10/19/02 Consumers Are Spooked
Halloween sales of candy and costumes are forecast to be flat. WalMart says theirs "are not where we would like them."
Disney's debt rating is reduced for the 3rd time in 2 months. That is not easy to accomplish! No wonder Eisner has board backing.
The U.S. trade gap ballooned to a record $38.5 billion in August. The government takes 60 days to release these figures. I wasn't slow in noticing this news. Our account deficit with China continues to climb. If this trend were to be maintained, it's conceivable China could tender for the U.S. in 2050. Of course, they might not want to be burdened with our healthcare costs and social security concerns.
This should be an exciting world series. We have two former Dodger teammates going head to head as managers. That must be a first.
Friday, October 18, 2002
10/18/02 There's More Than The Headlines
As I often stated, over the past 25 years Microsoft is easily the biggest business success story. Yesterday the media butchered Microsoft's news release. Yes, their 1st quarter results were above expectations. New licensing programs were the major reason. I failed to read, however, that there was a positive swing in investment income to the tune of one billion dollars. Operating margins were lower, and the second quarter will be lower. The company raised their estimate for the entire year by 5 cents per share, and therefore, results should exceed the prior year by maybe 3-5 cents to about $1.90. At $53 the stock is not exactly a bargain.
Over the past week treasuries have been pounded and yields have risen by 55 basis points. This is a huge move in one week, and is another illustration of extreme market volatility. Some money managers have been shifting their asset allocation and purchasing more stocks- in hopes that last week saw the bottom in stock prices. Good luck to them.
Sears dropped another 30% yesterday, and is now down almost 50% in the past 2 weeks. They made additional provisions for uncollectable credit accounts. I hope you don't believe Sears is alone in this area. This is just the tip of the iceberg for financial institutions.
Delta Air is laying off another 8000 and Sun Microsystems 11% of its workforce. Ericsson's numbers were a nightmare. Eastman Kodak's results were a pleasant surprise. Colgate, one of the great ones, continues to deliver in tough times.
It's interesting that the unemployment claims rose sharply, that there was an unexpected decline in September industrial production, and yet housing permits were the highest in 16 years. Maybe record low mortage rates helped the latter. In the last week those rates have risen 15 basis points or more.
As I often stated, over the past 25 years Microsoft is easily the biggest business success story. Yesterday the media butchered Microsoft's news release. Yes, their 1st quarter results were above expectations. New licensing programs were the major reason. I failed to read, however, that there was a positive swing in investment income to the tune of one billion dollars. Operating margins were lower, and the second quarter will be lower. The company raised their estimate for the entire year by 5 cents per share, and therefore, results should exceed the prior year by maybe 3-5 cents to about $1.90. At $53 the stock is not exactly a bargain.
Over the past week treasuries have been pounded and yields have risen by 55 basis points. This is a huge move in one week, and is another illustration of extreme market volatility. Some money managers have been shifting their asset allocation and purchasing more stocks- in hopes that last week saw the bottom in stock prices. Good luck to them.
Sears dropped another 30% yesterday, and is now down almost 50% in the past 2 weeks. They made additional provisions for uncollectable credit accounts. I hope you don't believe Sears is alone in this area. This is just the tip of the iceberg for financial institutions.
Delta Air is laying off another 8000 and Sun Microsystems 11% of its workforce. Ericsson's numbers were a nightmare. Eastman Kodak's results were a pleasant surprise. Colgate, one of the great ones, continues to deliver in tough times.
It's interesting that the unemployment claims rose sharply, that there was an unexpected decline in September industrial production, and yet housing permits were the highest in 16 years. Maybe record low mortage rates helped the latter. In the last week those rates have risen 15 basis points or more.
Thursday, October 17, 2002
10/17/02 Corporate Disappointments
I mentioned yesterday that a 1000 point Dow rally would not prevent bad news from occurring. Yesterday disappointing results were announced by Coke, Boeing, Motorola, Novellus, Plantronics, Ultratech and others. Weyerhaeuser, Honeywell, and Retek all announced layoffs and additional layoffs are expected to be announced within the semiconductor industry.
After the close IBM had a 3rd quarter conference call, and the stock rallied sharply to 70. I listened to the call and read their release. Their income from continuing operations was flat, their revenue was down 2%, and gross margins declined. So why did the stock rally? Management projected a 4th quarter revenue level which excited the Street. I was in the minority. The projection was well within prior announced expectations, and frankly, that projection is nothing to write home about. The Street is grasping for straws, and that has proven to result in unfavorable investing returns.
I mentioned yesterday that a 1000 point Dow rally would not prevent bad news from occurring. Yesterday disappointing results were announced by Coke, Boeing, Motorola, Novellus, Plantronics, Ultratech and others. Weyerhaeuser, Honeywell, and Retek all announced layoffs and additional layoffs are expected to be announced within the semiconductor industry.
After the close IBM had a 3rd quarter conference call, and the stock rallied sharply to 70. I listened to the call and read their release. Their income from continuing operations was flat, their revenue was down 2%, and gross margins declined. So why did the stock rally? Management projected a 4th quarter revenue level which excited the Street. I was in the minority. The projection was well within prior announced expectations, and frankly, that projection is nothing to write home about. The Street is grasping for straws, and that has proven to result in unfavorable investing returns.
Wednesday, October 16, 2002
10/16/02 Perspective On 1000 Dow Points
It was not until some time during 1982 that the Dow was able to rally just above the 1000 mark and to remain above that level. In other words, Dow 1000 was a huge hurdle for a very long time. Now we fast forward to 2002. From last thursday's intraday low to yesterday's close the Dow rallied 1000 points! It took only 4 days for the Dow to rally those 1000 points.
Last evening Sun Microsystems announced that they may have to lay off 8000 employees. Intel said that 4th quarter revenues will be lower than expected and lowered their capital spending budget as well as warning about lower than expected profit margins. Banc One warned about increasing loan losses in 2003. The point is simple. The bad news is not going to stop just because the Dow rallied 1000 points. In a month I believe investors will once again look back and wished they had sold into the rally. As an overall description, the stock market does not represent good value and is not cheap. 10/16/02 Perspective On 1000 Dow Points
It was not until some time during 1982 that the Dow was able to rally just above the 1000 mark and to remain above that level. In other words, Dow 1000 was a huge hurdle for a very long time. Now we fast forward to 2002. From last thursday's intraday low to yesterday's close the Dow rallied 1000 points! It took only 4 days for the Dow to rally those 1000 points.
Last evening Sun Microsystems announced that they may have to lay off 8000 employees. Intel said that 4th quarter revenues will be lower than expected and lowered their capital spending budget as well as warning about lower than expected profit margins. Banc One warned about increasing loan losses in 2003. The point is simple. The bad news is not going to stop just because the Dow rallied 1000 points. In a month I believe investors will once again look back and wished they had sold into the rally. As an overall description, in my view, the stock market does not represent good value and is not cheap.
It was not until some time during 1982 that the Dow was able to rally just above the 1000 mark and to remain above that level. In other words, Dow 1000 was a huge hurdle for a very long time. Now we fast forward to 2002. From last thursday's intraday low to yesterday's close the Dow rallied 1000 points! It took only 4 days for the Dow to rally those 1000 points.
Last evening Sun Microsystems announced that they may have to lay off 8000 employees. Intel said that 4th quarter revenues will be lower than expected and lowered their capital spending budget as well as warning about lower than expected profit margins. Banc One warned about increasing loan losses in 2003. The point is simple. The bad news is not going to stop just because the Dow rallied 1000 points. In a month I believe investors will once again look back and wished they had sold into the rally. As an overall description, the stock market does not represent good value and is not cheap. 10/16/02 Perspective On 1000 Dow Points
It was not until some time during 1982 that the Dow was able to rally just above the 1000 mark and to remain above that level. In other words, Dow 1000 was a huge hurdle for a very long time. Now we fast forward to 2002. From last thursday's intraday low to yesterday's close the Dow rallied 1000 points! It took only 4 days for the Dow to rally those 1000 points.
Last evening Sun Microsystems announced that they may have to lay off 8000 employees. Intel said that 4th quarter revenues will be lower than expected and lowered their capital spending budget as well as warning about lower than expected profit margins. Banc One warned about increasing loan losses in 2003. The point is simple. The bad news is not going to stop just because the Dow rallied 1000 points. In a month I believe investors will once again look back and wished they had sold into the rally. As an overall description, in my view, the stock market does not represent good value and is not cheap.
10/16/02 Perspective On 1000 Dow Points
It was not until some time during 1982 that the Dow was able to rally just above the 1000 mark and to remain above that level. In other words, Dow 1000 was a huge hurdle for a very long time. Now we fast forward to 2002. From last thursday's intraday low to yesterday's close the Dow rallied 1000 points! It took only 4 days for the Dow to rally those 1000 points.
Last evening Sun Microsystems announced that they may have to lay off 8000 employees. Intel said that 4th quarter revenues will be lower than expected and lowered their capital spending budget as well as warning about lower than expected profit margins. Banc One warned about increasing loan losses in 2003. The point is simple. The bad news is not going to stop just because the Dow rallied 1000 points. In a month I believe investors will once again look back and wished they had sold into the rally. As an overall description, the stock market does not represent good value and is not cheap.
Good value is in the eye of the investor. For me the last two times the market was truly an excellent value was in 1982 and in 1974. Patient investors have a better chance to achieve above average results. Often that requires sitting on one's hands and doing nothing.
It was not until some time during 1982 that the Dow was able to rally just above the 1000 mark and to remain above that level. In other words, Dow 1000 was a huge hurdle for a very long time. Now we fast forward to 2002. From last thursday's intraday low to yesterday's close the Dow rallied 1000 points! It took only 4 days for the Dow to rally those 1000 points.
Last evening Sun Microsystems announced that they may have to lay off 8000 employees. Intel said that 4th quarter revenues will be lower than expected and lowered their capital spending budget as well as warning about lower than expected profit margins. Banc One warned about increasing loan losses in 2003. The point is simple. The bad news is not going to stop just because the Dow rallied 1000 points. In a month I believe investors will once again look back and wished they had sold into the rally. As an overall description, the stock market does not represent good value and is not cheap.
Good value is in the eye of the investor. For me the last two times the market was truly an excellent value was in 1982 and in 1974. Patient investors have a better chance to achieve above average results. Often that requires sitting on one's hands and doing nothing.
Tuesday, October 15, 2002
10/15/02 Polls Taken In 1998 And Now
In 1998 a Gallup Poll indicated that two-thirds of those surveyed found it a good time to invest. It was for the next two years. In a recent Associated Press poll 64% thought it a bad idea to invest now. Time will tell how smart those recently surveyed are.
Osama bin Laden: "We congratulate our Islamic world for the heroic operations of courageous jihad carried out by its pious fighter children in Yemen, against the tanker of the crusaders, and in Kuwait, against the American invasion and occupation forces." In my view the free nations of the world must come together to eliminate this on-going horror. Hittler was eliminated and so shall these evil doers.
In 1998 a Gallup Poll indicated that two-thirds of those surveyed found it a good time to invest. It was for the next two years. In a recent Associated Press poll 64% thought it a bad idea to invest now. Time will tell how smart those recently surveyed are.
Osama bin Laden: "We congratulate our Islamic world for the heroic operations of courageous jihad carried out by its pious fighter children in Yemen, against the tanker of the crusaders, and in Kuwait, against the American invasion and occupation forces." In my view the free nations of the world must come together to eliminate this on-going horror. Hittler was eliminated and so shall these evil doers.
Monday, October 14, 2002
10/14/02 Mitchell E. Daniels Jr.
This gentleman is the Director of the OMB(Office of Management and Budget). Last week he wrote a letter to Congress in which he stated "federal government's accounts would never be tolerated in the private sector...repair of the system so badly broken will not happen overnight." He was referring to the trillions of dollars in unsubstantiated balance adjustments occurring yearly in federal departments and related that 20 of the largest agencies had serious chronic problems.
This gentleman is the Director of the OMB(Office of Management and Budget). Last week he wrote a letter to Congress in which he stated "federal government's accounts would never be tolerated in the private sector...repair of the system so badly broken will not happen overnight." He was referring to the trillions of dollars in unsubstantiated balance adjustments occurring yearly in federal departments and related that 20 of the largest agencies had serious chronic problems.
Sunday, October 13, 2002
10/13/2002 The Unsuccessful Investor
A common cause for the lack of success is the frequency with which investors come to believe only what they wish to believe.
One case in point is GE. On friday the company announced that they had hit their targets for the third quarter. The CEO said they had encountered "a more difficult environment than the one we had expected in July... and was counting on extremely low economic growth for 2003." Mr. Immelt did not provide a forecast for their earnings in 2003. He is assuming a 2% growth in the GDP for 2003. It is most unfortunate for investors that they failed to read beyond the 3rd quarter numbers.
Back in 1957 Arthur Rock was one of the forefathers of the Silicon Valley. He stated that this is the worst slump he has seen in the Valley and "there are no jobs. None. Zero."
A recent NY Times/CBS poll indicated about half of Americans are worried that someone in their household will be laid off within a year's time. It's no wonder that consumer confidence is the pits.
A common cause for the lack of success is the frequency with which investors come to believe only what they wish to believe.
One case in point is GE. On friday the company announced that they had hit their targets for the third quarter. The CEO said they had encountered "a more difficult environment than the one we had expected in July... and was counting on extremely low economic growth for 2003." Mr. Immelt did not provide a forecast for their earnings in 2003. He is assuming a 2% growth in the GDP for 2003. It is most unfortunate for investors that they failed to read beyond the 3rd quarter numbers.
Back in 1957 Arthur Rock was one of the forefathers of the Silicon Valley. He stated that this is the worst slump he has seen in the Valley and "there are no jobs. None. Zero."
A recent NY Times/CBS poll indicated about half of Americans are worried that someone in their household will be laid off within a year's time. It's no wonder that consumer confidence is the pits.
Saturday, October 12, 2002
10/12/02 The Cliff
The big story on Friday was not the sharp rally in stocks and the big decline in bonds. The consumer was the main event, and properly so. When you account for two-thirds of the economy, there's no question but that the consumer is all powerful. Unfortunately for the economy, in the latest readings, consumer confidence and expectations fell off a cliff. The drop was a massive plummet. Therefore, it's not surprising that retail sales had their largest drop since November 2001. There are many reasons- the weak job market, Iraq, and growing household debt combined with low savings. Analysts refer to a market being oversold. Well, the consumer is overbought and overspent and overwrought. WalMart listens to the customer better than any other company. WalMart has said for the past three months that its customer, that's you, is slowing down in the buying department. With the holiday season approaching, that's a disaster waiting to happen.
A rally for a few days does not mean the market is oversold. There are always going to be rallies. Analysts simply have a need to provide reasons for happenings after they happen but rarely before they happen. As such, they are mainly worthless despite their large salaries. Listening to analysts is, for the most part, a losing proposition. Do you think Warren Buffett hangs on the words of Wall Street?
This market is highly volatile, and increasingly so. This creates a greater risk, and especially in the derivatives market, which is 10 times the size of our yearly GDP and dwarfs the stock and bond markets. In a perfect world counterparty risk is intended to create zero risk. The world is not perfect, and therefore, not risk free. As such, those creating the custom derivatives, the financial institutions, are increasingly at risk. With heightened geopolitical worries, that aforementioned risk could create massive market dislocations. I don't believe the market adequately accounts for this potential meltdown.
The big story on Friday was not the sharp rally in stocks and the big decline in bonds. The consumer was the main event, and properly so. When you account for two-thirds of the economy, there's no question but that the consumer is all powerful. Unfortunately for the economy, in the latest readings, consumer confidence and expectations fell off a cliff. The drop was a massive plummet. Therefore, it's not surprising that retail sales had their largest drop since November 2001. There are many reasons- the weak job market, Iraq, and growing household debt combined with low savings. Analysts refer to a market being oversold. Well, the consumer is overbought and overspent and overwrought. WalMart listens to the customer better than any other company. WalMart has said for the past three months that its customer, that's you, is slowing down in the buying department. With the holiday season approaching, that's a disaster waiting to happen.
A rally for a few days does not mean the market is oversold. There are always going to be rallies. Analysts simply have a need to provide reasons for happenings after they happen but rarely before they happen. As such, they are mainly worthless despite their large salaries. Listening to analysts is, for the most part, a losing proposition. Do you think Warren Buffett hangs on the words of Wall Street?
This market is highly volatile, and increasingly so. This creates a greater risk, and especially in the derivatives market, which is 10 times the size of our yearly GDP and dwarfs the stock and bond markets. In a perfect world counterparty risk is intended to create zero risk. The world is not perfect, and therefore, not risk free. As such, those creating the custom derivatives, the financial institutions, are increasingly at risk. With heightened geopolitical worries, that aforementioned risk could create massive market dislocations. I don't believe the market adequately accounts for this potential meltdown.
Friday, October 11, 2002
10/11/02 Maintain Trend Focus
Rallies in a bear market provide welcome relief. One might characterize them as a Wall Street Prozac tonic. Unfortunately, the prescription is not necessarily renewable.
Over-all comparable retail sales grew just 1.5% in September. Warnings are being issued about a possible anemic holiday shopping season.
GM is out of stealth mode. They are now offering a new car "purchase" plan- no money down and no payment for 90 days. At least they could include a toaster or possibly the right to return the car after 90 days- a little like an Oreck vacuum.
There is $6 trillion in mortgage debt outstanding. Why would anyone consider the possibility of a bubble in housing?
The other day three men were huddling after returning from a funeral. They were comparing notes on their refinancing experiences. In 1999 these same men probably were discussing day trading and the Nasdaq.
Rallies in a bear market provide welcome relief. One might characterize them as a Wall Street Prozac tonic. Unfortunately, the prescription is not necessarily renewable.
Over-all comparable retail sales grew just 1.5% in September. Warnings are being issued about a possible anemic holiday shopping season.
GM is out of stealth mode. They are now offering a new car "purchase" plan- no money down and no payment for 90 days. At least they could include a toaster or possibly the right to return the car after 90 days- a little like an Oreck vacuum.
There is $6 trillion in mortgage debt outstanding. Why would anyone consider the possibility of a bubble in housing?
The other day three men were huddling after returning from a funeral. They were comparing notes on their refinancing experiences. In 1999 these same men probably were discussing day trading and the Nasdaq.
Thursday, October 10, 2002
10/10/02 It Was Almost Like Old Times
Other than the Dow at a 5 year low and the Nasdaq at a 6 year low and the Nikkei at a 19 year low it could have been 1999.
Amidst the carnage Yahoo, Sun, Intel, Amgen, EBay, Veritas, Seibel, Broadcom, Brocade, Verisign, Amazon, Cisco, and Gilead were all higher yesterday. I was psyched but then I read about GE laying off 1000 at the jet engine division and Abbott Labs laying off 2000 and Virginia laying off 1000 and household debt as a % of GDP at record levels.
Then the sun came out with Glenn Hubbard. He enabled me to sleep better. He said deflation appeared unlikely... that home refinancing had not been excessive...that home refinancing hadn't propped up consumption growth. Now I'm ready for another day.
Winnebago reported record sales and profits for their 4th quarter. Retirees must be taking to the roads. Meanwhile jets increasingly adorn the Mojave landscape. Maybe that's a reason the airline industry has lost $15 billion over the past 24 months. Yes, Boeing did layoff more folks yesterday. If the economy is so sound, as Glenn Hubbard declares, then why are Ford bonds trading at junk levels and Boeing creating an unemployment nightmare in the Seattle environs?
Other than the Dow at a 5 year low and the Nasdaq at a 6 year low and the Nikkei at a 19 year low it could have been 1999.
Amidst the carnage Yahoo, Sun, Intel, Amgen, EBay, Veritas, Seibel, Broadcom, Brocade, Verisign, Amazon, Cisco, and Gilead were all higher yesterday. I was psyched but then I read about GE laying off 1000 at the jet engine division and Abbott Labs laying off 2000 and Virginia laying off 1000 and household debt as a % of GDP at record levels.
Then the sun came out with Glenn Hubbard. He enabled me to sleep better. He said deflation appeared unlikely... that home refinancing had not been excessive...that home refinancing hadn't propped up consumption growth. Now I'm ready for another day.
Winnebago reported record sales and profits for their 4th quarter. Retirees must be taking to the roads. Meanwhile jets increasingly adorn the Mojave landscape. Maybe that's a reason the airline industry has lost $15 billion over the past 24 months. Yes, Boeing did layoff more folks yesterday. If the economy is so sound, as Glenn Hubbard declares, then why are Ford bonds trading at junk levels and Boeing creating an unemployment nightmare in the Seattle environs?
Wednesday, October 09, 2002
10/9/02 Port Lockout Ends. Credit President Bush Invoking Taft Hartley
For the first time in 19 years Japan's Nikkei falls below 8500.
Yesterday's Wall Street mini rally had more declines than advances.
Shared National Credit Review reveals loan losses rising by 34% at banks and other institutions.
Fiat to cut 6000 jobs.
SBC warns on profits.
Cisco finds revenue generation a challenge.
Hussein channels money to Palestinian terrorists.
For the first time in 19 years Japan's Nikkei falls below 8500.
Yesterday's Wall Street mini rally had more declines than advances.
Shared National Credit Review reveals loan losses rising by 34% at banks and other institutions.
Fiat to cut 6000 jobs.
SBC warns on profits.
Cisco finds revenue generation a challenge.
Hussein channels money to Palestinian terrorists.
Tuesday, October 08, 2002
10/8/02 Rumors To The Contrary The World Beyond Pluto, Quaoar, Does Not Hold A Bull Market
Since December 1999 U.S. government bonds have outperformed U.S. stocks by 56%. Pimco now the nation's biggest mutual fund.
Sears warns 3rd quarter earnings will fall short of expectations due to more credit card delinquencies.
Credit Suisse First Boston lays off 1700.
Mitsubishi Illinois production plant halted by port lockout.
August saw the slowest rise in consumer debt in 8 months. Christmas might be white but clearly not green.
Since December 1999 U.S. government bonds have outperformed U.S. stocks by 56%. Pimco now the nation's biggest mutual fund.
Sears warns 3rd quarter earnings will fall short of expectations due to more credit card delinquencies.
Credit Suisse First Boston lays off 1700.
Mitsubishi Illinois production plant halted by port lockout.
August saw the slowest rise in consumer debt in 8 months. Christmas might be white but clearly not green.
Monday, October 07, 2002
10/7/02 Nikkei Plunges To 8688 In Biggest 1 Day Drop Since June
War on Iraq seen by Administration as liberating not conquering.
Senior citizens would prefer the government to pay for their prescription drugs rather than spend millions of dollars on increasing Medicare payments to doctors and hospitals. A growing problem is healthcare for retirees prior to medicare eligibility. More U.S.
retirees making their homes in Mexico.
The department of labor says the average household unit made about $40,000 in 2001, spent $7000 on cars, and owes $7000 on credit cards.
The World Economic Forum conference in East Asia began in Kuala Lumpur on Sunday. Kenneth Courtis, vice chairman Asia, Goldman Sachs Japan, said "Asia's growth has probably peaked." China is the wild card, and has invested $60 billion this year into Asia. Malaysia has become China's largest trading partner in SE Asia.
War on Iraq seen by Administration as liberating not conquering.
Senior citizens would prefer the government to pay for their prescription drugs rather than spend millions of dollars on increasing Medicare payments to doctors and hospitals. A growing problem is healthcare for retirees prior to medicare eligibility. More U.S.
retirees making their homes in Mexico.
The department of labor says the average household unit made about $40,000 in 2001, spent $7000 on cars, and owes $7000 on credit cards.
The World Economic Forum conference in East Asia began in Kuala Lumpur on Sunday. Kenneth Courtis, vice chairman Asia, Goldman Sachs Japan, said "Asia's growth has probably peaked." China is the wild card, and has invested $60 billion this year into Asia. Malaysia has become China's largest trading partner in SE Asia.
Sunday, October 06, 2002
10/6/02 Wilshire 5000 At 5 Year Low
Over 500 negative earning and or revenue warnings in the past 5 weeks.
On Friday puts ahead of calls by 2 to 1 ratio.
Fourth quarter growth likely to be no more than 1%. Earnings will be lower than the 3rd quarter.
Israel Defense Minister: "Possible that the U.S. will begin attacks on Iraq toward the end of November."
Over 500 negative earning and or revenue warnings in the past 5 weeks.
On Friday puts ahead of calls by 2 to 1 ratio.
Fourth quarter growth likely to be no more than 1%. Earnings will be lower than the 3rd quarter.
Israel Defense Minister: "Possible that the U.S. will begin attacks on Iraq toward the end of November."
Saturday, October 05, 2002
10/5/02 Dow At 7500- Near 5 Year Low
Being up into the early morning hours this blog will be a bit short today.
Ethan S. Harris, chief economist Lehman Bros, "from the point of view of the average person, we're still in a recession. What the average person cares about is jobs."
President Bush: "there are still too many ppeople who wonder whether or not they're going to find employment."
Senator Sarbanes: "the jobs aren't there right now."
JP Morgan to layoff 4000 investment bankers.
Hiring on hold at temp agencies.
Being up into the early morning hours this blog will be a bit short today.
Ethan S. Harris, chief economist Lehman Bros, "from the point of view of the average person, we're still in a recession. What the average person cares about is jobs."
President Bush: "there are still too many ppeople who wonder whether or not they're going to find employment."
Senator Sarbanes: "the jobs aren't there right now."
JP Morgan to layoff 4000 investment bankers.
Hiring on hold at temp agencies.
Friday, October 04, 2002
10/4/02 Nasdaq At 6 Year Low
Warnings from Boeing, EMC, Prime Hospitality, Schering Plough, Bank of N.Y., Park Place, and others.
Awful results at Alcoa. Additional layoffs at Verizon and EMC. Terrific results at Starbucks, one of the great ones over the past 10 years.
The 4 week moving average of jobless claims was the highest since the first week in May. For the month there was a decline of 43,000 jobs; however, the government said the unemployment rate declined to 5.6% and that the reason was a decrease in teenager unemployment. I can't even comment on this!
For the very first time there was a delivery of Russian oil into our Strategic Petroleum Reserve.
Only 34% of large companies offer retiree health coverage, down from 66% in 1988. Only 5% of small firms with fewer than 200 workers offer coverage. Benefits are declining. Under existing plans, retirees will pay for 90% of total medical costs by 2031.
The Business Council is an association comprised of CEOs, and they are currently having their half-yearly gathering at the Greenbrier in West Virginia. The chairman is Bill Esprey, the CEO of Sprint. Has Mr. Esprey ever tried getting thru to Sprint's customer service line? He must not value his customers very highly. Another member is Carly Fiorina, CEO of HP. She stated "this is a climate that doesn't reward risk-taking- yet the fundamentals of business are to take prudent risks at the right time." She doesn't get it. Michael Dell does. Dell has entered the server and printer markets. Dell understands risk/reward, and they are eating their competitor's lunch, and that includes HP. Bill Harrison, CEO of JP Morgan Chase, stated that "Business Council members retain a very cautious view of the U.S. economy's near-term growth prospects." I would remain cautious too with Morgan's dismal performance over the last 6 quarters. Scott McNealy, CEO of Sun Microsystems, said "executives had to spend massive amounts of time executing on the rigmarole around Sarbines-Oxley." Rather than wine maybe McNealey should be concentrating on making Sun's servers more price competitive in the current environment. If he did, possibly Sun would not be facing additional layoffs and the stock wouldn't be selling at $2+. Former illustrious Business Council members are Kenneth Lay and Dennis Kozlowski. Maybe receiving an invitation to join the group isn't worth the paper on which it's printed.
Warnings from Boeing, EMC, Prime Hospitality, Schering Plough, Bank of N.Y., Park Place, and others.
Awful results at Alcoa. Additional layoffs at Verizon and EMC. Terrific results at Starbucks, one of the great ones over the past 10 years.
The 4 week moving average of jobless claims was the highest since the first week in May. For the month there was a decline of 43,000 jobs; however, the government said the unemployment rate declined to 5.6% and that the reason was a decrease in teenager unemployment. I can't even comment on this!
For the very first time there was a delivery of Russian oil into our Strategic Petroleum Reserve.
Only 34% of large companies offer retiree health coverage, down from 66% in 1988. Only 5% of small firms with fewer than 200 workers offer coverage. Benefits are declining. Under existing plans, retirees will pay for 90% of total medical costs by 2031.
The Business Council is an association comprised of CEOs, and they are currently having their half-yearly gathering at the Greenbrier in West Virginia. The chairman is Bill Esprey, the CEO of Sprint. Has Mr. Esprey ever tried getting thru to Sprint's customer service line? He must not value his customers very highly. Another member is Carly Fiorina, CEO of HP. She stated "this is a climate that doesn't reward risk-taking- yet the fundamentals of business are to take prudent risks at the right time." She doesn't get it. Michael Dell does. Dell has entered the server and printer markets. Dell understands risk/reward, and they are eating their competitor's lunch, and that includes HP. Bill Harrison, CEO of JP Morgan Chase, stated that "Business Council members retain a very cautious view of the U.S. economy's near-term growth prospects." I would remain cautious too with Morgan's dismal performance over the last 6 quarters. Scott McNealy, CEO of Sun Microsystems, said "executives had to spend massive amounts of time executing on the rigmarole around Sarbines-Oxley." Rather than wine maybe McNealey should be concentrating on making Sun's servers more price competitive in the current environment. If he did, possibly Sun would not be facing additional layoffs and the stock wouldn't be selling at $2+. Former illustrious Business Council members are Kenneth Lay and Dennis Kozlowski. Maybe receiving an invitation to join the group isn't worth the paper on which it's printed.
Thursday, October 03, 2002
10/03/02 Little To Smile About
Cisco's Chambers: "There's little to smile about when it comes to the short-term outlook for Cisco."
CEOs, in a survey, see slower economic growth in the months and year ahead.
Our oil inventories are at a 20 year low.
Tokyo stocks closed at a new 19 year low. Bad loans at Japanese banks continue to weigh on any recovery.
Foreigners cut their net purchases of US corporate bonds to a 7 year low in July. Purchases down 74%.
AMD has a significant revenue warning. Others warning: Dow Chemical, Libbey, and Charter Communications.
After 128 years the Younkers corporate offices are being moved out of Iowa. The new owner, Saks Inc, sacks 270 people.
Analysts continually try and compare this economy with prior economies in hopes the comparisons will provide a reading for future stock market movements. There's one problem. Our economy does not resemble prior periods like 1990 and 1974. Healthcare is now 15% of our GDP. The manufacturing sector represents only 14% of total jobs. Corporate balance sheets have a different look.
We are recovering from the national tragedy of 9/11. The consumer is tapped out financially and emotionally. At this point only 20% of Americans remain without credit cards. Life hangs on a thread- jobs are scarce, jobs have little security, and employers have no visibility. The Fed is powerless to provide a monetary policy which could change the economic landscape. Interest rates have little to fall until they reach zero. As a last resort the Fed might increase the money supply and the dollar will suffer. The world economies are weak. The banking structure in Japan is unstable, and ours is showing cracks too. WalMart, Microsoft, Dell, P&G, Colgate, and a few others cannot carry our economic burdens. Nor can the government. The latter has difficulty just funding medicare, medicaid, and social security.
A significant problem for today's economy is that we have too much of everything (except cash and housing) with too little demand. That creates little pricing power and an emphasis on cost cutting, and the latter usually entails lay-offs. When the majority of Americans have little net savings and depend on the next paycheck, the stability of the system is at risk. It would be prudent to limit comparisons with the past. Enough trillions have been lost to this point.
Cisco's Chambers: "There's little to smile about when it comes to the short-term outlook for Cisco."
CEOs, in a survey, see slower economic growth in the months and year ahead.
Our oil inventories are at a 20 year low.
Tokyo stocks closed at a new 19 year low. Bad loans at Japanese banks continue to weigh on any recovery.
Foreigners cut their net purchases of US corporate bonds to a 7 year low in July. Purchases down 74%.
AMD has a significant revenue warning. Others warning: Dow Chemical, Libbey, and Charter Communications.
After 128 years the Younkers corporate offices are being moved out of Iowa. The new owner, Saks Inc, sacks 270 people.
Analysts continually try and compare this economy with prior economies in hopes the comparisons will provide a reading for future stock market movements. There's one problem. Our economy does not resemble prior periods like 1990 and 1974. Healthcare is now 15% of our GDP. The manufacturing sector represents only 14% of total jobs. Corporate balance sheets have a different look.
We are recovering from the national tragedy of 9/11. The consumer is tapped out financially and emotionally. At this point only 20% of Americans remain without credit cards. Life hangs on a thread- jobs are scarce, jobs have little security, and employers have no visibility. The Fed is powerless to provide a monetary policy which could change the economic landscape. Interest rates have little to fall until they reach zero. As a last resort the Fed might increase the money supply and the dollar will suffer. The world economies are weak. The banking structure in Japan is unstable, and ours is showing cracks too. WalMart, Microsoft, Dell, P&G, Colgate, and a few others cannot carry our economic burdens. Nor can the government. The latter has difficulty just funding medicare, medicaid, and social security.
A significant problem for today's economy is that we have too much of everything (except cash and housing) with too little demand. That creates little pricing power and an emphasis on cost cutting, and the latter usually entails lay-offs. When the majority of Americans have little net savings and depend on the next paycheck, the stability of the system is at risk. It would be prudent to limit comparisons with the past. Enough trillions have been lost to this point.
Wednesday, October 02, 2002
10/02/02 October
It is a month with tricks and treats; however, the average October manages a slight gain in the Dow. Yesterday we started the month with a bang.
These are not average times. Almost all of the S&P 500 companies have a pension deficit; 401K plans have been taking it on the chin; and we have financial institutions who have guaranteed equity returns. Those guarantees are suspect at best. Even with 0 percent financing for 60 months GM's September sales were down 13%. The factory sector weakened for the first time since January, and the ISM Index slipped below 50%.
Then you have the rising spectre of healthcare costs. Medicaid and Medicare cover 75 million Americans with a yearly cost of $400 billion. This cost will rise in 2003, and the numbers covered with an aging population will rise as well. Of course, we also have 41 million Americans without health insurance- 19% of Californians are in this group, and this number is rising annually too.
The times are not average. Building of offices, plants, and stores have hit a 6 year low. At the same time oil has hit a 19 month high at $31 per barrel.
We are experiencing a slowdown in R&D spending, the first such cut since 1960. It is not surprising that this is the first time the venture capital industry has had back to back years of negative returns.
The National Association of Business Economists said the economy would continue to show solid growth. I don't have a masters or a doctorate degree in economics but I know profit skids when I see them. You can listen to the economists or make the trend your friend. There are very few great companies- WalMart, Microsoft, Dell, and some others. Dell just raised revenue forecasts for their upcoming quarter as they increased sales at the expense of other companies. However, until the economic turmoil reverses for the great majority of companies, we will continue in a bear market. The duration is anyone's guess. If I were taking a guess, I'd say the turn is not just around the corner. In fact, it could get worse. It's good to remember that in all months, and not just October, that the market accomodates the fewest number of people at any one time.
It is a month with tricks and treats; however, the average October manages a slight gain in the Dow. Yesterday we started the month with a bang.
These are not average times. Almost all of the S&P 500 companies have a pension deficit; 401K plans have been taking it on the chin; and we have financial institutions who have guaranteed equity returns. Those guarantees are suspect at best. Even with 0 percent financing for 60 months GM's September sales were down 13%. The factory sector weakened for the first time since January, and the ISM Index slipped below 50%.
Then you have the rising spectre of healthcare costs. Medicaid and Medicare cover 75 million Americans with a yearly cost of $400 billion. This cost will rise in 2003, and the numbers covered with an aging population will rise as well. Of course, we also have 41 million Americans without health insurance- 19% of Californians are in this group, and this number is rising annually too.
The times are not average. Building of offices, plants, and stores have hit a 6 year low. At the same time oil has hit a 19 month high at $31 per barrel.
We are experiencing a slowdown in R&D spending, the first such cut since 1960. It is not surprising that this is the first time the venture capital industry has had back to back years of negative returns.
The National Association of Business Economists said the economy would continue to show solid growth. I don't have a masters or a doctorate degree in economics but I know profit skids when I see them. You can listen to the economists or make the trend your friend. There are very few great companies- WalMart, Microsoft, Dell, and some others. Dell just raised revenue forecasts for their upcoming quarter as they increased sales at the expense of other companies. However, until the economic turmoil reverses for the great majority of companies, we will continue in a bear market. The duration is anyone's guess. If I were taking a guess, I'd say the turn is not just around the corner. In fact, it could get worse. It's good to remember that in all months, and not just October, that the market accomodates the fewest number of people at any one time.
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