4/24/04 Saturday Thoughts
Bill Gates: “If you invent a breakthrough in artificial intelligence so machines can learn, that is worth 10 Microsofts.” One might note that Microsoft went public in 1986. Since then, its stock has risen more than 24,000%. Buying and holding the great ones- that is a reflection of non-artificial intelligence.
Stephen Levy, director of the Center for Continuing Study of the California Economy: “Venture capital funding has increased by more than 5% in recent months. We have hit bottom, and we’re bouncing back up, but it’s nothing to write home about yet. The new jobs have to come from new companies, and that has to come from venture capital.”
Actually, Stephen, the new jobs can come through other means. Let’s look at Sunland Inc. of Portales, NM. This company has been making peanut butter since 1988. Sunland needs to expand in order to meet demand. The U.S. Department of Agriculture Rural Development program awarded a $450,000 federal loan to Roosevelt County Electric Cooperative, and the Cooperative, which is eligible to apply to the USDA for zero interest loans for economic development projects, reloaned the money at a zero interest rate to Sunland Inc. Jerry Partin, the Cooperative’s manager, stated “we re-lend that money to the industries creating the jobs and providing the economic development.”
In its first quarter survey of 3,000 job seekers, Challenger, Gray & Christmas found that 63.5% of those who found jobs got them at businesses with fewer than 500 employees.
China’s President Hu Jintao: “There’s excessive growth in fixed-asset investment and blind investment in construction. If these problems are not addressed, they will have a negative impact on the economy. We are confident that the strengthening of controls will bring China’s economic growth to a more sustainable momentum.” Jintao is sounding more like Greenspan each day.
For the week ended April 10, the following increases in initial unemployment claims took place: in California 12,000; in Pennsylvania 4,000; in New York 4,000; in Wisconsin 3,300; and in Michigan 2,600. Those are key voting states. Overall, the number of unemployed workers receiving state benefits increased by 52,000 to 3.02 million in the week ending April 10. Wall Street anticipates the Labor Department to pull a rabbit out of the April hat indicating 150,000 on-farm payroll jobs were created. It’s amazing how low-paying temporary employment with little or no benefits can get the bond market all worked up. Greenspan, in my view, only stated one fact in the last week. He remarked that 85,000 workers exhaust their benefits each week. Most workers are only eligible for up to 26 weeks of benefits. When the benefits run out, that person is dropped from the unemployment rolls. They are not counted. If 320,000 to 340,000 were dropped from the employment rolls in March, then, despite a gain of 308,000 in non-farm payrolls, there was a net loss of jobs. Similar happenings took place in January and February and will occur in the month of April. If the bond market does not wake up quickly, they will help to compound a serious problem.
Attorney Joe Tacapino: “The presumption of innocence begins with the first retainer.”
More than 100 U.S. soldiers have been killed in Iraq in April, and over 510 since our March 20, 2003 invasion.
The discount airlines are continuing to put pressure on other airlines. There is a $99 each way fare from coast to coast, and in May, one can fly to London for $260.
According to a new Harris Poll, Bush’s job ratings are down to 48% positive, 51% negative, the worst ratings of his presidency and the first time his negative rating is greater than his positive rating. Going back to Lyndon Johnson, in the month of April prior to a November election, only George H.W. Bush, Carter, and Ford had lower ratings, and none won in November. As an aside, Cheney’s ratings are 36% positive and 52% negative.
Wijian Shan, manager of Newbridge Capital: “China is now buying dear and selling cheap.”
Guo Shuqing, head of China’s State Administration of Foreign Exchange: “We don’t think that a fixed system is good. We think that a floating system is good.”
Nandan Nilekani, Infosys CEO: “We’re demolishing the myth that the future of global IT cannot be in India…Our business innovation is forcing rivals to redesign the way they do things. So this is more than an offshore play. It’s a model play.”
Micahel Santoli: “History is rather clear, though, in its verdict that stocks are at a disadvantage as monetary conditions tighten.”
Friday, April 23, 2004
4/23/04 Some Ways to Improve Profit Margins
Outsourcing continues to play an increasingly significant role in financial services call center operations, such as, the Bank of America forming a subsidiary in India and shifting 1,000 jobs there. A U.S. call center employee earns approximately $20,000 annually, whereas an Indian counterpart could earn $2,500, according to a recent study by Cutting Edge Information. The latter firm also mentioned that “a customer service job there is more prestigious than in the United States.”
The shift to Indian call centers has moved across the ocean with 850 people losing their jobs at services form Experian. That credit checking and data collection firm is shutting its division that provides call center services for third parties. They blamed the loss of some of its biggest contracts to offshore companies. One of the lost clients is Marks & Spencer, which is ending its contract early, in June. The British retail company stated it plans to cut 1,000 jobs at its head office, some of which are likely to be transferred to India.
Curt Anderson, senior director of investor relations at Microsoft: “We’re going to hold our operating expenses flat, ’04 to ’05. That’s going to give us about 2 percentage points of operating margin improvement.” The company is making more use of its videoconferencing software and has cut employee travel by 20%. The company is negotiating better deals with vendors. This is Microsoft and not Wal-Mart. One of the reasons I believe overall inflation will remain muted over time is the effort by companies, such as Microsoft, to improve margins. This will be a yearly exercise, and there are many opportunities for most companies in this area. There was another significant event yesterday at Microsoft. The company makes its headquarters in Redmond, Wa. About 12 miles down the road, is the city of Issaquah. Microsoft has purchased a large tract of land there. It would serve as a new campus. Microsoft told the city of Issaquah that construction on its new campus would not start for at least another year. John Connors, the CFO, stated “we’ll start building out Issaquah when and if we need the space.” This reminds me a great deal of Cisco and their property just south of San Jose. Watch what decision makers do and not what they say. Microsoft has $57 billion in cash. They will husband that money. PC sales and business spending have improved but it’s a bit like unemployment. The trend is better but not great. It doesn’t warrant a new campus.
One more note, and this on Boeing. The company indicated that their quarterly numbers would be better than expected. Deliveries of commercial airplanes are only modestly above plan. This is a fact. The only variable could be a benefit from a defense contract with more revenue hitting this quarter. Until there is a complete overhaul of Boeing’s management, I wouldn’t go near it as an investor.
There is an article in today’s Wall Street Journal on companies regaining pricing power. In fact, the price increases that have been announced have been modest and certainly not widespread. The major activities in improving profit margins are the effort to enhance productivity and to improve margins at the expense of vendors, such as, the effort by Microsoft and others.
Yasheng Huang, associate professor at MIT’s Sloan School of Management: “Sooner or later, China’s micro-economic fragility- which has led to low efficiency and huge non-performing bank loans- will dent its growth. Massive investment booms have fueled economic growth but the booms are not sustainable in the long term.”
Outsourcing continues to play an increasingly significant role in financial services call center operations, such as, the Bank of America forming a subsidiary in India and shifting 1,000 jobs there. A U.S. call center employee earns approximately $20,000 annually, whereas an Indian counterpart could earn $2,500, according to a recent study by Cutting Edge Information. The latter firm also mentioned that “a customer service job there is more prestigious than in the United States.”
The shift to Indian call centers has moved across the ocean with 850 people losing their jobs at services form Experian. That credit checking and data collection firm is shutting its division that provides call center services for third parties. They blamed the loss of some of its biggest contracts to offshore companies. One of the lost clients is Marks & Spencer, which is ending its contract early, in June. The British retail company stated it plans to cut 1,000 jobs at its head office, some of which are likely to be transferred to India.
Curt Anderson, senior director of investor relations at Microsoft: “We’re going to hold our operating expenses flat, ’04 to ’05. That’s going to give us about 2 percentage points of operating margin improvement.” The company is making more use of its videoconferencing software and has cut employee travel by 20%. The company is negotiating better deals with vendors. This is Microsoft and not Wal-Mart. One of the reasons I believe overall inflation will remain muted over time is the effort by companies, such as Microsoft, to improve margins. This will be a yearly exercise, and there are many opportunities for most companies in this area. There was another significant event yesterday at Microsoft. The company makes its headquarters in Redmond, Wa. About 12 miles down the road, is the city of Issaquah. Microsoft has purchased a large tract of land there. It would serve as a new campus. Microsoft told the city of Issaquah that construction on its new campus would not start for at least another year. John Connors, the CFO, stated “we’ll start building out Issaquah when and if we need the space.” This reminds me a great deal of Cisco and their property just south of San Jose. Watch what decision makers do and not what they say. Microsoft has $57 billion in cash. They will husband that money. PC sales and business spending have improved but it’s a bit like unemployment. The trend is better but not great. It doesn’t warrant a new campus.
One more note, and this on Boeing. The company indicated that their quarterly numbers would be better than expected. Deliveries of commercial airplanes are only modestly above plan. This is a fact. The only variable could be a benefit from a defense contract with more revenue hitting this quarter. Until there is a complete overhaul of Boeing’s management, I wouldn’t go near it as an investor.
There is an article in today’s Wall Street Journal on companies regaining pricing power. In fact, the price increases that have been announced have been modest and certainly not widespread. The major activities in improving profit margins are the effort to enhance productivity and to improve margins at the expense of vendors, such as, the effort by Microsoft and others.
Yasheng Huang, associate professor at MIT’s Sloan School of Management: “Sooner or later, China’s micro-economic fragility- which has led to low efficiency and huge non-performing bank loans- will dent its growth. Massive investment booms have fueled economic growth but the booms are not sustainable in the long term.”
Thursday, April 22, 2004
4/22/04 Mass Layoffs
In the Jan- March 2004 quarter there were 4,289 mass layoff events and they created unemployment claims of 416,209. This compares with the corresponding quarter of the previous year of 4,885 events and 463,421 claims. This is further evidence of a gradual decline in unemployment; however, with the recession having ended 2 1/2 years prior, unemployment claims remain at stubbornly high levels, and this after three successive quarters of above average GDP growth created by massive fiscal stimulus (record low interest rates and rounds of tax cuts). Going forward, circumstances will change for the worse.
The flattening of the treasury yield curve negates the theory that the economic recovery will retain its strength.
The two year treasury is yielding the most since October 2002.
I would recommend going long the 30 year treasury and shorting the 10 year treasury. The three quarter point spread does not provide enough value premium for a bond three times in duration.
I recommend the continuation of avoiding the noise coming from the Fed chairman. His words are filled with air bubbles.
In the Jan- March 2004 quarter there were 4,289 mass layoff events and they created unemployment claims of 416,209. This compares with the corresponding quarter of the previous year of 4,885 events and 463,421 claims. This is further evidence of a gradual decline in unemployment; however, with the recession having ended 2 1/2 years prior, unemployment claims remain at stubbornly high levels, and this after three successive quarters of above average GDP growth created by massive fiscal stimulus (record low interest rates and rounds of tax cuts). Going forward, circumstances will change for the worse.
The flattening of the treasury yield curve negates the theory that the economic recovery will retain its strength.
The two year treasury is yielding the most since October 2002.
I would recommend going long the 30 year treasury and shorting the 10 year treasury. The three quarter point spread does not provide enough value premium for a bond three times in duration.
I recommend the continuation of avoiding the noise coming from the Fed chairman. His words are filled with air bubbles.
Wednesday, April 21, 2004
4/21/04 Ass Backwards
Some things never change. Wall Street hangs on Greenspan's words as if he has something new to say. His words reflect what has taken place. He is not a futurist. He is an historian. The fact that the Chinese have created huge moves and, in some cases, shortages in several commodities is old news. This is true in oil, steel, aluminum, soybeans, etc. We have discussed this time and time again. The fact that Greenspan hinted at rising rates- so what. The market has moved rates dramatically over the past month. That's how the 10 year treasuries got to yielding about 4.5%. Maybe they go to 5.5% in the next 6 months. I don't know. I do know these rates are a gift. The government does not have a balance sheet to warrant borrowing at these rates and the same can be said for most companies. These rates do truly reflect non-reality borrowing.
Take Ford Motor Credit. Their first quarter interest rates declined by almost $200 million dollars compared with the prior year. They earned $1.1 billion pre-tax in the first quarter, compared with $727 million in the previous year. Basically, the entire quarterly improvement was from lower rates, higher used vehicle prices, and improved credit loss performance. When you have $4,300 in incentives on a vehicle, loss experiences will tend to decline. More importantly, their total financing revenue declined from $4.3 billion to $3.778 billion and their depreciation on operating leases declined from $2.1 billion to $1.3 billion. This is not a cheery picture.
Yesterday was another example of analysts not coming close to quarterly results for a company. In many cases, without company guidance, analysts are worthless. Motorola was the latest example. Rather than focusing on their earning 18 cents per share on $8.5 billion in revenue, a greater plus was the licensing agreement with RIMM that ties some Motorola handsets with the RIMM blackberry. New management seems to be working at Motorola as did the new management at McDonald's. Our best wishes are extended to Jim's family.
Foreign correspondent Philip Smucker's new book is A Qaeda's Great Escape. He tells the story of how poor planning and a rush to war allowed Bin Laden to slip away, regroup, and return to the front lines of the war on terror. With a myriad of interviews, he details how Bin Laden slipped away.
Some things never change. Wall Street hangs on Greenspan's words as if he has something new to say. His words reflect what has taken place. He is not a futurist. He is an historian. The fact that the Chinese have created huge moves and, in some cases, shortages in several commodities is old news. This is true in oil, steel, aluminum, soybeans, etc. We have discussed this time and time again. The fact that Greenspan hinted at rising rates- so what. The market has moved rates dramatically over the past month. That's how the 10 year treasuries got to yielding about 4.5%. Maybe they go to 5.5% in the next 6 months. I don't know. I do know these rates are a gift. The government does not have a balance sheet to warrant borrowing at these rates and the same can be said for most companies. These rates do truly reflect non-reality borrowing.
Take Ford Motor Credit. Their first quarter interest rates declined by almost $200 million dollars compared with the prior year. They earned $1.1 billion pre-tax in the first quarter, compared with $727 million in the previous year. Basically, the entire quarterly improvement was from lower rates, higher used vehicle prices, and improved credit loss performance. When you have $4,300 in incentives on a vehicle, loss experiences will tend to decline. More importantly, their total financing revenue declined from $4.3 billion to $3.778 billion and their depreciation on operating leases declined from $2.1 billion to $1.3 billion. This is not a cheery picture.
Yesterday was another example of analysts not coming close to quarterly results for a company. In many cases, without company guidance, analysts are worthless. Motorola was the latest example. Rather than focusing on their earning 18 cents per share on $8.5 billion in revenue, a greater plus was the licensing agreement with RIMM that ties some Motorola handsets with the RIMM blackberry. New management seems to be working at Motorola as did the new management at McDonald's. Our best wishes are extended to Jim's family.
Foreign correspondent Philip Smucker's new book is A Qaeda's Great Escape. He tells the story of how poor planning and a rush to war allowed Bin Laden to slip away, regroup, and return to the front lines of the war on terror. With a myriad of interviews, he details how Bin Laden slipped away.
Tuesday, April 20, 2004
4/20/04 The Most Prized Possession Is Integrity
Yesterday, Democrat Nelson of Nebraska, senior member on the Armed Services Committee, stated "it costs $100,000 to train and deploy one servicemember in Iraq. Half of the troops in Iraq are for support purposes only. Therefore, when we say we have 135,000 troops serving there, only half are combat troops...we could not possibly get another 20,000 troops over in Iraq for at least 90 days. That's why we extended the tour of duty for some personnel." He has heard from many families that the extended tour of duty to one year or more is presenting a severe economic and emotional hardship on those back home. In his opinion, our troops around the world require "better balancing." In my view, the administration has not been been truthful to our troops. Too many times, they have been told they are returning home only to be told the plans have been cancelled. If it happens once or twice, that is difficult at best. It has been a great deal more than that. Nelson admitted that was the case. It should be mentioned a Republican from Texas was present when Nelson was making these remarks. He never corrected Nelson- not once.The most endangered species are leaders of nations. Lack of integrity increases the endangerment.
Yesterday, Democrat Nelson of Nebraska, senior member on the Armed Services Committee, stated "it costs $100,000 to train and deploy one servicemember in Iraq. Half of the troops in Iraq are for support purposes only. Therefore, when we say we have 135,000 troops serving there, only half are combat troops...we could not possibly get another 20,000 troops over in Iraq for at least 90 days. That's why we extended the tour of duty for some personnel." He has heard from many families that the extended tour of duty to one year or more is presenting a severe economic and emotional hardship on those back home. In his opinion, our troops around the world require "better balancing." In my view, the administration has not been been truthful to our troops. Too many times, they have been told they are returning home only to be told the plans have been cancelled. If it happens once or twice, that is difficult at best. It has been a great deal more than that. Nelson admitted that was the case. It should be mentioned a Republican from Texas was present when Nelson was making these remarks. He never corrected Nelson- not once.The most endangered species are leaders of nations. Lack of integrity increases the endangerment.
Monday, April 19, 2004
4/19/04 Shopping on Main Street
Over the past week, three purchases were made at three different well-known retail establishments. On the cover of the box, the lamp was stated to operate on a three-way basis. It was one-way. The bath accessory was to stand from the floor to the ceiling. It couldn’t. It was missing a screw. The vacuum cleaner’s handle was difficult to push. It was missing two screws and became detached. All three items were returned. All were made in foreign lands. When items were made in America, I rarely had this experience. This is the price for lowering our manufacturing costs? I prefer the old times.
Over the past week, three purchases were made at three different well-known retail establishments. On the cover of the box, the lamp was stated to operate on a three-way basis. It was one-way. The bath accessory was to stand from the floor to the ceiling. It couldn’t. It was missing a screw. The vacuum cleaner’s handle was difficult to push. It was missing two screws and became detached. All three items were returned. All were made in foreign lands. When items were made in America, I rarely had this experience. This is the price for lowering our manufacturing costs? I prefer the old times.
Sunday, April 18, 2004
4/18/04 Voxel and the Orb
We live in a society marked by the shift to an aging population. In order to effectuate successful transformation, we must re-invent ourselves, so to speak. Some of the change can be found in the emerging fields of biotechnology and nanotechnology. Today we shall explore voxel images and the Orb.
Simply described, voxel images are 3-D images. They are most often found in x-rays, CAT scans, MRIs, and even computer games. Karthik Ramani, a Purdue University professor has created a 3-D search engine. It’s interface is to be licensed by Imaginestics LLC, where Ramani is chief scientist. He believes his 3-D search engine “is the beginning of the information age.” As objects, not just words, are accessible through computers, Ramani believes productivity can be further enhanced. Princeton University professor Thomas Funkhouser and his colleagues have put a 3-D search engine on the Web. By using a computer mouse, the user can sketch an object, add a description in text, and then search for similar designed models in databases. Caterpillar’s senior engineering specialist, Rick Jeffs, believes Ramani’s search engine could simplify his company’s inventory. Designers could sketch a required part, and then view what fits the bill in inventory. Jeffs stated “this would really just add to the efficiency.” The idea of Google soon going public is on the minds of many investors. Google’s search engine is in 2-D, as it were. Ramani’s work adds vision to a Google search.
David Rose is president of Ambient Devices, creator of the Orb. Author Seth Godin stated “when you think about the magic of the Orb, it’s a thermometer for the rest of your life.” Rose observes “it’s based on our brain’s natural ability to process many streams of information in parallel. Our perceptual system is great at multiprocessing hundreds of peripheral cues every second. We do it without even trying. Today’s computer interfaces completely ignore this.” The late Mark Weiser, former chief technologist at Xerox’s PARC, stated “ubiquitous computing is roughly the opposite of virtual reality. Where virtual reality puts people inside a computer-generated world, ubiquitous computing forces the computer to live out here in the world with people.” Rose believes “once people are aware how easy and delightful it is to have these information devices in their lives, it will become second nature.” The original Orb cost $300. The price is now $150, and dropping. About 20,000 have been sold to date. The Orb is described as a “calm computing device” and it can provide information “to increase my peace of mind” and it is “dedicated to information people care about.” It can provide physical form to information, and the latter is delivered through a nationwide wireless network. An example of the Orb, an object the size of an over-sized egg, is serving as an indicator of the DJIA. If the Dow is up, the Orb shines green. If it’s down, it glows red. If it’s roughly unchanged, it’s yellow. It can be programmed to tell you about job openings, whether someone is online, track e-bay auctions, and on and on and on. It has endless uses. It can provide relief from information overload and make it easy to process basic visual information.
Senator John Edwards of North Carolina: “You know it must be an amazing thing to live a life where, when you’re asked multiple times whether you’ve questioned anything you’ve done, whether you’ve made any mistakes…you can’t think of a single thing. Well I have a suggestion for the president. If he’s struggling with the question, give me a call. I’ll give him an answer.”
When we analyze Wal-Mart, we see the world’s largest retailer, America’s largest corporation and its third largest revenue-generating entity behind the Center for Medicare and Medicaid Services and the Department of Defense, and the largest private-sector employer in the U.S. They have the largest private trucking fleet in the nation. They are the number one retailer in the U.S. of clothing, toys, groceries, home furnishings, home textiles, housewares, tableware, DVDs, vacuum cleaners, TVs, video game consoles, and many more items. I think we might consider one more description. Wal-Mart’s current level of annual revenues exceeds the GDP of all but two dozen of the world’s countries. For example, their revenues exceed Switzerland’s gross domestic product. The company has recently announced the purchase of stores in Brazil. They will open about 280 stores in this fiscal year. They are on the hunt for strategic international acquisitions. In a few years, Wal-Mart can be within the size of the top dozen countries’ GDP. Bob Zaragoza is a frequent Wal-Mart shopper in Colorado. He stated “people have to look out for themselves. And prices at Wal-Mart are cheaper than most anywhere else.” Those cheap prices may not reduce the price of gasoline, but most everything else will be. Wal-Mart’s growth will place a lid on inflation. Their purchasing power will continue to import lower prices from outside our borders.
Over the past three years, Illinois Tool Works has shrunk its U.S. payroll from about 36,000 to 28,000. Their vice president of investor relations, John Brooklier, stated “why would you be hiring people right now? If you still have a ways to go before manufacturing capacity is filled, where are the jobs going to come from?”
This is a big week for the reporting of first quarter earnings. I wonder how much of the increase will be attributable to currency adjustments, such as, with IBM? How much will be attributable to cost-cutting, such as, with J&J? How much will be attributable to lower interest rates, such as, with Southwest Airlines? How many will have high profit margins due to lower tax rates? It’s a good thing to compare apples with apples.
We live in a society marked by the shift to an aging population. In order to effectuate successful transformation, we must re-invent ourselves, so to speak. Some of the change can be found in the emerging fields of biotechnology and nanotechnology. Today we shall explore voxel images and the Orb.
Simply described, voxel images are 3-D images. They are most often found in x-rays, CAT scans, MRIs, and even computer games. Karthik Ramani, a Purdue University professor has created a 3-D search engine. It’s interface is to be licensed by Imaginestics LLC, where Ramani is chief scientist. He believes his 3-D search engine “is the beginning of the information age.” As objects, not just words, are accessible through computers, Ramani believes productivity can be further enhanced. Princeton University professor Thomas Funkhouser and his colleagues have put a 3-D search engine on the Web. By using a computer mouse, the user can sketch an object, add a description in text, and then search for similar designed models in databases. Caterpillar’s senior engineering specialist, Rick Jeffs, believes Ramani’s search engine could simplify his company’s inventory. Designers could sketch a required part, and then view what fits the bill in inventory. Jeffs stated “this would really just add to the efficiency.” The idea of Google soon going public is on the minds of many investors. Google’s search engine is in 2-D, as it were. Ramani’s work adds vision to a Google search.
David Rose is president of Ambient Devices, creator of the Orb. Author Seth Godin stated “when you think about the magic of the Orb, it’s a thermometer for the rest of your life.” Rose observes “it’s based on our brain’s natural ability to process many streams of information in parallel. Our perceptual system is great at multiprocessing hundreds of peripheral cues every second. We do it without even trying. Today’s computer interfaces completely ignore this.” The late Mark Weiser, former chief technologist at Xerox’s PARC, stated “ubiquitous computing is roughly the opposite of virtual reality. Where virtual reality puts people inside a computer-generated world, ubiquitous computing forces the computer to live out here in the world with people.” Rose believes “once people are aware how easy and delightful it is to have these information devices in their lives, it will become second nature.” The original Orb cost $300. The price is now $150, and dropping. About 20,000 have been sold to date. The Orb is described as a “calm computing device” and it can provide information “to increase my peace of mind” and it is “dedicated to information people care about.” It can provide physical form to information, and the latter is delivered through a nationwide wireless network. An example of the Orb, an object the size of an over-sized egg, is serving as an indicator of the DJIA. If the Dow is up, the Orb shines green. If it’s down, it glows red. If it’s roughly unchanged, it’s yellow. It can be programmed to tell you about job openings, whether someone is online, track e-bay auctions, and on and on and on. It has endless uses. It can provide relief from information overload and make it easy to process basic visual information.
Senator John Edwards of North Carolina: “You know it must be an amazing thing to live a life where, when you’re asked multiple times whether you’ve questioned anything you’ve done, whether you’ve made any mistakes…you can’t think of a single thing. Well I have a suggestion for the president. If he’s struggling with the question, give me a call. I’ll give him an answer.”
When we analyze Wal-Mart, we see the world’s largest retailer, America’s largest corporation and its third largest revenue-generating entity behind the Center for Medicare and Medicaid Services and the Department of Defense, and the largest private-sector employer in the U.S. They have the largest private trucking fleet in the nation. They are the number one retailer in the U.S. of clothing, toys, groceries, home furnishings, home textiles, housewares, tableware, DVDs, vacuum cleaners, TVs, video game consoles, and many more items. I think we might consider one more description. Wal-Mart’s current level of annual revenues exceeds the GDP of all but two dozen of the world’s countries. For example, their revenues exceed Switzerland’s gross domestic product. The company has recently announced the purchase of stores in Brazil. They will open about 280 stores in this fiscal year. They are on the hunt for strategic international acquisitions. In a few years, Wal-Mart can be within the size of the top dozen countries’ GDP. Bob Zaragoza is a frequent Wal-Mart shopper in Colorado. He stated “people have to look out for themselves. And prices at Wal-Mart are cheaper than most anywhere else.” Those cheap prices may not reduce the price of gasoline, but most everything else will be. Wal-Mart’s growth will place a lid on inflation. Their purchasing power will continue to import lower prices from outside our borders.
Over the past three years, Illinois Tool Works has shrunk its U.S. payroll from about 36,000 to 28,000. Their vice president of investor relations, John Brooklier, stated “why would you be hiring people right now? If you still have a ways to go before manufacturing capacity is filled, where are the jobs going to come from?”
This is a big week for the reporting of first quarter earnings. I wonder how much of the increase will be attributable to currency adjustments, such as, with IBM? How much will be attributable to cost-cutting, such as, with J&J? How much will be attributable to lower interest rates, such as, with Southwest Airlines? How many will have high profit margins due to lower tax rates? It’s a good thing to compare apples with apples.
Saturday, April 17, 2004
4/17/04 The Economy
Economist Robert Brusca: “The economy is still growing. The evidence of acceleration is waning.”
Fed Vice Chairman Roger Ferguson: “Nonetheless, one cannot definitely rule out the possibility that hiring will fall short of expectations over the next several months as it had up until the most recent report. In particular, the lackluster performance we have seen in the labor market, even as real GDP has been moving up strongly, raises the question of whether an unusually large portion of job cuts implemented by firms in recent years represent permanent layoffs that will only gradually be offset by job creation elsewhere in the economy.”
Non-farm unit labor costs fell 2.4% in 2002, 1.2% in 2003, and they continued to decline in the first quarter of 2004.
Apple Computer has closed its Elk Grove, Ca. iMac assembly plant, eliminating at least 235 jobs. Assembly will be moved to an unnamed s. California supplier. Alcoa Mill Products is closing a 350,000 aluminum plant in San Antonio due to “poor market conditions.” The number of workers to be impacted was not mentioned. Yesterday, Boeing distributed 60-day layoff notices to 102 union hourly workers in the Puget Sound area. Boeing does not disclose the number of layoff notices issued to non-union employees.
The U.S. government needs to borrow $2 billion a day in order to finance its record deficit. Any material increase in interest rates would necessitate more treasury borrowings and, therefore, greater debt service. The economy needs that like a kick where it hurts.
Alan Greenspan: “We should not be surprised then to see a re-emergence of the market value placed on trust and personal reputation in business practice.”
In March, the number of unemployed people in Pennsylvania increased by 15,000 to 333,000. Since March 2003, total jobs were down 21,900.
In India, exporters have been hit hard by the appreciating value of the rupee, and they have threatened to stop exports from May 1 and sought immediate remedial measures, such as, pegging of the dollar exchange value at Rs 45. Up until now, garment and textile exporters had been preparing for accelerated exports since the quota free environment was approaching next year. Now those plans may require change. Exporters have been experiencing intense competition from China and other Asean countries, and they have begun switching their businesses to other areas.
With this past week’s strength in the U.S. dollar, the price for gold and silver took a pretty hefty drop. If you have a strong belief that our economy is going to continue in a gangbuster’s fashion, then you might want to avoid purchases of gold and silver. On the other hand, should your feet be firmly planted on the ground, it would not be a stretch to realize that something has to give in our economy- like the ability to reduce debt and curtail spending. Administration officials may tell you everything is fine and dandy, but please remember they are simply attempting to snow you. I wouldn’t buy the dollar with your money.
Some recent polls indicate that over two-third of investors are bullish. If you’re a buyer, you get a lot of bull for your buck.
There are a million stories in the naked city. One of my friends mentioned his wife’s friend’s experience. For many years she was a programming contractor and earned $40 an hour. She never experienced a lull between jobs and was accomplished in her area of expertise. Thousands and thousands of software jobs disappeared in Silicon Valley. She could not get another IT job. With rising housing and healthcare costs, she needed to find work. Finally, she turned to house cleaning and earns $12 an hour. The Labor Department counts her as employed. I think you’ll find many more individuals with wages going from $40 to $12 per hour than the reverse. There are many more job seekers than jobs. I don’t see that changing any time soon. The under-employed, the discouraged, the part-time workers- they have paid the price, and continue to pay the price, for an economy filled with too many over-priced non-risk taking executives and managers.
Economist Robert Brusca: “The economy is still growing. The evidence of acceleration is waning.”
Fed Vice Chairman Roger Ferguson: “Nonetheless, one cannot definitely rule out the possibility that hiring will fall short of expectations over the next several months as it had up until the most recent report. In particular, the lackluster performance we have seen in the labor market, even as real GDP has been moving up strongly, raises the question of whether an unusually large portion of job cuts implemented by firms in recent years represent permanent layoffs that will only gradually be offset by job creation elsewhere in the economy.”
Non-farm unit labor costs fell 2.4% in 2002, 1.2% in 2003, and they continued to decline in the first quarter of 2004.
Apple Computer has closed its Elk Grove, Ca. iMac assembly plant, eliminating at least 235 jobs. Assembly will be moved to an unnamed s. California supplier. Alcoa Mill Products is closing a 350,000 aluminum plant in San Antonio due to “poor market conditions.” The number of workers to be impacted was not mentioned. Yesterday, Boeing distributed 60-day layoff notices to 102 union hourly workers in the Puget Sound area. Boeing does not disclose the number of layoff notices issued to non-union employees.
The U.S. government needs to borrow $2 billion a day in order to finance its record deficit. Any material increase in interest rates would necessitate more treasury borrowings and, therefore, greater debt service. The economy needs that like a kick where it hurts.
Alan Greenspan: “We should not be surprised then to see a re-emergence of the market value placed on trust and personal reputation in business practice.”
In March, the number of unemployed people in Pennsylvania increased by 15,000 to 333,000. Since March 2003, total jobs were down 21,900.
In India, exporters have been hit hard by the appreciating value of the rupee, and they have threatened to stop exports from May 1 and sought immediate remedial measures, such as, pegging of the dollar exchange value at Rs 45. Up until now, garment and textile exporters had been preparing for accelerated exports since the quota free environment was approaching next year. Now those plans may require change. Exporters have been experiencing intense competition from China and other Asean countries, and they have begun switching their businesses to other areas.
With this past week’s strength in the U.S. dollar, the price for gold and silver took a pretty hefty drop. If you have a strong belief that our economy is going to continue in a gangbuster’s fashion, then you might want to avoid purchases of gold and silver. On the other hand, should your feet be firmly planted on the ground, it would not be a stretch to realize that something has to give in our economy- like the ability to reduce debt and curtail spending. Administration officials may tell you everything is fine and dandy, but please remember they are simply attempting to snow you. I wouldn’t buy the dollar with your money.
Some recent polls indicate that over two-third of investors are bullish. If you’re a buyer, you get a lot of bull for your buck.
There are a million stories in the naked city. One of my friends mentioned his wife’s friend’s experience. For many years she was a programming contractor and earned $40 an hour. She never experienced a lull between jobs and was accomplished in her area of expertise. Thousands and thousands of software jobs disappeared in Silicon Valley. She could not get another IT job. With rising housing and healthcare costs, she needed to find work. Finally, she turned to house cleaning and earns $12 an hour. The Labor Department counts her as employed. I think you’ll find many more individuals with wages going from $40 to $12 per hour than the reverse. There are many more job seekers than jobs. I don’t see that changing any time soon. The under-employed, the discouraged, the part-time workers- they have paid the price, and continue to pay the price, for an economy filled with too many over-priced non-risk taking executives and managers.
Friday, April 16, 2004
4/16/04 We Have A Large Problem
General Accounting Office head David M. Walker made remarks yesterday about our government’s burgeoning debts and looming obligations. He stated “the public has no idea how big the problem is.” He was referring to the $43 trillion in unfunded Social Security, Medicare, and other retirement benefits, and stated that these obligations would make the government bankrupt by 2040. Walker observed “you get wide eyes and dropped jaws. They really don’t understand the magnitude of the problem. We have a large problem. We have to stop digging the hole deeper, then provide discipline.” Walker is the official auditor of the government’s financial books. He observed that Medicare and Social Security “are not trust funds. They are accounting devices.” He observed the money has already been spent. He stated “the tax system is a nightmare” and “the system is fundamentally broken.” Walker remarked that “escalating health costs, which have grown at double-digit rates in recent years, not only have become a big headache for the government, but they are a major reason that employers have been slow to hire new workers and are quick to outsource jobs to countries where health care costs are lower.” Yesterday, IBM’s CFO stated that his company’s quarterly results were hurt by the costs of pensions and retiree health insurance rising $187 million.
Last week, nationally new claims for unemployment benefits increased by 30,000. We must remember that each week about 80,000 unemployed Americans lose their benefits and are no longer counted as unemployed. Yesterday, the Texas Workforce Commission released March figures that show the state’s seasonally adjusted unemployment rate increased to 6.2 percent from February’s 6.1 percent.
The government estimates it takes taxpayers 28 hours and 30 minutes to complete an average tax return with itemized deductions and income reported from interest, dividends, and capital gains. That’s 42 minutes longer than last year. In 1988, it took the average taxpayer 17 hours and 7 hours to complete the typical forms.
The IRS reported that the average tax refund increased 5 percent this year to $2,090. Bush was in Iowa yesterday telling the folks there how great his tax policies were working. Those listening were not impressed. Why? The fact is that 76% of Iowans received less than $100 from the 2003 tax cut. To make matters worse, last month alone Iowa lost approximately 1,200 jobs. Since Bush became president, Iowa has lost 32,000 jobs.
Edward Hudgins, the Washington Director of the Objectivist Center: “We should lament April 15- tax day- as the day that too many of us all too willingly surrender our liberty and opportunities in life. Politicians are pushers who want to addict us to government…April 15 is a day of moral shame.”
Since March 20, 2003, at least 680 U.S. troops have died from hostile fire in Iraq. At least 93 have died since March 31. We have 137,000 troops in Iraq. On daily average, almost two soldiers are killed.
Today, Nokia warned second-quarter earnings would fall and that sales would also decline. Yesterday, IBM reported that their revenue from services increased a mere 1% after adjusting for currency, and that pretax income rose less than 1% due to lower profit margins. Sun Microsystems reported another quarterly loss, the tenth in the last twelve quarters.
Net foreign capital flows into the U.S. fell to $83.4 billion in February from $92 billion in January. I anticipate this type of monthly decline to continue for some time.
Speculators pushed the price of aluminum to the highest level since December 1995. In the last several weeks, prices have risen about 10%. The reason for the jump has been attributed to Chinese speculative buying. Those same buyers get the credit for this year’s inflationary spike in the CRB. Those folks are everywhere. Last year you might recall, Goldman Sachs predicted that China and India could become the first and third largest economies within 30 years, respectively.
General Accounting Office head David M. Walker made remarks yesterday about our government’s burgeoning debts and looming obligations. He stated “the public has no idea how big the problem is.” He was referring to the $43 trillion in unfunded Social Security, Medicare, and other retirement benefits, and stated that these obligations would make the government bankrupt by 2040. Walker observed “you get wide eyes and dropped jaws. They really don’t understand the magnitude of the problem. We have a large problem. We have to stop digging the hole deeper, then provide discipline.” Walker is the official auditor of the government’s financial books. He observed that Medicare and Social Security “are not trust funds. They are accounting devices.” He observed the money has already been spent. He stated “the tax system is a nightmare” and “the system is fundamentally broken.” Walker remarked that “escalating health costs, which have grown at double-digit rates in recent years, not only have become a big headache for the government, but they are a major reason that employers have been slow to hire new workers and are quick to outsource jobs to countries where health care costs are lower.” Yesterday, IBM’s CFO stated that his company’s quarterly results were hurt by the costs of pensions and retiree health insurance rising $187 million.
Last week, nationally new claims for unemployment benefits increased by 30,000. We must remember that each week about 80,000 unemployed Americans lose their benefits and are no longer counted as unemployed. Yesterday, the Texas Workforce Commission released March figures that show the state’s seasonally adjusted unemployment rate increased to 6.2 percent from February’s 6.1 percent.
The government estimates it takes taxpayers 28 hours and 30 minutes to complete an average tax return with itemized deductions and income reported from interest, dividends, and capital gains. That’s 42 minutes longer than last year. In 1988, it took the average taxpayer 17 hours and 7 hours to complete the typical forms.
The IRS reported that the average tax refund increased 5 percent this year to $2,090. Bush was in Iowa yesterday telling the folks there how great his tax policies were working. Those listening were not impressed. Why? The fact is that 76% of Iowans received less than $100 from the 2003 tax cut. To make matters worse, last month alone Iowa lost approximately 1,200 jobs. Since Bush became president, Iowa has lost 32,000 jobs.
Edward Hudgins, the Washington Director of the Objectivist Center: “We should lament April 15- tax day- as the day that too many of us all too willingly surrender our liberty and opportunities in life. Politicians are pushers who want to addict us to government…April 15 is a day of moral shame.”
Since March 20, 2003, at least 680 U.S. troops have died from hostile fire in Iraq. At least 93 have died since March 31. We have 137,000 troops in Iraq. On daily average, almost two soldiers are killed.
Today, Nokia warned second-quarter earnings would fall and that sales would also decline. Yesterday, IBM reported that their revenue from services increased a mere 1% after adjusting for currency, and that pretax income rose less than 1% due to lower profit margins. Sun Microsystems reported another quarterly loss, the tenth in the last twelve quarters.
Net foreign capital flows into the U.S. fell to $83.4 billion in February from $92 billion in January. I anticipate this type of monthly decline to continue for some time.
Speculators pushed the price of aluminum to the highest level since December 1995. In the last several weeks, prices have risen about 10%. The reason for the jump has been attributed to Chinese speculative buying. Those same buyers get the credit for this year’s inflationary spike in the CRB. Those folks are everywhere. Last year you might recall, Goldman Sachs predicted that China and India could become the first and third largest economies within 30 years, respectively.
Thursday, April 15, 2004
4/15/04 Bush’s Exit Route Is Clear: November the 3rd
The IMF’s World Economic Outlook, to be released next week, expresses the viewpoint that “U.S. fiscal deficits threaten the world economy.”
In February 2003, General Tommy Franks told our troops “the road home goes right through Baghdad.”
The UAW membership peaked at 1.53 million members in 1969. Ten years later, the number had declined only slightly to 1.5 million. In 2003, the UAW lost 14,000 members, and total membership dropped to 624,585, the lowest number since 1942. Toyota and Wal-Mart have some things in common. Both are non-union shops, and both have a large number of applicants willing to work for wages well below union levels. In the case of Wal-Mart it’s about $8 per hour, and for Toyota about $10 or $12 per hour.
David Robinette’s son, Spc. Daniel Robinette, returned with the 82nd Airborne after a tour of duty in Iraq. In the last election, David voted for George W. Bush. He stated “It is clear that the president lied to us- to Americans and also to the world community of nations. Worst of all, he lied to our troops. I want to assure you that it is not un-American, and definitely not disrespectful of military members or families, to question the government’s decision to prosecute a war on foreign soil. In fact, it is your duty as a citizen to do exactly that. The citizens of this country are entitled to some answers about the war. The only thing the men and women who fight or support the fighters on the ground want is a clear, obtainable objective, and the tools needed to achieve it. If you give them those two things, they will win- every time. You can bet your life on it…If the members of the Congress could set aside politics for just one moment, and simply represent the people who elected them, they would impeach the president and remove him from office…For the first time, I will vote for the Democrat candidate for president of the United States. And if the current president is taking for granted the votes of the military community, he just may wake up on November 3 as a lame duck.”
In the April Money/ICR poll, 76% of Americans stated they would have preferred the government devote resources to job programs instead of tax cuts in 2003. Nearly two-thirds of Americans stated they did not benefit from 2003 tax cuts. Half of all Americans would have preferred cutting the deficit rather than last year’s tax cuts.
China’s economy grew at a 9.9% rate in the fourth quarter and barely slipped to a 9.7% rate in the first quarter of 2004. Beijing’s National Bureau of Statistics stated consumer prices rose 3% in March. When it comes to managing soft landings, the Chinese government is without any experience. Hyper-inflation, bad loans, excess fixed-asset investment, and booming production are a recipe for a train wreck.
According to the April Merrill Lynch Survey of Global Fund Managers, more than three-quarters of fund managers expect inflation to be higher one year from now. Merrill’s chief global investment strategist stated “for the first time in years, more fund managers believe higher selling prices, not lower costs, will drive corporate earnings. This survey has all the markings of a mid-cycle pause, with fund managers preparing for a more inflationary late-cycle phase.” A net 75% of equity fund managers now describe bonds as overvalued and 17% believe inflation-linked bonds will outperform conventional bonds. Japanese equities top the shopping lists of many global fund managers. Given that the Nikkei has risen about 4,500 points, that’s not surprising. Fund managers often arrive late to the train station.
In 2000, Terabeam raised $525 million in venture capital, 15% of the total raised in the state of Washington in that year. Of the $525 million, Lucent contributed $400 million. At one time, Terabeam had about 585 employees. Yesterday, the company agreed to be purchased by YDI Wireless for $64 million in stock. Of Terabeam’s current 130 employees, 84 will be laid off. Dan Hess, former AT&T Wireless chief executive, landed at Terabeam after the founder left. Hesse stated “I’ve been in telecom for 27 years and never seen anything like the last three…You have to look at it relative to industry, and we performed relatively well.”
According to the Mortgage Bankers Association, ARMs accounted for 29% of loan applications last week.
With interest rates having risen sharply in the last few weeks, refinancing applications have dropped off considerably.
In the first three months of 2004, petroleum-based energy costs increased at an 82.5 percent annual rate. In the first quarter, the index for grocery store food prices decreased at a 0.2% annual rate, reflecting declines in the indexes for meats, poultry, fish, and eggs. Fruits and vegetables declined at annual rates of 3.7% and 2.2%, respectively. I might need to become a vegan.
The Labor Department stated real average weekly earnings fell 0.7% in March and were essentially unchanged over the past 12 months. In other words, as productivity rose at record levels, workers had nothing to show for their added efforts. However, public companies, on average, were able to achieve double digit earnings increases through cost containment, lower weekly hours worked by employees, and higher productivity. When do the workers eat a bigger piece of the pie? New York Comptroller Alan Hevesi stated that, some large investment firms, such as, Merrill Lynch, provided a 25% increase in bonuses in 2003, and that investment industry bonuses amounted to $10.7 billion.
Yesterday, Ashcroft described the pre-Patriot Act “wall” that impeded intelligence sharing. I wonder whether the "Chinese wall” at investment firms is alive and well.
The IMF’s World Economic Outlook, to be released next week, expresses the viewpoint that “U.S. fiscal deficits threaten the world economy.”
In February 2003, General Tommy Franks told our troops “the road home goes right through Baghdad.”
The UAW membership peaked at 1.53 million members in 1969. Ten years later, the number had declined only slightly to 1.5 million. In 2003, the UAW lost 14,000 members, and total membership dropped to 624,585, the lowest number since 1942. Toyota and Wal-Mart have some things in common. Both are non-union shops, and both have a large number of applicants willing to work for wages well below union levels. In the case of Wal-Mart it’s about $8 per hour, and for Toyota about $10 or $12 per hour.
David Robinette’s son, Spc. Daniel Robinette, returned with the 82nd Airborne after a tour of duty in Iraq. In the last election, David voted for George W. Bush. He stated “It is clear that the president lied to us- to Americans and also to the world community of nations. Worst of all, he lied to our troops. I want to assure you that it is not un-American, and definitely not disrespectful of military members or families, to question the government’s decision to prosecute a war on foreign soil. In fact, it is your duty as a citizen to do exactly that. The citizens of this country are entitled to some answers about the war. The only thing the men and women who fight or support the fighters on the ground want is a clear, obtainable objective, and the tools needed to achieve it. If you give them those two things, they will win- every time. You can bet your life on it…If the members of the Congress could set aside politics for just one moment, and simply represent the people who elected them, they would impeach the president and remove him from office…For the first time, I will vote for the Democrat candidate for president of the United States. And if the current president is taking for granted the votes of the military community, he just may wake up on November 3 as a lame duck.”
In the April Money/ICR poll, 76% of Americans stated they would have preferred the government devote resources to job programs instead of tax cuts in 2003. Nearly two-thirds of Americans stated they did not benefit from 2003 tax cuts. Half of all Americans would have preferred cutting the deficit rather than last year’s tax cuts.
China’s economy grew at a 9.9% rate in the fourth quarter and barely slipped to a 9.7% rate in the first quarter of 2004. Beijing’s National Bureau of Statistics stated consumer prices rose 3% in March. When it comes to managing soft landings, the Chinese government is without any experience. Hyper-inflation, bad loans, excess fixed-asset investment, and booming production are a recipe for a train wreck.
According to the April Merrill Lynch Survey of Global Fund Managers, more than three-quarters of fund managers expect inflation to be higher one year from now. Merrill’s chief global investment strategist stated “for the first time in years, more fund managers believe higher selling prices, not lower costs, will drive corporate earnings. This survey has all the markings of a mid-cycle pause, with fund managers preparing for a more inflationary late-cycle phase.” A net 75% of equity fund managers now describe bonds as overvalued and 17% believe inflation-linked bonds will outperform conventional bonds. Japanese equities top the shopping lists of many global fund managers. Given that the Nikkei has risen about 4,500 points, that’s not surprising. Fund managers often arrive late to the train station.
In 2000, Terabeam raised $525 million in venture capital, 15% of the total raised in the state of Washington in that year. Of the $525 million, Lucent contributed $400 million. At one time, Terabeam had about 585 employees. Yesterday, the company agreed to be purchased by YDI Wireless for $64 million in stock. Of Terabeam’s current 130 employees, 84 will be laid off. Dan Hess, former AT&T Wireless chief executive, landed at Terabeam after the founder left. Hesse stated “I’ve been in telecom for 27 years and never seen anything like the last three…You have to look at it relative to industry, and we performed relatively well.”
According to the Mortgage Bankers Association, ARMs accounted for 29% of loan applications last week.
With interest rates having risen sharply in the last few weeks, refinancing applications have dropped off considerably.
In the first three months of 2004, petroleum-based energy costs increased at an 82.5 percent annual rate. In the first quarter, the index for grocery store food prices decreased at a 0.2% annual rate, reflecting declines in the indexes for meats, poultry, fish, and eggs. Fruits and vegetables declined at annual rates of 3.7% and 2.2%, respectively. I might need to become a vegan.
The Labor Department stated real average weekly earnings fell 0.7% in March and were essentially unchanged over the past 12 months. In other words, as productivity rose at record levels, workers had nothing to show for their added efforts. However, public companies, on average, were able to achieve double digit earnings increases through cost containment, lower weekly hours worked by employees, and higher productivity. When do the workers eat a bigger piece of the pie? New York Comptroller Alan Hevesi stated that, some large investment firms, such as, Merrill Lynch, provided a 25% increase in bonuses in 2003, and that investment industry bonuses amounted to $10.7 billion.
Yesterday, Ashcroft described the pre-Patriot Act “wall” that impeded intelligence sharing. I wonder whether the "Chinese wall” at investment firms is alive and well.
Wednesday, April 14, 2004
4/14/04 The Burden Exceeds The Iraqi Theatre
In my view, George W. Bush will be remembered in the record books. He will be remembered as the worst president in the history of the United States. In the face of making one poor decision after another, in the face of misrepresenting facts to the American people, he has apologized for nothing. His administration has frequently proven a disgrace to the citizenry. Scrutiny is not kind to Bush.
According to the latest AP-Ipsos poll of 1,001 adults, 61% of Americans would prefer a balanced budget to a cut in taxes. Forty nine percent stated their overall tax burden, including federal, state, and local taxes, had gone up over the past three years. Compare this with 13 percent who stated their overall taxes had gone down. As Tom Artley, a 52-year-old supervisor at a manufacturing plant in Williamsport, Pa. stated, “every time you turn around, there’s a new gasoline tax, more property taxes, a library tax- because they don’t have enough money.” Twenty five percent of those polled stated their federal taxes had gone up over the past three years., while forty three percent stated they had remained the same.
President Bush: “Everybody who pays taxes ought to get relief if we’re going to get relief.” The Hummer tax cut is not relief for everybody.
John McCain: “We are going to have to ask for more money after the election, and it’s going to increase the deficit.” Actually, that’s not correct. You are going to have to ask for more money in about 60 days, when the government will have reached its debt limit. Bush has spent and spent, and the deficits have wiped out the surpluses developed in the Clinton years. Our country’s finances have not been in this sorry shape since the Depression. You have Bush to thank for this. Last year, corporate taxes fell to 7.4% of government receipts, versus 20.3% 40 years ago. One reason for the decline has been the rise in “corporate inversions” in which a new foreign entity, typically located in a no- or low-tax country, replaces a U.S. company as the parent corporation of the business. As Joel Friedman, senior fellow at the Center on Budget and Policy Priorities noted, “no one likes to pay taxes, but it goes down easier if you know your neighbor and the man across town are paying.” Facts clearly show that the Bush tax-law changes have not worked well for those whose income is derived largely from wages and salaries. Rather, they have lessened the tax burden on capital by reducing taxes on dividends and capital gains. Bush maintains his tax policy has spurred job creation. After careful analysis and speaking with each and every state, I am confident that, of the 308,000 nonfarm payroll jobs created in March, a total of 296,000 represented part-time employment. Average weekly hours fell by 0.1% in March. Work hours are a leading indicator of future job growth or decline. Wall Street may cheer part-time jobs but Main Street does not look on them favorably.
As for job creation, most permanent jobs have been added overseas. Dell is an excellent example. A year ago, 54.2% of Dell’s workers were in the U.S. Dell’s workforce grew 17.6% in 2003. As of January 30, 2004, 48.3% of Dell’s employees are in the U.S. A Dell spokesperson stated “we have great opportunities outside the U.S., and as such we have built our employee base in areas that best reflect our strong sales growth.”
U.N Secretary Kofi Annan: “Given the deteriorating situation and the violence on the ground…for the foreseeable future, insecurity is going to be a major constraint for us. And so I cannot say right now that I am going to be sending in a large U.N. team.” At least 84 U.S. troops have been killed in action in Iraq this month and another 560 wounded and two soldiers have been declared missing. The number wounded so far in April exceeds the total for any other full month of the war in this theatre by more than 220. In the first 13 days after the March 20, 2003 invasion of Iraq, a total of 77 U.S. troops were killed in action. Lt. Gen. Richard Cody, the Army’s deputy chief of staff, remarked yesterday “combat is a dirty, nasty business.” So is the theatre of politics. It’s not a question of staying the course. It’s not a question of providing another 14,000 of our troops to this war effort. I don’t believe for one second that “Americans serving in that country are protecting their fellow citizens.” I don’t believe that “the defeat of violence and terror in Iraq…is vital, therefore, to the safety of the American people.” Iraq has not possessed WPM in over 10 years, and not one entity or individual has proven otherwise, including Bush. In my view, while flying a flag of misspeaking, a country cannot serve the cause of liberty. The issue is not testing the will of the civilized world. The issue is dedicating the country to a cause worth serving, and that is first and foremost walking and marching in the light of the truth. While violating the truth, one cannot further freedom. To do otherwise, is to create burdens for this and future generations. Our shores will be a better place on November 3. The voters do understand the stakes.
Plants in our country continue to close. Belden is in the process of selling its west-Phoenix plant. The merger will result in the plant closing with about 740 employees losing their jobs. The plant makes overhead and underground copper phone cables and has not been profitable due to the declining market caused by the growth in cell phones and high-speed Internet.
In the month of March, the federal deficit jumped to $72.70 billion. For the six months ended March, the federal deficit almost reached $300 billion, a staggering number.
According to the energy department, the average price of gasoline at the pump is $1.83 per gallon. According to research by Kathleen Bostjancic, a senior economist at Merrill Lynch, consumers may spend as much as three-quarters of this year’s increase in tax refunds to fill their gas tanks should fuel prices hold at their present levels through June.
Question: Mr. President, who will you be handing the Iraqi government over to on June 30th?
The President: We will find that out soon.
With 2 ½ months to the June 30th transfer of sovereignty, and troops dying every day, Bush should know the answer to the aforementioned question.
The President was asked what the biggest mistake he has made in his life. He couldn’t answer or wouldn’t answer the question. I might have suggested drinking too much. Speaking from watching other drinkers, and very close-up, I have always believed drinking too much has been a reflection of certain character flaws that remain through life- even after the drinking has stopped.
In my view, George W. Bush will be remembered in the record books. He will be remembered as the worst president in the history of the United States. In the face of making one poor decision after another, in the face of misrepresenting facts to the American people, he has apologized for nothing. His administration has frequently proven a disgrace to the citizenry. Scrutiny is not kind to Bush.
According to the latest AP-Ipsos poll of 1,001 adults, 61% of Americans would prefer a balanced budget to a cut in taxes. Forty nine percent stated their overall tax burden, including federal, state, and local taxes, had gone up over the past three years. Compare this with 13 percent who stated their overall taxes had gone down. As Tom Artley, a 52-year-old supervisor at a manufacturing plant in Williamsport, Pa. stated, “every time you turn around, there’s a new gasoline tax, more property taxes, a library tax- because they don’t have enough money.” Twenty five percent of those polled stated their federal taxes had gone up over the past three years., while forty three percent stated they had remained the same.
President Bush: “Everybody who pays taxes ought to get relief if we’re going to get relief.” The Hummer tax cut is not relief for everybody.
John McCain: “We are going to have to ask for more money after the election, and it’s going to increase the deficit.” Actually, that’s not correct. You are going to have to ask for more money in about 60 days, when the government will have reached its debt limit. Bush has spent and spent, and the deficits have wiped out the surpluses developed in the Clinton years. Our country’s finances have not been in this sorry shape since the Depression. You have Bush to thank for this. Last year, corporate taxes fell to 7.4% of government receipts, versus 20.3% 40 years ago. One reason for the decline has been the rise in “corporate inversions” in which a new foreign entity, typically located in a no- or low-tax country, replaces a U.S. company as the parent corporation of the business. As Joel Friedman, senior fellow at the Center on Budget and Policy Priorities noted, “no one likes to pay taxes, but it goes down easier if you know your neighbor and the man across town are paying.” Facts clearly show that the Bush tax-law changes have not worked well for those whose income is derived largely from wages and salaries. Rather, they have lessened the tax burden on capital by reducing taxes on dividends and capital gains. Bush maintains his tax policy has spurred job creation. After careful analysis and speaking with each and every state, I am confident that, of the 308,000 nonfarm payroll jobs created in March, a total of 296,000 represented part-time employment. Average weekly hours fell by 0.1% in March. Work hours are a leading indicator of future job growth or decline. Wall Street may cheer part-time jobs but Main Street does not look on them favorably.
As for job creation, most permanent jobs have been added overseas. Dell is an excellent example. A year ago, 54.2% of Dell’s workers were in the U.S. Dell’s workforce grew 17.6% in 2003. As of January 30, 2004, 48.3% of Dell’s employees are in the U.S. A Dell spokesperson stated “we have great opportunities outside the U.S., and as such we have built our employee base in areas that best reflect our strong sales growth.”
U.N Secretary Kofi Annan: “Given the deteriorating situation and the violence on the ground…for the foreseeable future, insecurity is going to be a major constraint for us. And so I cannot say right now that I am going to be sending in a large U.N. team.” At least 84 U.S. troops have been killed in action in Iraq this month and another 560 wounded and two soldiers have been declared missing. The number wounded so far in April exceeds the total for any other full month of the war in this theatre by more than 220. In the first 13 days after the March 20, 2003 invasion of Iraq, a total of 77 U.S. troops were killed in action. Lt. Gen. Richard Cody, the Army’s deputy chief of staff, remarked yesterday “combat is a dirty, nasty business.” So is the theatre of politics. It’s not a question of staying the course. It’s not a question of providing another 14,000 of our troops to this war effort. I don’t believe for one second that “Americans serving in that country are protecting their fellow citizens.” I don’t believe that “the defeat of violence and terror in Iraq…is vital, therefore, to the safety of the American people.” Iraq has not possessed WPM in over 10 years, and not one entity or individual has proven otherwise, including Bush. In my view, while flying a flag of misspeaking, a country cannot serve the cause of liberty. The issue is not testing the will of the civilized world. The issue is dedicating the country to a cause worth serving, and that is first and foremost walking and marching in the light of the truth. While violating the truth, one cannot further freedom. To do otherwise, is to create burdens for this and future generations. Our shores will be a better place on November 3. The voters do understand the stakes.
Plants in our country continue to close. Belden is in the process of selling its west-Phoenix plant. The merger will result in the plant closing with about 740 employees losing their jobs. The plant makes overhead and underground copper phone cables and has not been profitable due to the declining market caused by the growth in cell phones and high-speed Internet.
In the month of March, the federal deficit jumped to $72.70 billion. For the six months ended March, the federal deficit almost reached $300 billion, a staggering number.
According to the energy department, the average price of gasoline at the pump is $1.83 per gallon. According to research by Kathleen Bostjancic, a senior economist at Merrill Lynch, consumers may spend as much as three-quarters of this year’s increase in tax refunds to fill their gas tanks should fuel prices hold at their present levels through June.
Question: Mr. President, who will you be handing the Iraqi government over to on June 30th?
The President: We will find that out soon.
With 2 ½ months to the June 30th transfer of sovereignty, and troops dying every day, Bush should know the answer to the aforementioned question.
The President was asked what the biggest mistake he has made in his life. He couldn’t answer or wouldn’t answer the question. I might have suggested drinking too much. Speaking from watching other drinkers, and very close-up, I have always believed drinking too much has been a reflection of certain character flaws that remain through life- even after the drinking has stopped.
Tuesday, April 13, 2004
4/13/04 Curbing Growth
Yesterday China grabbed the headlines. The People’s Bank of China continued in its effort to limit credit growth and to reduce financial credit risks. They increased the reserve requirement for financial institutions at the central bank from 7% to 7.5%. In sum, they reduced the amount of money available for lending. Last September the reserve ratio was raised from 6 to 7%. Unfortunately, the rise to 7% was ineffective. China’s M2 rose 19.4% in February, and this exceeded the central bank’s target of 17% for 2004. In my view, 17% is an invitation to economic dislocation. It leads to hyper-inflation, accentuated risks, and growth rates that are not sustainable. China’s oil imports rose by 35.7% during the first quarter. China’s copper imports more than doubled in February. Over-all fixed asset investment in China had a 27% rate of growth in 2003. With domestic capital spending accounting for 50% of China’s GDP in 2004, shortages in electricity and other infrastructure items will make the daily news. Other countries will pay the price for China’s overnight rush to convert from an agrarian to an industrial society. It is impossible to find jobs for hundreds of millions of farmers in their burgeoning cities. The infrastructure is not there to support the onslaught. Japan’s exports have found a home in China. GM’s cars have been received well and profits from China are heavy contributors to their auto division profits. Make no mistake. One way or another, the Chinese economy will slow down and domestic demand will be reduced. This will impact a Japan, a GM, and many other exporters into China. Much of the recent growth in the U.S. has been fueled by demand in the Asian countries, and China has been the greatest contributor.
Yesterday, Singapore shifted its currency policy to one “of modest and gradual appreciation.” It is the latest Asian central bank after the Bank of Korea to signal it will allow a stronger currency as the region’s economies expand. This follows anti-inflation currency measures in Australia, New Zealand, and Britain. In the fourth quarter, Singapore’s GDP expanded 4.9% from the year earlier period. In this year’s first quarter, their GDP expanded 7.3%. Even though inflation is presently muted in Singapore, they want to stay ahead of the curve and see that it remains muted. Maybe they learned from the difficulty China is having in the inflation department.
According to Deloitte Research’s Leading Index of Consumer Spending, the growth in U.S. consumer spending will likely continue in the summer, and be followed by a slow down in the fall. The expected decline in growth signifies the first deceleration in consumer spending since the spring 2003, and is largely a result of fewer tax deductions.
John Byrne, editor of Fast Company: “It may be that competitive organizations have no choice but to play the labor arbitrage game to survive. It may be that a new wave of innovation and creativity will lead to new industries and new jobs. But in the meantime, millions of smart, talented, diligent people are losing something, and that will change them and their families forever. Their loss should never be discounted, dismissed, or ignored.”
Dean Baker, co-director of the Center for Economic and Policy Research: “When people know that their jobs could go to India, they are in a difficult position pressing for higher wages.”
Water supplies are dwindling in parts of California, Idaho, Montana, New Mexico, Arizona, Colorado, Utah, and Nevada. Arizona is facing its worst drought on record. Two huge reservoirs on the Colorado River are but half full. This summer has the potential for terrible forest fires. There is no way at this time to adequately determine the impact on crops.
For the sixth consecutive month the International Energy Agency raised its forecast for global oil demand this year. With China’s oil imports surging, it’s tough to get a handle on world demand. Something has to give, and so far that something is price. The supply has barely kept up with daily world usage of 80 million barrels. We haven’t reached the peak summer demand. I underestimated the extent of China’s daily demand for oil. The world is paying the price. I will repeat myself. The American public needs to reduce their discretionary driving and to reduce the importation of Chinese goods.
One senior British officer, speaking on condition of anonymity: “The U.S. will have to abandon the sledgehammer-to-crack-a-nut approach- it has failed. They need to stop viewing every Iraqi, every Arab as the enemy and attempt to win the hearts and minds of the people.”
San Francisco Reserve Bank President Robert Parry stated Fed funds have the potential to rise to 3.%% if inflation averages 1 to 2%, and he believes inflation will probably run in the 1 to 1.5% range by next year. Prices on the supermarket shelves look a good deal differently than a rise of only 1 to 2%.
Northern Arizona University announced plans to eliminate 5 schools and cut staffing. The schools to be eliminated include the nationally known School of Hotel and Restaurant Management, The School of Forestry, and the College of Health Professions. The plan is to streamline the university and to save $1.4 million over the next four years and a larger amount after that.
According to the Commerce Department, from the fourth quarter of 2001 onward, companies have paid out only 20% of their profits in taxes. For the prior 10 years, the rate was around 30%. With our current deficits, do you think a 20% tax rate is sustainable? I don’t. Do you think government spending will be reduced before corporate tax rates rise?
Yesterday China grabbed the headlines. The People’s Bank of China continued in its effort to limit credit growth and to reduce financial credit risks. They increased the reserve requirement for financial institutions at the central bank from 7% to 7.5%. In sum, they reduced the amount of money available for lending. Last September the reserve ratio was raised from 6 to 7%. Unfortunately, the rise to 7% was ineffective. China’s M2 rose 19.4% in February, and this exceeded the central bank’s target of 17% for 2004. In my view, 17% is an invitation to economic dislocation. It leads to hyper-inflation, accentuated risks, and growth rates that are not sustainable. China’s oil imports rose by 35.7% during the first quarter. China’s copper imports more than doubled in February. Over-all fixed asset investment in China had a 27% rate of growth in 2003. With domestic capital spending accounting for 50% of China’s GDP in 2004, shortages in electricity and other infrastructure items will make the daily news. Other countries will pay the price for China’s overnight rush to convert from an agrarian to an industrial society. It is impossible to find jobs for hundreds of millions of farmers in their burgeoning cities. The infrastructure is not there to support the onslaught. Japan’s exports have found a home in China. GM’s cars have been received well and profits from China are heavy contributors to their auto division profits. Make no mistake. One way or another, the Chinese economy will slow down and domestic demand will be reduced. This will impact a Japan, a GM, and many other exporters into China. Much of the recent growth in the U.S. has been fueled by demand in the Asian countries, and China has been the greatest contributor.
Yesterday, Singapore shifted its currency policy to one “of modest and gradual appreciation.” It is the latest Asian central bank after the Bank of Korea to signal it will allow a stronger currency as the region’s economies expand. This follows anti-inflation currency measures in Australia, New Zealand, and Britain. In the fourth quarter, Singapore’s GDP expanded 4.9% from the year earlier period. In this year’s first quarter, their GDP expanded 7.3%. Even though inflation is presently muted in Singapore, they want to stay ahead of the curve and see that it remains muted. Maybe they learned from the difficulty China is having in the inflation department.
According to Deloitte Research’s Leading Index of Consumer Spending, the growth in U.S. consumer spending will likely continue in the summer, and be followed by a slow down in the fall. The expected decline in growth signifies the first deceleration in consumer spending since the spring 2003, and is largely a result of fewer tax deductions.
John Byrne, editor of Fast Company: “It may be that competitive organizations have no choice but to play the labor arbitrage game to survive. It may be that a new wave of innovation and creativity will lead to new industries and new jobs. But in the meantime, millions of smart, talented, diligent people are losing something, and that will change them and their families forever. Their loss should never be discounted, dismissed, or ignored.”
Dean Baker, co-director of the Center for Economic and Policy Research: “When people know that their jobs could go to India, they are in a difficult position pressing for higher wages.”
Water supplies are dwindling in parts of California, Idaho, Montana, New Mexico, Arizona, Colorado, Utah, and Nevada. Arizona is facing its worst drought on record. Two huge reservoirs on the Colorado River are but half full. This summer has the potential for terrible forest fires. There is no way at this time to adequately determine the impact on crops.
For the sixth consecutive month the International Energy Agency raised its forecast for global oil demand this year. With China’s oil imports surging, it’s tough to get a handle on world demand. Something has to give, and so far that something is price. The supply has barely kept up with daily world usage of 80 million barrels. We haven’t reached the peak summer demand. I underestimated the extent of China’s daily demand for oil. The world is paying the price. I will repeat myself. The American public needs to reduce their discretionary driving and to reduce the importation of Chinese goods.
One senior British officer, speaking on condition of anonymity: “The U.S. will have to abandon the sledgehammer-to-crack-a-nut approach- it has failed. They need to stop viewing every Iraqi, every Arab as the enemy and attempt to win the hearts and minds of the people.”
San Francisco Reserve Bank President Robert Parry stated Fed funds have the potential to rise to 3.%% if inflation averages 1 to 2%, and he believes inflation will probably run in the 1 to 1.5% range by next year. Prices on the supermarket shelves look a good deal differently than a rise of only 1 to 2%.
Northern Arizona University announced plans to eliminate 5 schools and cut staffing. The schools to be eliminated include the nationally known School of Hotel and Restaurant Management, The School of Forestry, and the College of Health Professions. The plan is to streamline the university and to save $1.4 million over the next four years and a larger amount after that.
According to the Commerce Department, from the fourth quarter of 2001 onward, companies have paid out only 20% of their profits in taxes. For the prior 10 years, the rate was around 30%. With our current deficits, do you think a 20% tax rate is sustainable? I don’t. Do you think government spending will be reduced before corporate tax rates rise?
Monday, April 12, 2004
4/12/04 Navigating Tricky Waters
When Wall Street’s opening bell rings this morning, Detroit Mayor Kwame Kilpatrick will be delivering his fiscal 2004-2005 budget address to the City Council. It’s not a pretty picture, and navigating the tricky waters flowing with a projected $263 million budget gap without cutting city workers, will require a magician’s slight of hand. On Friday, Sean Werdlow, Detroit’s chief financial officer, met with reporters to discuss a large drop in city revenues and the city’s precarious financial situation. In recent years, there has been a 14% decrease in the amount of income taxes the city has collected. Property taxes, the primary source of funds for most municipalities, account for only 11% of Detroit’s revenues. Two bond rating services have recently downgraded Detroit’s general obligation bonds. Kilpatrick has vowed not to layoff police and firefighters. Others will not be so lucky. I strongly suggest investors pay attention to Detroit’s woes and the woes in other cities. A National League of Cities survey of 328 cities found that 30% are laying off employees to help balance their budgets. You think this is business as usual? Rising pension and health care costs can only exacerbate the situation in the future. We are not looking at a one-time problem in our cities.
DuPont will cut 3,5000 jobs or 6% of its workforce.
Yesterday, Sen. John McCain suggested that, to pay for the war in Iraq, the Pentagon may have to scrap a $71 billion program to acquire F/A-22 fighter jets built by Lockheed Martin Corp. as part of a wider overhaul of U.S. spending priorities. McCain is an important member of the Armed Services Committee. He stated “we may have to cancel this airplane that’s going to cost between $250 million and $300 million a copy. We’ve got to change the way we do business and put the priority where it belongs. And that is making sure that we succeed in Iraq.” McCain believes the U.S. must increase the number of troops in Iraq as well as the size of the U.S. Army and Marine Corps. Overall to face up to the challenges in Iraq.
Lockheed Martin is the biggest U.S. defense contractor. The Pentagon inspector general stated this morning that the company delivered 50 C-130J transport aircraft to the U.S. Air Force with deficiencies. The planes, delivered at a cost of $2.6 billion, do not meet “operational requirements.” The C-130J can carry 128 combat troops, almost 40% more than the older model and can fly 21% faster. In February, the C-130J was criticized by the Pentagon’s department of weapons testing.
Corus Pharma is a 3-year-old company located in Seattle. They are developing drugs for cystic fibrosis and severe asthma. Their CEO Bruce Montgomery announced the receipt of $60 million in venture funding to further their work in developing aerosol formulations to combat the two aforementioned afflictions.
When Wall Street’s opening bell rings this morning, Detroit Mayor Kwame Kilpatrick will be delivering his fiscal 2004-2005 budget address to the City Council. It’s not a pretty picture, and navigating the tricky waters flowing with a projected $263 million budget gap without cutting city workers, will require a magician’s slight of hand. On Friday, Sean Werdlow, Detroit’s chief financial officer, met with reporters to discuss a large drop in city revenues and the city’s precarious financial situation. In recent years, there has been a 14% decrease in the amount of income taxes the city has collected. Property taxes, the primary source of funds for most municipalities, account for only 11% of Detroit’s revenues. Two bond rating services have recently downgraded Detroit’s general obligation bonds. Kilpatrick has vowed not to layoff police and firefighters. Others will not be so lucky. I strongly suggest investors pay attention to Detroit’s woes and the woes in other cities. A National League of Cities survey of 328 cities found that 30% are laying off employees to help balance their budgets. You think this is business as usual? Rising pension and health care costs can only exacerbate the situation in the future. We are not looking at a one-time problem in our cities.
DuPont will cut 3,5000 jobs or 6% of its workforce.
Yesterday, Sen. John McCain suggested that, to pay for the war in Iraq, the Pentagon may have to scrap a $71 billion program to acquire F/A-22 fighter jets built by Lockheed Martin Corp. as part of a wider overhaul of U.S. spending priorities. McCain is an important member of the Armed Services Committee. He stated “we may have to cancel this airplane that’s going to cost between $250 million and $300 million a copy. We’ve got to change the way we do business and put the priority where it belongs. And that is making sure that we succeed in Iraq.” McCain believes the U.S. must increase the number of troops in Iraq as well as the size of the U.S. Army and Marine Corps. Overall to face up to the challenges in Iraq.
Lockheed Martin is the biggest U.S. defense contractor. The Pentagon inspector general stated this morning that the company delivered 50 C-130J transport aircraft to the U.S. Air Force with deficiencies. The planes, delivered at a cost of $2.6 billion, do not meet “operational requirements.” The C-130J can carry 128 combat troops, almost 40% more than the older model and can fly 21% faster. In February, the C-130J was criticized by the Pentagon’s department of weapons testing.
Corus Pharma is a 3-year-old company located in Seattle. They are developing drugs for cystic fibrosis and severe asthma. Their CEO Bruce Montgomery announced the receipt of $60 million in venture funding to further their work in developing aerosol formulations to combat the two aforementioned afflictions.
Sunday, April 11, 2004
4/11/04 Tax Freedom Day and The Morass
Today has finally arrived. It’s when the average American has finally paid off their combined federal, state, and local taxes. It took 101 days in 2004 to achieve this end. We spent 36 days for income taxes, primarily at the federal level. Then there was 28 days for Social Security and Medicare. Another 16 days was spent towards sales and excise taxes. There were 11 days for local property taxes. We cannot forget the nine days for business taxes, and another two days for miscellaneous taxes. With rounding, the number exceeded 101. We need to make some changes. We spend more time working to pay taxes than working towards housing (66 days) and more than for health/medical care (51 days) or food and transportation (31 days each) or recreation (22 days). On average, we devote just five days to fund savings and investment accounts. We need to get real. We are funding the salaries of do-nothing politicians before we care for our own present and future well being. We are taxed for pork while we toil 101 days for nothing. It’s tough enough to get a job. It’s tough enough to get a full-time job. For 101 days our productivity goes for naught. I take that back. Let me give you some examples of what you are receiving for your tax dollars.
Cheney on March 16, 2003: “We will, in fact, be greeted as liberators.”
Rice: “We had a structural problem in the United States, and that structural problem was that we did not share domestic and foreign intelligence in a way to make a product for policy makers, for good reasons- for legal weapons, for cultural reasons- a product that people could depend upon.”
Adnan Pachachi sits on the 25-member Iraq Governing Council. He accompanied Laura Bush to this year’s State of the Union address in January. He has harshly criticized U.S. actions and stated “we consider the action carried out by U.S. forces illegal and totally unacceptable.”
Hachim Hassani represents the Iraqi Islamic Part on the Council. He stated “the coalition has opened too many fronts in Iraq, alienating a large swath of the population. The Iraqi people now equate democracy with bloodshed.”
Yesterday, Bush signed into law a bill providing about $80 billion in pension accounting relief through the end of 2005 for some 31,000 companies with traditional “defined benefit” pension plans covering about 35 million workers. The present formula for calculating pension contributions will be replaced, thus providing extra time to keep these plans afloat. In addition, another $1.6 billion in extra relief through waivers of payments for some steel companies and major U.S. commercial airlines, such as, UAL, was provided. Meanwhile, plans sponsored by more than one employer, such as those covering union workers (construction and trucking for example) were not assisted by the new legislation. There are 1,600 multi-employer plans covering 9 million workers. Once again, big business won out over the union worker. If the playing field is not made level, there will be trouble in this country.
According to WorkTrends 2004, a growing number of employees are looking to leave their present job. In fact, their recent report indicates “there is a weariness of it all from the survivors of the layoffs.” More workers are eyeing the door than at any point in the last 4 years. According to a Towers Perrin survey of 1,000 working Americans, less than half think they are receiving truthful information about their company’s financial status and business strategy. Just because businesses have stated they had to do more with less, doesn’t mean white-collar professionals will continue to work longer hours and receive the short end of the stick. In the fourth quarter of 2003, workers’ wages and benefits grew 0.7%, the smallest quarterly increase in a year. Meanwhile, corporate profits jumped in double digits. The party is over. The wake-up call has arrived. Top talent will jump ship to the highest bidder. Research has found that nearly one in three employees are job hunting, and nearly two out of three stated they would seriously consider another job offer. Dennis Ahlburg, associate dean of the Carlson School of Management at the University of Minnesota, stated “companies that have manipulated workers’ fear of losing their jobs are going to see much more turnover. Workers will say ‘this company screwed me in the downturn so I’m going to get out of here and find a company that will treat me right in good times and bad.’ It’s the best people who will be out the door if they have a sense of not being fairly treated in the last couple of years.”
America’s trade deficit hit a record monthly high of $43.1 billion in January. For all of 2003, the trade deficit stood at an all-time high of $489.9 billion. Exports fell to $89 billion in January, a 1.2% decrease from December. I guess the Bush administration weak dollar policy proved ineffective once again. Our exports to Japan, valued at $4 billion, were at the lowest level in a year. Our January trade deficit with China expanded to $11.5 billion, up from December’s $9.9 billion.
Steven Hess, lead U.S. analyst at Moody’s in New York: “Because the United States has the dollar and its role in the market, it can run a large account deficit for much longer than a Third World country could…we have huge problems over the long term, and will have to face them some day. If not, the United States will find itself in an unsustainable fiscal problem.” The morass looks pretty significant to me. Then again, why should I worry about our $4.1 trillion debt. We’re toiling for 101 days in 2004 so that we can run up a federal deficit of $520 billion. Are we schmucks or are we schmucks?
Ted Darnell. President, Starwood Real Estate Group: “In our world, it’s not about the acquisition. It’s about the exit. The opportunity funds are getting into it now and selling to the REITs two years from now. The exit is critical.” One could say that about the exit in stocks and bonds too.
Today has finally arrived. It’s when the average American has finally paid off their combined federal, state, and local taxes. It took 101 days in 2004 to achieve this end. We spent 36 days for income taxes, primarily at the federal level. Then there was 28 days for Social Security and Medicare. Another 16 days was spent towards sales and excise taxes. There were 11 days for local property taxes. We cannot forget the nine days for business taxes, and another two days for miscellaneous taxes. With rounding, the number exceeded 101. We need to make some changes. We spend more time working to pay taxes than working towards housing (66 days) and more than for health/medical care (51 days) or food and transportation (31 days each) or recreation (22 days). On average, we devote just five days to fund savings and investment accounts. We need to get real. We are funding the salaries of do-nothing politicians before we care for our own present and future well being. We are taxed for pork while we toil 101 days for nothing. It’s tough enough to get a job. It’s tough enough to get a full-time job. For 101 days our productivity goes for naught. I take that back. Let me give you some examples of what you are receiving for your tax dollars.
Cheney on March 16, 2003: “We will, in fact, be greeted as liberators.”
Rice: “We had a structural problem in the United States, and that structural problem was that we did not share domestic and foreign intelligence in a way to make a product for policy makers, for good reasons- for legal weapons, for cultural reasons- a product that people could depend upon.”
Adnan Pachachi sits on the 25-member Iraq Governing Council. He accompanied Laura Bush to this year’s State of the Union address in January. He has harshly criticized U.S. actions and stated “we consider the action carried out by U.S. forces illegal and totally unacceptable.”
Hachim Hassani represents the Iraqi Islamic Part on the Council. He stated “the coalition has opened too many fronts in Iraq, alienating a large swath of the population. The Iraqi people now equate democracy with bloodshed.”
Yesterday, Bush signed into law a bill providing about $80 billion in pension accounting relief through the end of 2005 for some 31,000 companies with traditional “defined benefit” pension plans covering about 35 million workers. The present formula for calculating pension contributions will be replaced, thus providing extra time to keep these plans afloat. In addition, another $1.6 billion in extra relief through waivers of payments for some steel companies and major U.S. commercial airlines, such as, UAL, was provided. Meanwhile, plans sponsored by more than one employer, such as those covering union workers (construction and trucking for example) were not assisted by the new legislation. There are 1,600 multi-employer plans covering 9 million workers. Once again, big business won out over the union worker. If the playing field is not made level, there will be trouble in this country.
According to WorkTrends 2004, a growing number of employees are looking to leave their present job. In fact, their recent report indicates “there is a weariness of it all from the survivors of the layoffs.” More workers are eyeing the door than at any point in the last 4 years. According to a Towers Perrin survey of 1,000 working Americans, less than half think they are receiving truthful information about their company’s financial status and business strategy. Just because businesses have stated they had to do more with less, doesn’t mean white-collar professionals will continue to work longer hours and receive the short end of the stick. In the fourth quarter of 2003, workers’ wages and benefits grew 0.7%, the smallest quarterly increase in a year. Meanwhile, corporate profits jumped in double digits. The party is over. The wake-up call has arrived. Top talent will jump ship to the highest bidder. Research has found that nearly one in three employees are job hunting, and nearly two out of three stated they would seriously consider another job offer. Dennis Ahlburg, associate dean of the Carlson School of Management at the University of Minnesota, stated “companies that have manipulated workers’ fear of losing their jobs are going to see much more turnover. Workers will say ‘this company screwed me in the downturn so I’m going to get out of here and find a company that will treat me right in good times and bad.’ It’s the best people who will be out the door if they have a sense of not being fairly treated in the last couple of years.”
America’s trade deficit hit a record monthly high of $43.1 billion in January. For all of 2003, the trade deficit stood at an all-time high of $489.9 billion. Exports fell to $89 billion in January, a 1.2% decrease from December. I guess the Bush administration weak dollar policy proved ineffective once again. Our exports to Japan, valued at $4 billion, were at the lowest level in a year. Our January trade deficit with China expanded to $11.5 billion, up from December’s $9.9 billion.
Steven Hess, lead U.S. analyst at Moody’s in New York: “Because the United States has the dollar and its role in the market, it can run a large account deficit for much longer than a Third World country could…we have huge problems over the long term, and will have to face them some day. If not, the United States will find itself in an unsustainable fiscal problem.” The morass looks pretty significant to me. Then again, why should I worry about our $4.1 trillion debt. We’re toiling for 101 days in 2004 so that we can run up a federal deficit of $520 billion. Are we schmucks or are we schmucks?
Ted Darnell. President, Starwood Real Estate Group: “In our world, it’s not about the acquisition. It’s about the exit. The opportunity funds are getting into it now and selling to the REITs two years from now. The exit is critical.” One could say that about the exit in stocks and bonds too.
Saturday, April 10, 2004
4/10/04 The Truth Does Not Cease Firing
Former Army Chief of Staff Gen. Eric Shinseki in his last year’s farewell speech: “Beware the 12-division strategy for a 10-division Army. Our soldiers and families bear the risk and the hardship of carrying a mission load that exceeds what force capabilities we can sustain, so we must alleviate risk and hardship by our willingness to resource the mission requirements.” According to Defense Department statistics, two soldiers died yesterday in Iraq. More than 200 U.S. personnel have been injured in combat in the last 24 hours. This week 42 U.S. soldiers have been killed in this war called Iraqi Freedom. This week our fighting troops incurred the biggest losses in such a short time since our March 2003 invasion. British Foreign Secretary Jack Straw stated “there is no doubt that the current situation is very serious, and it is the most serious that we have faced.” Yesterday, U.S. Central Command chief Gen. John Abizaid requested more forces for Iraq. About 3,300 U.S. troops have been wounded in combat since the war began. It was ill-advised for our Commander-in-Chief to leave mid-week for Crawford, Texas for an Easter holiday. The last time I checked the White House lawn was large enough for an Easter egg hunt.
The labor force in Santa Clara County, heart of the Silicon Valley, has declined to its lowest level in more than 8 years, according to the figures released Friday by the California EDD. Since August 2000, the latest labor pool statistics for the county shows there are 145,300 fewer people in the work force. In March, the number of people unemployed in the state of California rose by 28,000 over February.
Yesterday, Boeing stated that it reduced employment in the state of Washington by 194 in March. As of April 1, they employ 53,0333 in the state. In June 1998, Boeing employed 104,000 in the state. For close to three years, Boeing has experienced monthly employment declines.
In the past three months, non-petroleum import prices have risen at close to a 6% annual rate. Over the past year the CRB has risen by 40%. Toyota stated they would raise prices by up to $500 on certain models. In March, the Economic Cycle Research Institute’s Future Inflation Gauge increased from –2.2% to 3.3%. The one bright spot is the minimal increase in unit labor cost.
Yesterday the U.S. markets were closed. Many might have missed the new AP-Ipsos Consumer Confidence Index. From a reading of 97.7 in early March, it dropped this week to 84.8. The reading was the lowest since October, and only slightly higher than the 83.8 reading one year ago. The “jobs gauge” dropped to 100.3 in early April from 95.2 in March. Consumers’ feelings about economic expectations over the next six months fell to 90.5 in early April from 95.2 in March. April’s index reading was based on interviews with 1,000 adults about the economy.
Former Army Chief of Staff Gen. Eric Shinseki in his last year’s farewell speech: “Beware the 12-division strategy for a 10-division Army. Our soldiers and families bear the risk and the hardship of carrying a mission load that exceeds what force capabilities we can sustain, so we must alleviate risk and hardship by our willingness to resource the mission requirements.” According to Defense Department statistics, two soldiers died yesterday in Iraq. More than 200 U.S. personnel have been injured in combat in the last 24 hours. This week 42 U.S. soldiers have been killed in this war called Iraqi Freedom. This week our fighting troops incurred the biggest losses in such a short time since our March 2003 invasion. British Foreign Secretary Jack Straw stated “there is no doubt that the current situation is very serious, and it is the most serious that we have faced.” Yesterday, U.S. Central Command chief Gen. John Abizaid requested more forces for Iraq. About 3,300 U.S. troops have been wounded in combat since the war began. It was ill-advised for our Commander-in-Chief to leave mid-week for Crawford, Texas for an Easter holiday. The last time I checked the White House lawn was large enough for an Easter egg hunt.
The labor force in Santa Clara County, heart of the Silicon Valley, has declined to its lowest level in more than 8 years, according to the figures released Friday by the California EDD. Since August 2000, the latest labor pool statistics for the county shows there are 145,300 fewer people in the work force. In March, the number of people unemployed in the state of California rose by 28,000 over February.
Yesterday, Boeing stated that it reduced employment in the state of Washington by 194 in March. As of April 1, they employ 53,0333 in the state. In June 1998, Boeing employed 104,000 in the state. For close to three years, Boeing has experienced monthly employment declines.
In the past three months, non-petroleum import prices have risen at close to a 6% annual rate. Over the past year the CRB has risen by 40%. Toyota stated they would raise prices by up to $500 on certain models. In March, the Economic Cycle Research Institute’s Future Inflation Gauge increased from –2.2% to 3.3%. The one bright spot is the minimal increase in unit labor cost.
Yesterday the U.S. markets were closed. Many might have missed the new AP-Ipsos Consumer Confidence Index. From a reading of 97.7 in early March, it dropped this week to 84.8. The reading was the lowest since October, and only slightly higher than the 83.8 reading one year ago. The “jobs gauge” dropped to 100.3 in early April from 95.2 in March. Consumers’ feelings about economic expectations over the next six months fell to 90.5 in early April from 95.2 in March. April’s index reading was based on interviews with 1,000 adults about the economy.
Friday, April 09, 2004
4/9/04 Downsizing In The Workplace
William Baumol, Alan Blinder, and Edward Wolff have written a new book entitled “Downsizing in America.” The authors make some important observations. They stated that, of the 100 million men and women with full-time jobs in 2001, more than half earned less than $35,000; 84% earned under $65,000; 10% made between $65,000 and $100,000; and only 5.7% made above $100,000. In addition, they note that, in two-thirds of households with wage earners, the workers hold two or more jobs. For families with children, two-thirds of the mothers work. However, fewer than half the households have adults with two full-time jobs. There are serious implications resulting from the trends towards less full-time jobs, the average weekly work hours declining, weekly paychecks declining, and benefits dwindling.
House Democratic Leader Nancy Pelosi: “The Republican leadership in the House refuses to schedule a vote on the bipartisan Crane-Rangel manufacturing bill, which would lower taxes for American manufacturers and keep good paying jobs in the United States. The Bush Administration needs to take concrete action to level the playing field with China, give our manufacturers the tax relief they deserve, and reward those companies that create jobs here in America, rather than sending them overseas.”
The United States Senate passed a bill that did not provide meaningful relief for all pension plans. They excluded multi-employer plans covering 10 million working Americans. Only twelve Democrats and seven Republicans voted against this legislation. Why should the retirement security of union workers covered by multi-employer plans be treated differently from others in the workplace? Is this a sign of compassionate conservatism? Maybe the failure to extend unemployment benefits for millions of Americans is a sign of compassionate conservatism on the part of the administration.
Sen. Don Nickles, a Republican from Oklahoma, chairs the Senate Budget Committee. As previously discussed, Brian Roseboro, acting under secretary for domestic finance, stated in February that the nation’s debt limit of $7.384 trillion would need to be raised sometime around June or so. Nickles and his committee have been discussing a plan for a limited debate in which the debt limit would be increased by $664 billion. In other words, we can downsize the quality and the amount of jobs in the workplace while we upsize governmental spending and the nation’s debts. That sounds like a great recipe for disaster. I hope the voters have an intelligent exit strategy.
According to a new report from the business intelligence firm Cutting Edge Information, only one out of every 1,000 drug candidates that make it to pre-clinical development is deemed promising enough to advance to human clinical trials. On average, commercial spending for pre-clinical drugs reaches $1.5 million. Cutting Edge stated “marketing spending from pre-clinical through Phase IIIa comprises 21% of total commercial spending. Launch, Phase IIIb, and Phase IV account for 79% of all marketing dollars.”
According to the Association of Hispanic Advertising Agencies (AHAA), the Hispanic advertising industry grew almost 10% in 2003 and is expected to grow further in 2004. While Hispanics represent 13% of the U.S. population, the Hispanic market receives only about 3.2% of total advertising spending. However, Hispanics have a buying power estimated at more than $630 billion.
The Travel Industry Association of America’s study found that Hispanic travel increased by 20% from 200-2002 and is growing 10 times the overall rate for the traveling population as a whole. The TIAA study indicated that 33% of all Hispanic trips included three or more people from the same household. Hispanics are significantly more likely to use bus and rail transportation for travel. Approximately 15% of Hispanic households spends $1,000 or more on trips, over and beyond transportation to their destination. In addition, 34% state shopping is the favored activity for Hispanic travelers.
Microsoft CEO Steve Ballmer: “I think that as long as there are a handful or less of operating systems that are popular, hackers will figure out how to attack each and every one of them, because there will be a profit to be made, national security interests to be pursued, and mischief to be done.”
The U.S. military announced that six troops died Wednesday and yesterday, bringing to at least 36 the number killed in combat since Sunday in Iraq.
Bush received a classified briefing from the CIA on Aug. 6, 2001 entitled “Bin Laden determined to attack inside the United States.” Rice stated she was not briefed prior to 9/11 about terrorists’ plans to use airplanes as missiles before 9/11. In fact, there were 12 previous intelligence reports and one explicitly stated “Islamic terrorists might attempt to kill world leaders by crashing an airliner.” In January 2004, Rice told the 9/11 Commission she “regretted” her earlier denials and did “misspeak.” However, on March 22, Rice wrote in the Washington Post “we received no intelligence that terrorists were preparing to attack the homeland using airplanes as missiles.” Misspeaking must be a virus within administration inner circles.
Due to the upcoming merger of Giant Food and Stop & Shop Supermarket, 650 employees at Giant’s Landover headquarters will be either cut or relocated. The cuts will be completed by the end of May.
Infosys Technologies of Bangalore, a large Indian outsourcing firm, will invest $20 million to create Infosys Consulting . They plan to hire 500 workers at its Fremont, California headquarters and other locations over the next three years.
Boeing is considering selling its fuselage and cockpit assembly plant in Wichita and facilities in Tulsa and McAlaster, Oklahoma. The company employs 12,400 in this region. Boeing continues in its efforts to downsize.
William Baumol, Alan Blinder, and Edward Wolff have written a new book entitled “Downsizing in America.” The authors make some important observations. They stated that, of the 100 million men and women with full-time jobs in 2001, more than half earned less than $35,000; 84% earned under $65,000; 10% made between $65,000 and $100,000; and only 5.7% made above $100,000. In addition, they note that, in two-thirds of households with wage earners, the workers hold two or more jobs. For families with children, two-thirds of the mothers work. However, fewer than half the households have adults with two full-time jobs. There are serious implications resulting from the trends towards less full-time jobs, the average weekly work hours declining, weekly paychecks declining, and benefits dwindling.
House Democratic Leader Nancy Pelosi: “The Republican leadership in the House refuses to schedule a vote on the bipartisan Crane-Rangel manufacturing bill, which would lower taxes for American manufacturers and keep good paying jobs in the United States. The Bush Administration needs to take concrete action to level the playing field with China, give our manufacturers the tax relief they deserve, and reward those companies that create jobs here in America, rather than sending them overseas.”
The United States Senate passed a bill that did not provide meaningful relief for all pension plans. They excluded multi-employer plans covering 10 million working Americans. Only twelve Democrats and seven Republicans voted against this legislation. Why should the retirement security of union workers covered by multi-employer plans be treated differently from others in the workplace? Is this a sign of compassionate conservatism? Maybe the failure to extend unemployment benefits for millions of Americans is a sign of compassionate conservatism on the part of the administration.
Sen. Don Nickles, a Republican from Oklahoma, chairs the Senate Budget Committee. As previously discussed, Brian Roseboro, acting under secretary for domestic finance, stated in February that the nation’s debt limit of $7.384 trillion would need to be raised sometime around June or so. Nickles and his committee have been discussing a plan for a limited debate in which the debt limit would be increased by $664 billion. In other words, we can downsize the quality and the amount of jobs in the workplace while we upsize governmental spending and the nation’s debts. That sounds like a great recipe for disaster. I hope the voters have an intelligent exit strategy.
According to a new report from the business intelligence firm Cutting Edge Information, only one out of every 1,000 drug candidates that make it to pre-clinical development is deemed promising enough to advance to human clinical trials. On average, commercial spending for pre-clinical drugs reaches $1.5 million. Cutting Edge stated “marketing spending from pre-clinical through Phase IIIa comprises 21% of total commercial spending. Launch, Phase IIIb, and Phase IV account for 79% of all marketing dollars.”
According to the Association of Hispanic Advertising Agencies (AHAA), the Hispanic advertising industry grew almost 10% in 2003 and is expected to grow further in 2004. While Hispanics represent 13% of the U.S. population, the Hispanic market receives only about 3.2% of total advertising spending. However, Hispanics have a buying power estimated at more than $630 billion.
The Travel Industry Association of America’s study found that Hispanic travel increased by 20% from 200-2002 and is growing 10 times the overall rate for the traveling population as a whole. The TIAA study indicated that 33% of all Hispanic trips included three or more people from the same household. Hispanics are significantly more likely to use bus and rail transportation for travel. Approximately 15% of Hispanic households spends $1,000 or more on trips, over and beyond transportation to their destination. In addition, 34% state shopping is the favored activity for Hispanic travelers.
Microsoft CEO Steve Ballmer: “I think that as long as there are a handful or less of operating systems that are popular, hackers will figure out how to attack each and every one of them, because there will be a profit to be made, national security interests to be pursued, and mischief to be done.”
The U.S. military announced that six troops died Wednesday and yesterday, bringing to at least 36 the number killed in combat since Sunday in Iraq.
Bush received a classified briefing from the CIA on Aug. 6, 2001 entitled “Bin Laden determined to attack inside the United States.” Rice stated she was not briefed prior to 9/11 about terrorists’ plans to use airplanes as missiles before 9/11. In fact, there were 12 previous intelligence reports and one explicitly stated “Islamic terrorists might attempt to kill world leaders by crashing an airliner.” In January 2004, Rice told the 9/11 Commission she “regretted” her earlier denials and did “misspeak.” However, on March 22, Rice wrote in the Washington Post “we received no intelligence that terrorists were preparing to attack the homeland using airplanes as missiles.” Misspeaking must be a virus within administration inner circles.
Due to the upcoming merger of Giant Food and Stop & Shop Supermarket, 650 employees at Giant’s Landover headquarters will be either cut or relocated. The cuts will be completed by the end of May.
Infosys Technologies of Bangalore, a large Indian outsourcing firm, will invest $20 million to create Infosys Consulting . They plan to hire 500 workers at its Fremont, California headquarters and other locations over the next three years.
Boeing is considering selling its fuselage and cockpit assembly plant in Wichita and facilities in Tulsa and McAlaster, Oklahoma. The company employs 12,400 in this region. Boeing continues in its efforts to downsize.
Thursday, April 08, 2004
4/8/04 Back To The Future And The Present
This year the budget deficit of $521 billion will exceed 4% of the GDP. In 1988, the budget deficit was 3.1% of our GDP. In 1988, the Business Roundtable stated the budget deficit “posed a major threat to sustained economic growth.”
In the last 24 months, freight rates for the Asia-U.S.A. route have jumped 29% and rates between Asia and Europe have climbed 54% during this period.
Penny de Valk, a director of Ceridian in the UK: “Employers need to include the eldercare needs of employees in their work/life strategies now or risk a generation of workers who will cost their businesses billions in lost productivity and stress.”
Yesterday, Moody’s raised its rating on non-yen government bonds. Last month, Japan’s foreign exchange reserves rose by about $50 billion to a record $827 billion.
For the last week, the Labor Department stated 31 states and territories reported a decrease in new unemployment claims and that 22 reported an increase. It should be noted that, last week about 80,000 previously counted as unemployed, were dropped from those unemployment rolls due to the loss of benefits.
When jobs are outsourced and jobs leave our country, there are less employee tax contributions to Social Security, Medicare, workers’ compensation, and other payroll-deduction funds. Some argue that the net impact is to harm tax coffers. It should be noted, for example, that corporate profits do not make their way into Social Security. It might be wise to understand the pluses and minuses of outsourcing and offshoring.
The Citizens Against Government Waste released their annual “Pig Book” yesterday. The organization stated that 10,656 pork projects were included in the 13 appropriations bills outlining federal spending for 2004, a 13% increase over 2003. There is a record $22.9 billion spending on so-called earmarks for members. I suggest we dismember the members earmarking pork projects. The voters need to act responsibly in the voting booth.
According to an annual AAA study, the average cost of driving a new passenger car in 2004 is 56.2 cents per mile or $8,431 per year. The largest component of the vehicle cost is depreciation estimated at $3,782 per year of ownership for an average new car. The IRS tax allowance for business mileage is currently 37.5 cents per mile.
According to the Cambridge Credit Index, nearly seven out of ten Americans who already have received or anticipate receiving a tax refund this tax season plan to spend it on everyday items or pay bills, up from 59% in 2003. Only 23% plan to save their refunds in their bank accounts, down from 27% in the prior year. Only 4% plan to invest the refund in stocks, bonds, or mutual funds, the same percentage as in 2003.
There is an increasing number of workers having to settle for part-time employment. This has implications for the average weekly paycheck, the average weekly hours worked, the lack of benefits, and other critical matters. When the workplace cannot accommodate the number of workers entering the labor force, it would behoove us to re-think our structural make-up. While we make war in Iraq, Mexico is creating a trade accord with Japan, India is creating business alliances with China, and other global unions are being formed. This administration lacks business- negotiating skills and our exports are suffering. U.S. plants are constructed outside of our borders. Plants are closing within our borders. Change is required, and it must happen quickly.
This year the budget deficit of $521 billion will exceed 4% of the GDP. In 1988, the budget deficit was 3.1% of our GDP. In 1988, the Business Roundtable stated the budget deficit “posed a major threat to sustained economic growth.”
In the last 24 months, freight rates for the Asia-U.S.A. route have jumped 29% and rates between Asia and Europe have climbed 54% during this period.
Penny de Valk, a director of Ceridian in the UK: “Employers need to include the eldercare needs of employees in their work/life strategies now or risk a generation of workers who will cost their businesses billions in lost productivity and stress.”
Yesterday, Moody’s raised its rating on non-yen government bonds. Last month, Japan’s foreign exchange reserves rose by about $50 billion to a record $827 billion.
For the last week, the Labor Department stated 31 states and territories reported a decrease in new unemployment claims and that 22 reported an increase. It should be noted that, last week about 80,000 previously counted as unemployed, were dropped from those unemployment rolls due to the loss of benefits.
When jobs are outsourced and jobs leave our country, there are less employee tax contributions to Social Security, Medicare, workers’ compensation, and other payroll-deduction funds. Some argue that the net impact is to harm tax coffers. It should be noted, for example, that corporate profits do not make their way into Social Security. It might be wise to understand the pluses and minuses of outsourcing and offshoring.
The Citizens Against Government Waste released their annual “Pig Book” yesterday. The organization stated that 10,656 pork projects were included in the 13 appropriations bills outlining federal spending for 2004, a 13% increase over 2003. There is a record $22.9 billion spending on so-called earmarks for members. I suggest we dismember the members earmarking pork projects. The voters need to act responsibly in the voting booth.
According to an annual AAA study, the average cost of driving a new passenger car in 2004 is 56.2 cents per mile or $8,431 per year. The largest component of the vehicle cost is depreciation estimated at $3,782 per year of ownership for an average new car. The IRS tax allowance for business mileage is currently 37.5 cents per mile.
According to the Cambridge Credit Index, nearly seven out of ten Americans who already have received or anticipate receiving a tax refund this tax season plan to spend it on everyday items or pay bills, up from 59% in 2003. Only 23% plan to save their refunds in their bank accounts, down from 27% in the prior year. Only 4% plan to invest the refund in stocks, bonds, or mutual funds, the same percentage as in 2003.
There is an increasing number of workers having to settle for part-time employment. This has implications for the average weekly paycheck, the average weekly hours worked, the lack of benefits, and other critical matters. When the workplace cannot accommodate the number of workers entering the labor force, it would behoove us to re-think our structural make-up. While we make war in Iraq, Mexico is creating a trade accord with Japan, India is creating business alliances with China, and other global unions are being formed. This administration lacks business- negotiating skills and our exports are suffering. U.S. plants are constructed outside of our borders. Plants are closing within our borders. Change is required, and it must happen quickly.
Wednesday, April 07, 2004
4/7/04 A Portfolio Addition
I often lose track of time. It’s been about two years since turning bearish on the U.S dollar and adding New Zealand dollars to the portfolio. Several months ago, we added an initial position in the rupee. I am suggesting we take a significant long-term holding in the rupee. Yesterday, some of our thoughts were reinforced by Moody’s Investors Service stating that India’s economy is likely to grow at a 6.5% rate in the coming years. Just three months ago, the credit service gave India an investment-grade rating for the first time. Their report remarked “even at ‘just’ 6.5%, India is likely to attract much more capital going forward than has been the case historically.” India’s foreign reserves topped $112 billion U.S., nearly twice the amount the country spends on funding its annual imports, according to the latest estimates from the central bank. However, a word of caution is necessary. The consolidated gross debt of India’s federal and state governments has increased to around 85% of GDP, Moody’s stated. It should also be noted that S&P, which had revised the outlook for foreign currency rating of India from “negative” to “stable” due to the country’s improved macro-economic fundamentals, however, continued to accord India only a “sub-investment” grade status.
Mumbai-based State Bank of India, the country’s largest bank, is looking to take a major step. The bank is in the process of acquiring a bank in the U.S. It would be a first for an Indian financial institution.
IBM signed a deal late last night to acquire Daksh e-services Pvt Ltd, India’s third-largest business outsourcing firm. Delhi-based Daksh employs more than 6,000 people and offers call centers. They have more than 10 clients, including Amazon.
According to a new AARP study, 40% of all people in business for themselves are older than 50. Among self-employed workers age 51 and older, 34% have employer-provided health insurance compared with 67% of wage and salary workers of the same age.
A recent CIBC World Markets report stated “not only are better quality jobs being lost, but those without them are finding it harder to get back to work.” The result, the report observed, is that U.S. workers are either turning to self-employment options or are settling for whatever they can get in terms of paid employment.
The IBD and TechnoMetrica Market Intelligence survey stated their optimism index fell to 52.8 in April from 54.5 in March, the third straight monthly drop. The president of TIPP stated “most Americans continue to be very optimistic, but in about 30% of households, someone has either lost a job in the past 12 months or fears they might lose a job in the next 12 months.” The six-month economic outlook lost 3.1 points to 50.5.
Challenger, Gray & Christmas stated planned job cuts decreased to 68,034 in March compared with 77,250 in February. John Challenger remarked “the heavy job cutting we have seen over the past three years appears to be trending down. However, the job market seems to be in a state of limbo, where companies are eager to hold on to the people they have, but many are reluctant to create any jobs. Employers know they are far better off with a seasoned, senior staff versus the cost of acquiring and training replacements in a period when the customer is king.”
Blockbuster introduced the prepaid gift card in 1996. According to TowerGroup Research, over 92% of consumers are aware of the product. In the past year, gift card dollar volume grew 50% to $45 billion in sales. TowerGroup projects significant growth for gift cards to more than $90 billion in sales in 2007.
Gasoline at the pump reached a new all-time high of $1.77 per gallon.
Nokia warned that first quarter sales would decline 2% and that earnings would come in at the low point of the previously forecast range. With Nokia the cell phone leader, their projected sales decline should create some doubt about current valuations in the industry.
Yesterday, 18 of our soldiers were killed in Iraq. The administration has dubbed our effort Iraqi Freedom. If we close down a newspaper, do we further the cause of freedom? It is not surprising to see the reactions of the insurgents. Ted Kennedy spoke at the Brookings Institution, and stated Iraq has become “George Bush’s Vietnam” and that “this president has now created the largest credibility gap since Richard Nixon. He has broken the basic bond of trust with the American people…in this administration, truth is the first casualty of policy.” We should not forget the 18 casualties from Tuesday and the 610 before them.
Hans Blix told a Danish newspaper that the costs of the Iraq war outweighed the benefits of removing Saddam Hussein and “it’s positive that Saddam and his bloody regime is gone, but when one weighs the costs, it’s clearly the negative aspects that dominate.” I concur.
The EU warned that Germany, France, Italy, the Netherlands, Portugal, and Greece, representing 80% of the $8.5 trillion euro economy, will exceed the debt limit of 3% of GDP. In the U.S. our debt has a limit but not as a percentage of GDP. As stated yesterday, our debt limit will be reached shortly. Hopefully, the Congress will vote not to raise the current level of debt. Our president does not have married children and does not have grandchildren. As such, he may not fully appreciate current debts handed to the next generation.
I often lose track of time. It’s been about two years since turning bearish on the U.S dollar and adding New Zealand dollars to the portfolio. Several months ago, we added an initial position in the rupee. I am suggesting we take a significant long-term holding in the rupee. Yesterday, some of our thoughts were reinforced by Moody’s Investors Service stating that India’s economy is likely to grow at a 6.5% rate in the coming years. Just three months ago, the credit service gave India an investment-grade rating for the first time. Their report remarked “even at ‘just’ 6.5%, India is likely to attract much more capital going forward than has been the case historically.” India’s foreign reserves topped $112 billion U.S., nearly twice the amount the country spends on funding its annual imports, according to the latest estimates from the central bank. However, a word of caution is necessary. The consolidated gross debt of India’s federal and state governments has increased to around 85% of GDP, Moody’s stated. It should also be noted that S&P, which had revised the outlook for foreign currency rating of India from “negative” to “stable” due to the country’s improved macro-economic fundamentals, however, continued to accord India only a “sub-investment” grade status.
Mumbai-based State Bank of India, the country’s largest bank, is looking to take a major step. The bank is in the process of acquiring a bank in the U.S. It would be a first for an Indian financial institution.
IBM signed a deal late last night to acquire Daksh e-services Pvt Ltd, India’s third-largest business outsourcing firm. Delhi-based Daksh employs more than 6,000 people and offers call centers. They have more than 10 clients, including Amazon.
According to a new AARP study, 40% of all people in business for themselves are older than 50. Among self-employed workers age 51 and older, 34% have employer-provided health insurance compared with 67% of wage and salary workers of the same age.
A recent CIBC World Markets report stated “not only are better quality jobs being lost, but those without them are finding it harder to get back to work.” The result, the report observed, is that U.S. workers are either turning to self-employment options or are settling for whatever they can get in terms of paid employment.
The IBD and TechnoMetrica Market Intelligence survey stated their optimism index fell to 52.8 in April from 54.5 in March, the third straight monthly drop. The president of TIPP stated “most Americans continue to be very optimistic, but in about 30% of households, someone has either lost a job in the past 12 months or fears they might lose a job in the next 12 months.” The six-month economic outlook lost 3.1 points to 50.5.
Challenger, Gray & Christmas stated planned job cuts decreased to 68,034 in March compared with 77,250 in February. John Challenger remarked “the heavy job cutting we have seen over the past three years appears to be trending down. However, the job market seems to be in a state of limbo, where companies are eager to hold on to the people they have, but many are reluctant to create any jobs. Employers know they are far better off with a seasoned, senior staff versus the cost of acquiring and training replacements in a period when the customer is king.”
Blockbuster introduced the prepaid gift card in 1996. According to TowerGroup Research, over 92% of consumers are aware of the product. In the past year, gift card dollar volume grew 50% to $45 billion in sales. TowerGroup projects significant growth for gift cards to more than $90 billion in sales in 2007.
Gasoline at the pump reached a new all-time high of $1.77 per gallon.
Nokia warned that first quarter sales would decline 2% and that earnings would come in at the low point of the previously forecast range. With Nokia the cell phone leader, their projected sales decline should create some doubt about current valuations in the industry.
Yesterday, 18 of our soldiers were killed in Iraq. The administration has dubbed our effort Iraqi Freedom. If we close down a newspaper, do we further the cause of freedom? It is not surprising to see the reactions of the insurgents. Ted Kennedy spoke at the Brookings Institution, and stated Iraq has become “George Bush’s Vietnam” and that “this president has now created the largest credibility gap since Richard Nixon. He has broken the basic bond of trust with the American people…in this administration, truth is the first casualty of policy.” We should not forget the 18 casualties from Tuesday and the 610 before them.
Hans Blix told a Danish newspaper that the costs of the Iraq war outweighed the benefits of removing Saddam Hussein and “it’s positive that Saddam and his bloody regime is gone, but when one weighs the costs, it’s clearly the negative aspects that dominate.” I concur.
The EU warned that Germany, France, Italy, the Netherlands, Portugal, and Greece, representing 80% of the $8.5 trillion euro economy, will exceed the debt limit of 3% of GDP. In the U.S. our debt has a limit but not as a percentage of GDP. As stated yesterday, our debt limit will be reached shortly. Hopefully, the Congress will vote not to raise the current level of debt. Our president does not have married children and does not have grandchildren. As such, he may not fully appreciate current debts handed to the next generation.
Tuesday, April 06, 2004
4/6/04 Micro and Macro
Almost on a daily basis, I receive emails describing my macro views and their applicability for long-term investing; however, I’m told, since I avoid micro analysis, my musings are not particularly helpful for day-to-day and hour-to-hour and minute-to-minute traders. There is probably some truth to that theory. I am not a trader. I am an investor. The problem is most money managers manage other people’s money and not their own. They feel the pressure to perform each day. I have an intense desire to perform each day to the best of my abilities. I know my daily performance. I also attempt to position myself for the long term by anticipating future happenings and trends. I try to focus on my strengths and avoid the pitfalls. There are some who are excellent at minute-to-minute trading. However, few are successful at that endeavor. Investing for the long-term generally produces more satisfying results. This discussion is timely and brings into view today’s article in the Financial Times by Francis Bator, professor emeritus of political economy at Harvard’s Kennedy School. Entitled “Tax cuts will not rescue America,” he discussed Bush’s desire to make his tax cuts permanent. Bator states “the planned future tax cuts also pose a danger in the shorter term. The tax cuts unmatched by cuts in government consumption, together with high interest rates to prevent inflation, may not be a sustainable policy combination. Because high U.S. interest rates tend to cause the dollar to appreciate, they are likely to make an already large trade deficit larger. If borrowing to pay for the resulting excess of imports over exports means that our foreign debt keeps increasing faster than gross domestic product, our creditors are likely to get nervous. Should they try to reduce their holdings of dollar debt, or even to cut back on new lending, they might inadvertently set in motion a speculative run from the dollar.” Bator makes a point I share with great enthusiasm. He observes “barring a supply-side miracle, the president’s future tax cuts will shift the composition of spending in favor of consumption and against national investment. As a result, the economy’s capacity to produce output for our own use will grow more slowly.”
Our economy is producing output for our own use more slowly. Other nations produce for us. Our imports have swelled with the rise in our consumption, and with it, our debt levels have surged. It doesn’t matter whether one believes this is a macro or a micro view. It will have short and long-term implications. Why? The nation’s growing shift to consumption has created the rise in service sector jobs. Of the 308,000 net jobs created in March, 230,000 were in the service sector. Those are jobs at Wal-Mart, Starbucks, Walgreens, McDonald’s, Marriott, Krispy Kreme, and the like. These are not jobs at GM or IBM. I am not putting down the 1.4 million associates at Wal-Mart. However, service sector jobs, in general, pay lower wages, provide less benefits, contain less weekly hours worked, and often are characterized by greater turnover. Service sector jobs comprise 75 to 80 percent of our nation’s employment. Does this fact have an impact on micro investing? Think about it. How does it create pressures to perform? It leads to cost cutting. It leads to lower levels of investment. Wal-Mart invests heavily in IT but not in store infrastructure. They are described as big box stores. Let’s look at Arkansas in March. The state’s manufacturing base continued to decline; however, overall, the number of unemployed was down 700 from February. Of the net jobs created, food services accounted for 65% of that jump. Leisure and hospitality were also strong.
I often talk about the lack of pricing power. You have a bad situation in the auto industry. The automakers reported a March surge in buying by consumers. The companies need to rid themselves of inflated inventories. So far this year, incentives are up 35% while sales are up 4%. Would you want to own a business like that? If you invest in GM, Ford, or Chrysler, you are an owner. According to Autodata Corp., GM’s average incentives rose 42% to $4,226 per vehicle. In the first three months of 2002, GM’s market share was 28.3%. Today it is 26.8%. Toyota offers much less incentives and their market share has consistently been rising.
I write often of the budget gaps experienced by our states. California has the largest budget gap at $14 billion. I write about teacher layoffs. Today we have something a bit different. The 45-year-old School of Engineering program at SF State University has grown by nearly 50% since fall 2001 to 700 students with 17 faculty members. The University has a $14 million budget gap. Nothing has been decided, but there is a proposal by administrators to close the engineering program. The School of Business is also facing cuts. As one of the school officials stated, “we are going through unprecedented times…it is very painful. We are not used to cutting programs. We are used to adding programs.” Do unprecedented times have an impact on minute-to-minute trading? If we graduate less engineers and business professionals, will that impact the S&P futures? Why should a Wall Street broker worry when they earn $150,000 a year from commissions? Why should a mutual fund manager worry? It won’t impact his or her continued lack of performance. They rarely get replaced.
Drugstores control 46% of the pharmacy industry. Walgreens and CVS are the two giants. If you look at the record for Walgreens over the past 25 years, you would think they are a growth tech stock. With uninterrupted multi-decade growth, the company is one of the under appreciated investment vehicles. Wal-Mart has learned to appreciate the value of its pharmacy operations and the profitability of generics. With the aging of the population, this sector has a promising future. Will it impact today’s trading? That’s another story.
As an investor, should you care that unemployment in Germany rose by 44,000 in March, and that it was the third consecutive monthly rise? One of the Chancellor’s advisors stated “I don’t see any reason why companies should feel inclined to resume hiring.” I don’t see any reason why manufacturers in the U.S. should resume hiring. It’s been almost four years since that happened. On the other hand, we produced a great many service sector jobs in March. I call them paycheck to paycheck jobs. It beats the unemployment rolls.
I hope everyone cares that 5 more American soldiers were killed today in the Anbar province of Iraq. The killing is escalating. Does this impact the Nasdaq futures? Does anyone care that, in the next few days, there will be $50 to $100 million in budget cuts in the metro Atlanta school system? Atlanta does not have an approved budget for their new fiscal year beginning July 1. By the way, in another 30 to 60 days our government will need to raise the debt limit for the third year in succession. Wouldn’t it be great if the government offices ground to a halt. It probably wouldn’t impact the S&P.
Almost on a daily basis, I receive emails describing my macro views and their applicability for long-term investing; however, I’m told, since I avoid micro analysis, my musings are not particularly helpful for day-to-day and hour-to-hour and minute-to-minute traders. There is probably some truth to that theory. I am not a trader. I am an investor. The problem is most money managers manage other people’s money and not their own. They feel the pressure to perform each day. I have an intense desire to perform each day to the best of my abilities. I know my daily performance. I also attempt to position myself for the long term by anticipating future happenings and trends. I try to focus on my strengths and avoid the pitfalls. There are some who are excellent at minute-to-minute trading. However, few are successful at that endeavor. Investing for the long-term generally produces more satisfying results. This discussion is timely and brings into view today’s article in the Financial Times by Francis Bator, professor emeritus of political economy at Harvard’s Kennedy School. Entitled “Tax cuts will not rescue America,” he discussed Bush’s desire to make his tax cuts permanent. Bator states “the planned future tax cuts also pose a danger in the shorter term. The tax cuts unmatched by cuts in government consumption, together with high interest rates to prevent inflation, may not be a sustainable policy combination. Because high U.S. interest rates tend to cause the dollar to appreciate, they are likely to make an already large trade deficit larger. If borrowing to pay for the resulting excess of imports over exports means that our foreign debt keeps increasing faster than gross domestic product, our creditors are likely to get nervous. Should they try to reduce their holdings of dollar debt, or even to cut back on new lending, they might inadvertently set in motion a speculative run from the dollar.” Bator makes a point I share with great enthusiasm. He observes “barring a supply-side miracle, the president’s future tax cuts will shift the composition of spending in favor of consumption and against national investment. As a result, the economy’s capacity to produce output for our own use will grow more slowly.”
Our economy is producing output for our own use more slowly. Other nations produce for us. Our imports have swelled with the rise in our consumption, and with it, our debt levels have surged. It doesn’t matter whether one believes this is a macro or a micro view. It will have short and long-term implications. Why? The nation’s growing shift to consumption has created the rise in service sector jobs. Of the 308,000 net jobs created in March, 230,000 were in the service sector. Those are jobs at Wal-Mart, Starbucks, Walgreens, McDonald’s, Marriott, Krispy Kreme, and the like. These are not jobs at GM or IBM. I am not putting down the 1.4 million associates at Wal-Mart. However, service sector jobs, in general, pay lower wages, provide less benefits, contain less weekly hours worked, and often are characterized by greater turnover. Service sector jobs comprise 75 to 80 percent of our nation’s employment. Does this fact have an impact on micro investing? Think about it. How does it create pressures to perform? It leads to cost cutting. It leads to lower levels of investment. Wal-Mart invests heavily in IT but not in store infrastructure. They are described as big box stores. Let’s look at Arkansas in March. The state’s manufacturing base continued to decline; however, overall, the number of unemployed was down 700 from February. Of the net jobs created, food services accounted for 65% of that jump. Leisure and hospitality were also strong.
I often talk about the lack of pricing power. You have a bad situation in the auto industry. The automakers reported a March surge in buying by consumers. The companies need to rid themselves of inflated inventories. So far this year, incentives are up 35% while sales are up 4%. Would you want to own a business like that? If you invest in GM, Ford, or Chrysler, you are an owner. According to Autodata Corp., GM’s average incentives rose 42% to $4,226 per vehicle. In the first three months of 2002, GM’s market share was 28.3%. Today it is 26.8%. Toyota offers much less incentives and their market share has consistently been rising.
I write often of the budget gaps experienced by our states. California has the largest budget gap at $14 billion. I write about teacher layoffs. Today we have something a bit different. The 45-year-old School of Engineering program at SF State University has grown by nearly 50% since fall 2001 to 700 students with 17 faculty members. The University has a $14 million budget gap. Nothing has been decided, but there is a proposal by administrators to close the engineering program. The School of Business is also facing cuts. As one of the school officials stated, “we are going through unprecedented times…it is very painful. We are not used to cutting programs. We are used to adding programs.” Do unprecedented times have an impact on minute-to-minute trading? If we graduate less engineers and business professionals, will that impact the S&P futures? Why should a Wall Street broker worry when they earn $150,000 a year from commissions? Why should a mutual fund manager worry? It won’t impact his or her continued lack of performance. They rarely get replaced.
Drugstores control 46% of the pharmacy industry. Walgreens and CVS are the two giants. If you look at the record for Walgreens over the past 25 years, you would think they are a growth tech stock. With uninterrupted multi-decade growth, the company is one of the under appreciated investment vehicles. Wal-Mart has learned to appreciate the value of its pharmacy operations and the profitability of generics. With the aging of the population, this sector has a promising future. Will it impact today’s trading? That’s another story.
As an investor, should you care that unemployment in Germany rose by 44,000 in March, and that it was the third consecutive monthly rise? One of the Chancellor’s advisors stated “I don’t see any reason why companies should feel inclined to resume hiring.” I don’t see any reason why manufacturers in the U.S. should resume hiring. It’s been almost four years since that happened. On the other hand, we produced a great many service sector jobs in March. I call them paycheck to paycheck jobs. It beats the unemployment rolls.
I hope everyone cares that 5 more American soldiers were killed today in the Anbar province of Iraq. The killing is escalating. Does this impact the Nasdaq futures? Does anyone care that, in the next few days, there will be $50 to $100 million in budget cuts in the metro Atlanta school system? Atlanta does not have an approved budget for their new fiscal year beginning July 1. By the way, in another 30 to 60 days our government will need to raise the debt limit for the third year in succession. Wouldn’t it be great if the government offices ground to a halt. It probably wouldn’t impact the S&P.
Monday, April 05, 2004
4/5/04 A Multimedia Super Corridor
The world’s largest twin towers, Petronas, are located in Kuala Lumpur in Malaysia. The government hopes to create 60,000 jobs in Malaysia’s Multimedia Super Corridor by 2008. Shell Information Technology International chose this location over eight other alternative sites, including Singapore and Hong Kong. Shell has moved 600 IT services personnel here. HSBC has made this one of five worldwide back-office data-processing centers, and in 2004, the bank plans to add another 2,500 staff members to service clients in the U.K., Australia, and New Zealand. Within the Multimedia Super Corridor we can find Ericcson, Fujitsu, NTT, DHL, BAT, Prudential, EDS, IBM, Nokia, Western Union, HP, Intel, Standard Chartered Bank, BMW, Microsoft, Sun, Oracle, and a long list of world-class companies who see this as an emerging regional hi-tech outsourcing center. Motorola arrived here in 1999, and employs more than 250 software engineers, of which over 98% are Malaysians. Their focus includes solutions in 2G, 2.5G, and 3G as well as embedded test software applications for portable wireless devices. Employee turnover is less than 10%. Japan’s NTT employs 75 engineers, of which 90% are Malaysians. They are developing software and content for third-generation mobile phones. The average cost of employing a software engineer in Malaysia is one-fifth of that in the United States. The operating costs of companies in Malaysia are lower than in New Delhi or Mumbai. The President and CEO of NTT Malaysia stated “the quality of engineers available in Malaysia is very good. When we wanted to set up operations outside Japan, we found that Malaysia was the best market to offer our services within the ASEAN Region.” This region is forecast to have one of the strongest long-term growth trends in the coming decades. Between now and 2008, the twin towers of Kuala Lumpur will become more crowded with sophisticated software and embedded engineers. I am not certain the same statement would hold true for the Silicon Valley.
Tony Crescenzi, chief bond market strategist at Miller Tabak: “The current divergence between beans and bonds suggests that any future gain in the bond market could be limited.”
A study by the National Employment Law Institute and the EPI found that the number of college graduates without a job for six months or longer increased in the past twelve months by 32% to 369,115. Among professionals the rise was 38%. Overall, in 2003, only 76% of college-educated workers had jobs, the lowest level in 25 years. So much for the emphasis on education and landing a job. It’s right up there with no child left behind as teacher layoffs increase.
Kroger is beginning to remind me of Toys R Us. Kroger has offered workers in Houston higher wages and improved health care as the workers’ union contract is set to expire on Saturday. The contract covers 10,800 workers in the Texas market. Kroger stated health care costs in the region have risen 67% in the past four years. Presently, the company picks up full cost for employees covered under labor contracts. Kroger stated a number of major contracts are scheduled to expire in 2004, in Cincinnati, Seattle, Louisville, Nashville, Detroit, Denver, and Las Vegas. Kroger’s vice chairman stated the company “is committed to achieving a cost structure that enables us to grow our business while providing competitive wages and benefits to our associates.” I think that’s a great commitment; however, with rising employee and healthcare cost hurdles, how will the company compete with Wal-Mart?
Yesterday, there were riots in four Iraqi cities, and 8 American soldiers died and many were injured. Since the war began last March, the death toll has risen to at least 610. Mark LeVine writes from Baghdad and Amman that “Iraq is sliding toward chaos; a state that many Iraqis increasingly believe is exactly where the U.S. wants them to be. A prominent Iraqi psychiatrist who has worked with the Coalition Provisional Authority and the U.S. military explained to me that ‘there is no way the United States can be this incompetent. The chaos here has to be at least partly deliberate.’ The main question on most people’s minds is not if his assertion is true, but why?” I don’t know the answer to the question, but I would tell the psychiatrist that our government is clearly capable of being this incompetent.
The Union Pacific has a rail system covering 33,000 miles or roughly twice the size of the National Railways of Mexico. Frequently, we kid about fiestas taken south of border and business being transacted on a tomorrow basis. The Union Pacific can hold its own. They are unable to handle the volume of freight business in the LA area and on many of the routes to the Southwest. Consequently, they are asking some customers to cool it and reduce their level of business with the railroad. Is this any way to run a railroad?
The world’s largest twin towers, Petronas, are located in Kuala Lumpur in Malaysia. The government hopes to create 60,000 jobs in Malaysia’s Multimedia Super Corridor by 2008. Shell Information Technology International chose this location over eight other alternative sites, including Singapore and Hong Kong. Shell has moved 600 IT services personnel here. HSBC has made this one of five worldwide back-office data-processing centers, and in 2004, the bank plans to add another 2,500 staff members to service clients in the U.K., Australia, and New Zealand. Within the Multimedia Super Corridor we can find Ericcson, Fujitsu, NTT, DHL, BAT, Prudential, EDS, IBM, Nokia, Western Union, HP, Intel, Standard Chartered Bank, BMW, Microsoft, Sun, Oracle, and a long list of world-class companies who see this as an emerging regional hi-tech outsourcing center. Motorola arrived here in 1999, and employs more than 250 software engineers, of which over 98% are Malaysians. Their focus includes solutions in 2G, 2.5G, and 3G as well as embedded test software applications for portable wireless devices. Employee turnover is less than 10%. Japan’s NTT employs 75 engineers, of which 90% are Malaysians. They are developing software and content for third-generation mobile phones. The average cost of employing a software engineer in Malaysia is one-fifth of that in the United States. The operating costs of companies in Malaysia are lower than in New Delhi or Mumbai. The President and CEO of NTT Malaysia stated “the quality of engineers available in Malaysia is very good. When we wanted to set up operations outside Japan, we found that Malaysia was the best market to offer our services within the ASEAN Region.” This region is forecast to have one of the strongest long-term growth trends in the coming decades. Between now and 2008, the twin towers of Kuala Lumpur will become more crowded with sophisticated software and embedded engineers. I am not certain the same statement would hold true for the Silicon Valley.
Tony Crescenzi, chief bond market strategist at Miller Tabak: “The current divergence between beans and bonds suggests that any future gain in the bond market could be limited.”
A study by the National Employment Law Institute and the EPI found that the number of college graduates without a job for six months or longer increased in the past twelve months by 32% to 369,115. Among professionals the rise was 38%. Overall, in 2003, only 76% of college-educated workers had jobs, the lowest level in 25 years. So much for the emphasis on education and landing a job. It’s right up there with no child left behind as teacher layoffs increase.
Kroger is beginning to remind me of Toys R Us. Kroger has offered workers in Houston higher wages and improved health care as the workers’ union contract is set to expire on Saturday. The contract covers 10,800 workers in the Texas market. Kroger stated health care costs in the region have risen 67% in the past four years. Presently, the company picks up full cost for employees covered under labor contracts. Kroger stated a number of major contracts are scheduled to expire in 2004, in Cincinnati, Seattle, Louisville, Nashville, Detroit, Denver, and Las Vegas. Kroger’s vice chairman stated the company “is committed to achieving a cost structure that enables us to grow our business while providing competitive wages and benefits to our associates.” I think that’s a great commitment; however, with rising employee and healthcare cost hurdles, how will the company compete with Wal-Mart?
Yesterday, there were riots in four Iraqi cities, and 8 American soldiers died and many were injured. Since the war began last March, the death toll has risen to at least 610. Mark LeVine writes from Baghdad and Amman that “Iraq is sliding toward chaos; a state that many Iraqis increasingly believe is exactly where the U.S. wants them to be. A prominent Iraqi psychiatrist who has worked with the Coalition Provisional Authority and the U.S. military explained to me that ‘there is no way the United States can be this incompetent. The chaos here has to be at least partly deliberate.’ The main question on most people’s minds is not if his assertion is true, but why?” I don’t know the answer to the question, but I would tell the psychiatrist that our government is clearly capable of being this incompetent.
The Union Pacific has a rail system covering 33,000 miles or roughly twice the size of the National Railways of Mexico. Frequently, we kid about fiestas taken south of border and business being transacted on a tomorrow basis. The Union Pacific can hold its own. They are unable to handle the volume of freight business in the LA area and on many of the routes to the Southwest. Consequently, they are asking some customers to cool it and reduce their level of business with the railroad. Is this any way to run a railroad?
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