AARP's Foundation's new program to help Americans age 50 and over stay in the workforce. Walgreens is actively looking to hire those 50 and over.
Advisor confidence slid for the third month in a row in February, according to Rydex AdvisorBenchmarking. Confidence levels decreased 2.3% last month from 120.95 to 118.08. Their big concern is the U.S. balance of payments and its impact on the dollar.
According to a report issued yesterday by Verisign, Internet commerce dollar volume rose 88% during the November-December holiday season compared with the same period a year earlier. Verisign processed approximately $12 billion in online sales between 11/1 and 12/31/04 compared to $6.4 billion in 2003's last two months. The average purchase price per transaction decreased about 35 to $146. The Monday after Thanksgiving proved to be the peak shopping day for Internet merchants.
That's not a promising recipe for a successful economy. The core PCE price index rose 0.3% in January, the biggest gain since October 2001. With the CRB making a new high yesterday at 305 and looking at February's higher prices for crude, heating oil, copper, cocoa, wheat, coffee, soybeans, cotton, sugar, and many other commodities, the core PCE price index should be higher than January's. Meanwhile, nominal incomes fell 2.3% in January, the largest decline in 11 years. In addition, interest rates moved to their highest level in two months with the 5-year Treasury at 4.01% and the 10-year at 4.37%. That means mortgage rates will move higher this week. To top it off, new home sales declined 9.2% during January and the median sales price dropped to 199,400 from the prior month's $229,700. It was the lowest median price since December 2003.
The bulls say there is nothing to fear because the Bloomberg survey anticipates that 225,000 jobs will have been created in February. No matter that many will be temp jobs and no matter that the jobs will reflect wage gains trailing the inflation rate. Maybe the bulls should have a bit more concern because U.S. consumer spending was flat in January, and it was the weakest showing since a 0.3% decline in June 2003. In 2004, consumer spending rose by 3.8%. That won't be the case this year. Why? Where's the money for spending? The savings rate was a puny 1% in January. Even debt has its limits for consumers. Only the government keeps raising the debt limit once a year. Then again, it's other people's money!
I highly recommend today's article on inflation and the CPI written by ContraryInvestor.com. The link is http://safehaven.com/article-2672.htm
Walgreens is the country's ninth-largest retailer. The company announced that it is one of 13 featured employers in the AARP's Foundation's new program to help Americans age 50 and over stay in the workforce. Walgreens is actively looking to hire those 50 and over.
Advisor confidence slid for the third month in a row in February, according to Rydex AdvisorBenchmarking. Confidence levels decreased 2.3% last month from 120.95 to 118.08. Their big concern is the U.S. balance of payments and its impact on the dollar.
According to a report issued yesterday by Verisign, Internet commerce dollar volume rose 88% during the November-December holiday season compared with the same period a year earlier. Verisign processed approximately $12 billion in online sales between 11/1 and 12/31/04 compared to $6.4 billion in 2003's last two months. The average purchase price per transaction decreased about 35 to $146. The Monday after Thanksgiving proved to be the peak shopping day for Internet merchants.
Reducing Inventory
2/28/05 Reducing Inventory
Clint Eastwood: "If you want a guarantee, buy a toaster."
GM and Ford decided not to wait for the Tuesday release of their latest car sales. Both announced temporarily closing assembly plants for at least one week. GM will close its
Lansing Grand River and Detroit-Hamptramck assembly plants that make several Cadillac models as well as two Chevy facilities in Louisiana and Colorado. Ford will close a plant in Wayne
that assembles the Focus and a Twin Cities plant making the Ranger. At some point, GM and Ford will realize there is not sufficient demand for all of the models offered. Further cutbacks are on the horizon.
The storm in the Northeast has helped to propel crude above $52 a barrel. Prices at the pump
will rise this week.
Federated Department Stores (FD) and May Department Stores (MAY) confirmed plans to merge early Monday. The deal calls for Federated to acquire May for $17 billion in cash, stock and debt assumption. A per share consideration of $17.75 in cash and 0.3115 shares of Federated stock values May shares at $35.50 each. May's stock closed Friday at $35.35, up almost 4 percent. The cash and stock portion of the transaction has a value of $11 billion, and Federated is assuming $6 billion worth of May's debt. Federated has also agreed to increase its annual dividend to $1 per share. The boards of both companies have approved the deal, which is expected to close in the third quarter. Federated anticipates the transaction will add to earnings per share in 2007. This deal will make Federated the second-largest department chain.
Clint Eastwood: "I tried being reasonable. I didn't like it."
Many businesses could use Clint Eastwood as an example of how to run a business. His crew members have been with him for ten to forty years. There is tremendous loyalty and respect.
Everyone knows their role and they are paid to excel. That they do. His crew is efficient and productive. Million Dollar Baby was made in 37 days. GM and Ford could learn much from Eastwood, and that's also true of many other overpaid CEOs.
Clint Eastwood: "If you want a guarantee, buy a toaster."
GM and Ford decided not to wait for the Tuesday release of their latest car sales. Both announced temporarily closing assembly plants for at least one week. GM will close its
Lansing Grand River and Detroit-Hamptramck assembly plants that make several Cadillac models as well as two Chevy facilities in Louisiana and Colorado. Ford will close a plant in Wayne
that assembles the Focus and a Twin Cities plant making the Ranger. At some point, GM and Ford will realize there is not sufficient demand for all of the models offered. Further cutbacks are on the horizon.
The storm in the Northeast has helped to propel crude above $52 a barrel. Prices at the pump
will rise this week.
Federated Department Stores (FD) and May Department Stores (MAY) confirmed plans to merge early Monday. The deal calls for Federated to acquire May for $17 billion in cash, stock and debt assumption. A per share consideration of $17.75 in cash and 0.3115 shares of Federated stock values May shares at $35.50 each. May's stock closed Friday at $35.35, up almost 4 percent. The cash and stock portion of the transaction has a value of $11 billion, and Federated is assuming $6 billion worth of May's debt. Federated has also agreed to increase its annual dividend to $1 per share. The boards of both companies have approved the deal, which is expected to close in the third quarter. Federated anticipates the transaction will add to earnings per share in 2007. This deal will make Federated the second-largest department chain.
Clint Eastwood: "I tried being reasonable. I didn't like it."
Many businesses could use Clint Eastwood as an example of how to run a business. His crew members have been with him for ten to forty years. There is tremendous loyalty and respect.
Everyone knows their role and they are paid to excel. That they do. His crew is efficient and productive. Million Dollar Baby was made in 37 days. GM and Ford could learn much from Eastwood, and that's also true of many other overpaid CEOs.
Sunday, February 27, 2005
Stick To What You Know Best
2/27/05 Stick To What You Know Best
I don't want to be accused of knowing a little about a lot of things. I'm not even interested in knowing a little about very much. I try and stick to what I know best. To get a handle on the economy I focus on Wal-Mart, Pfizer, Microsoft, GE, ExxonMobil, and GM. I try and learn as much as possible every day about those companies and their industries and their customers. Thta's where my knowledge begins. Everyone needs to recognize what they know best. Build on that knowledge.
When reading surveys, please note its size. The University of Michigan's is tiny when compared with that conducted by the Conference Board. Randstad North America, the Atlanta-based subsidiary of Dutch staffing giant Ranstad, conducted 2,639 interviews, and that's a good-sized survey. It reflected that 80% stated companies are expecting too few workers to handle too much work. Three-quarters of employees and employers said that, even if the economy were to sizzle, workers will be asked to continue their heavy loads because companies aren't likely to add legions of new workers. In sum, too many workers feel the amount of work they're doing is becoming onerous. At the same time, wage gains continue to trail the rate of inflation. Do you think this disparity has a long shelf life?
The Qatari oil minister stated he doesn't believe OPEC will raise output when it meets in March in Iran. One might question how much additional production is available to be increased. Global demand is now averaging 83.6 million barrels. What will the demand be in June, July, and August in comparison to production capabilities?
Brad Williams, a senior economist with the California Legislative Analyst's office, notes that "total property tax revenues statewide are up 8 to 9 percent over the last three years."
Jim Wunderman, Pres. & CEO of the Bay Area Council: "It simply stands to reason that, if people can't afford to live here, companies are not going to add new jobs."
Yesterday, Wal-Mart announced that their February U.S. same-store sales rose approximately 4%, the top of the estimated range. Food sales were stronger than general merchandise.
Talking about food, rice consumption in Japan has fallen to a postwar low. Working women are opting towards bread and pasta. Over the past 41 years, rice consumption per person has declined by about 50%. Spending on bread has risen about 23% over the last 23 years. Helping to shore up rice consumption of late has been the technology to make rice bread.
I don't want to be accused of knowing a little about a lot of things. I'm not even interested in knowing a little about very much. I try and stick to what I know best. To get a handle on the economy I focus on Wal-Mart, Pfizer, Microsoft, GE, ExxonMobil, and GM. I try and learn as much as possible every day about those companies and their industries and their customers. Thta's where my knowledge begins. Everyone needs to recognize what they know best. Build on that knowledge.
When reading surveys, please note its size. The University of Michigan's is tiny when compared with that conducted by the Conference Board. Randstad North America, the Atlanta-based subsidiary of Dutch staffing giant Ranstad, conducted 2,639 interviews, and that's a good-sized survey. It reflected that 80% stated companies are expecting too few workers to handle too much work. Three-quarters of employees and employers said that, even if the economy were to sizzle, workers will be asked to continue their heavy loads because companies aren't likely to add legions of new workers. In sum, too many workers feel the amount of work they're doing is becoming onerous. At the same time, wage gains continue to trail the rate of inflation. Do you think this disparity has a long shelf life?
The Qatari oil minister stated he doesn't believe OPEC will raise output when it meets in March in Iran. One might question how much additional production is available to be increased. Global demand is now averaging 83.6 million barrels. What will the demand be in June, July, and August in comparison to production capabilities?
Brad Williams, a senior economist with the California Legislative Analyst's office, notes that "total property tax revenues statewide are up 8 to 9 percent over the last three years."
Jim Wunderman, Pres. & CEO of the Bay Area Council: "It simply stands to reason that, if people can't afford to live here, companies are not going to add new jobs."
Yesterday, Wal-Mart announced that their February U.S. same-store sales rose approximately 4%, the top of the estimated range. Food sales were stronger than general merchandise.
Talking about food, rice consumption in Japan has fallen to a postwar low. Working women are opting towards bread and pasta. Over the past 41 years, rice consumption per person has declined by about 50%. Spending on bread has risen about 23% over the last 23 years. Helping to shore up rice consumption of late has been the technology to make rice bread.
Stick To What You Know Best
2/27/05 Stick To What You Know Best
I don't want to be accused of knowing a little about a lot of things. I'm not even interested in knowing a little about very much. I try and stick to what I know best. To get a handle on the economy I focus on Wal-Mart, Pfizer, Microsoft, GE, ExxonMobil, and GM. I try and learn as much as possible every day about those companies and their industries and their customers. Thta's where my knowledge begins. Everyone needs to recognize what they know best. Build on that knowledge.
When reading surveys, please note its size. The University of Michigan's is tiny when compared with that conducted by the Conference Board. Randstad North America, the Atlanta-based subsidiary of Dutch staffing giant Ranstad, conducted 2,639 interviews, and that's a good-sized survey. It reflected that 80% stated companies are expecting too few workers to handle too much work. Three-quarters of employees and employers said that, even if the economy were to sizzle, workers will be asked to continue their heavy loads because companies aren't likely to add legions of new workers. In sum, too many workers feel the amount of work they're doing is becoming onerous. At the same time, wage gains continue to trail the rate of inflation. Do you think this disparity has a long shelf life?
The Qatari oil minister stated he doesn't believe OPEC will raise output when it meets in March in Iran. One might question how much additional production is available to be increased. Global demand is now averaging 83.6 million barrels. What will the demand be in June, July, and August in comparison to production capabilities?
Brad Williams, a senior economist with the California Legislative Analyst's office, notes that "total property tax revenues statewide are up 8 to 9 percent over the last three years."
Jim Wunderman, Pres. & CEO of the Bay Area Council: "It simply stands to reason that, if people can't afford to live here, companies are not going to add new jobs."
Yesterday, Wal-Mart announced that their February U.S. same-store sales rose approximately 4%, the top of the estimated range. Food sales were stronger than general merchandise.
Talking about food, rice consumption in Japan has fallen to a postwar low. Working women are opting towards bread and pasta. Over the past 41 years, rice consumption per person has declined by about 50%. Spending on bread has risen about 23% over the last 23 years. Helping to shore up rice consumption of late has been the technology to make rice bread.
I don't want to be accused of knowing a little about a lot of things. I'm not even interested in knowing a little about very much. I try and stick to what I know best. To get a handle on the economy I focus on Wal-Mart, Pfizer, Microsoft, GE, ExxonMobil, and GM. I try and learn as much as possible every day about those companies and their industries and their customers. Thta's where my knowledge begins. Everyone needs to recognize what they know best. Build on that knowledge.
When reading surveys, please note its size. The University of Michigan's is tiny when compared with that conducted by the Conference Board. Randstad North America, the Atlanta-based subsidiary of Dutch staffing giant Ranstad, conducted 2,639 interviews, and that's a good-sized survey. It reflected that 80% stated companies are expecting too few workers to handle too much work. Three-quarters of employees and employers said that, even if the economy were to sizzle, workers will be asked to continue their heavy loads because companies aren't likely to add legions of new workers. In sum, too many workers feel the amount of work they're doing is becoming onerous. At the same time, wage gains continue to trail the rate of inflation. Do you think this disparity has a long shelf life?
The Qatari oil minister stated he doesn't believe OPEC will raise output when it meets in March in Iran. One might question how much additional production is available to be increased. Global demand is now averaging 83.6 million barrels. What will the demand be in June, July, and August in comparison to production capabilities?
Brad Williams, a senior economist with the California Legislative Analyst's office, notes that "total property tax revenues statewide are up 8 to 9 percent over the last three years."
Jim Wunderman, Pres. & CEO of the Bay Area Council: "It simply stands to reason that, if people can't afford to live here, companies are not going to add new jobs."
Yesterday, Wal-Mart announced that their February U.S. same-store sales rose approximately 4%, the top of the estimated range. Food sales were stronger than general merchandise.
Talking about food, rice consumption in Japan has fallen to a postwar low. Working women are opting towards bread and pasta. Over the past 41 years, rice consumption per person has declined by about 50%. Spending on bread has risen about 23% over the last 23 years. Helping to shore up rice consumption of late has been the technology to make rice bread.
Stick To What You Know Best
2/27/05 Stick To What You Know Best
I don't want to be accused of knowing a little about a lot of things. I'm not even interested in knowing a little about very much. I try and stick to what I know best. To get a handle on the economy I focus on Wal-Mart, Pfizer, Microsoft, GE, ExxonMobil, and GM. I try and learn as much as possible every day about those companies and their industries and their customers. Thta's where my knowledge begins. Everyone needs to recognize what they know best. Build on that knowledge.
When reading surveys, please note its size. The University of Michigan's is tiny when compared with that conducted by the Conference Board. Randstad North America, the Atlanta-based subsidiary of Dutch staffing giant Ranstad, conducted 2,639 interviews, and that's a good-sized survey. It reflected that 80% stated companies are expecting too few workers to handle too much work. Three-quarters of employees and employers said that, even if the economy were to sizzle, workers will be asked to continue their heavy loads because companies aren't likely to add legions of new workers. In sum, too many workers feel the amount of work they're doing is becoming onerous. At the same time, wage gains continue to trail the rate of inflation. Do you think this disparity has a long shelf life?
The Qatari oil minister stated he doesn't believe OPEC will raise output when it meets in March in Iran. One might question how much additional production is available to be increased. Global demand is now averaging 83.6 million barrels. What will the demand be in June, July, and August in comparison to production capabilities?
Brad Williams, a senior economist with the California Legislative Analyst's office, notes that "total property tax revenues statewide are up 8 to 9 percent over the last three years."
Jim Wunderman, Pres. & CEO of the Bay Area Council: "It simply stands to reason that, if people can't afford to live here, companies are not going to add new jobs."
Yesterday, Wal-Mart announced that their February U.S. same-store sales rose approximately 4%, the top of the estimated range. Food sales were stronger than general merchandise.
Talking about food, rice consumption in Japan has fallen to a postwar low. Working women are opting towards bread and pasta. Over the past 41 years, rice consumption per person has declined by about 50%. Spending on bread has risen about 23% over the last 23 years. Helping to shore up rice consumption of late has been the technology to make rice bread.
I don't want to be accused of knowing a little about a lot of things. I'm not even interested in knowing a little about very much. I try and stick to what I know best. To get a handle on the economy I focus on Wal-Mart, Pfizer, Microsoft, GE, ExxonMobil, and GM. I try and learn as much as possible every day about those companies and their industries and their customers. Thta's where my knowledge begins. Everyone needs to recognize what they know best. Build on that knowledge.
When reading surveys, please note its size. The University of Michigan's is tiny when compared with that conducted by the Conference Board. Randstad North America, the Atlanta-based subsidiary of Dutch staffing giant Ranstad, conducted 2,639 interviews, and that's a good-sized survey. It reflected that 80% stated companies are expecting too few workers to handle too much work. Three-quarters of employees and employers said that, even if the economy were to sizzle, workers will be asked to continue their heavy loads because companies aren't likely to add legions of new workers. In sum, too many workers feel the amount of work they're doing is becoming onerous. At the same time, wage gains continue to trail the rate of inflation. Do you think this disparity has a long shelf life?
The Qatari oil minister stated he doesn't believe OPEC will raise output when it meets in March in Iran. One might question how much additional production is available to be increased. Global demand is now averaging 83.6 million barrels. What will the demand be in June, July, and August in comparison to production capabilities?
Brad Williams, a senior economist with the California Legislative Analyst's office, notes that "total property tax revenues statewide are up 8 to 9 percent over the last three years."
Jim Wunderman, Pres. & CEO of the Bay Area Council: "It simply stands to reason that, if people can't afford to live here, companies are not going to add new jobs."
Yesterday, Wal-Mart announced that their February U.S. same-store sales rose approximately 4%, the top of the estimated range. Food sales were stronger than general merchandise.
Talking about food, rice consumption in Japan has fallen to a postwar low. Working women are opting towards bread and pasta. Over the past 41 years, rice consumption per person has declined by about 50%. Spending on bread has risen about 23% over the last 23 years. Helping to shore up rice consumption of late has been the technology to make rice bread.
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