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.
Friday, March 04, 2005
payrolls
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.
Saturday, February 26, 2005
Revisiting Reality
2/26/05 Revisiting Reality
I spoke too soon. Only yesterday I mentioned the ray of sunshine from the Conference Board's Help-Wanted Ad Index. Bam! Wouldn't you know it. My smile only lasted one day. U.S. employers nationwide initiated 2,564 mass layoffs in January, which accounted for 263,952 initial claims for unemployment. This was an increase from 1,614 mass layoffs in December 2004 resulting in 161,271 job cuts. Importantly, it represented an increase from the year-ago period of January 2004 with 2,428 mass layoffs and 239,454 lost jobs. Wall Street preferred to focus on the revised GDP number for the fourth quarter. Due to a statistical error, exports to Canada had been understated. That error had been well noted some two weeks ago. It's often said that bull markets ignore bad news, and freqently the tape paints a montage of stock prices that doesn't reflect reality.
This coming Tuesday there will be more bad news. That's when the February auto sales will be released. They will be punk for GM and Ford. What else is new? The new might be additional production cuts that will be forthcoming.
I'm so delighted that the election in Iraq went so swimmingly. How is it that this blood-splattered country has left about 1,500 U.S. soldiers dead since we invaded Iraq in March 2003? The number of wounded has escalated so rapidly that it's difficult to get a handle on whether it's 14,000, 15,000, or more wounded over the past 23 months.
There are other bombs outside of Iraq. In 2005, bank credit has exploded in the U.S. to the tune of $180 billion. Fortunately, the Fed's printing press has slowed down into the mid-single digits. Unfortunately, inflation has not been so kind, and this fact is reflected in the Goldman Sachs Commodity Index being up 13.7% in 2005. This index has been dwarfed by the 25% rise in ExxonMobil stock in the first seven weeks of 2005. This rise may help to explain in part the recent gain in the Dow and the S&P 500.
The auto industry in China may have hit a road bump; however, infrastructure demands are alive and well. The China Electricity Council stated "China's consumption of electricity this year may rise 12%."
According to Mark Lundeen, in 1925, the U.S. had only $3.96 billion in coins and paper dollars in circulation. Eighty years later, in 2005, there was a slight upward adjustment to $750.27 billion or 187 more dollars circulating this year than for every dollar in 1925. Let's add the change in population to the mix. In 1925 there were 116 million people in the U.S. and now there are 294 million. Simply put, in 1925, there was $34,000 per person in circulation and now there is $2,550,000 per person. That number grows daily, and so does each citizen's share of our exploding national debt. Should anyone care? Not when your home is making you rich and you can use the increasing equity for ATM purposes. That's called reality in real-time.
I spoke too soon. Only yesterday I mentioned the ray of sunshine from the Conference Board's Help-Wanted Ad Index. Bam! Wouldn't you know it. My smile only lasted one day. U.S. employers nationwide initiated 2,564 mass layoffs in January, which accounted for 263,952 initial claims for unemployment. This was an increase from 1,614 mass layoffs in December 2004 resulting in 161,271 job cuts. Importantly, it represented an increase from the year-ago period of January 2004 with 2,428 mass layoffs and 239,454 lost jobs. Wall Street preferred to focus on the revised GDP number for the fourth quarter. Due to a statistical error, exports to Canada had been understated. That error had been well noted some two weeks ago. It's often said that bull markets ignore bad news, and freqently the tape paints a montage of stock prices that doesn't reflect reality.
This coming Tuesday there will be more bad news. That's when the February auto sales will be released. They will be punk for GM and Ford. What else is new? The new might be additional production cuts that will be forthcoming.
I'm so delighted that the election in Iraq went so swimmingly. How is it that this blood-splattered country has left about 1,500 U.S. soldiers dead since we invaded Iraq in March 2003? The number of wounded has escalated so rapidly that it's difficult to get a handle on whether it's 14,000, 15,000, or more wounded over the past 23 months.
There are other bombs outside of Iraq. In 2005, bank credit has exploded in the U.S. to the tune of $180 billion. Fortunately, the Fed's printing press has slowed down into the mid-single digits. Unfortunately, inflation has not been so kind, and this fact is reflected in the Goldman Sachs Commodity Index being up 13.7% in 2005. This index has been dwarfed by the 25% rise in ExxonMobil stock in the first seven weeks of 2005. This rise may help to explain in part the recent gain in the Dow and the S&P 500.
The auto industry in China may have hit a road bump; however, infrastructure demands are alive and well. The China Electricity Council stated "China's consumption of electricity this year may rise 12%."
According to Mark Lundeen, in 1925, the U.S. had only $3.96 billion in coins and paper dollars in circulation. Eighty years later, in 2005, there was a slight upward adjustment to $750.27 billion or 187 more dollars circulating this year than for every dollar in 1925. Let's add the change in population to the mix. In 1925 there were 116 million people in the U.S. and now there are 294 million. Simply put, in 1925, there was $34,000 per person in circulation and now there is $2,550,000 per person. That number grows daily, and so does each citizen's share of our exploding national debt. Should anyone care? Not when your home is making you rich and you can use the increasing equity for ATM purposes. That's called reality in real-time.
Friday, February 25, 2005
Housing
2/25/05 The news coming out of the housing industry simply blows me away. The CEO of Pulte Homes stated he believes his company will record 20% annual growth over the next three years. That's after knocking the cover off the ball for the past three years. It gets better. Coldwell Banker announced its 2004 sales of U.S. luxury homes valued at $1 million or more surged to an all-time high of $35.5 billion, surpassing its previous record of $23.3 billion set in 2003, a 52% increase in luxury sales. Coldwell Banker's CEO stated "the luxury real estate market continues to thrive. We expect the luxury home sales market to remain solid throughout 2005." Let's take a look at an example of today's market---below the $1 million luxury level. In San Francisco this week, not in a prime neighborhood, a 975 sq. ft. apartment was listed for sale at $649,000. The seller received two-dozen bids, and four were in excess of $850,000. In another example, a luxury home in a prime neighborhood is being offered at approximately $1,375 a sq. ft. As Coldwell Banker's CEO remarked, there is "high demand from baby boomers who have more disposable income than any other previous generation, and continued attractive interest rates."
I committed two very stupid mistakes. As I mentioned several times, while the dotcom stocks were in their frenzy period, I was buying housing stocks. No one wanted them. They were like watching paint dry for months and months and months. I did make three and four and in one case five times my investment. I sold way too soon. Despite the old saying "you can't get hurt
taking a profit," I feel stupid every day looking at the prices for Toll, Pulte, Beazer, and four others. The other mistake was misreading the long-term housing potential in the U.S. Easy credit, record low interest rates, baby boomer demand, and foreigners buying because the weak dollar made our real estate increasingly attractive---generated a housing boom. Despite studying everyday, it became increasingly difficult to find other stocks with better risk/reward and value than the housing stocks I had sold.
Finally, yesterday there was some good news out of the Conference Board on their Help-Wanted Advertising Index. It increased 3 points in January to 41, up from 38 one year ago. It was the first ray of sunshine in some time.
The Varroa mite has been attacking Honey bee larvae in their hives. Some beekeepers report that 50% or more of their cultivated hives have been destroyed. In California, where the 2004 estimated farm value of the almond crop was almost $2 billion, the shortage of bees is potentially catastrophic. Almond trees must have Honey bee pollination in order to bear its nut. The mites have developed a resistance to the present efforts to control their population. As it stands today, beekeepers are in a tough fight. Lee Heine, Chairman of the Board of the National Honey Board, stated "usually, a few winners can emerge in any agricultural shortfall situation. Right now there are absolutely no winners except, maybe for the mite itself."
France's unemployment rate rose to 10%, a 5-year high.
Yesterday, the Treasury auctioned $24 billion in 2-year notes. The response was muted and the yield was 3.498%.
UPS is closing its Dayton hub. A total of 1,400 jobs will be lost. Where is Pastor Parsley now?
The Commerce Dept (what commerce do they generate?) reported that, in January, there was a 5.3% drop in orders for transportation goods.
Australia's Treasury Secretary Ken Henry spoke to a meeting of Asian treasurers in Sydney yesterday. He fears the U.S is heading for a financial crash because of the record trade and budget deficits. He likened the enormous flows of money pouring into the U.S. to "worryingly reminiscent of Federal Reserve chairman Alan Greenspan's warning in 1996 of irrational exuberance in U.S. stocks." Henry stated one could not tell how long it would keep going, but it would burst eventually. From recent comments, Toll and Pulte and Coldwell Banker believe housing will remain strong for some time. Only the Shadow knows when the bubble will burst.
I committed two very stupid mistakes. As I mentioned several times, while the dotcom stocks were in their frenzy period, I was buying housing stocks. No one wanted them. They were like watching paint dry for months and months and months. I did make three and four and in one case five times my investment. I sold way too soon. Despite the old saying "you can't get hurt
taking a profit," I feel stupid every day looking at the prices for Toll, Pulte, Beazer, and four others. The other mistake was misreading the long-term housing potential in the U.S. Easy credit, record low interest rates, baby boomer demand, and foreigners buying because the weak dollar made our real estate increasingly attractive---generated a housing boom. Despite studying everyday, it became increasingly difficult to find other stocks with better risk/reward and value than the housing stocks I had sold.
Finally, yesterday there was some good news out of the Conference Board on their Help-Wanted Advertising Index. It increased 3 points in January to 41, up from 38 one year ago. It was the first ray of sunshine in some time.
The Varroa mite has been attacking Honey bee larvae in their hives. Some beekeepers report that 50% or more of their cultivated hives have been destroyed. In California, where the 2004 estimated farm value of the almond crop was almost $2 billion, the shortage of bees is potentially catastrophic. Almond trees must have Honey bee pollination in order to bear its nut. The mites have developed a resistance to the present efforts to control their population. As it stands today, beekeepers are in a tough fight. Lee Heine, Chairman of the Board of the National Honey Board, stated "usually, a few winners can emerge in any agricultural shortfall situation. Right now there are absolutely no winners except, maybe for the mite itself."
France's unemployment rate rose to 10%, a 5-year high.
Yesterday, the Treasury auctioned $24 billion in 2-year notes. The response was muted and the yield was 3.498%.
UPS is closing its Dayton hub. A total of 1,400 jobs will be lost. Where is Pastor Parsley now?
The Commerce Dept (what commerce do they generate?) reported that, in January, there was a 5.3% drop in orders for transportation goods.
Australia's Treasury Secretary Ken Henry spoke to a meeting of Asian treasurers in Sydney yesterday. He fears the U.S is heading for a financial crash because of the record trade and budget deficits. He likened the enormous flows of money pouring into the U.S. to "worryingly reminiscent of Federal Reserve chairman Alan Greenspan's warning in 1996 of irrational exuberance in U.S. stocks." Henry stated one could not tell how long it would keep going, but it would burst eventually. From recent comments, Toll and Pulte and Coldwell Banker believe housing will remain strong for some time. Only the Shadow knows when the bubble will burst.
Thursday, February 24, 2005
In Response To A Request
This morning I received a request from Charles Kirk of the Kirk Report to create a permalink for my blog. As I mentioned to Charles, I never heard that word before he mentioned it. I am not technically proficient. I hope I have done this properly. The link should be as follows:
http://melduke.blogspot.com/atom.xml
If it was not done properly, I trust I will be informed.
http://melduke.blogspot.com/atom.xml
If it was not done properly, I trust I will be informed.
permalinks
This morning I received a request from Charles Kirk of the Kirk Report to create a permalink for my blog. As I mentioned to Charles, I never heard that word before he mentioned it. I am not technically proficient. I hope I have done this properly. The link should be as follows:
http://melduke.blogspot.com/atom.xml
If it was not done properly, I trust I will be informed.
http://melduke.blogspot.com/atom.xml
If it was not done properly, I trust I will be informed.
2/24/05 Don't Be A Putz
If wage gains trail inflation, then there is a problem. Yesterday, the BLS announced that real average weekly earnings from December 2004 to January 2005 fell by 0.2% after seasonal adjustment. From January 2004 to January 2005, after deflation by the CPI-W, average weekly earnings decreased by 0.7%. How can anyone be optimistic about inflationary trends when earnings for both full-time and part-time workers can't hold their own in our consumer-based economy. Do you really believe that one can ATM the home or depend on the carry trade well into the future. Are you a putz?
If you listen to the Wal-Mart bashers, you'd think the company is responsible for our trade deficit. Lee Scott, their CEO, spoke yesterday to a group of business leaders. He stated that 270 million shoppers entered their 3,500 plus stores last year. He related that the company acted as the bargaining agent for these families and that Wal-Mart saves its customers up to $100 billion a year. He stated "these savings are a lifeline for millions of middle and lower-income families who live from payday to payday. In effect, it gives them a raise every time they shop with us." Scott went on and related some other important facts. Last year, Wal-Mart collected $10.2 billion in state and local taxes, money that went back to communities for police, fire protection, and schools. In 2005, the company will create an estimated 100,000 new jobs in the U.S., up from 83,000 in 2004. Do you know any other company creating anywhere close to 100,000 jobs? Not many companies employ 100,000 people. Get this! Wal-Mart purchases goods from more than 68,000 U.S. suppliers and supports more than 3.5 million supplier jobs. In 2004, the company spent $137.5 billion with U.S. suppliers. Don't be a putz. Stop bashing Wal-Mart.
You had better think twice before believing $51 plus crude does not make a difference. Cars are a vital part of our economy. According to the annual California State Economic Impact Report, in 2004 California's franchised new car dealers generated 20% of all retail sales in the state. Total revenue from goods and services sold at California franchised dealerships was almost $96 billion in 2004 (more than the GDP in most countries) and total full and part-time employment stood at 149,523. Dealership payrolls were over $9.4 billion, and California dealers spent nearly $12 billion for goods and services from other businesses in the state. Franchised dealers in California paid or collected over $7 billion in federal, state, and local taxes on over $699 billion in taxable sales for 2004.
According to a new study by the Center on Budget and Policy Priorities, state and local governments could lose $214 billion over the next five years under the proposed Bush budget plan. Losses would be in federal grants for education, housing transportation, and other domestic programs plus forfeiting federal funds for veterans' health care, parks, research, and law enforcement.
Yesterday, France sold a 50-year bond. Greece is planning to issue a 30-year government bond. Britain is studying the possibility of issuing 40 and 50-year gilts. Meanwhile, the average duration of U.S. government debt is 3 years. The Fed Chairman has warned repeatedly that interest rates will rise in the U.S. If so, why is our treasury department not locking in these record low yields for 30 years? Why be a putz and fight the Fed?
According to the Financial Times, EADS is closing in on a $25 billion UK air tanker deal. Boeing has told our government that they are the only supplier capable of providing air tankers. I guess they never considered Airbus a competitor. When you underestimate the competition, then you are a putz.
If wage gains trail inflation, then there is a problem. Yesterday, the BLS announced that real average weekly earnings from December 2004 to January 2005 fell by 0.2% after seasonal adjustment. From January 2004 to January 2005, after deflation by the CPI-W, average weekly earnings decreased by 0.7%. How can anyone be optimistic about inflationary trends when earnings for both full-time and part-time workers can't hold their own in our consumer-based economy. Do you really believe that one can ATM the home or depend on the carry trade well into the future. Are you a putz?
If you listen to the Wal-Mart bashers, you'd think the company is responsible for our trade deficit. Lee Scott, their CEO, spoke yesterday to a group of business leaders. He stated that 270 million shoppers entered their 3,500 plus stores last year. He related that the company acted as the bargaining agent for these families and that Wal-Mart saves its customers up to $100 billion a year. He stated "these savings are a lifeline for millions of middle and lower-income families who live from payday to payday. In effect, it gives them a raise every time they shop with us." Scott went on and related some other important facts. Last year, Wal-Mart collected $10.2 billion in state and local taxes, money that went back to communities for police, fire protection, and schools. In 2005, the company will create an estimated 100,000 new jobs in the U.S., up from 83,000 in 2004. Do you know any other company creating anywhere close to 100,000 jobs? Not many companies employ 100,000 people. Get this! Wal-Mart purchases goods from more than 68,000 U.S. suppliers and supports more than 3.5 million supplier jobs. In 2004, the company spent $137.5 billion with U.S. suppliers. Don't be a putz. Stop bashing Wal-Mart.
You had better think twice before believing $51 plus crude does not make a difference. Cars are a vital part of our economy. According to the annual California State Economic Impact Report, in 2004 California's franchised new car dealers generated 20% of all retail sales in the state. Total revenue from goods and services sold at California franchised dealerships was almost $96 billion in 2004 (more than the GDP in most countries) and total full and part-time employment stood at 149,523. Dealership payrolls were over $9.4 billion, and California dealers spent nearly $12 billion for goods and services from other businesses in the state. Franchised dealers in California paid or collected over $7 billion in federal, state, and local taxes on over $699 billion in taxable sales for 2004.
According to a new study by the Center on Budget and Policy Priorities, state and local governments could lose $214 billion over the next five years under the proposed Bush budget plan. Losses would be in federal grants for education, housing transportation, and other domestic programs plus forfeiting federal funds for veterans' health care, parks, research, and law enforcement.
Yesterday, France sold a 50-year bond. Greece is planning to issue a 30-year government bond. Britain is studying the possibility of issuing 40 and 50-year gilts. Meanwhile, the average duration of U.S. government debt is 3 years. The Fed Chairman has warned repeatedly that interest rates will rise in the U.S. If so, why is our treasury department not locking in these record low yields for 30 years? Why be a putz and fight the Fed?
According to the Financial Times, EADS is closing in on a $25 billion UK air tanker deal. Boeing has told our government that they are the only supplier capable of providing air tankers. I guess they never considered Airbus a competitor. When you underestimate the competition, then you are a putz.
Wednesday, February 23, 2005
2/23/05 Yesterday Was Not Just Another Day
It was more than just the Dow having its worst drop since May 19, 2003 or crude rising above $51 a barrel or gold, silver, and the CRB rising smartly to multi-week highs or consumer confidence falling or interest rates rising or the dollar dropping or large layoffs being announced or timid projections provided for this year's first quarter. It was a combination of all those developments in one single day, and the reaction in equities took place on large volume. You will be hearing and reading that stocks are oversold on a technical basis. So what. The idea is to keep your eye on the ball. Risks have been increasing for weeks. On strength, I continue to suggest cutting back on exposure and increasing liquid assets.
The CPI will be released this morning. It will not reflect that Rio Tinto increased iron ore prices by 72% due to "continuing growth in steel consumption, particularly in China." It will not reflect the recent price rise in soybeans due to dry weather in Brazil and Argentina, which together grow 45% of the world's soybeans. In 2004, prices for soybeans declined about 37% due to oversupply. That situation will be quite different this year. Despite the statements from the Fed, inflation is alive and well, and that fact is bad for stocks and bonds.
Lands' End will cut 375 jobs. Celestica will close its Mt. Pleasant, Iowa plant and 334 jobs will be lost. Acuity will cut 1,100 jobs in Lorain, Ohio. There's nothing Pastor Parsley can do about that.
The first quarter for Lowe's will be below current Wall Street estimates.
Net long exposure in gold and silver is on the rise. That is reflected in the latest weekly COMEX figures.
The Conference Board's February survey revealed that consumers' outlook for the next six months lost ground. Those anticipating business conditions to improve declined to 17.8% from 22% in January. Consumers were less optimistic about the availability of jobs and any improvement in the months ahead for their incomes.
On an annual basis, Wal-Mart spends more than $1 billion on electricity for air-conditioning and lighting for their stores. In Texas, the company has experimented with buying its own power by establishing an energy trading desk. It has been quite successful, and cost reductions have been achieved. This strategy may be expanded to Arkansas, Lousiana, and California.
Last week the Fed Chairman appeared before the House Financial Services Committee. There, he encountered Ron Paul of Texas. As Rep. Paul noted, the Chairman "utterly repudiated the arguments he made 40 years ago...If he was so wrong in the past, why should we listen to him now?...First, the Federal Reserve does not mimic a gold standard by any measure...Second, inflation is a much greater problem than the federal government admits...Third, Fed policies do indeed have adverse political ramifications...It's not enough to question the wisdom of Mr. Greenspan. Americans should question why we have a central bank at all, and whose interests it serves... Americans should not tolerate the manipulation of our economy and the inflation of our currency by an unaccountable institution."
It was more than just the Dow having its worst drop since May 19, 2003 or crude rising above $51 a barrel or gold, silver, and the CRB rising smartly to multi-week highs or consumer confidence falling or interest rates rising or the dollar dropping or large layoffs being announced or timid projections provided for this year's first quarter. It was a combination of all those developments in one single day, and the reaction in equities took place on large volume. You will be hearing and reading that stocks are oversold on a technical basis. So what. The idea is to keep your eye on the ball. Risks have been increasing for weeks. On strength, I continue to suggest cutting back on exposure and increasing liquid assets.
The CPI will be released this morning. It will not reflect that Rio Tinto increased iron ore prices by 72% due to "continuing growth in steel consumption, particularly in China." It will not reflect the recent price rise in soybeans due to dry weather in Brazil and Argentina, which together grow 45% of the world's soybeans. In 2004, prices for soybeans declined about 37% due to oversupply. That situation will be quite different this year. Despite the statements from the Fed, inflation is alive and well, and that fact is bad for stocks and bonds.
Lands' End will cut 375 jobs. Celestica will close its Mt. Pleasant, Iowa plant and 334 jobs will be lost. Acuity will cut 1,100 jobs in Lorain, Ohio. There's nothing Pastor Parsley can do about that.
The first quarter for Lowe's will be below current Wall Street estimates.
Net long exposure in gold and silver is on the rise. That is reflected in the latest weekly COMEX figures.
The Conference Board's February survey revealed that consumers' outlook for the next six months lost ground. Those anticipating business conditions to improve declined to 17.8% from 22% in January. Consumers were less optimistic about the availability of jobs and any improvement in the months ahead for their incomes.
On an annual basis, Wal-Mart spends more than $1 billion on electricity for air-conditioning and lighting for their stores. In Texas, the company has experimented with buying its own power by establishing an energy trading desk. It has been quite successful, and cost reductions have been achieved. This strategy may be expanded to Arkansas, Lousiana, and California.
Last week the Fed Chairman appeared before the House Financial Services Committee. There, he encountered Ron Paul of Texas. As Rep. Paul noted, the Chairman "utterly repudiated the arguments he made 40 years ago...If he was so wrong in the past, why should we listen to him now?...First, the Federal Reserve does not mimic a gold standard by any measure...Second, inflation is a much greater problem than the federal government admits...Third, Fed policies do indeed have adverse political ramifications...It's not enough to question the wisdom of Mr. Greenspan. Americans should question why we have a central bank at all, and whose interests it serves... Americans should not tolerate the manipulation of our economy and the inflation of our currency by an unaccountable institution."
Tuesday, February 22, 2005
2/22/05 Diversifying
Most money managers believe in a diversified portfolio. For several years I have written about the non-diversified global central bank currency holdings, which have used the U.S. dollar as its core dependency. Slowly but surely, diversification is on the move. South Korea, our ally, has the world's fourth largest forex holdings---after Japan, China, and Taiwan. The Bank of Korea announced it plans to diversify its reserves beyond dollar holdings. In addition, it should be noted that information from our treasury department lists Korean investors as the fifth-largest entity in our treasury bonds. Not surprisingly, our currency had its worst drop in more than four months. There will be many other central banks following in the footsteps of the Bank of Korea. You can expect many bad days for the dollar in the future. Our twin tower deficits cement that further decline.
The sharp decline in the dollar was accompanied by a further rise in crude oil to $49.35 a barrel, and this ensures another price increase at the pump. Cold weather was given as the primary reason for the rise. It is well to remember that currently oil purchases are made in dollars. Every time the dollar drops, as it did today, the producer of oil sees the value of the cash receipts diminish. A rise in the price of oil helps to offset the drop in the dollar.
Winn-Dixie Stores filed for Chapter 11 bankruptcy. The company has 920 stores. By comparison, Whole Foods Markets will open its new corporate headquarters in Austin on March 3 as well as a landmark 80,000 square foot store in Austin. After 25 years, the company is still growing smartly and soon there will be 200 stores. Of course, the stock at $100 or so per share does reflect that growth. Shopping in their landmark store will not be cheap, but it may prove cheaper than buying the stock at these levels.
Not many companies lift their yearly profit guidance from 30 to 40%. That's not a stretch with the net profit in the six months ended December 31 up 73% on revenue growth of 37%. The company is Billabong International, the Australian surfware and apparel outfit. With annual profits closing in on $120 million, sales will begin to approach $1 billion. The stock had a good rise on the news, but the future looks bright. As long as there are ocean waves, there probably will be surfers with Billabong wear.
Talking about water, for over 25 years, I have had place in my portfolio for companies serving the water industry. As a commodity, I continue to feel it is the most underpriced global must-have item. That brings me to Great Lakes Chemical (GLK). In 1993 and 1994 the stock sold over 70. In 1996 it appraoched 70. Between 2002 and the present, the stock has been trading in a range of roughly 20 to 30 and now is close to the mid-point of the range. The company makes specialty chemical solutions that treat and purify water, waterless fire protection systems, cleaning products, and various pest control and flame retardant items. At some point, converting salt water to purified drinking water will become a necessity for the world's growing population. There just isn't enough water to go around. GLK has recently had some managerial changes and it has been beset by rising commodity costs. It was only recently that the company announced various product price increases. The stock has not been in my portfolio for about 8 years, but a closer look may be in order. They should start to do better and their $1.6 billion in sales should grow in 2005. This should be viewed as a 2 to 3 year holding for a patient investor. If you watch the paint dry, GLK is not for you. It's more likely to catch Buffett's eye. He was a stockholder some years back.
Most money managers believe in a diversified portfolio. For several years I have written about the non-diversified global central bank currency holdings, which have used the U.S. dollar as its core dependency. Slowly but surely, diversification is on the move. South Korea, our ally, has the world's fourth largest forex holdings---after Japan, China, and Taiwan. The Bank of Korea announced it plans to diversify its reserves beyond dollar holdings. In addition, it should be noted that information from our treasury department lists Korean investors as the fifth-largest entity in our treasury bonds. Not surprisingly, our currency had its worst drop in more than four months. There will be many other central banks following in the footsteps of the Bank of Korea. You can expect many bad days for the dollar in the future. Our twin tower deficits cement that further decline.
The sharp decline in the dollar was accompanied by a further rise in crude oil to $49.35 a barrel, and this ensures another price increase at the pump. Cold weather was given as the primary reason for the rise. It is well to remember that currently oil purchases are made in dollars. Every time the dollar drops, as it did today, the producer of oil sees the value of the cash receipts diminish. A rise in the price of oil helps to offset the drop in the dollar.
Winn-Dixie Stores filed for Chapter 11 bankruptcy. The company has 920 stores. By comparison, Whole Foods Markets will open its new corporate headquarters in Austin on March 3 as well as a landmark 80,000 square foot store in Austin. After 25 years, the company is still growing smartly and soon there will be 200 stores. Of course, the stock at $100 or so per share does reflect that growth. Shopping in their landmark store will not be cheap, but it may prove cheaper than buying the stock at these levels.
Not many companies lift their yearly profit guidance from 30 to 40%. That's not a stretch with the net profit in the six months ended December 31 up 73% on revenue growth of 37%. The company is Billabong International, the Australian surfware and apparel outfit. With annual profits closing in on $120 million, sales will begin to approach $1 billion. The stock had a good rise on the news, but the future looks bright. As long as there are ocean waves, there probably will be surfers with Billabong wear.
Talking about water, for over 25 years, I have had place in my portfolio for companies serving the water industry. As a commodity, I continue to feel it is the most underpriced global must-have item. That brings me to Great Lakes Chemical (GLK). In 1993 and 1994 the stock sold over 70. In 1996 it appraoched 70. Between 2002 and the present, the stock has been trading in a range of roughly 20 to 30 and now is close to the mid-point of the range. The company makes specialty chemical solutions that treat and purify water, waterless fire protection systems, cleaning products, and various pest control and flame retardant items. At some point, converting salt water to purified drinking water will become a necessity for the world's growing population. There just isn't enough water to go around. GLK has recently had some managerial changes and it has been beset by rising commodity costs. It was only recently that the company announced various product price increases. The stock has not been in my portfolio for about 8 years, but a closer look may be in order. They should start to do better and their $1.6 billion in sales should grow in 2005. This should be viewed as a 2 to 3 year holding for a patient investor. If you watch the paint dry, GLK is not for you. It's more likely to catch Buffett's eye. He was a stockholder some years back.
Monday, February 21, 2005
2/21/05 Finishing Touches
Just because acquiring another company creates larger market share, doesn't mean the combined company will become a fiercer competitor. Dell was delighted after HP acquired Compaq. Up until now, Teva has been the number one generics manufacturer. Novartis announced buying Hexal AG and Eon Labs for $8.3 billion in cash. Novartis entered the generics business in 1996 by purchasing Sandoz. The latter's generic division was its slowest grower last year. With today's announcement, Novartis will become the world's largest generics manufacturer, and will best Teva in market share. I'm sure Teva is delighted with the Novartis purchase. In less than 5 years, generics will become a $100 billion a year business. The best will continue to grow market share. Teva will, in my opinion, outperform Novartis in years to come.
In a recent survey commisssioned by Visa of 800 consumers earning at least $125,000 in annual household income (placing them in the top 7% of all Americans), 72% of the high-income earners stated they clip coupons, compared with the national average of 65%, and 66% said they shop at discount stores, compared with 47% of consumers on average.
Comptroller General David Walker of the GAO discussing Social Security: "The left hand owes the right hand, and that has legal, political, and moral significance. But it doesn't have any economic significance whatsoever. There are no stocks or bonds or real estate in the trust fund. It has nothing down...The trust fund gives a very false sense of security about where we are and how much time we have." A court of law might disagree with Walker. The U.S has $1.6 trillion in obligations to Social Security, and they will be funded and paid. Those monies were taken from taxpayers and their employers. Either that, or the U.S. will be in default on its debt.
Did you see the latest Univ. of Michigan consumer satisfaction index? It showed the first year-to-year drop in satisfaction with e-retail, such as, with Amazon, eBay, and Charles Schwab. We need to monitor this situation.
Just because acquiring another company creates larger market share, doesn't mean the combined company will become a fiercer competitor. Dell was delighted after HP acquired Compaq. Up until now, Teva has been the number one generics manufacturer. Novartis announced buying Hexal AG and Eon Labs for $8.3 billion in cash. Novartis entered the generics business in 1996 by purchasing Sandoz. The latter's generic division was its slowest grower last year. With today's announcement, Novartis will become the world's largest generics manufacturer, and will best Teva in market share. I'm sure Teva is delighted with the Novartis purchase. In less than 5 years, generics will become a $100 billion a year business. The best will continue to grow market share. Teva will, in my opinion, outperform Novartis in years to come.
In a recent survey commisssioned by Visa of 800 consumers earning at least $125,000 in annual household income (placing them in the top 7% of all Americans), 72% of the high-income earners stated they clip coupons, compared with the national average of 65%, and 66% said they shop at discount stores, compared with 47% of consumers on average.
Comptroller General David Walker of the GAO discussing Social Security: "The left hand owes the right hand, and that has legal, political, and moral significance. But it doesn't have any economic significance whatsoever. There are no stocks or bonds or real estate in the trust fund. It has nothing down...The trust fund gives a very false sense of security about where we are and how much time we have." A court of law might disagree with Walker. The U.S has $1.6 trillion in obligations to Social Security, and they will be funded and paid. Those monies were taken from taxpayers and their employers. Either that, or the U.S. will be in default on its debt.
Did you see the latest Univ. of Michigan consumer satisfaction index? It showed the first year-to-year drop in satisfaction with e-retail, such as, with Amazon, eBay, and Charles Schwab. We need to monitor this situation.
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