6/19/04 Change Is In The Air
Microsoft has 157 staff hiring recruiters. The company announced yesterday that about 20 of them would lose their jobs. Over the past year, employment rose from 54,500 to 56,100. You don’t need 157 recruiters to hire 1,600 people. In addition, with the new campus moving to completion in India, Microsoft’s hiring focus appears to be headed outside the U.S. Top management has increasingly turned its attention to cost cutting measures. Wall Street’s recent focus is the speculation of a big share buyback announcement in July. A better alternative might be to sell the 25 puts whenever the stock trades at or near that level. In the bullish dotcom run, the company made billions selling naked puts. Why change a course that has worked so successfully?
Since Bush was elected, about 35,000 wood-furniture workers, or 28% of that sector’s workforce, have lost their jobs. John Bassett of Bassett Furniture stated “the illegal dumping by the Chinese has devastated the U.S. bedroom industry.” The U.S. will slap tariffs on Chinese furniture.
The WTO ruled that $3 billion in U.S. cotton subsidies violate trade rules.
The Houston Chronicle reports that the Justice Department’s Enron Task Force has been investigating Kenny Boy Lay, former Enron Chairman, for the past 2 ½ years. The paper stated that Federal prosecutors plan to ask a grand jury to indict Lay on charges of fraud. Lay was a heavy donor to Bush and to Bush Sr. and a friend of both. In September 2001, Lay told Enron employees that the stock is “incredibly cheap” and “talk up the stock and talk positively about Enron to your family and friends…There have been all kinds of reckless and unfounded rumors about Enron and the financial condition of Enron.”
There have also been unfounded rumors about Iraq’s WMD and ties between Saddam Hussein and Al-Qaida and 9/11. It must be the water in Texas that creates these unfounded rumors. It’s a big state with tall tales. I wonder if the American people can read the terror card.
The U.S. current account deficit widened to a record $144.9 billion in the first quarter. Can you imagine the size of the deficit had the dollar been strong? In April the trade deficit widened to a record $48.3 billion. Greenspan stated “there is an unquenchable demand to hold assets of claims against American residents largely because they are presumed to be safe and they’re presumed to have significantly higher rates of return adjusted for risk than most other areas of the world.” It should be noted that, as the Fed raises interest rates, billions more are paid out to foreigners holding our treasuries and the current account deficit widens. As the deficits increase, some investors might question the ability of the U.S. to repay the debt principal outstanding. Of course, our country is recently built on the refinancing house of cards. That Ponzi game is in the ninth inning and will not go into extra innings. Michael Metcalfe of State Street Bank observed that “the dollar needs to be funded by equity or FDI flows, but now they are both negative.”
The EU agreed to a new constitutional treaty.
Grant M. Nulle of the Ludwig von Mises Institute: “Mr. Greenspan has no one to blame for inflation but himself.”
Friday, June 18, 2004
6/18/04 Is China’s Economy Slowing Down?
Chinese officials maintain that banks are tightening credit. Is it fact or fiction? Stock traders are becoming believers. The Shanghai Composite Index is selling near 7-month lows. Many U.S. semiconductor stocks have been spooked. Sharp and Samsung have recently been on the receiving end of selling. One thing is for certain. China’s recent growth rate is unsustainable.
Ten-year Japanese bond yields are trading at their highest level in four years.
John Challenger, CEO of Challenger, Gray, & Christmas, stated that nationally about 2.2 million people in prime working age are not counted as unemployed but do want a job. He cites the latest BLS statistics. Michael Wald, regional economist for the BLS, stated that about 798,000 people age 25 to 54 are not in the workforce but say they would like a job. He remarked “one could argue that the most likely group of workers not currently in the labor force but most likely to rejoin it are those people. If they were included in the count now, the national jobless rate would be 6.6%.” The Pew Hispanic Center stated that a high proportion of new jobs required low skills and paid relatively low wages. The average time that a laid-off worker takes to find a job remains near all-time highs.
According to the third annual Principal Financial Group Global Financial Well Being Study, 49% of all U.S. respondents believe their lifestyle in retirement will be less than it is today. Only 29% of people surveyed felt that way last year. Norman Sorensen, president of Principal International, observed “we weren’t expecting this. The golden years have become the beholden years.”
According to the latest Duke University CFO Outlook Survey, “the CFOs are telling us that there are growing risks to a continued recovery. In addition to dampened capital spending growth, employment is expected to grow by only one percent next year, a notable worsening of the employment expectations expressed by CFOs just last quarter. Our analysis of this quarter’s survey suggests the economic situation is growing more fragile.” One-third of CFOs cite price inflation as a top risk. Also, rising health care costs remain a major concern for many companies.
According to yesterday’s report released by the California Association of Realtors, only 20% of households in California are able to afford a median-priced home. The minimum household income needed to purchase a median-priced home at 4453,590 in California in April was $102,550, based on a typical 30-year, fixed-rate mortgage at 5.42 percent and assuming a 20% downpayment. By comparison, the minimum household income needed to purchase a median-priced home at $176,000 in the U.S. in April 2004 was $39,790. It is not surprising that people are moving from California to other more affordable areas.
Norway is the world’s third-biggest exporter of crude oil behind Saudi Arabia and Russia. A strike by 200 Norwegian oil workers could cut that country’s output by 13% or about 400,000 bpd.
ExxonMobil’s 538,000 bpd refinery in Baytown, Texas had an unscheduled closure for at least two days. There is some speculation that the refinery could be closed for at least one week.
According to the USDA, farming and related businesses account for about 12% of the U.S. GDP and about 17% of American jobs. According to Purdue University economists, the U.S. might run an agricultural trade deficit by the end of this decade. With a current agricultural trade surplus of only $10 billion, it would not be surprising to see a deficit sooner than Purdue’s prediction. Whether it is Russia, Brazil, China, India, China, Australia or some other country, our agricultural exports face serious competition. The picnic is over.
Wal-Mart is reducing shelf space for home entertainment products. This move will have a decided impact on its suppliers.
The Pension Benefit Guaranty Corp. reported that more than 1,000 underfunded pension plans had a total shortfall of $278.6 billion in 2003. Only pension plans that had shortfalls greater than $50 million were required to file a report.
Scientists at the U.S. Geological Survey stated yesterday that the current drought in the West could be the biggest in 500 years. The Colorado River has the lowest water flow on record. It is at half the annual flow experienced during the Dust Bowl years between 1930 and 1937. In my view, if the current drought persists, there could be severe economic and sociological fallout. To make matters worse, we are headed into the dry summer season in the West. At the very least, we can expect heightened risk from forest fires.
Chinese officials maintain that banks are tightening credit. Is it fact or fiction? Stock traders are becoming believers. The Shanghai Composite Index is selling near 7-month lows. Many U.S. semiconductor stocks have been spooked. Sharp and Samsung have recently been on the receiving end of selling. One thing is for certain. China’s recent growth rate is unsustainable.
Ten-year Japanese bond yields are trading at their highest level in four years.
John Challenger, CEO of Challenger, Gray, & Christmas, stated that nationally about 2.2 million people in prime working age are not counted as unemployed but do want a job. He cites the latest BLS statistics. Michael Wald, regional economist for the BLS, stated that about 798,000 people age 25 to 54 are not in the workforce but say they would like a job. He remarked “one could argue that the most likely group of workers not currently in the labor force but most likely to rejoin it are those people. If they were included in the count now, the national jobless rate would be 6.6%.” The Pew Hispanic Center stated that a high proportion of new jobs required low skills and paid relatively low wages. The average time that a laid-off worker takes to find a job remains near all-time highs.
According to the third annual Principal Financial Group Global Financial Well Being Study, 49% of all U.S. respondents believe their lifestyle in retirement will be less than it is today. Only 29% of people surveyed felt that way last year. Norman Sorensen, president of Principal International, observed “we weren’t expecting this. The golden years have become the beholden years.”
According to the latest Duke University CFO Outlook Survey, “the CFOs are telling us that there are growing risks to a continued recovery. In addition to dampened capital spending growth, employment is expected to grow by only one percent next year, a notable worsening of the employment expectations expressed by CFOs just last quarter. Our analysis of this quarter’s survey suggests the economic situation is growing more fragile.” One-third of CFOs cite price inflation as a top risk. Also, rising health care costs remain a major concern for many companies.
According to yesterday’s report released by the California Association of Realtors, only 20% of households in California are able to afford a median-priced home. The minimum household income needed to purchase a median-priced home at 4453,590 in California in April was $102,550, based on a typical 30-year, fixed-rate mortgage at 5.42 percent and assuming a 20% downpayment. By comparison, the minimum household income needed to purchase a median-priced home at $176,000 in the U.S. in April 2004 was $39,790. It is not surprising that people are moving from California to other more affordable areas.
Norway is the world’s third-biggest exporter of crude oil behind Saudi Arabia and Russia. A strike by 200 Norwegian oil workers could cut that country’s output by 13% or about 400,000 bpd.
ExxonMobil’s 538,000 bpd refinery in Baytown, Texas had an unscheduled closure for at least two days. There is some speculation that the refinery could be closed for at least one week.
According to the USDA, farming and related businesses account for about 12% of the U.S. GDP and about 17% of American jobs. According to Purdue University economists, the U.S. might run an agricultural trade deficit by the end of this decade. With a current agricultural trade surplus of only $10 billion, it would not be surprising to see a deficit sooner than Purdue’s prediction. Whether it is Russia, Brazil, China, India, China, Australia or some other country, our agricultural exports face serious competition. The picnic is over.
Wal-Mart is reducing shelf space for home entertainment products. This move will have a decided impact on its suppliers.
The Pension Benefit Guaranty Corp. reported that more than 1,000 underfunded pension plans had a total shortfall of $278.6 billion in 2003. Only pension plans that had shortfalls greater than $50 million were required to file a report.
Scientists at the U.S. Geological Survey stated yesterday that the current drought in the West could be the biggest in 500 years. The Colorado River has the lowest water flow on record. It is at half the annual flow experienced during the Dust Bowl years between 1930 and 1937. In my view, if the current drought persists, there could be severe economic and sociological fallout. To make matters worse, we are headed into the dry summer season in the West. At the very least, we can expect heightened risk from forest fires.
Thursday, June 17, 2004
6/17/04 The Uninsured
According to the U.S. Census Bureau’s Current Population Survey, in September 2003 there were 43.6 million uninsured people in the U.S. in 2002, an increase of 14.6% over 2001. However, the survey reported many people who are uninsured for a portion of a year but not for the entire year. These people are not reflected in the Census Bureau number. Astoundingly, for those under the age of 65 without health insurance for all or part of 2002 and 2003, their analysis states there were approximately 81.8 million such people, or one out of three people in this age category, and that two-thirds of these people were uninsured for six months or more.
Sprint Corp. will lay off 1,100 employees in the portion of the company that sells to business customers. Sprint stated that the layoffs are due to continued market pressures and erosion of the long-distance business. Since October 2001, Sprint has laid off more than 23,600 people. The company indicated it has been hurt by price cutting from chief rival AT&T.
Jack Guynn, President of the Atlanta Fed: The Fed “is several hundred basis points behind what would be a more normal policy setting.”
Albert Broaddus Jr., President of the Richmond Fed: “We’re clear that we need for rates to move up.” A neutral Fed target rate “is something in the vicinity of 2.5 to 3.5 percent, but many things can affect what neutral is—it is difficult to answer with precision.”
Pimco’s Bill Gross: “Too much debt, geopolitical risk and several bubbles have created an unstable environment which can turn any minute.”
The 9-11 Commission found no evidence exists that al-Qaida had strong ties to Saddam Hussein.
The U.S. Department of Transportation reported that, for the first time, last month Southwest Airlines carried 6.5 million domestic passengers, and that exceeded all major airlines.
In the year ended March 2004, U.S. direct investment into Japan fell 41%.
The Financial Times has a comment and analysis on the prisoner abuse scandal in Iraq. The headline reads chain of Command: can torture in Iraq be linked to the White House?
According to the U.S. Census Bureau’s Current Population Survey, in September 2003 there were 43.6 million uninsured people in the U.S. in 2002, an increase of 14.6% over 2001. However, the survey reported many people who are uninsured for a portion of a year but not for the entire year. These people are not reflected in the Census Bureau number. Astoundingly, for those under the age of 65 without health insurance for all or part of 2002 and 2003, their analysis states there were approximately 81.8 million such people, or one out of three people in this age category, and that two-thirds of these people were uninsured for six months or more.
Sprint Corp. will lay off 1,100 employees in the portion of the company that sells to business customers. Sprint stated that the layoffs are due to continued market pressures and erosion of the long-distance business. Since October 2001, Sprint has laid off more than 23,600 people. The company indicated it has been hurt by price cutting from chief rival AT&T.
Jack Guynn, President of the Atlanta Fed: The Fed “is several hundred basis points behind what would be a more normal policy setting.”
Albert Broaddus Jr., President of the Richmond Fed: “We’re clear that we need for rates to move up.” A neutral Fed target rate “is something in the vicinity of 2.5 to 3.5 percent, but many things can affect what neutral is—it is difficult to answer with precision.”
Pimco’s Bill Gross: “Too much debt, geopolitical risk and several bubbles have created an unstable environment which can turn any minute.”
The 9-11 Commission found no evidence exists that al-Qaida had strong ties to Saddam Hussein.
The U.S. Department of Transportation reported that, for the first time, last month Southwest Airlines carried 6.5 million domestic passengers, and that exceeded all major airlines.
In the year ended March 2004, U.S. direct investment into Japan fell 41%.
The Financial Times has a comment and analysis on the prisoner abuse scandal in Iraq. The headline reads chain of Command: can torture in Iraq be linked to the White House?
6/17/04 The Uninsured
According to the U.S. Census Bureau’s Current Population Survey, in September 2003 there were 43.6 million uninsured people in the U.S. in 2002, an increase of 14.6% over 2001. However, the survey reported many people who are uninsured for a portion of a year but not for the entire year. These people are not reflected in the Census Bureau number. Astoundingly, for those under the age of 65 without health insurance for all or part of 2002 and 2003, their analysis states there were approximately 81.8 million such people, or one out of three people in this age category, and that two-thirds of these people were uninsured for six months or more.
Sprint Corp. will lay off 1,100 employees in the portion of the company that sells to business customers. Sprint stated that the layoffs are due to continued market pressures and erosion of the long-distance business. Since October 2001, Sprint has laid off more than 23,600 people. The company indicated it has been hurt by price cutting from chief rival AT&T.
Jack Guynn, President of the Atlanta Fed: The Fed “is several hundred basis points behind what would be a more normal policy setting.”
Albert Broaddus Jr., President of the Richmond Fed: “We’re clear that we need for rates to move up.” A neutral Fed target rate “is something in the vicinity of 2.5 to 3.5 percent, but many things can affect what neutral is—it is difficult to answer with precision.”
Pimco’s Bill Gross: “Too much debt, geopolitical risk and several bubbles have created an unstable environment which can turn any minute.”
The 9-11 Commission found no evidence exists that al-Qaida had strong ties to Saddam Hussein.
The U.S. Department of Transportation reported that, for the first time, last month Southwest Airlines carried 6.5 million domestic passengers, and that exceeded all major airlines.
In the year ended March 2004, U.S. direct investment into Japan fell 41%.
The Financial Times has a comment and analysis on the prisoner abuse scandal in Iraq. The headline reads chain of Command: can torture in Iraq be linked to the White House?
According to the U.S. Census Bureau’s Current Population Survey, in September 2003 there were 43.6 million uninsured people in the U.S. in 2002, an increase of 14.6% over 2001. However, the survey reported many people who are uninsured for a portion of a year but not for the entire year. These people are not reflected in the Census Bureau number. Astoundingly, for those under the age of 65 without health insurance for all or part of 2002 and 2003, their analysis states there were approximately 81.8 million such people, or one out of three people in this age category, and that two-thirds of these people were uninsured for six months or more.
Sprint Corp. will lay off 1,100 employees in the portion of the company that sells to business customers. Sprint stated that the layoffs are due to continued market pressures and erosion of the long-distance business. Since October 2001, Sprint has laid off more than 23,600 people. The company indicated it has been hurt by price cutting from chief rival AT&T.
Jack Guynn, President of the Atlanta Fed: The Fed “is several hundred basis points behind what would be a more normal policy setting.”
Albert Broaddus Jr., President of the Richmond Fed: “We’re clear that we need for rates to move up.” A neutral Fed target rate “is something in the vicinity of 2.5 to 3.5 percent, but many things can affect what neutral is—it is difficult to answer with precision.”
Pimco’s Bill Gross: “Too much debt, geopolitical risk and several bubbles have created an unstable environment which can turn any minute.”
The 9-11 Commission found no evidence exists that al-Qaida had strong ties to Saddam Hussein.
The U.S. Department of Transportation reported that, for the first time, last month Southwest Airlines carried 6.5 million domestic passengers, and that exceeded all major airlines.
In the year ended March 2004, U.S. direct investment into Japan fell 41%.
The Financial Times has a comment and analysis on the prisoner abuse scandal in Iraq. The headline reads chain of Command: can torture in Iraq be linked to the White House?
Wednesday, June 16, 2004
6/16/06 Silicon Valley Employment Outlook Uncertain
According to the quarterly Manpower Employment Outlook Survey released yesterday, the Santa Clara County employment outlook is one of the weakest in the nation. From this July to September, 15% of the companies interviewed plan to hire more employees while 135 intend to reduce their workforce. Another 50% expect to maintain their current staff levels and 22% are not certain of their hiring plans. In this year's second quarter, 35% of the companies interviewed predicted an increase in hiring activity while 13% planned to decrease the hiring pace. Even one year ago, 18% of companies surveyed thought employment increases were likely while 13% intended to reduce staff. According to the most recent survey, job prospects appear best in construction; non-durable goods manufacturing; finance/insurance/real estate; and public administration. Reduced staff levels are anticipated in education and services, both areas showing recent hiring strength.
According to BP's chief economist, world oil reserves rose by almost 10% last year. Peter Davies stated "there is no global oil resource or reserve shortage." J P Morgan estiates that the price of oil is headed downward to $34 a barrel. Where were oil the bears when oil changed hands at $41+ a barrel?
According to the quarterly Manpower Employment Outlook Survey released yesterday, the Santa Clara County employment outlook is one of the weakest in the nation. From this July to September, 15% of the companies interviewed plan to hire more employees while 135 intend to reduce their workforce. Another 50% expect to maintain their current staff levels and 22% are not certain of their hiring plans. In this year's second quarter, 35% of the companies interviewed predicted an increase in hiring activity while 13% planned to decrease the hiring pace. Even one year ago, 18% of companies surveyed thought employment increases were likely while 13% intended to reduce staff. According to the most recent survey, job prospects appear best in construction; non-durable goods manufacturing; finance/insurance/real estate; and public administration. Reduced staff levels are anticipated in education and services, both areas showing recent hiring strength.
According to BP's chief economist, world oil reserves rose by almost 10% last year. Peter Davies stated "there is no global oil resource or reserve shortage." J P Morgan estiates that the price of oil is headed downward to $34 a barrel. Where were oil the bears when oil changed hands at $41+ a barrel?
Tuesday, June 15, 2004
6/15/04 Where It Counts
Real average weekly earnings adjusted for inflation fell 0.4% in May. Earnings were down 0.5% from year earlier levels. Cracks are beginning to show. Business sales fell by 0.1% in May, the first monthly decline since August. Total retail sales declined by 0.6%. At the same time, inventories climbed for the 8th straight month.
Over the past year inflation has jumped 3.1%. Much of that increase can be attributed to higher energy prices; however, in the latest CPI report, food prices rose 0.9%, the biggest jump in 14 years. More disturbing was the increase in dairy prices which had their largest rise in almost 60 years. I have been writing for some time about the rising prices for eggs and milk, for example.
The Fed states they are inflation fighters. Don't believe it. Their actions talk a different game. From May 1996 thru May 2004, M3 grew by 93% or at an annual rate of 8.5% and M2 grew 7.7% during this same time period. It's no wonder that our dollar continues to erode in value, and with it, our purchasing power.
In April our trade deficit with China expanded to $12 billion and with Canada to $5.7 billion.
The new census shows almost 300 million Americans with Hispanics amounting to about 40 million and Asians to about 12 million. Multi-racial persons account for another 4.3 million. It will be interesting to see the voting patterns of these groups come the November election.
Real average weekly earnings adjusted for inflation fell 0.4% in May. Earnings were down 0.5% from year earlier levels. Cracks are beginning to show. Business sales fell by 0.1% in May, the first monthly decline since August. Total retail sales declined by 0.6%. At the same time, inventories climbed for the 8th straight month.
Over the past year inflation has jumped 3.1%. Much of that increase can be attributed to higher energy prices; however, in the latest CPI report, food prices rose 0.9%, the biggest jump in 14 years. More disturbing was the increase in dairy prices which had their largest rise in almost 60 years. I have been writing for some time about the rising prices for eggs and milk, for example.
The Fed states they are inflation fighters. Don't believe it. Their actions talk a different game. From May 1996 thru May 2004, M3 grew by 93% or at an annual rate of 8.5% and M2 grew 7.7% during this same time period. It's no wonder that our dollar continues to erode in value, and with it, our purchasing power.
In April our trade deficit with China expanded to $12 billion and with Canada to $5.7 billion.
The new census shows almost 300 million Americans with Hispanics amounting to about 40 million and Asians to about 12 million. Multi-racial persons account for another 4.3 million. It will be interesting to see the voting patterns of these groups come the November election.
Monday, June 14, 2004
6/14/04 Competition For Stocks?
As 10 year government bonds trade at a yield of 4.83%, one must begin to question whether that return begins to create formidable competition for stocks. With a pick up in yield of about 300 basis points, bonds might begin to make investors pause prior to the purchase of equities.
Wal-Mart is our nation's largest employer in the private sector. As the company approaches the roll out of another 500 stores, they anticipate adding 83,000 new employees. Their earnings should approach $2.38 per share this year.
After Ronald Reagan was shot and survived, he viewed the future as his responsibility from God to make our country a better place for all Americans. On the other hand, in my view, the present president views his actions as a reflection of a mandate from God.
Of the main crops, wheat is the cheapest to plant. At the present price range of $3.50 to $4 per bushel, farmers can make money. A bushel of grain should weigh 60 pounds; however, without a late rain prior to harvest, those bushels are weighing about 55 pounds.
The Rocket tries to make it 10-0 today.
The U.S. trade deficit widened in April to a record $48.3 billion, up from March's deficit of $46.6 billion. Importantly, our exports fell 1.5% in April. At the same time, prices of imported goods rose 1.6% in May.
Psychiatrist Dr. Justin Frank: "Bush fits the profile of a former drinker whose alcholism has been arrested but not treated."
As 10 year government bonds trade at a yield of 4.83%, one must begin to question whether that return begins to create formidable competition for stocks. With a pick up in yield of about 300 basis points, bonds might begin to make investors pause prior to the purchase of equities.
Wal-Mart is our nation's largest employer in the private sector. As the company approaches the roll out of another 500 stores, they anticipate adding 83,000 new employees. Their earnings should approach $2.38 per share this year.
After Ronald Reagan was shot and survived, he viewed the future as his responsibility from God to make our country a better place for all Americans. On the other hand, in my view, the present president views his actions as a reflection of a mandate from God.
Of the main crops, wheat is the cheapest to plant. At the present price range of $3.50 to $4 per bushel, farmers can make money. A bushel of grain should weigh 60 pounds; however, without a late rain prior to harvest, those bushels are weighing about 55 pounds.
The Rocket tries to make it 10-0 today.
The U.S. trade deficit widened in April to a record $48.3 billion, up from March's deficit of $46.6 billion. Importantly, our exports fell 1.5% in April. At the same time, prices of imported goods rose 1.6% in May.
Psychiatrist Dr. Justin Frank: "Bush fits the profile of a former drinker whose alcholism has been arrested but not treated."
Sunday, June 13, 2004
6/13/04 Driving The Economic Wagon
Samuel Gerdano, executive driector of the American Bankruptcy Institute: "We need consumers to spend money to drive the economic wagon. But when they do, that adds to the bankruptcy rate." According to the Fed, nationwide, one in 73 households filed for bankruptcy in 2003. For the past 25 years, that number has been rising steadily. On the other other hand, Greenspan says we have nothing to worry about, and that debt service is under control. In looking at the latest Fed numbers, debt as a percentage of renters' income is a rousing 32%, a sharp increase from 23% only 10 years ago. Maybe Greenspan should wander down Main Street and take a closer look at the debt service picture.
Daimler Chrysler aims to cut 10,000 jobs at its Mercedes Benz unit. Sales at that unit fell 9.2% thru May.
China's Premier Wen Jiabao: "we haven't fundamentally solved the salient problems-- the supply of coal, electricity, oil, and transport are still very tight. The size of total investment is still very big, the government still faces a tough job to slow economic growth." With the first quarter's 43% rise in outlays for factories, roads, and other capital projects, China ia well into the over-heating danger zone. The world will feel the enormous impact of China operating past the boiling point. Something will give. Try and take cover.
Samuel Gerdano, executive driector of the American Bankruptcy Institute: "We need consumers to spend money to drive the economic wagon. But when they do, that adds to the bankruptcy rate." According to the Fed, nationwide, one in 73 households filed for bankruptcy in 2003. For the past 25 years, that number has been rising steadily. On the other other hand, Greenspan says we have nothing to worry about, and that debt service is under control. In looking at the latest Fed numbers, debt as a percentage of renters' income is a rousing 32%, a sharp increase from 23% only 10 years ago. Maybe Greenspan should wander down Main Street and take a closer look at the debt service picture.
Daimler Chrysler aims to cut 10,000 jobs at its Mercedes Benz unit. Sales at that unit fell 9.2% thru May.
China's Premier Wen Jiabao: "we haven't fundamentally solved the salient problems-- the supply of coal, electricity, oil, and transport are still very tight. The size of total investment is still very big, the government still faces a tough job to slow economic growth." With the first quarter's 43% rise in outlays for factories, roads, and other capital projects, China ia well into the over-heating danger zone. The world will feel the enormous impact of China operating past the boiling point. Something will give. Try and take cover.
Saturday, June 12, 2004
6/12/04 Being Inefficient
Ronald Reagan on how cumbersome the bureaucracy can be with its many rules: "Don't mind them being inefficent. If they were efficient, we wouldn't have any liberty."
Jack Guynn, President of the Atlanta Fed, stated that long-term inflation expectations remain well contained; however, " a great deal depends upon how much of the recent spate of price increases turns out to be transitory. Recent developments on the price front warrant significant attention."
Over the past six years, Chevron Texaco's proven oil and gas reserves have risen more than 15% or more than 1 billion barrels while its annual output during this same period has falllen by about 14%. The company expects production to begin rising in 2006.
For the first time since 1974, talks have broken down between Maytag and its 2,225 union workers. The sticking points revolve around the company's desire to have workers pick up more health care costs and the proposal to freeze retirement benefits and not credit union members with future years of service to Maytag. There is an expectation for a long strike.
Ronald Reagan on how cumbersome the bureaucracy can be with its many rules: "Don't mind them being inefficent. If they were efficient, we wouldn't have any liberty."
Jack Guynn, President of the Atlanta Fed, stated that long-term inflation expectations remain well contained; however, " a great deal depends upon how much of the recent spate of price increases turns out to be transitory. Recent developments on the price front warrant significant attention."
Over the past six years, Chevron Texaco's proven oil and gas reserves have risen more than 15% or more than 1 billion barrels while its annual output during this same period has falllen by about 14%. The company expects production to begin rising in 2006.
For the first time since 1974, talks have broken down between Maytag and its 2,225 union workers. The sticking points revolve around the company's desire to have workers pick up more health care costs and the proposal to freeze retirement benefits and not credit union members with future years of service to Maytag. There is an expectation for a long strike.
6/12/04 Being Inefficient
Ronald Reagan on how cumbersome the bureaucracy can be with its many rules: "Don't mind them being inefficent. If they were efficient, we wouldn't have any liberty."
Jack Guynn, President of the Atlanta Fed, stated that long-term inflation expectations remain well contained; however, " a great deal depends upon how much of the recent spate of price increases turns out to be transitory. Recent developments on the price front warrant significant attention."
Over the past six years, Chevron Texaco's proven oil and gas reserves have risen more than 15% or more than 1 billion barrels while its annual output during this same period has falllen by about 14%. The company expects production to begin rising in 2006.
For the first time since 1974, talks have broken down between Maytag and its 2,225 union workers. The sticking points revolve around the company's desire to have workers pick up more health care costs and the proposal to freeze retirement benefits and not credit union members with future years of service to Maytag. There is an expectation for a long strike.
Ronald Reagan on how cumbersome the bureaucracy can be with its many rules: "Don't mind them being inefficent. If they were efficient, we wouldn't have any liberty."
Jack Guynn, President of the Atlanta Fed, stated that long-term inflation expectations remain well contained; however, " a great deal depends upon how much of the recent spate of price increases turns out to be transitory. Recent developments on the price front warrant significant attention."
Over the past six years, Chevron Texaco's proven oil and gas reserves have risen more than 15% or more than 1 billion barrels while its annual output during this same period has falllen by about 14%. The company expects production to begin rising in 2006.
For the first time since 1974, talks have broken down between Maytag and its 2,225 union workers. The sticking points revolve around the company's desire to have workers pick up more health care costs and the proposal to freeze retirement benefits and not credit union members with future years of service to Maytag. There is an expectation for a long strike.
6/12/04 Being Inefficient
Ronald Reagan on how cumbersome the bureaucracy can be with its many rules: "Don't mind them being inefficent. If they were efficient, we wouldn't have any liberty."
Jack Guynn, President of the Atlanta Fed, stated that long-term inflation expectations remain well contained; however, " a great deal depends upon how much of the recent spate of price increases turns out to be transitory. Recent developments on the price front warrant significant attention."
Over the past six years, Chevron Texaco's proven oil and gas reserves have risen more than 15% or more than 1 billion barrels while its annual output during this same period has falllen by about 14%. The company expects production to begin rising in 2006.
For the first time since 1974, talks have broken down between Maytag and its 2,225 union workers. The sticking points revolve around the company's desire to have workers pick up more health care costs and the proposal to freeze retirement benefits and not credit union members with future years of service to Maytag. There is an expectation for a long strike.
Ronald Reagan on how cumbersome the bureaucracy can be with its many rules: "Don't mind them being inefficent. If they were efficient, we wouldn't have any liberty."
Jack Guynn, President of the Atlanta Fed, stated that long-term inflation expectations remain well contained; however, " a great deal depends upon how much of the recent spate of price increases turns out to be transitory. Recent developments on the price front warrant significant attention."
Over the past six years, Chevron Texaco's proven oil and gas reserves have risen more than 15% or more than 1 billion barrels while its annual output during this same period has falllen by about 14%. The company expects production to begin rising in 2006.
For the first time since 1974, talks have broken down between Maytag and its 2,225 union workers. The sticking points revolve around the company's desire to have workers pick up more health care costs and the proposal to freeze retirement benefits and not credit union members with future years of service to Maytag. There is an expectation for a long strike.
Friday, June 11, 2004
6/11/04 For All Seasons
Ronald Wilson Reagan may not have been all things to all people; however, he was a man for all seasons.
In this year's first quarter, our federal debt grew by 11.6%, household debt by 10.9%, and the debt of state and local governments by 9.6%. Hopefully, these growth rates are not sustainable.
The nation's debt accumulation has outpaced nominal GDP for the 14th time in the past 15 quarters.
This nation's mortgage debt has grown to almost $7 trillion and the household consumer debt has risen to just over $2 trillion. I guess debt can grow to the sky. It's a little like being short a stock. There is no limit on how high a stock can rise. Too bad our indebtedness is not replaced by equity ownership.
Atlanta Federal Reserve Bank President Jack Guynn: Rising interest rates at a "measured" pace is "more of a plan than a pledge." Plans are certainly subject to change.
Ronald Wilson Reagan may not have been all things to all people; however, he was a man for all seasons.
In this year's first quarter, our federal debt grew by 11.6%, household debt by 10.9%, and the debt of state and local governments by 9.6%. Hopefully, these growth rates are not sustainable.
The nation's debt accumulation has outpaced nominal GDP for the 14th time in the past 15 quarters.
This nation's mortgage debt has grown to almost $7 trillion and the household consumer debt has risen to just over $2 trillion. I guess debt can grow to the sky. It's a little like being short a stock. There is no limit on how high a stock can rise. Too bad our indebtedness is not replaced by equity ownership.
Atlanta Federal Reserve Bank President Jack Guynn: Rising interest rates at a "measured" pace is "more of a plan than a pledge." Plans are certainly subject to change.
6/11/04 For All Seasons
Ronald Wilson Reagan was not all things to all people; however, he was a man for all seasons.
In this year's first quarter, federal debt grew by 11.6%, household debt by 10.9%, and the debt of state and local governments by 9.6%. Hopefully, these rates of growth are not sustainable.
In this year's first quarter, the nation's debt accumulation outpaced nominal GDP for the 14th time in the past 15 months. I hope our citizens do not believe this is an achievement.
Mortgage debt has risen to almost $7 trillion. Household consumer debt increased to just over $2 trillion. Greenspan says we have nothing to worry about when it comes to these debt levels. I am worried about his judgment.
Atlanta Federal Reserve Bank President Jack Guynn: Raising interest rates at a "measured" pace is "more of a plan than a pledge." Plans are made to change with the wind.
Ronald Wilson Reagan was not all things to all people; however, he was a man for all seasons.
In this year's first quarter, federal debt grew by 11.6%, household debt by 10.9%, and the debt of state and local governments by 9.6%. Hopefully, these rates of growth are not sustainable.
In this year's first quarter, the nation's debt accumulation outpaced nominal GDP for the 14th time in the past 15 months. I hope our citizens do not believe this is an achievement.
Mortgage debt has risen to almost $7 trillion. Household consumer debt increased to just over $2 trillion. Greenspan says we have nothing to worry about when it comes to these debt levels. I am worried about his judgment.
Atlanta Federal Reserve Bank President Jack Guynn: Raising interest rates at a "measured" pace is "more of a plan than a pledge." Plans are made to change with the wind.
Thursday, June 10, 2004
6/10/04 Behind The 8 Ball
Prices of goods imported into the U.S. rose by 1.6% in May. Export prices, on the other hand, rose o.3% in May. One doesn't need to be a genius to realize our currency won't be worth diddly should this relationship continue.
Initial unemployment claims in the most recent week rose 12,000 to 352,000, a 7 week high. Some temps must have lost their low-paying contracts.
Morgan Stanley and ABN Amro Holding predict that the Fed will lift interest rates 4 times this year to 2%. Several others share this view. In the meantime, the Bank of England lifted its benchmark lending rate by a quarter point to 4.5% citing rising house prices and other inflation concerns. It sounds like they could be describing the U.S.
Robert Arnott, manager of the $2.3 billion Pimco All Asset Fund: "18 months ago there was a lot of low-hanging fruit. Today there isn't. Almost everything is moderately to significantly expensive." Be patient, Robert. Value is waiting around the corner.
The International Energy Agency revised its oil demand forcast for 2004 by 360,000 barrels per day to the highest rate since 1980.
According to a new LA Times poll, with Nader in the race, Kerry leads Bush by 48% to 42%.
Prices of goods imported into the U.S. rose by 1.6% in May. Export prices, on the other hand, rose o.3% in May. One doesn't need to be a genius to realize our currency won't be worth diddly should this relationship continue.
Initial unemployment claims in the most recent week rose 12,000 to 352,000, a 7 week high. Some temps must have lost their low-paying contracts.
Morgan Stanley and ABN Amro Holding predict that the Fed will lift interest rates 4 times this year to 2%. Several others share this view. In the meantime, the Bank of England lifted its benchmark lending rate by a quarter point to 4.5% citing rising house prices and other inflation concerns. It sounds like they could be describing the U.S.
Robert Arnott, manager of the $2.3 billion Pimco All Asset Fund: "18 months ago there was a lot of low-hanging fruit. Today there isn't. Almost everything is moderately to significantly expensive." Be patient, Robert. Value is waiting around the corner.
The International Energy Agency revised its oil demand forcast for 2004 by 360,000 barrels per day to the highest rate since 1980.
According to a new LA Times poll, with Nader in the race, Kerry leads Bush by 48% to 42%.
Wednesday, June 09, 2004
6/9/04 Home Equity Loans
According to Lending Tree, Inc., by the end of 2004, a projected 23.5% of homeowners will have secured a home equity loan, double the number who did so in 2003. Only 6.7% had home equity loans in 2002. With wages and salaries running behind the rate of inflation for the past three years, the home equity loans have kept the consumer in the spending game. As interest rates have risen about 100 basis points, the refinancing of homes has declined to about one-third of all mortgages. The engine fueling consumers is about to run out of gas. When it does, the fallout will not present a pretty picture.
GM expects to start its car financing business in China by September or October. Car financing is another description for sales incentives. It reminds me of the barker at the circus shouting "come right this way to the greatest show on earth."
July crude fell to the contract's lowest level since May 3, and settled at $37.15 per barrel. Soon the goniffs at the gas stations will lower their prices.
John Carlson, columnist for the Des Moines Register on Ronald Reagan: "He was like a confused poker player who kept asking if a flush beat two pair and left the table with all the cash. The other players never figured out he invented the game."
Patti Davis: "There is nothing stronger than love between two people, two souls."
Tata Consultancy Services has a new clinical drug management system that could reduce a drug's time to market and lower the trial's costs.
Sen. Diane Feinstein: "There appears to be an effort to redefine torture and narrow the prohibition against it."
According to Lending Tree, Inc., by the end of 2004, a projected 23.5% of homeowners will have secured a home equity loan, double the number who did so in 2003. Only 6.7% had home equity loans in 2002. With wages and salaries running behind the rate of inflation for the past three years, the home equity loans have kept the consumer in the spending game. As interest rates have risen about 100 basis points, the refinancing of homes has declined to about one-third of all mortgages. The engine fueling consumers is about to run out of gas. When it does, the fallout will not present a pretty picture.
GM expects to start its car financing business in China by September or October. Car financing is another description for sales incentives. It reminds me of the barker at the circus shouting "come right this way to the greatest show on earth."
July crude fell to the contract's lowest level since May 3, and settled at $37.15 per barrel. Soon the goniffs at the gas stations will lower their prices.
John Carlson, columnist for the Des Moines Register on Ronald Reagan: "He was like a confused poker player who kept asking if a flush beat two pair and left the table with all the cash. The other players never figured out he invented the game."
Patti Davis: "There is nothing stronger than love between two people, two souls."
Tata Consultancy Services has a new clinical drug management system that could reduce a drug's time to market and lower the trial's costs.
Sen. Diane Feinstein: "There appears to be an effort to redefine torture and narrow the prohibition against it."
Tuesday, June 08, 2004
6/8/04 Whatever It Takes
Greenspan: The FOMC "is prepared to do what is required" to fight inflation. If necessary, interest rate hikes will not be measured.
Shell Oil is cutting 600 to 800 IT jobs in the U.S. in a cost cutting move. Currently, Shell has 9,000 software developers. The company plans to send more of its work to India and Malaysia.
India is seeking to develop "value partnerships" in discovery drug research with U.S. firms. The new Indian government is committed to protect intellectual property rights.
India's forex reserves have climbed to $120 billion. Gold assets remain at $4.19 billion.
Home Depot plansd to create a business development operation in China. They will find little competition in that country.
Is Bush being to crack under the many pressures he is feeling and confronting?
Greenspan: The FOMC "is prepared to do what is required" to fight inflation. If necessary, interest rate hikes will not be measured.
Shell Oil is cutting 600 to 800 IT jobs in the U.S. in a cost cutting move. Currently, Shell has 9,000 software developers. The company plans to send more of its work to India and Malaysia.
India is seeking to develop "value partnerships" in discovery drug research with U.S. firms. The new Indian government is committed to protect intellectual property rights.
India's forex reserves have climbed to $120 billion. Gold assets remain at $4.19 billion.
Home Depot plansd to create a business development operation in China. They will find little competition in that country.
Is Bush being to crack under the many pressures he is feeling and confronting?
Monday, June 07, 2004
6/7/04 Inflation
It is hard to measure inflation. In the end, it is a personal matter. It depends on each individual's spending habits. Some drive more miles. Some do a good deal of home improvement projects and can get impacted by rising lumber and possibly even metal prices. Shipping costs can cause some hurt to the bottom line. You may be effected by rising airline prices due to fuel adjustments. For some inflation is alive and well. The CRB Index recently hit a 23 year high. For others, it may come down to the cost of eggs and milk. The fact is though that no one escapes the hand of inflation when it is rising. You don't need the Fed to remind you. Your bank balance feels it. If inflation should gain traction, you had better hunker down. The results will not be pleasant. Fighting inflation and high interst rates took its toll some two decades ago. They were trying times for all Americans, and that included Ronadl Reagan. Let's hope those times are not revisited.
The Congress is working on a $447 billion defense budget. You can do the math. We have 285 million Americans. That size budget, is, in my view, indefensible. It is irrational and irresponsible. I guarantee they cannot reconcile the accounting for all those expenditures. Hopefully, all Amnericans will not swallow and accept this budget in the name of the war on terror. Our greatest enemy is the great divide in our country. It costs nothing to fix it but the will to do so.
It is hard to measure inflation. In the end, it is a personal matter. It depends on each individual's spending habits. Some drive more miles. Some do a good deal of home improvement projects and can get impacted by rising lumber and possibly even metal prices. Shipping costs can cause some hurt to the bottom line. You may be effected by rising airline prices due to fuel adjustments. For some inflation is alive and well. The CRB Index recently hit a 23 year high. For others, it may come down to the cost of eggs and milk. The fact is though that no one escapes the hand of inflation when it is rising. You don't need the Fed to remind you. Your bank balance feels it. If inflation should gain traction, you had better hunker down. The results will not be pleasant. Fighting inflation and high interst rates took its toll some two decades ago. They were trying times for all Americans, and that included Ronadl Reagan. Let's hope those times are not revisited.
The Congress is working on a $447 billion defense budget. You can do the math. We have 285 million Americans. That size budget, is, in my view, indefensible. It is irrational and irresponsible. I guarantee they cannot reconcile the accounting for all those expenditures. Hopefully, all Amnericans will not swallow and accept this budget in the name of the war on terror. Our greatest enemy is the great divide in our country. It costs nothing to fix it but the will to do so.
Sunday, June 06, 2004
6/6/04 Thanks For The Memories
Only three times have I felt good about voting for a presidential candidate, and of those, twice were for Ronald Reagan. He was a great leader, a fantastic communicator to nations around the globe, and provided optimism and a feel good red, white, and blue spirit to Americans. Our country has not come close to electing an individual who could carry his genuine smile.
It is the 60th anniversary of D- Day. Our veterans did make the world a safer place. They made a difference that is still felt today.
Smarty Jones has great courage and grit. His owners, handlers, and jockey have displayed great class throughout the running of the triple crown events. I thought this 15.3 hands thoroughbred was a lock on the Belmont Stakes. He just came up a bit short in the end. The loss was disappointing but not Smarty Jones. He gave it everything he had.
As I was watching the events of yesterday and thinking about the ending to WWII, I could not help but turn my attention once again to the battle raging within our nation. We can’t defeat time. No warhead can do it. Praying cannot stop a clock. Americans are aging. Millions are squeezed for co-payments and deductibles. Millions are squeezed due to no health insurance. At present, this is a losing battle. According to Hewitt Associates, in 1998, employees nationwide paid out-of-pocket medical expenses of $385 per year. This year, it’s averaging $1,030. In addition, in 1998, health insurance premiums cost $630. This year employees are paying an average of $1,565. In 1998, employers covered 75% of the health expenses. This year that’s down to 68%. In essence, you have the underinsured and the uninsured. The average hourly paycheck cannot carry the burden of rising healthcare costs.
Only three times have I felt good about voting for a presidential candidate, and of those, twice were for Ronald Reagan. He was a great leader, a fantastic communicator to nations around the globe, and provided optimism and a feel good red, white, and blue spirit to Americans. Our country has not come close to electing an individual who could carry his genuine smile.
It is the 60th anniversary of D- Day. Our veterans did make the world a safer place. They made a difference that is still felt today.
Smarty Jones has great courage and grit. His owners, handlers, and jockey have displayed great class throughout the running of the triple crown events. I thought this 15.3 hands thoroughbred was a lock on the Belmont Stakes. He just came up a bit short in the end. The loss was disappointing but not Smarty Jones. He gave it everything he had.
As I was watching the events of yesterday and thinking about the ending to WWII, I could not help but turn my attention once again to the battle raging within our nation. We can’t defeat time. No warhead can do it. Praying cannot stop a clock. Americans are aging. Millions are squeezed for co-payments and deductibles. Millions are squeezed due to no health insurance. At present, this is a losing battle. According to Hewitt Associates, in 1998, employees nationwide paid out-of-pocket medical expenses of $385 per year. This year, it’s averaging $1,030. In addition, in 1998, health insurance premiums cost $630. This year employees are paying an average of $1,565. In 1998, employers covered 75% of the health expenses. This year that’s down to 68%. In essence, you have the underinsured and the uninsured. The average hourly paycheck cannot carry the burden of rising healthcare costs.
Saturday, June 05, 2004
6/5/06 Do You Feel Lucky Today?
You are in the chips. Congratulations. If you are a production or non-supervisory worker, your average hourly wages rose by 5 cents in May, and that’s after the 4 cent increase in April. That’s the good news. Unfortunately, your hours worked per week remained unchanged at 33.8 hours per week. That leaves plenty of time to place a bet on Smarty Jones. It could be worse. The number of unemployed persons remained unchanged in May at 8.2 million. That does not include the 80,000 dropped from the unemployment tally each week due to the loss of benefits. The unemployment rate has essentially remained the same since December 2003. The proportion of the population age 16 and over with jobs—remained at 62.2%. The civilian labor force participation rate was 65.9% for the fourth consecutive month. Also not counted as unemployed were another 1.5 million marginally attached to the labor force, about the same number as one year ago. There were 476,000 discouraged workers in May, also about the same number as a year earlier. The number of persons who had been jobless for 27 weeks or longer held at 1.8 million.
There are always bright spots. In May, construction employment grew by 37,000 and over the past 14 months the construction industry has added about 250,000 jobs. Essentially in the durable goods sector, 32,000 jobs were added in May, and most were in construction-related manufacturing industries, such as, fabricated metal products and wood products. Employment in temporary help was once again the real star in May, and in the last 13 months about 299,000 temp jobs have been added. Health care and social assistance added 36,000 jobs in May, and over the past year a total of 274,000 jobs. We can’t forget that old standby food services. That sector added 33,000 jobs in May, roughly the monthly increase for 2004. Lastly, the retail industry, and that includes building material and garden supply, food and beverage, and clothing stores, has added 142,000 jobs over the past year. These are the same sectors I have highlighted for the past year. Nothing has changed. I do want to include one thought. The unemployment rate for adult women is only 4.8%. It is more cost effective for businesses to hire women rather than men. For the same job, women, on average, only earn 75% or less than do the men. It is one more reason why the average hourly earnings per week has hardly increased over the past year, and when viewed in the light of rising inflation, the salaries and wages have declined.
Paul Kasriel, director of economic research at the Northern Trust Co. in Chicago: “I don’t see anything not to like in this report.” He is talking about the employment report I just discussed. It’s not enough to state that 248,000 non-farm payroll jobs were added in May. One must also focus on the quality of those jobs. They continue to be lower paying and, for the most part, without benefits or with minor benefits. Do you know a great many people who can make ends meet on $528.63 per week before taxes? That’s what’s wrong with the employment picture. Too many Americans cannot earn a living leading to some quality of life. How much income can one expect from employment in service industries? This sector added 176,000 jobs in May and 294,000 in April. The leading area within the entire sector was temporary employment. That’s truly why the weekly hours worked remain at such a low level. I am certain of one thing. The weekly wages of $528.63 will not lead to a sustained recovery. It will not lead to the re-election of Bush. It will not lead to higher interest rates. Consumer spending will no longer carry the day.
I was happy to see that, in May, there was a net decrease of 27,000 government jobs. I also noticed that on Friday it was announced that more than 400 government jobs will be eliminated by Iowa Gov. Tom Vilsack in an effort to reduce the state’s budget gap.
Boeing continues to eliminate workers. In the state of Washington they shed 250 workers in April. IBM will cut 63 jobs at their Rational Software subsidiary in Redmond, Washington. Maytag will cut 20% of its salaried workforce or about 1,100 jobs.
The rate of growth in China’s car sales in the month of May dropped by more than 50% from the prior month. It is still a healthy 15% or so, but it won’t help carry the day for GM. With incentives rising to $5,000, GM needs a blowout performance from its China operations. They delivered in the first four months of 2004; however, with the curbing of car loans by the Chinese government, it would appear that results for the remainder of 2005 will reflect a significant slowdown.
The price for Brent crude fell 1.9% this week. U.S. crude futures closed below $39 per barrel, and 8% below the record intraday high set on Tuesday.
The race is 1 ½ miles. There are only nine horses entered in the Belmont Stakes. Based on past results, maybe four horses should be racing. When you have Secretariat and Mr. Prospector running through your veins, it might be realistic to see only one horse running. Bring two pairs of binoculars. You’ll see Smarty Jones in one and the other eight horses in the other binoculars. It will be a split screen race. The question is how lucky do you feel today? Can you pick the number of lengths Smarty will win by today? Will it be 13?
That’s my guess. Smarty can retire undefeated --- like Seattle Slew and Rocky Marciano.
Karen Taylor, co-owner with her husband of Seattle Slew: “When you looked him in the eye he would look into your soul.”
You are in the chips. Congratulations. If you are a production or non-supervisory worker, your average hourly wages rose by 5 cents in May, and that’s after the 4 cent increase in April. That’s the good news. Unfortunately, your hours worked per week remained unchanged at 33.8 hours per week. That leaves plenty of time to place a bet on Smarty Jones. It could be worse. The number of unemployed persons remained unchanged in May at 8.2 million. That does not include the 80,000 dropped from the unemployment tally each week due to the loss of benefits. The unemployment rate has essentially remained the same since December 2003. The proportion of the population age 16 and over with jobs—remained at 62.2%. The civilian labor force participation rate was 65.9% for the fourth consecutive month. Also not counted as unemployed were another 1.5 million marginally attached to the labor force, about the same number as one year ago. There were 476,000 discouraged workers in May, also about the same number as a year earlier. The number of persons who had been jobless for 27 weeks or longer held at 1.8 million.
There are always bright spots. In May, construction employment grew by 37,000 and over the past 14 months the construction industry has added about 250,000 jobs. Essentially in the durable goods sector, 32,000 jobs were added in May, and most were in construction-related manufacturing industries, such as, fabricated metal products and wood products. Employment in temporary help was once again the real star in May, and in the last 13 months about 299,000 temp jobs have been added. Health care and social assistance added 36,000 jobs in May, and over the past year a total of 274,000 jobs. We can’t forget that old standby food services. That sector added 33,000 jobs in May, roughly the monthly increase for 2004. Lastly, the retail industry, and that includes building material and garden supply, food and beverage, and clothing stores, has added 142,000 jobs over the past year. These are the same sectors I have highlighted for the past year. Nothing has changed. I do want to include one thought. The unemployment rate for adult women is only 4.8%. It is more cost effective for businesses to hire women rather than men. For the same job, women, on average, only earn 75% or less than do the men. It is one more reason why the average hourly earnings per week has hardly increased over the past year, and when viewed in the light of rising inflation, the salaries and wages have declined.
Paul Kasriel, director of economic research at the Northern Trust Co. in Chicago: “I don’t see anything not to like in this report.” He is talking about the employment report I just discussed. It’s not enough to state that 248,000 non-farm payroll jobs were added in May. One must also focus on the quality of those jobs. They continue to be lower paying and, for the most part, without benefits or with minor benefits. Do you know a great many people who can make ends meet on $528.63 per week before taxes? That’s what’s wrong with the employment picture. Too many Americans cannot earn a living leading to some quality of life. How much income can one expect from employment in service industries? This sector added 176,000 jobs in May and 294,000 in April. The leading area within the entire sector was temporary employment. That’s truly why the weekly hours worked remain at such a low level. I am certain of one thing. The weekly wages of $528.63 will not lead to a sustained recovery. It will not lead to the re-election of Bush. It will not lead to higher interest rates. Consumer spending will no longer carry the day.
I was happy to see that, in May, there was a net decrease of 27,000 government jobs. I also noticed that on Friday it was announced that more than 400 government jobs will be eliminated by Iowa Gov. Tom Vilsack in an effort to reduce the state’s budget gap.
Boeing continues to eliminate workers. In the state of Washington they shed 250 workers in April. IBM will cut 63 jobs at their Rational Software subsidiary in Redmond, Washington. Maytag will cut 20% of its salaried workforce or about 1,100 jobs.
The rate of growth in China’s car sales in the month of May dropped by more than 50% from the prior month. It is still a healthy 15% or so, but it won’t help carry the day for GM. With incentives rising to $5,000, GM needs a blowout performance from its China operations. They delivered in the first four months of 2004; however, with the curbing of car loans by the Chinese government, it would appear that results for the remainder of 2005 will reflect a significant slowdown.
The price for Brent crude fell 1.9% this week. U.S. crude futures closed below $39 per barrel, and 8% below the record intraday high set on Tuesday.
The race is 1 ½ miles. There are only nine horses entered in the Belmont Stakes. Based on past results, maybe four horses should be racing. When you have Secretariat and Mr. Prospector running through your veins, it might be realistic to see only one horse running. Bring two pairs of binoculars. You’ll see Smarty Jones in one and the other eight horses in the other binoculars. It will be a split screen race. The question is how lucky do you feel today? Can you pick the number of lengths Smarty will win by today? Will it be 13?
That’s my guess. Smarty can retire undefeated --- like Seattle Slew and Rocky Marciano.
Karen Taylor, co-owner with her husband of Seattle Slew: “When you looked him in the eye he would look into your soul.”
Friday, June 04, 2004
6/4/03 Wholesale Gasoline Prices Plummet
Over the last two days wholesale gasoline prices fell by nearly 12 cents a gallon. It’s a start. OPEC boosted output quotas by 2 million barrels, and Mark Baxter, director of the Maguire Energy Institute at the SMU Cox School of Business, stated this increase in output could take 35 cents a gallon off the price of gasoline. Also contributing to the price decline was the 1.3 million barrels rise in U.S. gasoline reserves. U.S. oil stockpiles rose by 2.8 million barrels in the week ended May 28. Crude is trading under $39 a barrel. The price will decline further the old-fashioned way—supply will outstrip demand.
Rather noteworthy is the Rocket at 8-0 and now with 318 career wins.
U.S. employers announced plans in May to cut 73,368 jobs, a 6.9% increase over the same month a year earlier, according to Challenger, Gray, & Christmas. All the buzz is about new job creation. Low-paying, non-benefit, non-permanent jobs are hardly the American dream. Then again, it beats food stamps and the unemployment lines. The insured unemployment rate rose to 2.4% in the week ended May 22 from 2.3%. Thirty states and territories during that week reported an increase in new claims, while 23 had a decrease. This is hardly the stuff that signals strong job creation. It signals the jobless rate moving higher.
Seagate is cutting 7% of its workforce or 2,900 workers.
The story at Intel is the turnaround of flash memory for cell phones. After a big loss in 2003, it is nearing profitability and will turn into the green in 2005.
The ISM’s non-manufacturing index for new orders fell to 61.3 from 65.6 in April. It suggests a slowing services sector in the months to come.
Continental Air’s CEO Bethune: “As to the financial condition of the industry—it is perilous, and the skies are only growing darker.” That is not true for Southwest Air or a few others.
There is a rumor that George Tenet will star in a new reality TV show called “The Fall Guy.”
Over the last two days wholesale gasoline prices fell by nearly 12 cents a gallon. It’s a start. OPEC boosted output quotas by 2 million barrels, and Mark Baxter, director of the Maguire Energy Institute at the SMU Cox School of Business, stated this increase in output could take 35 cents a gallon off the price of gasoline. Also contributing to the price decline was the 1.3 million barrels rise in U.S. gasoline reserves. U.S. oil stockpiles rose by 2.8 million barrels in the week ended May 28. Crude is trading under $39 a barrel. The price will decline further the old-fashioned way—supply will outstrip demand.
Rather noteworthy is the Rocket at 8-0 and now with 318 career wins.
U.S. employers announced plans in May to cut 73,368 jobs, a 6.9% increase over the same month a year earlier, according to Challenger, Gray, & Christmas. All the buzz is about new job creation. Low-paying, non-benefit, non-permanent jobs are hardly the American dream. Then again, it beats food stamps and the unemployment lines. The insured unemployment rate rose to 2.4% in the week ended May 22 from 2.3%. Thirty states and territories during that week reported an increase in new claims, while 23 had a decrease. This is hardly the stuff that signals strong job creation. It signals the jobless rate moving higher.
Seagate is cutting 7% of its workforce or 2,900 workers.
The story at Intel is the turnaround of flash memory for cell phones. After a big loss in 2003, it is nearing profitability and will turn into the green in 2005.
The ISM’s non-manufacturing index for new orders fell to 61.3 from 65.6 in April. It suggests a slowing services sector in the months to come.
Continental Air’s CEO Bethune: “As to the financial condition of the industry—it is perilous, and the skies are only growing darker.” That is not true for Southwest Air or a few others.
There is a rumor that George Tenet will star in a new reality TV show called “The Fall Guy.”
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