11/27/04 Early Bird Specials
As is the custom on Black Friday, shoppers lined up before dawn to get the early bird specials. The weak dollar did not prevent low pricing on selected items, such as, $15 DVDs, $69 TVs, $30 MPs players, and $499 Toshiba laptops. Many other items included mail-in rebates. Best Buy, Circuit City, and Sears, for example, were heavy promoters of sale items with mail-in rebates. I can’t stand them. A sale should be a sale, and that’s what you find at Wal-Mart.
More and more shoppers are purchasing diamonds at Wal-Mart and Costco. I expect this trend to continue.
The WTO finalized or approved sanctions the EU will have against the U.S. These are sanctions pertaining to the Byrd amendment, and it is expected they will amount to more than $150 million a year.
According to the Massachusetts Software Council, the state lost 121 software companies and 3,859 software-related jobs, which represents a 3% decline, during the past year. It was the fourth straight year of declines in the number of software businesses and jobs.
According to a forecast by the USDA, 2005 will represent the first year since the late 1950s that the U.S. didn’t record an agricultural trade surplus. Bruce Gardner, dean of the College of Agriculture and Natural Resources at the University of Maryland, opines “and the reasons suggest it isn’t likely to turn around…this probably is not just a one-year blip.” U.S. farm exports are expected to fall to $56 billion in 2005 from $62.3 billion this year, and that’s with the declining dollar. Our agricultural exports represent about 7% of our total yearly exports. Gardner observed “imports are more expensive, but we’re buying them anyway.”
Fed Governor William Poole: “You have to move the rates to respond to changing circumstances and I suggest that it is what we have ahead of us.” The changing circumstances are not represented by unfavorable core inflation rates. They couldn’t be represented by exceptional GDP growth because it has been declining for several quarters. Is it possible that the Fed is lifting rates in an effort to attract capital out of savings surplus countries into the U.S. in order to fund, on a daily basis, our “junky-like” deficits? As a nation, we’re strung out on spending beyond our means, and our debts have mounted to a level that exceeds our ability to repay them. Some Fed members believe that it is possible for our nation to repay the debt through depreciating dollars that will energize our exports. As with our farm exports, this will not prove successful. However, it may prove successful in creating a dollar crisis. We are well on our way to having that occur. Intervention is an unsuccessful stop-gap measure.
Maxwell Drever, successful contrarian residential property investor: “What I have seen in 30-plus years of contrarian investing is that people think things are never going to get better or they think they are going to go to the moon.” A 0.25 per cent rise in the 10-year Treasury yield, he predicts, would cause “additional financial stress.” A one per cent rise would for some put properties in a “death spiral.”
Mark Twain: "The man who has not expereinced being poor cannot imagine the curse of it."
Ohio has the seventh largest state economy in the nation. According to a recent report by non-profit Columbus-based (where Pastor Parsley’s Center for Moral Clarity is located) Community Research Partners, one in five jobs or about 1 million pay less than a poverty-level wage. Twenty-one per cent of Ohio’s low-income working families or about 74,000 families have a parent who has not completed high school or a GED. An estimated 44% to 49% of Ohioans age 16 and over have poor literacy skills. In Ohio, 68% of Ohio’s low-income working families or 200,000 families have an adult without any post-secondary education. One out of 10 Ohio adults or 575,000 workers is not fully employed, a percentage worse than 34 other states. Ninety-six thousand Ohio working families with children are living in poverty, and yet, Ohio levies more taxes on lower-income families than in all but five other states. If I were a betting man, and I’m not, I’d wager that these lower-income wage earners are the ones that gave Bush the win in Ohio. These are the same Americans who have seen their unemployment benefits run out while tax cuts were implemented over and over again since January 2001. These are the same Americans who have done so well under their Republican governor Taft. A minimum wage worker toiling 35 hours a week does not meet Ohio’s current $181 average weekly wage requirement to qualify for unemployment benefits. Ohio serves as an excellent example of our country’s as well as that state’s efforts on behalf of low-income working families.
Aristotle: "Poverty is the parent of revolution."
Saturday, November 27, 2004
11/27/04 Early Bird Specials
As is the custom on Black Friday, shoppers lined up before dawn to get the early bird specials. The weak dollar did not prevent low pricing on selected items, such as, $15 DVDs, $69 TVs, $30 MPs players, and $499 Toshiba laptops. Many other items included mail-in rebates. Best Buy, Circuit City, and Sears, for example, were heavy promoters of sale items with mail-in rebates. I can’t stand them. A sale should be a sale, and that’s what you find at Wal-Mart.
More and more shoppers are purchasing diamonds at Wal-Mart and Costco. I expect this trend to continue.
The WTO finalized or approved sanctions the EU will have against the U.S. These are sanctions pertaining to the Byrd amendment, and it is expected they will amount to more than $150 million a year.
According to the Massachusetts Software Council, the state lost 121 software companies and 3,859 software-related jobs, which represents a 3% decline, during the past year. It was the fourth straight year of declines in the number of software businesses and jobs.
According to a forecast by the USDA, 2005 will represent the first year since the late 1950s that the U.S. didn’t record an agricultural trade surplus. Bruce Gardner, dean of the College of Agriculture and Natural Resources at the University of Maryland, opines “and the reasons suggest it isn’t likely to turn around…this probably is not just a one-year blip.” U.S. farm exports are expected to fall to $56 billion in 2005 from $62.3 billion this year, and that’s with the declining dollar. Our agricultural exports represent about 7% of our total yearly exports. Gardner observed “imports are more expensive, but we’re buying them anyway.”
Fed Governor William Poole: “You have to move the rates to respond to changing circumstances and I suggest that it is what we have ahead of us.” The changing circumstances are not represented by unfavorable core inflation rates. They couldn’t be represented by exceptional GDP growth because it has been declining for several quarters. Is it possible that the Fed is lifting rates in an effort to attract capital out of savings surplus countries into the U.S. in order to fund, on a daily basis, our “junky-like” deficits? As a nation, we’re strung out on spending beyond our means, and our debts have mounted to a level that exceeds our ability to repay them. Some Fed members believe that it is possible for our nation to repay the debt through depreciating dollars that will energize our exports. As with our farm exports, this will not prove successful. However, it may prove successful in creating a dollar crisis. We are well on our way to having that occur. Intervention is an unsuccessful stop-gap measure.
Maxwell Drever, successful contrarian residential property investor: “What I have seen in 30-plus years of contrarian investing is that people think things are never going to get better or they think they are going to go to the moon.” A 0.25 per cent rise in the 10-year Treasury yield, he predicts, would cause “additional financial stress.” A one per cent rise would for some put properties in a “death spiral.”
Mark Twain: "The man who has not expereinced being poor cannot imagine the curse of it."
Ohio has the seventh largest state economy in the nation. According to a recent report by non-profit Columbus-based (where Pastor Parsley’s Center for Moral Clarity is located) Community Research Partners, one in five jobs or about 1 million pay less than a poverty-level wage. Twenty-one per cent of Ohio’s low-income working families or about 74,000 families have a parent who has not completed high school or a GED. An estimated 44% to 49% of Ohioans age 16 and over have poor literacy skills. In Ohio, 68% of Ohio’s low-income working families or 200,000 families have an adult without any post-secondary education. One out of 10 Ohio adults or 575,000 workers is not fully employed, a percentage worse than 34 other states. Ninety-six thousand Ohio working families with children are living in poverty, and yet, Ohio levies more taxes on lower-income families than in all but five other states. If I were a betting man, and I’m not, I’d wager that these lower-income wage earners are the ones that gave Bush the win in Ohio. These are the same Americans who have seen their unemployment benefits run out while tax cuts were implemented over and over again since January 2001. These are the same Americans who have done so well under their Republican governor Taft. A minimum wage worker toiling 35 hours a week does not meet Ohio’s current $181 average weekly wage requirement to qualify for unemployment benefits. Ohio serves as an excellent example of our country’s as well as that state’s efforts on behalf of low-income working families.
Aristotle: "Poverty is the parent of revolution."
As is the custom on Black Friday, shoppers lined up before dawn to get the early bird specials. The weak dollar did not prevent low pricing on selected items, such as, $15 DVDs, $69 TVs, $30 MPs players, and $499 Toshiba laptops. Many other items included mail-in rebates. Best Buy, Circuit City, and Sears, for example, were heavy promoters of sale items with mail-in rebates. I can’t stand them. A sale should be a sale, and that’s what you find at Wal-Mart.
More and more shoppers are purchasing diamonds at Wal-Mart and Costco. I expect this trend to continue.
The WTO finalized or approved sanctions the EU will have against the U.S. These are sanctions pertaining to the Byrd amendment, and it is expected they will amount to more than $150 million a year.
According to the Massachusetts Software Council, the state lost 121 software companies and 3,859 software-related jobs, which represents a 3% decline, during the past year. It was the fourth straight year of declines in the number of software businesses and jobs.
According to a forecast by the USDA, 2005 will represent the first year since the late 1950s that the U.S. didn’t record an agricultural trade surplus. Bruce Gardner, dean of the College of Agriculture and Natural Resources at the University of Maryland, opines “and the reasons suggest it isn’t likely to turn around…this probably is not just a one-year blip.” U.S. farm exports are expected to fall to $56 billion in 2005 from $62.3 billion this year, and that’s with the declining dollar. Our agricultural exports represent about 7% of our total yearly exports. Gardner observed “imports are more expensive, but we’re buying them anyway.”
Fed Governor William Poole: “You have to move the rates to respond to changing circumstances and I suggest that it is what we have ahead of us.” The changing circumstances are not represented by unfavorable core inflation rates. They couldn’t be represented by exceptional GDP growth because it has been declining for several quarters. Is it possible that the Fed is lifting rates in an effort to attract capital out of savings surplus countries into the U.S. in order to fund, on a daily basis, our “junky-like” deficits? As a nation, we’re strung out on spending beyond our means, and our debts have mounted to a level that exceeds our ability to repay them. Some Fed members believe that it is possible for our nation to repay the debt through depreciating dollars that will energize our exports. As with our farm exports, this will not prove successful. However, it may prove successful in creating a dollar crisis. We are well on our way to having that occur. Intervention is an unsuccessful stop-gap measure.
Maxwell Drever, successful contrarian residential property investor: “What I have seen in 30-plus years of contrarian investing is that people think things are never going to get better or they think they are going to go to the moon.” A 0.25 per cent rise in the 10-year Treasury yield, he predicts, would cause “additional financial stress.” A one per cent rise would for some put properties in a “death spiral.”
Mark Twain: "The man who has not expereinced being poor cannot imagine the curse of it."
Ohio has the seventh largest state economy in the nation. According to a recent report by non-profit Columbus-based (where Pastor Parsley’s Center for Moral Clarity is located) Community Research Partners, one in five jobs or about 1 million pay less than a poverty-level wage. Twenty-one per cent of Ohio’s low-income working families or about 74,000 families have a parent who has not completed high school or a GED. An estimated 44% to 49% of Ohioans age 16 and over have poor literacy skills. In Ohio, 68% of Ohio’s low-income working families or 200,000 families have an adult without any post-secondary education. One out of 10 Ohio adults or 575,000 workers is not fully employed, a percentage worse than 34 other states. Ninety-six thousand Ohio working families with children are living in poverty, and yet, Ohio levies more taxes on lower-income families than in all but five other states. If I were a betting man, and I’m not, I’d wager that these lower-income wage earners are the ones that gave Bush the win in Ohio. These are the same Americans who have seen their unemployment benefits run out while tax cuts were implemented over and over again since January 2001. These are the same Americans who have done so well under their Republican governor Taft. A minimum wage worker toiling 35 hours a week does not meet Ohio’s current $181 average weekly wage requirement to qualify for unemployment benefits. Ohio serves as an excellent example of our country’s as well as that state’s efforts on behalf of low-income working families.
Aristotle: "Poverty is the parent of revolution."
Friday, November 26, 2004
11/26/04 This Holiday Shopping Season
To begin, it is two days longer than last year’s. According to Jupiter analyst Patti Freeman Evans, 86.1 million will shop online this season compared with 73.3 million last year, and the biggest online season shopping is expected to start either Dec. 6 or Dec. 13. In sum, the Internet will become the number one shopping choice for the first time for households nationwide. This is significant, and in my view, has a long-term bearing on the worth of traditional department stores and mall-oriented retailers. The exceptions would be Wal-Mart, Target, and Costco.
The National Retail Federation projects that gift-card sales will exceed $55 billion this year, a 22% increase over the prior year. By 2005, they forecast sales of $65 billion. According to a Comdata survey, 59% of respondents purchased a gift card for a relative and 44% bought one for a friend. Gift cards are especially popular with those 65 and older. With the aging of the population, one can expect gift card purchases to have an ever-increasing share of the holiday season as well as year-round giving. This phenomenon should impact the number of seasonal workers hired. You don’t need as many temp workers to sell a gift card. According to the BLS, nationally, on average 506,000 jobs are added in November and December, with 550,000 in the retail sector or essentially seasonal workers. John Challenger mentioned that “a lot of people want to work during the holiday just to get access to discounts and get money coming in.”
Erma Bombeck: "Shopping is a woman thing. It's a contact sport like football. Women enjoy the scrimmage, the noisy crowds, the danger of being trampled to death, and the ecstasy of the purchase."
Starbucks’ reloadable stored-value cards hit the $1 billion mark in October. They have become an increasingly important part of the company’s sales.
Bo Derek: "Whoever said money can't buy happiness simply didn't know where to go shopping."
Because of the large drop in the dollar, individuals in euroland have become large buyers of items listed on Ebay.
In the 1960s, the U.S. had a current account surplus and we were a net creditor to the world. In only 40 years, our economic world has turned 180 degrees. This morning there was an erroneous newspaper report that China had cut its U.S. Treasury bond holdings. Because of the rumor, the dollar got slammed, U.S. 10-year Treasury bond yields jumped to 4.245%, and gold climbed to $455 a try ounce. The dollar recovered after the central bank advisor quoted by the paper stated he had no knowledge about China’s foreign exchange reserves, which amounted to nearly $515 billion at the end of September and are the world’s second largest. It’s a sad day when the U.S. currency is held hostage to rumors surrounding China’s buying and selling our dollar. Does that thought interrupt your sleep knowing your assets are dollar denominated? You had better think twice before you have all your eggs in dollar baskets. Come Easter, you may be hunting for your nest egg.
I hope you enjoy this holiday shopping season. BB Simon Belts aka bling bling belts, Fat Baby Boots, Choppers, Dig-Dug, and Pole Position don’t exactly ring my bell for excitement. As for layaways, I can do away with them too.
Since 2001, Asia’s official reserves have increased by $1.2 trillion. And since 2001, our national debt has increased by how many trillions of dollars? You get the picture. It’s not pretty.
In March, Ohio Governor Bob Taft held a news conference and stated that state and county loans had saved Lester Precision Die Casting of Bedford Heights from closing and that 168 jobs had been saved. I guess Taft spoke too soon. The money never arrived. The day before Thanksgiving the die casting company closed and the employees lost their jobs. Ohio should have learned that having a job is a basic common value and a core mainstream issue. Where is Pastor Parsley?
According to the American Association of Railroads, year-to-date intermodal shipments are up nearly 10% from a year ago.
To begin, it is two days longer than last year’s. According to Jupiter analyst Patti Freeman Evans, 86.1 million will shop online this season compared with 73.3 million last year, and the biggest online season shopping is expected to start either Dec. 6 or Dec. 13. In sum, the Internet will become the number one shopping choice for the first time for households nationwide. This is significant, and in my view, has a long-term bearing on the worth of traditional department stores and mall-oriented retailers. The exceptions would be Wal-Mart, Target, and Costco.
The National Retail Federation projects that gift-card sales will exceed $55 billion this year, a 22% increase over the prior year. By 2005, they forecast sales of $65 billion. According to a Comdata survey, 59% of respondents purchased a gift card for a relative and 44% bought one for a friend. Gift cards are especially popular with those 65 and older. With the aging of the population, one can expect gift card purchases to have an ever-increasing share of the holiday season as well as year-round giving. This phenomenon should impact the number of seasonal workers hired. You don’t need as many temp workers to sell a gift card. According to the BLS, nationally, on average 506,000 jobs are added in November and December, with 550,000 in the retail sector or essentially seasonal workers. John Challenger mentioned that “a lot of people want to work during the holiday just to get access to discounts and get money coming in.”
Erma Bombeck: "Shopping is a woman thing. It's a contact sport like football. Women enjoy the scrimmage, the noisy crowds, the danger of being trampled to death, and the ecstasy of the purchase."
Starbucks’ reloadable stored-value cards hit the $1 billion mark in October. They have become an increasingly important part of the company’s sales.
Bo Derek: "Whoever said money can't buy happiness simply didn't know where to go shopping."
Because of the large drop in the dollar, individuals in euroland have become large buyers of items listed on Ebay.
In the 1960s, the U.S. had a current account surplus and we were a net creditor to the world. In only 40 years, our economic world has turned 180 degrees. This morning there was an erroneous newspaper report that China had cut its U.S. Treasury bond holdings. Because of the rumor, the dollar got slammed, U.S. 10-year Treasury bond yields jumped to 4.245%, and gold climbed to $455 a try ounce. The dollar recovered after the central bank advisor quoted by the paper stated he had no knowledge about China’s foreign exchange reserves, which amounted to nearly $515 billion at the end of September and are the world’s second largest. It’s a sad day when the U.S. currency is held hostage to rumors surrounding China’s buying and selling our dollar. Does that thought interrupt your sleep knowing your assets are dollar denominated? You had better think twice before you have all your eggs in dollar baskets. Come Easter, you may be hunting for your nest egg.
I hope you enjoy this holiday shopping season. BB Simon Belts aka bling bling belts, Fat Baby Boots, Choppers, Dig-Dug, and Pole Position don’t exactly ring my bell for excitement. As for layaways, I can do away with them too.
Since 2001, Asia’s official reserves have increased by $1.2 trillion. And since 2001, our national debt has increased by how many trillions of dollars? You get the picture. It’s not pretty.
In March, Ohio Governor Bob Taft held a news conference and stated that state and county loans had saved Lester Precision Die Casting of Bedford Heights from closing and that 168 jobs had been saved. I guess Taft spoke too soon. The money never arrived. The day before Thanksgiving the die casting company closed and the employees lost their jobs. Ohio should have learned that having a job is a basic common value and a core mainstream issue. Where is Pastor Parsley?
According to the American Association of Railroads, year-to-date intermodal shipments are up nearly 10% from a year ago.
11/26/04 This Holiday Shopping Season
To begin, it is two days longer than last year’s. According to Jupiter analyst Patti Freeman Evans, 86.1 million will shop online this season compared with 73.3 million last year, and the biggest online season shopping is expected to start either Dec. 6 or Dec. 13. In sum, the Internet will become the number one shopping choice for the first time for households nationwide. This is significant, and in my view, has a long-term bearing on the worth of traditional department stores and mall-oriented retailers. The exceptions would be Wal-Mart, Target, and Costco.
The National Retail Federation projects that gift-card sales will exceed $55 billion this year, a 22% increase over the prior year. By 2005, they forecast sales of $65 billion. According to a Comdata survey, 59% of respondents purchased a gift card for a relative and 44% bought one for a friend. Gift cards are especially popular with those 65 and older. With the aging of the population, one can expect gift card purchases to have an ever-increasing share of the holiday season as well as year-round giving. This phenomenon should impact the number of seasonal workers hired. You don’t need as many temp workers to sell a gift card. According to the BLS, nationally, on average 506,000 jobs are added in November and December, with 550,000 in the retail sector or essentially seasonal workers. John Challenger mentioned that “a lot of people want to work during the holiday just to get access to discounts and get money coming in.”
Erma Bombeck: "Shopping is a woman thing. It's a contact sport like football. Women enjoy the scrimmage, the noisy crowds, the danger of being trampled to death, and the ecstasy of the purchase."
Starbucks’ reloadable stored-value cards hit the $1 billion mark in October. They have become an increasingly important part of the company’s sales.
Bo Derek: "Whoever said money can't buy happiness simply didn't know where to go shopping."
Because of the large drop in the dollar, individuals in euroland have become large buyers of items listed on Ebay.
In the 1960s, the U.S. had a current account surplus and we were a net creditor to the world. In only 40 years, our economic world has turned 180 degrees. This morning there was an erroneous newspaper report that China had cut its U.S. Treasury bond holdings. Because of the rumor, the dollar got slammed, U.S. 10-year Treasury bond yields jumped to 4.245%, and gold climbed to $455 a try ounce. The dollar recovered after the central bank advisor quoted by the paper stated he had no knowledge about China’s foreign exchange reserves, which amounted to nearly $515 billion at the end of September and are the world’s second largest. It’s a sad day when the U.S. currency is held hostage to rumors surrounding China’s buying and selling our dollar. Does that thought interrupt your sleep knowing your assets are dollar denominated? You had better think twice before you have all your eggs in dollar baskets. Come Easter, you may be hunting for your nest egg.
I hope you enjoy this holiday shopping season. BB Simon Belts aka bling bling belts, Fat Baby Boots, Choppers, Dig-Dug, and Pole Position don’t exactly ring my bell for excitement. As for layaways, I can do away with them too.
Since 2001, Asia’s official reserves have increased by $1.2 trillion. And since 2001, our national debt has increased by how many trillions of dollars? You get the picture. It’s not pretty.
In March, Ohio Governor Bob Taft held a news conference and stated that state and county loans had saved Lester Precision Die Casting of Bedford Heights from closing and that 168 jobs had been saved. I guess Taft spoke too soon. The money never arrived. The day before Thanksgiving the die casting company closed and the employees lost their jobs. Ohio should have learned that having a job is a basic common value and a core mainstream issue. Where is Pastor Parsley?
According to the American Association of Railroads, year-to-date intermodal shipments are up nearly 10% from a year ago.
To begin, it is two days longer than last year’s. According to Jupiter analyst Patti Freeman Evans, 86.1 million will shop online this season compared with 73.3 million last year, and the biggest online season shopping is expected to start either Dec. 6 or Dec. 13. In sum, the Internet will become the number one shopping choice for the first time for households nationwide. This is significant, and in my view, has a long-term bearing on the worth of traditional department stores and mall-oriented retailers. The exceptions would be Wal-Mart, Target, and Costco.
The National Retail Federation projects that gift-card sales will exceed $55 billion this year, a 22% increase over the prior year. By 2005, they forecast sales of $65 billion. According to a Comdata survey, 59% of respondents purchased a gift card for a relative and 44% bought one for a friend. Gift cards are especially popular with those 65 and older. With the aging of the population, one can expect gift card purchases to have an ever-increasing share of the holiday season as well as year-round giving. This phenomenon should impact the number of seasonal workers hired. You don’t need as many temp workers to sell a gift card. According to the BLS, nationally, on average 506,000 jobs are added in November and December, with 550,000 in the retail sector or essentially seasonal workers. John Challenger mentioned that “a lot of people want to work during the holiday just to get access to discounts and get money coming in.”
Erma Bombeck: "Shopping is a woman thing. It's a contact sport like football. Women enjoy the scrimmage, the noisy crowds, the danger of being trampled to death, and the ecstasy of the purchase."
Starbucks’ reloadable stored-value cards hit the $1 billion mark in October. They have become an increasingly important part of the company’s sales.
Bo Derek: "Whoever said money can't buy happiness simply didn't know where to go shopping."
Because of the large drop in the dollar, individuals in euroland have become large buyers of items listed on Ebay.
In the 1960s, the U.S. had a current account surplus and we were a net creditor to the world. In only 40 years, our economic world has turned 180 degrees. This morning there was an erroneous newspaper report that China had cut its U.S. Treasury bond holdings. Because of the rumor, the dollar got slammed, U.S. 10-year Treasury bond yields jumped to 4.245%, and gold climbed to $455 a try ounce. The dollar recovered after the central bank advisor quoted by the paper stated he had no knowledge about China’s foreign exchange reserves, which amounted to nearly $515 billion at the end of September and are the world’s second largest. It’s a sad day when the U.S. currency is held hostage to rumors surrounding China’s buying and selling our dollar. Does that thought interrupt your sleep knowing your assets are dollar denominated? You had better think twice before you have all your eggs in dollar baskets. Come Easter, you may be hunting for your nest egg.
I hope you enjoy this holiday shopping season. BB Simon Belts aka bling bling belts, Fat Baby Boots, Choppers, Dig-Dug, and Pole Position don’t exactly ring my bell for excitement. As for layaways, I can do away with them too.
Since 2001, Asia’s official reserves have increased by $1.2 trillion. And since 2001, our national debt has increased by how many trillions of dollars? You get the picture. It’s not pretty.
In March, Ohio Governor Bob Taft held a news conference and stated that state and county loans had saved Lester Precision Die Casting of Bedford Heights from closing and that 168 jobs had been saved. I guess Taft spoke too soon. The money never arrived. The day before Thanksgiving the die casting company closed and the employees lost their jobs. Ohio should have learned that having a job is a basic common value and a core mainstream issue. Where is Pastor Parsley?
According to the American Association of Railroads, year-to-date intermodal shipments are up nearly 10% from a year ago.
Thursday, November 25, 2004
11/25/04 Giving Thanks And Remembering Others
Sir John Templeton: “ If you do not fall on your knees each day with overwhelming gratitude for your blessing--your multiplying multitudes of blessings—then you just have not yet seen the big picture.”
This Thanksgiving there will be too many families missing their loved ones. Some have passed on as a result of the years, some from poor health, and some due to war. Since the Fallujah offensive began on Nov. 7, at least 868 of our troops have been wounded, and since the war began, 9,326 U.S. troops have been wounded. At least 1,228 members of the U.S. military have died since March 2003. We give thanks to each and every U.S. service member, and forever give thanks and remember their bravery and their dedication to duty.
Tecumseh, Shawnee Chief: “When you arise in the morning, give thanks for the morning light, for your life and strength. Give thanks for your food and the joy of living. If you see no reason for giving thanks, the fault lies in yourself.”
Nissan Motor Co Ltd will suspend operations at 3 of its 4 domestic plants for 5 days due to a shortage of steel.
Native American proverb: “The frog does not drink up the pond in which he lives.”
Japan’s trade surplus rose 8.8% from a year ago.
The euro rose above $1.32 for the first time. Gold traded overnight at $450 an ounce.
The Conference Board’s Help-Wanted Advertising Index increased one point in October to 37. It was 36 one year ago. In the last three months, help-wanted advertising declined in six of the nine U.S. regions. Conference Board economist Ken Goldstein stated “despite the outsized job gain in October, the measure of labor demand going forward remains relatively flat, as does the number signing up for their unemployment checks. Both initial jobless claims and want-ad volume have remained flat since early 2004. Except for two outbursts of job growth (one in the spring and one in October) the lack of steady improvement in employment has weakened consumer confidence, especially with respect to where the labor market is going in the next six months. Moreover, with the Leading Economic Index declining for five straight months, prospects are that the economy will be growing too slowly to allow the labor market more than an occasional good month in the first half of 2005.”
Crude has rallied back near the $50 a barrel level. Frederic Lasserre, head of commodities research at SG, opined “my feeling is that the market is pricing in something new, a longer term perspective. For the last 20 years the industry has been living with market over-capacity. Now it is shifting to under-capacity for the next 3-5 years.” A slowing economy, in my view, may reduce demand from the U.S., but an energized China and India can make up for much of the potential slack.
In the latter part of November, the University of Michigan sentiment index weakened to 92.8 from 95.5 earlier in the month. In October, the index stood at 91.7.
For the week ended Nov. 19, the Energy Dept stated U.S. natural gas stocks fell by a whopping 49 billion cubic feet rather than the expected 8 billion. On that news, futures soared. Crude stocks fell by 1.2 million barrels.
Germany’s business assessment and business expectations indices fell in November from October to a 14-month low. Unemployment levels stand at a 5-year high.
In the race for governor in the state of Washington, almost 3 million votes were cast. In an upset, Rossi beat Gregoire. The margin was 42 votes, and yes, there was a recount.
On page 1,112 of the 3,600-page massive spending bill, the office of Sen. Kent Conrad, D-N.D, discovered a provision that would allow lawmakers access to individuals’ tax returns. Republican congressional leaders blamed the provision’s late night insertion on a staff member working for Rep. Ernest Istook, R-Okla. What are the chances this was a clerical error?
Short-term yields broke above 3% for the first time since mid-2002. The two-year Treasury note traded at 3.01%. On Tuesday, $24 billion of these notes were auctioned at 2.945%. Ten year-Treasury bonds stand at a yield of 4.2%.
U.S. new home sales rose 0.2% in October to an annual rate of 1.226 million, the third highest ever. The median price of a single family home in October rose to $221,800, a 14% gain from a year ago. On the other hand, sales of previously owned homes fell 0.1% in October to an annual rate of 6.76 million. According to the National Association of Realtors, sales of previously owned homes account for 85% of the U.S. residential real estate market.
Sir John Templeton: “ If you do not fall on your knees each day with overwhelming gratitude for your blessing--your multiplying multitudes of blessings—then you just have not yet seen the big picture.”
This Thanksgiving there will be too many families missing their loved ones. Some have passed on as a result of the years, some from poor health, and some due to war. Since the Fallujah offensive began on Nov. 7, at least 868 of our troops have been wounded, and since the war began, 9,326 U.S. troops have been wounded. At least 1,228 members of the U.S. military have died since March 2003. We give thanks to each and every U.S. service member, and forever give thanks and remember their bravery and their dedication to duty.
Tecumseh, Shawnee Chief: “When you arise in the morning, give thanks for the morning light, for your life and strength. Give thanks for your food and the joy of living. If you see no reason for giving thanks, the fault lies in yourself.”
Nissan Motor Co Ltd will suspend operations at 3 of its 4 domestic plants for 5 days due to a shortage of steel.
Native American proverb: “The frog does not drink up the pond in which he lives.”
Japan’s trade surplus rose 8.8% from a year ago.
The euro rose above $1.32 for the first time. Gold traded overnight at $450 an ounce.
The Conference Board’s Help-Wanted Advertising Index increased one point in October to 37. It was 36 one year ago. In the last three months, help-wanted advertising declined in six of the nine U.S. regions. Conference Board economist Ken Goldstein stated “despite the outsized job gain in October, the measure of labor demand going forward remains relatively flat, as does the number signing up for their unemployment checks. Both initial jobless claims and want-ad volume have remained flat since early 2004. Except for two outbursts of job growth (one in the spring and one in October) the lack of steady improvement in employment has weakened consumer confidence, especially with respect to where the labor market is going in the next six months. Moreover, with the Leading Economic Index declining for five straight months, prospects are that the economy will be growing too slowly to allow the labor market more than an occasional good month in the first half of 2005.”
Crude has rallied back near the $50 a barrel level. Frederic Lasserre, head of commodities research at SG, opined “my feeling is that the market is pricing in something new, a longer term perspective. For the last 20 years the industry has been living with market over-capacity. Now it is shifting to under-capacity for the next 3-5 years.” A slowing economy, in my view, may reduce demand from the U.S., but an energized China and India can make up for much of the potential slack.
In the latter part of November, the University of Michigan sentiment index weakened to 92.8 from 95.5 earlier in the month. In October, the index stood at 91.7.
For the week ended Nov. 19, the Energy Dept stated U.S. natural gas stocks fell by a whopping 49 billion cubic feet rather than the expected 8 billion. On that news, futures soared. Crude stocks fell by 1.2 million barrels.
Germany’s business assessment and business expectations indices fell in November from October to a 14-month low. Unemployment levels stand at a 5-year high.
In the race for governor in the state of Washington, almost 3 million votes were cast. In an upset, Rossi beat Gregoire. The margin was 42 votes, and yes, there was a recount.
On page 1,112 of the 3,600-page massive spending bill, the office of Sen. Kent Conrad, D-N.D, discovered a provision that would allow lawmakers access to individuals’ tax returns. Republican congressional leaders blamed the provision’s late night insertion on a staff member working for Rep. Ernest Istook, R-Okla. What are the chances this was a clerical error?
Short-term yields broke above 3% for the first time since mid-2002. The two-year Treasury note traded at 3.01%. On Tuesday, $24 billion of these notes were auctioned at 2.945%. Ten year-Treasury bonds stand at a yield of 4.2%.
U.S. new home sales rose 0.2% in October to an annual rate of 1.226 million, the third highest ever. The median price of a single family home in October rose to $221,800, a 14% gain from a year ago. On the other hand, sales of previously owned homes fell 0.1% in October to an annual rate of 6.76 million. According to the National Association of Realtors, sales of previously owned homes account for 85% of the U.S. residential real estate market.
Wednesday, November 24, 2004
11/24/04 Sharing And Thanksgiving
Fools Crow, Ceremonial Chief of the Teton Sioux: “The survival of the world depends upon our sharing what we have and working together. If we don’t, the whole world will die. First the plant, and next the people.”
Phyllis Diller: “My cooking is so bad my kids thought Thanksgiving was to commemorate Pearl Harbor.”
Sadi, The Gulistan: “Once, when my feet were bare, and I had not the means of obtaining shoes I came to the chief of Kufah in a state of much dejection, and saw there a man who had no feet. I returned thanks to God and acknowledged his mercies, and endured my want of shoes with patience.”
As we move into the holiday season, consumers often focus more on price markdowns than the special offerings they might find at home. Holidays were not meant for spending but rather for sharing love and kindness. Thanksgiving is not for one day of the year. It is an every day event. We can all improve in the sharing with others and in giving thanks.
Wal-Mart is taking a major step. The company will allow unions in its stores in China.
Due to disappointing results at its mortgage unit, H&R Block reported a $52 million quarter loss versus a $10 million profit in the year-ago period. The company reduced its forecast for the fiscal year.
The euro made a new all-time high at 131.60 versus the dollar. Crude is holding presently around $48.60 a barrel and gold around $448 an ounce.
According to SEMI, the October book-to-bill ratio was 0.96. That means that $96 worth of orders were received for every $100 of product billed for the month. Stanley Myers, president and CEO of SEMI, stated that the overall semiconductor equipment sector “is several months into a period of order softening. Total equipment bookings for North American producers have declined 13% from the cyclic peak observed in June. Given recent announcements from several equipment companies, continued moderation in orders is expected until end market visibility strengthens for the semiconductor manufacturers.”
Hewlett-Packard, in an 8-K filing, stated that it expects expenses for workforce reductions in 2005 will total approximately $200 million, cutting earnings by about 4 cents per share. They mentioned that jobs “across HP’s businesses” will be affected; however, they did not state how many employees would lose their jobs.
The Conference Board’s survey of 5,000 households revealed that about 33% of all households will spend $500 or more on holiday gifts, with 37% spending $200-$500 and the remaining 30% planning to spend less than $200. About 29% of all consumers will buy holiday gifts on the Internet, up from 28% a year ago. Compared with last year, the Conference Board stated there could be an overall 4.5% lift in retail sales.
According to the IMF, the dollar’s share of the world’s foreign currency holdings fell to 63.8% at the end of 2003 from 66.9% in 2002 while the euro’s share rose to 19.7% from 16.7% in that period. It is safe to state that we will see similar relationships with the dollar and the euro by year-end 2004. With a continuing dollar-negative trend, it is difficult to envision the funding of our record budget and current account deficits without interest rates rising more than anticipated.
Forty two percent of all UPS revenue moves by air. Should UPS management move to break the Teamsters Canada strike by having non-union management pilots fly struck goods out of Canada and into the United States, then the UPS pilots union will give 24 hour notice before withdrawing their pilot services worldwide.
Cingular Wireless will cut about 7,000 jobs, or about 10% of its workforce.
In the past year, U.S. existing home sales rose 5.6% and the national median home price in October rose to $187,000, an 8.8% increase over the past 12 months.
To compete with Boeing’s 7E7, Airbus will announce the A350-800 that will seat 250 passengers and fly 7,650 miles and the A350-900 that would seat 300 passengers and fly 6,600 miles. The German newspaper Handelsblatt stated that Aer Lingus is already in talks with Airbus about the purchase of a dozen A350s. Boeing has only announced two firm customer orders for its 7E7.
The yield curve continues to flatten with two-year Treasury notes yielding 2.98% and 10-year bonds standing at 4.17% yields.
According to Project Bread, poverty and hunger are at a new high in the state of Massachusetts as more jobs have been lost at a faster rate than any other state in the union over the last three years. Between 200 and 2003, the demand for emergency food has increased by 38% with Project Bread providing 40 million meals a year. So far this winter, calls to Project Bread’s Foodsource Hotline have increased by 50%.
When it comes to spending, the federal government spends during all seasons of the year. It is amazing to watch t the President and the Congress spend money they don't have. For example, take October. There was a 35% increase in government orders for defense aircraft. Bookings for non-defense capital goods, excluding aircraft, declined 3.6%, the first decline in 5 months. New orders for U.S. October durable goods declined 0.4% after September's figures were revised upward from a 0.2% increase to a rise of 0.9%.
Fools Crow, Ceremonial Chief of the Teton Sioux: “The survival of the world depends upon our sharing what we have and working together. If we don’t, the whole world will die. First the plant, and next the people.”
Phyllis Diller: “My cooking is so bad my kids thought Thanksgiving was to commemorate Pearl Harbor.”
Sadi, The Gulistan: “Once, when my feet were bare, and I had not the means of obtaining shoes I came to the chief of Kufah in a state of much dejection, and saw there a man who had no feet. I returned thanks to God and acknowledged his mercies, and endured my want of shoes with patience.”
As we move into the holiday season, consumers often focus more on price markdowns than the special offerings they might find at home. Holidays were not meant for spending but rather for sharing love and kindness. Thanksgiving is not for one day of the year. It is an every day event. We can all improve in the sharing with others and in giving thanks.
Wal-Mart is taking a major step. The company will allow unions in its stores in China.
Due to disappointing results at its mortgage unit, H&R Block reported a $52 million quarter loss versus a $10 million profit in the year-ago period. The company reduced its forecast for the fiscal year.
The euro made a new all-time high at 131.60 versus the dollar. Crude is holding presently around $48.60 a barrel and gold around $448 an ounce.
According to SEMI, the October book-to-bill ratio was 0.96. That means that $96 worth of orders were received for every $100 of product billed for the month. Stanley Myers, president and CEO of SEMI, stated that the overall semiconductor equipment sector “is several months into a period of order softening. Total equipment bookings for North American producers have declined 13% from the cyclic peak observed in June. Given recent announcements from several equipment companies, continued moderation in orders is expected until end market visibility strengthens for the semiconductor manufacturers.”
Hewlett-Packard, in an 8-K filing, stated that it expects expenses for workforce reductions in 2005 will total approximately $200 million, cutting earnings by about 4 cents per share. They mentioned that jobs “across HP’s businesses” will be affected; however, they did not state how many employees would lose their jobs.
The Conference Board’s survey of 5,000 households revealed that about 33% of all households will spend $500 or more on holiday gifts, with 37% spending $200-$500 and the remaining 30% planning to spend less than $200. About 29% of all consumers will buy holiday gifts on the Internet, up from 28% a year ago. Compared with last year, the Conference Board stated there could be an overall 4.5% lift in retail sales.
According to the IMF, the dollar’s share of the world’s foreign currency holdings fell to 63.8% at the end of 2003 from 66.9% in 2002 while the euro’s share rose to 19.7% from 16.7% in that period. It is safe to state that we will see similar relationships with the dollar and the euro by year-end 2004. With a continuing dollar-negative trend, it is difficult to envision the funding of our record budget and current account deficits without interest rates rising more than anticipated.
Forty two percent of all UPS revenue moves by air. Should UPS management move to break the Teamsters Canada strike by having non-union management pilots fly struck goods out of Canada and into the United States, then the UPS pilots union will give 24 hour notice before withdrawing their pilot services worldwide.
Cingular Wireless will cut about 7,000 jobs, or about 10% of its workforce.
In the past year, U.S. existing home sales rose 5.6% and the national median home price in October rose to $187,000, an 8.8% increase over the past 12 months.
To compete with Boeing’s 7E7, Airbus will announce the A350-800 that will seat 250 passengers and fly 7,650 miles and the A350-900 that would seat 300 passengers and fly 6,600 miles. The German newspaper Handelsblatt stated that Aer Lingus is already in talks with Airbus about the purchase of a dozen A350s. Boeing has only announced two firm customer orders for its 7E7.
The yield curve continues to flatten with two-year Treasury notes yielding 2.98% and 10-year bonds standing at 4.17% yields.
According to Project Bread, poverty and hunger are at a new high in the state of Massachusetts as more jobs have been lost at a faster rate than any other state in the union over the last three years. Between 200 and 2003, the demand for emergency food has increased by 38% with Project Bread providing 40 million meals a year. So far this winter, calls to Project Bread’s Foodsource Hotline have increased by 50%.
When it comes to spending, the federal government spends during all seasons of the year. It is amazing to watch t the President and the Congress spend money they don't have. For example, take October. There was a 35% increase in government orders for defense aircraft. Bookings for non-defense capital goods, excluding aircraft, declined 3.6%, the first decline in 5 months. New orders for U.S. October durable goods declined 0.4% after September's figures were revised upward from a 0.2% increase to a rise of 0.9%.
Tuesday, November 23, 2004
11/23/04 China’s Currency
With the close of the G-20 meeting in Berlin, it is timely to discuss China’s currency. Beijing announced that China is not ready to change the current 8.3 yuan peg to the dollar. Gov. Xiaochuan of the People’s Bank of China remarked on Saturday that “it is still not the stage to talk about specific technical arrangement” in changing the exchange rate.” The words were a good deal more heated from Li Ruogo, deputy governor of the People’s Bank of China. In an interview he remarked that “China’s custom is that we never blame others for our own problem. For the past 26 years, we never put pressure or problems on to the world. The U.S. has the reverse attitude, whenever they have a problem, they blame others…Under heavy speculation we cannot move towards greater flexibility and under heavy external pressure we cannot. So the best environment for us is to gradually move towards a more flexible exchange rate when people don’t talk about it…The appreciation of the RMB will not solve the problems of unemployment in the U.S. because the cost of labor in China is only about 3% that of U.S. labor—they should give up textiles, shoe-making, and even agriculture probably. They should concentrate on sectors like aerospace and then sell those things to us and we would spend billions on this. We could easily balance the trade.” Ruogo might take an inward look into China. His country will be running a budget deficit in 2005. Their infrastructure problems are overwhelming. China has enough on its plate for decades to come. They are in no position to solve our deficit problem. On the other hand, China has over $500 billion in foreign exchange reserves, and that is not small change.
According to the Pentagon, the military death toll in Iraq for November is at least 101.
Frederick Hayek: “The idea that human kind can shape the world according to wish is what I call the fatal conceit.”
Wal-Mart is jump-starting Black Friday, the day after Thanksgiving. Last year, one in four shoppers did shop on Black Friday. Between yesterday and Thanksgiving, the company is offering on walmart.com significant savings on electronics, toys, jewelry, and other gifts, such as, women’s and men’s cashmere sweaters for $34.88 and 39.88, respectively. This promotion is well designed and timed in an effort to lure customers who “more than ever are doing their holiday shopping closer and closer to Christmas.” Interestingly, Black Friday was the biggest sales day of 2003, topping Christmas Eve, according to the International Council of Shopping Centers. Last year retailers built up large discounts leading up to Black Friday, and this has not been the case in 2004. Delos Smith, economist with the Conference Board, stated “the key to a successful holiday for the industry is not how many presents the kids get. It’s about Uncle Charlie and Aunt Millie. Will they get a gift or not? If the energy costs are high, the secondary players get scratched off the list. It’s the difference between buying a card or a gift that could determine the final outcome.”
Ludwig von Mises: “Government cannot make a person richer, but it can make a person poorer.”
Intel hired 800 people a year in India in the past two years. That rate is expected to continue with the completion of their new building in Bangalore.
Barry Goldwater: “I think every good Christian ought to kick Falwell right in the ass.”
The Canadian dollar is trading near a 12-year high versus the dollar.
According to MasterCard Advisors LLC, U.S. spending on retail and food services during the first two months of November rose 3.7% from a year earlier. The sales gain was roughly half of the 7.6% year-to-year increase for the same period in 2003. This retail data excludes car sales.
According to Edmunds.com, the average days-to-turn, which measures how many days on average it takes to sell vehicles after they arrive at dealerships, was 114 days for 2004 model year vehicles and 29 days for 2005 model year vehicles in October 2004. The average days-to-turn last month was 75 days. It should be noted that previous model year vehicles are making up an increasingly high percentage of new vehicle sales late in the calendar year. In October 2004, 54% of new vehicles sold were 2004 models. In October 2003, 45% of new vehicles sold were 2003 models, and in October 2002, 31% of new vehicles sold were 2002 models. In October 2004, the average discount from MSRP to net price for the 2004 model year vehicles was $5,970, up $481 from the same period a year earlier. Many industry analysts believe your greatest savings will be offered on 2004 models next month.
In October, the unemployment count rose 10,000 in Pennsylvania. Only the construction sector has grown every month of 2004. By contrast, the manufacturing sector has lost jobs 49 out of the past 51 months.
According to a report by Packaged Facts, overall, the organic foods and beverages industry has been experiencing annual growth between 17% and 22% over the past few years, and this market is expected to generate sales of over $32 billion by 2008. That’s good news for long-term holders of Whole Foods stock.
SAS, a business intelligence software company, was founded in 1976. Their revenue has grown steadily to its present $1.34 billion. Jim Goodnight, co-founder of SAS, will co-chair sessions at the World Economic Forum’s India Economic Summit in New Delhi with N.R. Narayana Murthy, chairman of Infosys, and with Shyam Saran, India’s Foreign secretary. In India, SAS enjoys a 22.5% share of the business intelligence software market. SAS is consistently recognized as one of our country’s leading employers.
Hiroshi Watanabe, Japan’s vice-finance minister: “The movement of currencies in the past seven days has been rapid and erratic, meaning this is the proper time to thin of intervention.” History has shown that the market is bigger than a government’s intervention. It will only serve as money poorly spent.
With the close of the G-20 meeting in Berlin, it is timely to discuss China’s currency. Beijing announced that China is not ready to change the current 8.3 yuan peg to the dollar. Gov. Xiaochuan of the People’s Bank of China remarked on Saturday that “it is still not the stage to talk about specific technical arrangement” in changing the exchange rate.” The words were a good deal more heated from Li Ruogo, deputy governor of the People’s Bank of China. In an interview he remarked that “China’s custom is that we never blame others for our own problem. For the past 26 years, we never put pressure or problems on to the world. The U.S. has the reverse attitude, whenever they have a problem, they blame others…Under heavy speculation we cannot move towards greater flexibility and under heavy external pressure we cannot. So the best environment for us is to gradually move towards a more flexible exchange rate when people don’t talk about it…The appreciation of the RMB will not solve the problems of unemployment in the U.S. because the cost of labor in China is only about 3% that of U.S. labor—they should give up textiles, shoe-making, and even agriculture probably. They should concentrate on sectors like aerospace and then sell those things to us and we would spend billions on this. We could easily balance the trade.” Ruogo might take an inward look into China. His country will be running a budget deficit in 2005. Their infrastructure problems are overwhelming. China has enough on its plate for decades to come. They are in no position to solve our deficit problem. On the other hand, China has over $500 billion in foreign exchange reserves, and that is not small change.
According to the Pentagon, the military death toll in Iraq for November is at least 101.
Frederick Hayek: “The idea that human kind can shape the world according to wish is what I call the fatal conceit.”
Wal-Mart is jump-starting Black Friday, the day after Thanksgiving. Last year, one in four shoppers did shop on Black Friday. Between yesterday and Thanksgiving, the company is offering on walmart.com significant savings on electronics, toys, jewelry, and other gifts, such as, women’s and men’s cashmere sweaters for $34.88 and 39.88, respectively. This promotion is well designed and timed in an effort to lure customers who “more than ever are doing their holiday shopping closer and closer to Christmas.” Interestingly, Black Friday was the biggest sales day of 2003, topping Christmas Eve, according to the International Council of Shopping Centers. Last year retailers built up large discounts leading up to Black Friday, and this has not been the case in 2004. Delos Smith, economist with the Conference Board, stated “the key to a successful holiday for the industry is not how many presents the kids get. It’s about Uncle Charlie and Aunt Millie. Will they get a gift or not? If the energy costs are high, the secondary players get scratched off the list. It’s the difference between buying a card or a gift that could determine the final outcome.”
Ludwig von Mises: “Government cannot make a person richer, but it can make a person poorer.”
Intel hired 800 people a year in India in the past two years. That rate is expected to continue with the completion of their new building in Bangalore.
Barry Goldwater: “I think every good Christian ought to kick Falwell right in the ass.”
The Canadian dollar is trading near a 12-year high versus the dollar.
According to MasterCard Advisors LLC, U.S. spending on retail and food services during the first two months of November rose 3.7% from a year earlier. The sales gain was roughly half of the 7.6% year-to-year increase for the same period in 2003. This retail data excludes car sales.
According to Edmunds.com, the average days-to-turn, which measures how many days on average it takes to sell vehicles after they arrive at dealerships, was 114 days for 2004 model year vehicles and 29 days for 2005 model year vehicles in October 2004. The average days-to-turn last month was 75 days. It should be noted that previous model year vehicles are making up an increasingly high percentage of new vehicle sales late in the calendar year. In October 2004, 54% of new vehicles sold were 2004 models. In October 2003, 45% of new vehicles sold were 2003 models, and in October 2002, 31% of new vehicles sold were 2002 models. In October 2004, the average discount from MSRP to net price for the 2004 model year vehicles was $5,970, up $481 from the same period a year earlier. Many industry analysts believe your greatest savings will be offered on 2004 models next month.
In October, the unemployment count rose 10,000 in Pennsylvania. Only the construction sector has grown every month of 2004. By contrast, the manufacturing sector has lost jobs 49 out of the past 51 months.
According to a report by Packaged Facts, overall, the organic foods and beverages industry has been experiencing annual growth between 17% and 22% over the past few years, and this market is expected to generate sales of over $32 billion by 2008. That’s good news for long-term holders of Whole Foods stock.
SAS, a business intelligence software company, was founded in 1976. Their revenue has grown steadily to its present $1.34 billion. Jim Goodnight, co-founder of SAS, will co-chair sessions at the World Economic Forum’s India Economic Summit in New Delhi with N.R. Narayana Murthy, chairman of Infosys, and with Shyam Saran, India’s Foreign secretary. In India, SAS enjoys a 22.5% share of the business intelligence software market. SAS is consistently recognized as one of our country’s leading employers.
Hiroshi Watanabe, Japan’s vice-finance minister: “The movement of currencies in the past seven days has been rapid and erratic, meaning this is the proper time to thin of intervention.” History has shown that the market is bigger than a government’s intervention. It will only serve as money poorly spent.
Monday, November 22, 2004
11/22/04 Rebounding Fuel Prices
Those shorting crude seemed to have forgotten about the Thanksgiving holiday season. It is a time for drivers to take to the road. In fact, according to the AAA, some 31 million Americans will drive 50 miles or more from home this Thanksgiving. That is 35 more than last year, and this amounts to a lot of fuel consumption. It is not surprising that crude is climbing back to $50 a barrel, and now stands at about $49.50 a barrel. The rising price of fuel was one of the reasons that the IMF lowered its global growth forecast for 2005 from 4.3% to 4%. The other main reason was the U.S. budget deficit. The year-over-year increase in our national debt has grown to a record $558 billion.
In case anyone thought irrational exuberance on Wall Street died with the dotcom era, Piper Jaffray upped its target price on Apple Computer from $52 to $100 a share. The stock closed at $55 on Friday.
ElBaradei, head of the IAEA, confirmed that Iran has produced several tons of uranium hexafluoride. After the cow has left the barn, so to speak, Iran has agreed to suspend uranium enrichment operations.
Krispy Kreme will not project its results for the fourth quarter.
GM is slowly moving its engineering work from North America to Korea and China. Pontiac will cut GTO production about 30% next year. GM stated on Friday that it will offer zero percent financing for as much as 72 months on most 2004 vehicles.
Retail studies show that shoppers redeeming gift cards spend an average of 15% to 20% more than the face value of the card.
Many seniors who live on fixed incomes are getting squeezed by rising costs for heating oil and natural gas. It could mean average monthly bills rising $30 to $50 during this winter. That may not register with those on Wall Street averaging six-figure incomes; however, it will have some impact on consumer spending.
The number of drug patents expiring in 2005 will be lower than it has been over the last several years.
Toshihiko Fukui, governor of the Bank of Japan: “We are seeing some disturbances. Our concern is whether this temporary pause is really short-lived or not…The sustainability of the Japanese economy depends on long the IT inventory adjustment lasts and how long the negative impact from the overseas economy continues.”
Mexico’s stock market reached all-time highs last week. Considering that 90% of Mexico’s exports travel to the U.S., I question the sustainability of the lofty share prices.
Those shorting crude seemed to have forgotten about the Thanksgiving holiday season. It is a time for drivers to take to the road. In fact, according to the AAA, some 31 million Americans will drive 50 miles or more from home this Thanksgiving. That is 35 more than last year, and this amounts to a lot of fuel consumption. It is not surprising that crude is climbing back to $50 a barrel, and now stands at about $49.50 a barrel. The rising price of fuel was one of the reasons that the IMF lowered its global growth forecast for 2005 from 4.3% to 4%. The other main reason was the U.S. budget deficit. The year-over-year increase in our national debt has grown to a record $558 billion.
In case anyone thought irrational exuberance on Wall Street died with the dotcom era, Piper Jaffray upped its target price on Apple Computer from $52 to $100 a share. The stock closed at $55 on Friday.
ElBaradei, head of the IAEA, confirmed that Iran has produced several tons of uranium hexafluoride. After the cow has left the barn, so to speak, Iran has agreed to suspend uranium enrichment operations.
Krispy Kreme will not project its results for the fourth quarter.
GM is slowly moving its engineering work from North America to Korea and China. Pontiac will cut GTO production about 30% next year. GM stated on Friday that it will offer zero percent financing for as much as 72 months on most 2004 vehicles.
Retail studies show that shoppers redeeming gift cards spend an average of 15% to 20% more than the face value of the card.
Many seniors who live on fixed incomes are getting squeezed by rising costs for heating oil and natural gas. It could mean average monthly bills rising $30 to $50 during this winter. That may not register with those on Wall Street averaging six-figure incomes; however, it will have some impact on consumer spending.
The number of drug patents expiring in 2005 will be lower than it has been over the last several years.
Toshihiko Fukui, governor of the Bank of Japan: “We are seeing some disturbances. Our concern is whether this temporary pause is really short-lived or not…The sustainability of the Japanese economy depends on long the IT inventory adjustment lasts and how long the negative impact from the overseas economy continues.”
Mexico’s stock market reached all-time highs last week. Considering that 90% of Mexico’s exports travel to the U.S., I question the sustainability of the lofty share prices.
Sunday, November 21, 2004
11/21/04 The Good, The Bad, And The Ugly
Rep. Charles Stenholm: “When both extremes are talking nonsense, there must be some way of getting them together that makes sense.” Sadly, at present, there appears little will to find a way. Within the $388 billion spending bill, the Weldon amendment was included. As Nancy Pelosi describes, “the Weldon amendment restricts access to abortion counseling, referral, and information…If a hospital, health insurance company, or doctor opposes Roe v. Wade, they could simply ignore it…Any law or regulation currently on the books to protect access to reproductive health services is at risk…Federal dollars should not be used to deny the federally-protected right to choose.”
By insisting on unrelated provisions, House Republicans were unable to enact recommendations of the 9/11 Commission. In fact, they reneged on a bipartisan agreement that might have strengthened our intelligence agencies.
Groucho Marx: “Military intelligence is a contradiction in terms.”
Calusewitz: “A great part of the information obtained in war is contradictory, a still greater part is false, and by far the greatest part is of doubtful character.”
According to the Pentagon, 1220 Americans have died in the Iraq war, and approximately 9,000 U.S. troops have been wounded in action.
Mark Zandi, chief economist at Economy.com: “Once the Chinese revalue, almost three-fourths of consumer goods imported into the United States will see price increases.”
Global quotas on textiles and garments are set to be phased on Jan. 1, 2005. According to the WTO, the U.S. imported $82.8 billion in textiles and clothing in 2003 and $58.2 billion in the first 8 months of 2004. The U.S. textile and clothing industries employ 2 million workers and produce a yearly output that exceeds $50 billion. China’s textile and clothing exports account for 30% of the country’s total exports, and 90 million people are employed in these industries. China anticipates that, with the elimination of quotas, textiles and garments can grow to 50% of their exports. India is also strong in textiles. They are expanding factories and expect a significant increase in textile and clothing exports, and believe these industries can expand to 15% of their total exports. Over the past two years I have described the number of plant closings and the number of jobs lost in the U.S. textile and clothing industries. Unfortunately, I think you will see more of the 2 million workers employed in these fields cut from the workforce and more plants will close. It will continue to adversely impact many communities, and many are in the South. Hopefully, some of the “values voters” can provide new sources of income for those left unemployed. Now we can witness how the ability of mainstream moral issues and the effort to define the moral infrastructure of our society can combine to pay the bills of those out of work.
According to the Arizona Republic, housing is metropolitan Phoenix’s biggest industry. One out of every three dollars in the city’s $140 billion economy is generated by the housing industry.
Lucent has 31,800 active employees attempting to support the benefits, including healthcare, for 125,000 retirees and tens of thousands of their spouses. This is a growing story at many companies throughout the U.S.
Our farmers are achieving some record crops, such as, 11.7 billion bushels of corn and more than 3 billion bushes of soybeans. The size of the harvests has driven down the price of many crops. According to the Farm Bill, when grain prices fall below minimum levels, the earnings for farmers gain an assist by U.S. support payments. That will definitely take place with corn growers.
Richard Arvedlund, money manager: “It will not be an exciting environment for the stock market. A slowdown in GDP growth implies profit growth will slow down sharply, particularly in the cyclical areas, which have been the market leaders.”
According to William Hester, CFA, since 1950 short-term growth in S&P 500 earnings and market performance show a near-zero correlation. Patricia Dechow and Ccatherine Schrand, professors of accounting at the University of Michigan and the University of Pennsylvania, respectively, suggest that "decline in the relationship between earnings and stock returns can be viewed as a decline in earnings quality." It might be wise to focus on any gap between company earnings and free cash flow. That can prove a helpful pathway towards the analysis of a company's quality of earnings.
Rep. Charles Stenholm: “When both extremes are talking nonsense, there must be some way of getting them together that makes sense.” Sadly, at present, there appears little will to find a way. Within the $388 billion spending bill, the Weldon amendment was included. As Nancy Pelosi describes, “the Weldon amendment restricts access to abortion counseling, referral, and information…If a hospital, health insurance company, or doctor opposes Roe v. Wade, they could simply ignore it…Any law or regulation currently on the books to protect access to reproductive health services is at risk…Federal dollars should not be used to deny the federally-protected right to choose.”
By insisting on unrelated provisions, House Republicans were unable to enact recommendations of the 9/11 Commission. In fact, they reneged on a bipartisan agreement that might have strengthened our intelligence agencies.
Groucho Marx: “Military intelligence is a contradiction in terms.”
Calusewitz: “A great part of the information obtained in war is contradictory, a still greater part is false, and by far the greatest part is of doubtful character.”
According to the Pentagon, 1220 Americans have died in the Iraq war, and approximately 9,000 U.S. troops have been wounded in action.
Mark Zandi, chief economist at Economy.com: “Once the Chinese revalue, almost three-fourths of consumer goods imported into the United States will see price increases.”
Global quotas on textiles and garments are set to be phased on Jan. 1, 2005. According to the WTO, the U.S. imported $82.8 billion in textiles and clothing in 2003 and $58.2 billion in the first 8 months of 2004. The U.S. textile and clothing industries employ 2 million workers and produce a yearly output that exceeds $50 billion. China’s textile and clothing exports account for 30% of the country’s total exports, and 90 million people are employed in these industries. China anticipates that, with the elimination of quotas, textiles and garments can grow to 50% of their exports. India is also strong in textiles. They are expanding factories and expect a significant increase in textile and clothing exports, and believe these industries can expand to 15% of their total exports. Over the past two years I have described the number of plant closings and the number of jobs lost in the U.S. textile and clothing industries. Unfortunately, I think you will see more of the 2 million workers employed in these fields cut from the workforce and more plants will close. It will continue to adversely impact many communities, and many are in the South. Hopefully, some of the “values voters” can provide new sources of income for those left unemployed. Now we can witness how the ability of mainstream moral issues and the effort to define the moral infrastructure of our society can combine to pay the bills of those out of work.
According to the Arizona Republic, housing is metropolitan Phoenix’s biggest industry. One out of every three dollars in the city’s $140 billion economy is generated by the housing industry.
Lucent has 31,800 active employees attempting to support the benefits, including healthcare, for 125,000 retirees and tens of thousands of their spouses. This is a growing story at many companies throughout the U.S.
Our farmers are achieving some record crops, such as, 11.7 billion bushels of corn and more than 3 billion bushes of soybeans. The size of the harvests has driven down the price of many crops. According to the Farm Bill, when grain prices fall below minimum levels, the earnings for farmers gain an assist by U.S. support payments. That will definitely take place with corn growers.
Richard Arvedlund, money manager: “It will not be an exciting environment for the stock market. A slowdown in GDP growth implies profit growth will slow down sharply, particularly in the cyclical areas, which have been the market leaders.”
According to William Hester, CFA, since 1950 short-term growth in S&P 500 earnings and market performance show a near-zero correlation. Patricia Dechow and Ccatherine Schrand, professors of accounting at the University of Michigan and the University of Pennsylvania, respectively, suggest that "decline in the relationship between earnings and stock returns can be viewed as a decline in earnings quality." It might be wise to focus on any gap between company earnings and free cash flow. That can prove a helpful pathway towards the analysis of a company's quality of earnings.
Saturday, November 20, 2004
11/20/04 Notoriously Unstable
Willie Scott is a volcanologist at the U.S. Geological Survey Cascades Volcano Observatory. He remarked about Mount St. Helens that “this is a rather unpredictable volcano. It’s very important we monitor the situation closely…Lava domes are notoriously unstable. The larger the dome, the more likely chunks will break off.” The new lava dome and the uplifted area encompass 70 acres and stand 750 feet high. It is growing daily.
As of today, the nation’s outstanding public debt is $7.45 trillion. There are just under 295 million people living in the U.S. Each citizen’s share of this debt is $25,267.76. The national debt mounts daily and so does each citizen’s share. The total national debt has risen 30% in Bush’s first four years. In my view, the mounting debt should be monitored closely. At this size, it is notoriously unstable.
According to the International Herald Tribune, during the Bush presidency, 92% of the nearly $1 trillion increase in publicly held debt has been financed by foreign lenders. Greenspan stated yesterday “international investors will eventually adjust their accumulation of dollar assets or, alternatively, seek higher dollar returns to offset concentration risk, elevating the cost of financing the U.S. current account deficit and rendering it increasingly less tenable.” Less tenable makes the situation less predictable. Uncertainty is bad for the equity and debt markets. According to the IMF, dollars account for about 64% of all the assets in the vaults of foreign central banks and national treasuries.
Greenspan: “Rising interest rates have been advertised for so long and in so many places that any one who has not appropriately hedged his position by now, obviously, is desirous of losing money.” The other day I suggested the elimination of all debt positions. Rising interest rates can only cause debt instruments to lose value.
Traded goods account for 25% of our GDP. At its current rate of growth, the account deficit amounts to 6% of our GDP, and therefore, it approximates 25% of the traded goods produced. That is an unsustainable situation.
In my view, the declining dollar and the twin tower deficits will lead to much lower equity prices and much higher interest rates.
Yesterday, crude oil jumped up 5% to $48.44 a barrel. December heating oil rose 8.7% for the week to $1.48 a gallon. Gold rose to $447 an ounce, up $8.70 for the week. Finally, the dollar was last seen trading at a 4 ½ year low versus the yen and at a new all-time low versus the euro. The South Korean won had its biggest weekly advance in six years. One should note that about three weeks ago the Bank of Japan forecast that core prices will increase in the fiscal year beginning April 1 for the first time in eight years.
We should maintain a watchful eye for the rally in Asian currencies. A balance of power could be in the works with more countries having an increasing appetite for non-dollar assets. This could contribute to a 4% increase in the value of China’s yuan. It would not be surprising to see the yuan pegged to a basket of currencies rather than to just our dollar. In my view, the big story in 2005 will be the move by international investors and foreign lenders away from U.S. assets. It makes rational sense for them to increase the diversity of their holdings. The declining dollar has limited the upside potential for their equity positions, and the unsustainable debt levels have imposed greater risks in holding U.S. debt instruments and Greenspan reminded us that record low interest rates are not here to stay.
Stephen Roach, chief economist for Morgan Stanley: “The personal saving rate stood at just 0.2% of disposable personal income in September 2004—down from 7.7% as recently as 1992.”
Zhou Xiaochuan, China’s central bank chief, stated yesterday that China is “prepared to talk with other G-20 countries about long-term economic policy, including its exchange rate.”
Even though net capital inflows have exceeded the trade deficit by a comfortable margin, the current trend is unsettling. It was only 12 months ago that the U.S. was importing twice the capital as the size of the trade deficit. In August of this year, foreign investment in U.S. assets actually declined. There was a rebound in September, but the margin to cover the deficit was slight. As the decline in the dollar quickens, the opportunity to attract foreign investors and lenders declines. This is a risk that cannot be ignored. In light of this risk, I do not believe investors are being compensated adequately in the equity and debt markets.
Samsung accounts for more than a 10th of Korean exports.
House and Senate negotiators agreed on a $388 billion federal spending bill that will fund 13 government departments in 2005. Don’t be fooled. There were cuts but there was still plenty of pork, and not surprisingly, they voted to increase the pay of civilian government workers by 3.5%. If Bush had the backbone, he’d veto this spending bill. With our record deficits, spending must be reduced and not just cut. Meanwhile, Rep. Bill Young, R-Fla., chairman of the House Appropriations Committee, and a chief author of this “omnibus” spending bill, stated “this is a lean and clean package that adheres to the budgetary limits agreed to by the president and the Congress.” Young proves it’s so easy to spend the money of others. He goes to the head of the class. Meanwhile, the taxpayers take it on the chin. Some day the voters will elect adherents to thrift to Congress and the oval office.
Cingular told AT&T Wireless contract workers that, as of 12/31/04, they would be let go. Glenshaw Glass Co, is a venerable, 109-year-old maker of glass bottles. They have 300 workers and they are Shaler County, Pa’s largest private employer. The company will shut down their furnaces on Monday, All 300 will lose their jobs.
Willie Scott is a volcanologist at the U.S. Geological Survey Cascades Volcano Observatory. He remarked about Mount St. Helens that “this is a rather unpredictable volcano. It’s very important we monitor the situation closely…Lava domes are notoriously unstable. The larger the dome, the more likely chunks will break off.” The new lava dome and the uplifted area encompass 70 acres and stand 750 feet high. It is growing daily.
As of today, the nation’s outstanding public debt is $7.45 trillion. There are just under 295 million people living in the U.S. Each citizen’s share of this debt is $25,267.76. The national debt mounts daily and so does each citizen’s share. The total national debt has risen 30% in Bush’s first four years. In my view, the mounting debt should be monitored closely. At this size, it is notoriously unstable.
According to the International Herald Tribune, during the Bush presidency, 92% of the nearly $1 trillion increase in publicly held debt has been financed by foreign lenders. Greenspan stated yesterday “international investors will eventually adjust their accumulation of dollar assets or, alternatively, seek higher dollar returns to offset concentration risk, elevating the cost of financing the U.S. current account deficit and rendering it increasingly less tenable.” Less tenable makes the situation less predictable. Uncertainty is bad for the equity and debt markets. According to the IMF, dollars account for about 64% of all the assets in the vaults of foreign central banks and national treasuries.
Greenspan: “Rising interest rates have been advertised for so long and in so many places that any one who has not appropriately hedged his position by now, obviously, is desirous of losing money.” The other day I suggested the elimination of all debt positions. Rising interest rates can only cause debt instruments to lose value.
Traded goods account for 25% of our GDP. At its current rate of growth, the account deficit amounts to 6% of our GDP, and therefore, it approximates 25% of the traded goods produced. That is an unsustainable situation.
In my view, the declining dollar and the twin tower deficits will lead to much lower equity prices and much higher interest rates.
Yesterday, crude oil jumped up 5% to $48.44 a barrel. December heating oil rose 8.7% for the week to $1.48 a gallon. Gold rose to $447 an ounce, up $8.70 for the week. Finally, the dollar was last seen trading at a 4 ½ year low versus the yen and at a new all-time low versus the euro. The South Korean won had its biggest weekly advance in six years. One should note that about three weeks ago the Bank of Japan forecast that core prices will increase in the fiscal year beginning April 1 for the first time in eight years.
We should maintain a watchful eye for the rally in Asian currencies. A balance of power could be in the works with more countries having an increasing appetite for non-dollar assets. This could contribute to a 4% increase in the value of China’s yuan. It would not be surprising to see the yuan pegged to a basket of currencies rather than to just our dollar. In my view, the big story in 2005 will be the move by international investors and foreign lenders away from U.S. assets. It makes rational sense for them to increase the diversity of their holdings. The declining dollar has limited the upside potential for their equity positions, and the unsustainable debt levels have imposed greater risks in holding U.S. debt instruments and Greenspan reminded us that record low interest rates are not here to stay.
Stephen Roach, chief economist for Morgan Stanley: “The personal saving rate stood at just 0.2% of disposable personal income in September 2004—down from 7.7% as recently as 1992.”
Zhou Xiaochuan, China’s central bank chief, stated yesterday that China is “prepared to talk with other G-20 countries about long-term economic policy, including its exchange rate.”
Even though net capital inflows have exceeded the trade deficit by a comfortable margin, the current trend is unsettling. It was only 12 months ago that the U.S. was importing twice the capital as the size of the trade deficit. In August of this year, foreign investment in U.S. assets actually declined. There was a rebound in September, but the margin to cover the deficit was slight. As the decline in the dollar quickens, the opportunity to attract foreign investors and lenders declines. This is a risk that cannot be ignored. In light of this risk, I do not believe investors are being compensated adequately in the equity and debt markets.
Samsung accounts for more than a 10th of Korean exports.
House and Senate negotiators agreed on a $388 billion federal spending bill that will fund 13 government departments in 2005. Don’t be fooled. There were cuts but there was still plenty of pork, and not surprisingly, they voted to increase the pay of civilian government workers by 3.5%. If Bush had the backbone, he’d veto this spending bill. With our record deficits, spending must be reduced and not just cut. Meanwhile, Rep. Bill Young, R-Fla., chairman of the House Appropriations Committee, and a chief author of this “omnibus” spending bill, stated “this is a lean and clean package that adheres to the budgetary limits agreed to by the president and the Congress.” Young proves it’s so easy to spend the money of others. He goes to the head of the class. Meanwhile, the taxpayers take it on the chin. Some day the voters will elect adherents to thrift to Congress and the oval office.
Cingular told AT&T Wireless contract workers that, as of 12/31/04, they would be let go. Glenshaw Glass Co, is a venerable, 109-year-old maker of glass bottles. They have 300 workers and they are Shaler County, Pa’s largest private employer. The company will shut down their furnaces on Monday, All 300 will lose their jobs.
Friday, November 19, 2004
11/19/04 A Recession Has Returned
In 1990, the Congress enacted the Budget Enforcement Act (BEA) in an effort to rein in yearly deficits that the government had experienced since 1970. By 1998, the government had a surplus of $68 billion, the first surplus since 1969. The discretionary spending caps and the PAYGO (PAY-AS-YOU-GO) provisions were extended twice until, on October 1, 2002, the Republican-controlled Congress voted not to extend discretionary spending caps and PAYGO rules. The efforts of the Blue Dog Coalition, a group of 36 moderate to conservative Democrats in the Congress, have been in vain. The Blue Dogs have attempted to impose enforceable spending limits that would serve as fiscal guardrails to restrain Congress and the president from enacting legislation that would increase the federal debt. Late Thursday, the Congress voted to increase the debt limit by $800 billion to $8.18 trillion. In sum, that increase brought to $2.23 trillion the total debt limit increases Bush has required in his four years in office, more than all the debt the U.S. accumulated from 1776 through 1986. Bush commended the debt ceiling increase and stated “passage of this legislation was important to protect the full faith and credit of the U.S.” Unfortunately, Bush doesn’t get it. With the same deficit policies in place, there is no place to go but down. Since Bush entered the White House, the Fed’s trade-weighted major currency dollar index indicates that the dollar has declined about 20%. The next 20% decline won’t take 4 years to take place. Global Insight anticipates the trade deficit will be $700 billion in 2005, up from $600 billion in 2004, and this will require a $2 billion daily inflow of foreign capital to fund the budget and trade deficits. The problem is that foreigners already own 50% of all U.S. Treasuries outstanding, 12% of U.S. agency bonds, and 25% of corporates. Their walls are well-endowed with our paper.
Rep. Tom Reynolds, Republican from NY: “If you don’t vote to increase the debt limit, you put our country in harm’s way.”
Rep. Peter De Fazio, Democrat from Oregon: “We are borrowing $1 million a minute to run the government.”
As mentioned, the PAYGO provision expired in 2002. Yesterday, the Republican rules committee would not let this provision be attached to the debt limit increase vote. By raising the debt limit, the government is asking each citizen of our nation to borrow an additional $2,000. Each one of us is a part owner of the daily increasing $7.4 trillion government debt, and this excludes trillions of future liabilities for Medicare and Social Security.
So why do I say our economy is now in the early stages of a recession? I’m not an economist- thank goodness. You might think I am shooting from the hip. I should point out that I don’t walk with a swagger and have never touched a drink or drugs. I haven’t even smoked. That makes me kind of different. In addition, I think for myself and don’t invest other people’s money. If I’m wrong, it’s my money that dwindles. Our economy has significant imbalances. In my view, the tipping point has been reached. The Conference Board’s Index of Leading Economic Indicators fell 0.3% in October, the fifth straight monthly decline. Some say the index must decline for three straight months and at least 3.5% over 6 months. There aren’t any hard rules and/or definitions. There are different theories on the subject. The Conference Board’s chief economist, Ken Goldstein, stated the five consecutive monthly declines in the index are “ a clear signal that the economy is losing steam, and may start off 2005 with a relatively weak pace of economic activity.”
Yesterday, Mad Cow and soybean rust did not cause the Philly Fed Manufacturing Index to fall to 20.7 in November from 28.5 in October. They didn’t make for the decline in new orders and shipments. They were not behind the 0.7% October decline in building permits in the U.S. A lot of people have purchased houses with little or no money down. Real estate taxes have escalated as the median price of a home has risen. Employee pay raises have not offset the rise in real estate taxes. Unfortunately, lenders are seeing foreclosures of houses only a few years old. That, I am afraid, will become a more common every day story in 2005.
I referred to the tipping point. There is no magic formula. Since Bush arrived in the Oval Office, net real earnings have declined for the average worker. It is not surprising that the savings rate is at an historical low while the average American’s total indebtedness is at an all-time high. That has been accompanied by record discretionary government spending, record budget and trade deficits, the need to spend almost $1 billion a day on interest on the nation’s debt, and a requirement to attract $2 billion a day in foreign capital to keep the economic ship afloat. It is members of Congress like Tom Reynolds who have put our nation in harm’s way. Their votes have produced record sending and record deficits and undermine our democracy and freedoms. Snow and others will place the blame on other countries not growing fast enough to solve our problems. Snow is a mouthpiece who had an abysmal record running a railroad. He isn’t up to the task of helping to make tough policy choices.
As for jobs, the Labor Department stated yesterday that, in the last week of October, 47 states and territories reported an increase in new unemployment claims while only six reported a decrease. Be wary of the employment reports. As I mentioned a couple of weeks ago, the non- farm payroll report counts an individual as two employees should that person be working two jobs. That is double counting. With the increase in those working more than one job to 8 million, there is a great deal of double counting and there will be more so with the growing trend to part time work, or work that is less than 32 hours a week and does not include benefits.
The negative cash flow of the average American and the negative cash flow at the municipal, state, and federal level have combined to place our nation in an economic declining position. The story is not that of 2.5% GDP growth or 3% GDP growth. There is no meaning to growth without an ability to sustain our way of life. That is not taking place. Don’t take my word for it. Look around you. Take a real good look. I don’t mean on Madison Avenue or Fifth Avenue. Take a good look on Main Street. The country isn’t making it on Main Street. Our country is red and blue on Main Street and comprises 98% of our citizens.
In 1990, the Congress enacted the Budget Enforcement Act (BEA) in an effort to rein in yearly deficits that the government had experienced since 1970. By 1998, the government had a surplus of $68 billion, the first surplus since 1969. The discretionary spending caps and the PAYGO (PAY-AS-YOU-GO) provisions were extended twice until, on October 1, 2002, the Republican-controlled Congress voted not to extend discretionary spending caps and PAYGO rules. The efforts of the Blue Dog Coalition, a group of 36 moderate to conservative Democrats in the Congress, have been in vain. The Blue Dogs have attempted to impose enforceable spending limits that would serve as fiscal guardrails to restrain Congress and the president from enacting legislation that would increase the federal debt. Late Thursday, the Congress voted to increase the debt limit by $800 billion to $8.18 trillion. In sum, that increase brought to $2.23 trillion the total debt limit increases Bush has required in his four years in office, more than all the debt the U.S. accumulated from 1776 through 1986. Bush commended the debt ceiling increase and stated “passage of this legislation was important to protect the full faith and credit of the U.S.” Unfortunately, Bush doesn’t get it. With the same deficit policies in place, there is no place to go but down. Since Bush entered the White House, the Fed’s trade-weighted major currency dollar index indicates that the dollar has declined about 20%. The next 20% decline won’t take 4 years to take place. Global Insight anticipates the trade deficit will be $700 billion in 2005, up from $600 billion in 2004, and this will require a $2 billion daily inflow of foreign capital to fund the budget and trade deficits. The problem is that foreigners already own 50% of all U.S. Treasuries outstanding, 12% of U.S. agency bonds, and 25% of corporates. Their walls are well-endowed with our paper.
Rep. Tom Reynolds, Republican from NY: “If you don’t vote to increase the debt limit, you put our country in harm’s way.”
Rep. Peter De Fazio, Democrat from Oregon: “We are borrowing $1 million a minute to run the government.”
As mentioned, the PAYGO provision expired in 2002. Yesterday, the Republican rules committee would not let this provision be attached to the debt limit increase vote. By raising the debt limit, the government is asking each citizen of our nation to borrow an additional $2,000. Each one of us is a part owner of the daily increasing $7.4 trillion government debt, and this excludes trillions of future liabilities for Medicare and Social Security.
So why do I say our economy is now in the early stages of a recession? I’m not an economist- thank goodness. You might think I am shooting from the hip. I should point out that I don’t walk with a swagger and have never touched a drink or drugs. I haven’t even smoked. That makes me kind of different. In addition, I think for myself and don’t invest other people’s money. If I’m wrong, it’s my money that dwindles. Our economy has significant imbalances. In my view, the tipping point has been reached. The Conference Board’s Index of Leading Economic Indicators fell 0.3% in October, the fifth straight monthly decline. Some say the index must decline for three straight months and at least 3.5% over 6 months. There aren’t any hard rules and/or definitions. There are different theories on the subject. The Conference Board’s chief economist, Ken Goldstein, stated the five consecutive monthly declines in the index are “ a clear signal that the economy is losing steam, and may start off 2005 with a relatively weak pace of economic activity.”
Yesterday, Mad Cow and soybean rust did not cause the Philly Fed Manufacturing Index to fall to 20.7 in November from 28.5 in October. They didn’t make for the decline in new orders and shipments. They were not behind the 0.7% October decline in building permits in the U.S. A lot of people have purchased houses with little or no money down. Real estate taxes have escalated as the median price of a home has risen. Employee pay raises have not offset the rise in real estate taxes. Unfortunately, lenders are seeing foreclosures of houses only a few years old. That, I am afraid, will become a more common every day story in 2005.
I referred to the tipping point. There is no magic formula. Since Bush arrived in the Oval Office, net real earnings have declined for the average worker. It is not surprising that the savings rate is at an historical low while the average American’s total indebtedness is at an all-time high. That has been accompanied by record discretionary government spending, record budget and trade deficits, the need to spend almost $1 billion a day on interest on the nation’s debt, and a requirement to attract $2 billion a day in foreign capital to keep the economic ship afloat. It is members of Congress like Tom Reynolds who have put our nation in harm’s way. Their votes have produced record sending and record deficits and undermine our democracy and freedoms. Snow and others will place the blame on other countries not growing fast enough to solve our problems. Snow is a mouthpiece who had an abysmal record running a railroad. He isn’t up to the task of helping to make tough policy choices.
As for jobs, the Labor Department stated yesterday that, in the last week of October, 47 states and territories reported an increase in new unemployment claims while only six reported a decrease. Be wary of the employment reports. As I mentioned a couple of weeks ago, the non- farm payroll report counts an individual as two employees should that person be working two jobs. That is double counting. With the increase in those working more than one job to 8 million, there is a great deal of double counting and there will be more so with the growing trend to part time work, or work that is less than 32 hours a week and does not include benefits.
The negative cash flow of the average American and the negative cash flow at the municipal, state, and federal level have combined to place our nation in an economic declining position. The story is not that of 2.5% GDP growth or 3% GDP growth. There is no meaning to growth without an ability to sustain our way of life. That is not taking place. Don’t take my word for it. Look around you. Take a real good look. I don’t mean on Madison Avenue or Fifth Avenue. Take a good look on Main Street. The country isn’t making it on Main Street. Our country is red and blue on Main Street and comprises 98% of our citizens.
Thursday, November 18, 2004
11/18/04 Two Very Different Forecasts
Intel’s CEO: “I am looking at much improved performance in the first half of 2005 than in 2004.” On the other hand, Applied Materials’ CEO stated the company “expects new orders to shrink by one-third in the first quarter because some of the orders were placed in this year’s fourth quarter.” One of the reasons for the rush to place orders by year-end is to take advance of the 50% tax break on capital investment, a tax break which will expire on Jan. 1, 2005 unless extended. This is a good illustration of the phenomenon taking place throughout industry this month and next. You are seeing a short-term spike in capital investment for tax reasons. The rush to spend will end just as the $100,000 tax credit to purchase a Hummer was sharply reduced to $25,000, and then GM couldn’t move the car off dealer lots through large incentives. You can’t operate an investment portfolio based on tax decisions alone, and the same can be stated for running a business.
Kmart has about 144,000 employees with about 2,000 at its Troy, MI headquarters. Sears employs 249,000 with 4,800 at its Hoffman Estates headquarters. Sears’ CEO stated there will be “head count” changes. Financial engineering will not create positive same-store sales gains. In my view, from a retailing perspective, Wal-Mart and Target will continue to eat Kmart’s and Sears’ breakfast, lunch, and dinner.
According to independent, non-sponsored research conducted by Feedback Research, results indicated that this year’s online holiday shopping season kicked off stronger than last year. In addition, 52% indicated they will begin holiday gift buying more than 30 days before Christmas, up from 43% in 2004. Online shoppers are also planning to finish buying their gifts sooner than in-store shoppers. A total of 66% of respondents stated they will buy gifts online this year, up from 54% last year. Seventy-two percent replied that clothing was their holiday gift of choice, followed by both movies and toys, each with 60%.
In October, industrial output rose 0.7% with capacity utilization rising to 77.7%. Over the last 30 years, the average has been 81.1%.
P.J. O’Rourke: “Giving money and power to the government is like giving whiskey and car keys to teenage boys.”
According to the BLS, real average weekly earnings fell by 0.4% from September to October after seasonal adjustment. After deflation by the CPI, average weekly earnings decreased by 0.4% from October 2003 to October 2004.
John Maynard Keyes: “The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
Crude stocks have risen more than 8% since late September. However, supplies of heating oil remain 16% below year-ago levels. Heating oil futures rose yesterday by 8.45 cents to $1.41 a gallon and crude rose by 73 cents to $46.84 a barrel.
Sam Rayburn: “When you get too big a majority, you’re immediately in trouble.”
Delphi Corp. is closing its Foley, Alabama plant and about 170 jobs will be lost.
Gold topped $445 per ounce. Silver rose to $7.66 per ounce. Copper settled at $1.40 a pound.
Consumer core prices are rising at a 2.4% annual rate, up from 1.3% in the first ten months of 2003.
Ronald Reagan: “Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.”
There were many reasons given as well as many rumors provided for yesterday’s drop in interest rates for treasury bonds. For example, the ten-year yield declined from 4.21% to 4.14%. Considering the inflation report, that was quite a performance. I don’t deal in rumors- just the facts- like Joe Friday. As such, I don’t know why the rates declined like they did.
Senator Fritz Hollings of South Carolina is retiring from the Senate after a 38-year public service career. On Tuesday, he gave a farewell address to his fellow Senators. Here are some excerpts from this address: “We had five drunks or six drunks when I came here. There is nobody drunk in the United States Senate. We don’t have time to be drunk and, more than that, we have the women. We had one woman. Now we have 14, and you can’t shut them up…Take right now the issue that is going to confront us tomorrow afternoon or Thursday of raising the debt limit. We are spending $600 billion more than we are taking in, which is 6% of our GDP. In the European Union, if you exceed 3% of your GDP, you are not eligible to be in the European Union. Here we are telling the world what they ought to do in diplomacy, international affairs, defense affairs, and fiscal affairs, and we would not even be eligible to be in the European Union. We have, Mr. President, the economy on steroids. Add it up. Add up the deficit of 2001, 2002, 2003, and 2004-those four years- and you have $1.7 trillion that we have goosed into the economy with these tax cuts…We have to do something about that deficit…When Bush came in, he turned a $6 trillion projected surplus to a $5 trillion projected deficit, and now we have to increase the debt limit. Now the dollar is in a deep dive. Interest rates are going to have to go up. We are depending on financing our debt some $700 billion by the Japanese, $170 billion by the Chinese, and $67 billion by Korea. Can you imagine going with a tin cup to Korea, begging: Please finance my debt because I need another tax cut?…
We don’t have time for constituents, except for the givers. Somebody ought to tell the truth about that…Money is a cancer on the body politic.”
Google stated its revenue growth rate from the second to the third quarter of 2004 may not be sustainable into the fourth quarter.
Intel’s CEO: “I am looking at much improved performance in the first half of 2005 than in 2004.” On the other hand, Applied Materials’ CEO stated the company “expects new orders to shrink by one-third in the first quarter because some of the orders were placed in this year’s fourth quarter.” One of the reasons for the rush to place orders by year-end is to take advance of the 50% tax break on capital investment, a tax break which will expire on Jan. 1, 2005 unless extended. This is a good illustration of the phenomenon taking place throughout industry this month and next. You are seeing a short-term spike in capital investment for tax reasons. The rush to spend will end just as the $100,000 tax credit to purchase a Hummer was sharply reduced to $25,000, and then GM couldn’t move the car off dealer lots through large incentives. You can’t operate an investment portfolio based on tax decisions alone, and the same can be stated for running a business.
Kmart has about 144,000 employees with about 2,000 at its Troy, MI headquarters. Sears employs 249,000 with 4,800 at its Hoffman Estates headquarters. Sears’ CEO stated there will be “head count” changes. Financial engineering will not create positive same-store sales gains. In my view, from a retailing perspective, Wal-Mart and Target will continue to eat Kmart’s and Sears’ breakfast, lunch, and dinner.
According to independent, non-sponsored research conducted by Feedback Research, results indicated that this year’s online holiday shopping season kicked off stronger than last year. In addition, 52% indicated they will begin holiday gift buying more than 30 days before Christmas, up from 43% in 2004. Online shoppers are also planning to finish buying their gifts sooner than in-store shoppers. A total of 66% of respondents stated they will buy gifts online this year, up from 54% last year. Seventy-two percent replied that clothing was their holiday gift of choice, followed by both movies and toys, each with 60%.
In October, industrial output rose 0.7% with capacity utilization rising to 77.7%. Over the last 30 years, the average has been 81.1%.
P.J. O’Rourke: “Giving money and power to the government is like giving whiskey and car keys to teenage boys.”
According to the BLS, real average weekly earnings fell by 0.4% from September to October after seasonal adjustment. After deflation by the CPI, average weekly earnings decreased by 0.4% from October 2003 to October 2004.
John Maynard Keyes: “The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
Crude stocks have risen more than 8% since late September. However, supplies of heating oil remain 16% below year-ago levels. Heating oil futures rose yesterday by 8.45 cents to $1.41 a gallon and crude rose by 73 cents to $46.84 a barrel.
Sam Rayburn: “When you get too big a majority, you’re immediately in trouble.”
Delphi Corp. is closing its Foley, Alabama plant and about 170 jobs will be lost.
Gold topped $445 per ounce. Silver rose to $7.66 per ounce. Copper settled at $1.40 a pound.
Consumer core prices are rising at a 2.4% annual rate, up from 1.3% in the first ten months of 2003.
Ronald Reagan: “Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.”
There were many reasons given as well as many rumors provided for yesterday’s drop in interest rates for treasury bonds. For example, the ten-year yield declined from 4.21% to 4.14%. Considering the inflation report, that was quite a performance. I don’t deal in rumors- just the facts- like Joe Friday. As such, I don’t know why the rates declined like they did.
Senator Fritz Hollings of South Carolina is retiring from the Senate after a 38-year public service career. On Tuesday, he gave a farewell address to his fellow Senators. Here are some excerpts from this address: “We had five drunks or six drunks when I came here. There is nobody drunk in the United States Senate. We don’t have time to be drunk and, more than that, we have the women. We had one woman. Now we have 14, and you can’t shut them up…Take right now the issue that is going to confront us tomorrow afternoon or Thursday of raising the debt limit. We are spending $600 billion more than we are taking in, which is 6% of our GDP. In the European Union, if you exceed 3% of your GDP, you are not eligible to be in the European Union. Here we are telling the world what they ought to do in diplomacy, international affairs, defense affairs, and fiscal affairs, and we would not even be eligible to be in the European Union. We have, Mr. President, the economy on steroids. Add it up. Add up the deficit of 2001, 2002, 2003, and 2004-those four years- and you have $1.7 trillion that we have goosed into the economy with these tax cuts…We have to do something about that deficit…When Bush came in, he turned a $6 trillion projected surplus to a $5 trillion projected deficit, and now we have to increase the debt limit. Now the dollar is in a deep dive. Interest rates are going to have to go up. We are depending on financing our debt some $700 billion by the Japanese, $170 billion by the Chinese, and $67 billion by Korea. Can you imagine going with a tin cup to Korea, begging: Please finance my debt because I need another tax cut?…
We don’t have time for constituents, except for the givers. Somebody ought to tell the truth about that…Money is a cancer on the body politic.”
Google stated its revenue growth rate from the second to the third quarter of 2004 may not be sustainable into the fourth quarter.
Wednesday, November 17, 2004
11/17/04 Creating Shareholder Value
There are many ways to accomplish this endeavor. One is through merging. Kmart will Buy Sears, creating the third largest retailer with about 3,500 stores. The transaction is valued at $11 billion, and the new company will be called Sears Holdings even though each business will be operated separately under their respective brand names. Eddie Lampert, the largest shareholder in each company, will look to sell more stores and unleash underlying shareholder value. So far, he has done just that after Kmart came out of bankruptcy. This is a merger of two weak retailers.
Then there is the case of HP. They grew quarterly revenue 8% year-over-year. The problem is that their receivables increased $1.8 billion from the prior quarter to $10.2 billion and inventory ended the quarter at $7.1 billion, up $1 billion or 16+% year-over-year. In other words, the headlines read great with respect to sales and earnings but beneath the surface potential problems loom.
Then there is cost cutting in an effort to unlock shareholder value. GM plans to close its Baltimore assembly plant next year. The plant makes the Chevy Astro and the GMC Safari. There is practically no demand for these vehicles, and hasn’t been in well over a year. The shutdown will impact about 1,000 hourly and 100 salaried workers.
Bertrand Russell: “The fact that an opinion has been widely held is no evidence whatever that it is not utterly absurd.”
Marcel Proust: “The voyage of discovery is not in seeking new landscapes but in having new eyes.”
One of the problems with security analysts and market sages is that they look at the landscape with old eyes. Often, one hears the same stories about year-end rallies and rallies after presidential elections. Unfortunately, the landscape’s underpinnings change through the years. It requires new eyes. On Thursday night, the Senate will take up the vote for increasing the debt limit. Since Bush took office, the debt limit has been increased by more than $2 trillion to its present $7.4 trillion. Now, Republicans want to raise the debt limit for the third time in three years. This has never taken place in our nation’s history. Will this vote be accompanied by a vote on spending measures to control the budget deficit?
Nancy Pelosi: “We must return to fiscal responsibility, because no nation has ever been strong, free, and bankrupt.” If the Senate does not put forth any pay-as-you-go measures, I urge investors to sharply reduce their holdings in equities, and begin with those companies not central to your long-term objectives.
General Omar Bradley: “Our is a world of nuclear giants and ethical infants. If we continue to develop our technology without wisdom or prudence, our servant may prove to be our executioner.”
Wal-Mart’s CFO stated current U.S. quarterly sales remain sluggish.
GM’s October sales in western Europe fell 9.5%.
Goldman Sachs suggests that 2005 will prove to be another year of modest tech spending.
According to Cendant, there are more than 89 million members of frequent flyer programs today, and $1.9 billion is spent annually as part of loyalty programs.
The Association of Flight Attendants represents more than 46,000 flight attendants at 26 airlines. The president of the AFA urged union leaders to authorize a nationwide strike and railed against U.S. airlines for slashing flight attendants’ pay and benefits.
The euro traded at a record high and gold hit a new 16-year high.
The index for crude materials rose 4.3% in October compared with a decline of 4.2% in September. U.S. October PPI intermediate prices rose 0.9% with core prices up 0.3% for the second consecutive month. The PPI is now up 4.4% in the past 12 months, with the core rate up 1.8% in the past year. The good news is that crude reached $55.67 on October 25, and it’s now trading around the $46 level. Longer-term inflation worries remain subdued as the difference between the 10-year Treasury bond and 10-year TIPS is about 2.5 percentage points, close to the 10-year average.
Money Foods is closing its three U.S. mushroom operations in Michigan, Indiana, and San Mateo County, CA. The farms have not made any money in the last four years. Several hundred workers will lose their jobs. Osram Sylvania will close its Waldoboro, Maine light bulb filament plant and 134 workers will lose jobs. Most of the production will be shifted to the Czech Republic, where labor costs are cheaper.
There are many ways to accomplish this endeavor. One is through merging. Kmart will Buy Sears, creating the third largest retailer with about 3,500 stores. The transaction is valued at $11 billion, and the new company will be called Sears Holdings even though each business will be operated separately under their respective brand names. Eddie Lampert, the largest shareholder in each company, will look to sell more stores and unleash underlying shareholder value. So far, he has done just that after Kmart came out of bankruptcy. This is a merger of two weak retailers.
Then there is the case of HP. They grew quarterly revenue 8% year-over-year. The problem is that their receivables increased $1.8 billion from the prior quarter to $10.2 billion and inventory ended the quarter at $7.1 billion, up $1 billion or 16+% year-over-year. In other words, the headlines read great with respect to sales and earnings but beneath the surface potential problems loom.
Then there is cost cutting in an effort to unlock shareholder value. GM plans to close its Baltimore assembly plant next year. The plant makes the Chevy Astro and the GMC Safari. There is practically no demand for these vehicles, and hasn’t been in well over a year. The shutdown will impact about 1,000 hourly and 100 salaried workers.
Bertrand Russell: “The fact that an opinion has been widely held is no evidence whatever that it is not utterly absurd.”
Marcel Proust: “The voyage of discovery is not in seeking new landscapes but in having new eyes.”
One of the problems with security analysts and market sages is that they look at the landscape with old eyes. Often, one hears the same stories about year-end rallies and rallies after presidential elections. Unfortunately, the landscape’s underpinnings change through the years. It requires new eyes. On Thursday night, the Senate will take up the vote for increasing the debt limit. Since Bush took office, the debt limit has been increased by more than $2 trillion to its present $7.4 trillion. Now, Republicans want to raise the debt limit for the third time in three years. This has never taken place in our nation’s history. Will this vote be accompanied by a vote on spending measures to control the budget deficit?
Nancy Pelosi: “We must return to fiscal responsibility, because no nation has ever been strong, free, and bankrupt.” If the Senate does not put forth any pay-as-you-go measures, I urge investors to sharply reduce their holdings in equities, and begin with those companies not central to your long-term objectives.
General Omar Bradley: “Our is a world of nuclear giants and ethical infants. If we continue to develop our technology without wisdom or prudence, our servant may prove to be our executioner.”
Wal-Mart’s CFO stated current U.S. quarterly sales remain sluggish.
GM’s October sales in western Europe fell 9.5%.
Goldman Sachs suggests that 2005 will prove to be another year of modest tech spending.
According to Cendant, there are more than 89 million members of frequent flyer programs today, and $1.9 billion is spent annually as part of loyalty programs.
The Association of Flight Attendants represents more than 46,000 flight attendants at 26 airlines. The president of the AFA urged union leaders to authorize a nationwide strike and railed against U.S. airlines for slashing flight attendants’ pay and benefits.
The euro traded at a record high and gold hit a new 16-year high.
The index for crude materials rose 4.3% in October compared with a decline of 4.2% in September. U.S. October PPI intermediate prices rose 0.9% with core prices up 0.3% for the second consecutive month. The PPI is now up 4.4% in the past 12 months, with the core rate up 1.8% in the past year. The good news is that crude reached $55.67 on October 25, and it’s now trading around the $46 level. Longer-term inflation worries remain subdued as the difference between the 10-year Treasury bond and 10-year TIPS is about 2.5 percentage points, close to the 10-year average.
Money Foods is closing its three U.S. mushroom operations in Michigan, Indiana, and San Mateo County, CA. The farms have not made any money in the last four years. Several hundred workers will lose their jobs. Osram Sylvania will close its Waldoboro, Maine light bulb filament plant and 134 workers will lose jobs. Most of the production will be shifted to the Czech Republic, where labor costs are cheaper.
11/17/04 Creating Shareholder Value
There are many ways to accomplish this endeavor. One is through merging. Kmart will Buy Sears, creating the third largest retailer with about 3,500 stores. The transaction is valued at $11 billion, and the new company will be called Sears Holdings even though each business will be operated separately under their respective brand names. Eddie Lampert, the largest shareholder in each company, will look to sell more stores and unleash underlying shareholder value. So far, he has done just that after Kmart came out of bankruptcy. This is a merger of two weak retailers.
Then there is the case of HP. They grew quarterly revenue 8% year-over-year. The problem is that their receivables increased $1.8 billion from the prior quarter to $10.2 billion and inventory ended the quarter at $7.1 billion, up $1 billion or 16+% year-over-year. In other words, the headlines read great with respect to sales and earnings but beneath the surface potential problems loom.
Then there is cost cutting in an effort to unlock shareholder value. GM plans to close its Baltimore assembly plant next year. The plant makes the Chevy Astro and the GMC Safari. There is practically no demand for these vehicles, and hasn’t been in well over a year. The shutdown will impact about 1,000 hourly and 100 salaried workers.
Bertrand Russell: “The fact that an opinion has been widely held is no evidence whatever that it is not utterly absurd.”
Marcel Proust: “The voyage of discovery is not in seeking new landscapes but in having new eyes.”
One of the problems with security analysts and market sages is that they look at the landscape with old eyes. Often, one hears the same stories about year-end rallies and rallies after presidential elections. Unfortunately, the landscape’s underpinnings change through the years. It requires new eyes. On Thursday night, the Senate will take up the vote for increasing the debt limit. Since Bush took office, the debt limit has been increased by more than $2 trillion to its present $7.4 trillion. Now, Republicans want to raise the debt limit for the third time in three years. This has never taken place in our nation’s history. Will this vote be accompanied by a vote on spending measures to control the budget deficit?
Nancy Pelosi: “We must return to fiscal responsibility, because no nation has ever been strong, free, and bankrupt.” If the Senate does not put forth any pay-as-you-go measures, I urge investors to sharply reduce their holdings in equities, and begin with those companies not central to your long-term objectives.
General Omar Bradley: “Our is a world of nuclear giants and ethical infants. If we continue to develop our technology without wisdom or prudence, our servant may prove to be our executioner.”
Wal-Mart’s CFO stated current U.S. quarterly sales remain sluggish.
GM’s October sales in western Europe fell 9.5%.
Goldman Sachs suggests that 2005 will prove to be another year of modest tech spending.
According to Cendant, there are more than 89 million members of frequent flyer programs today, and $1.9 billion is spent annually as part of loyalty programs.
The Association of Flight Attendants represents more than 46,000 flight attendants at 26 airlines. The president of the AFA urged union leaders to authorize a nationwide strike and railed against U.S. airlines for slashing flight attendants’ pay and benefits.
The euro traded at a record high and gold hit a new 16-year high.
The index for crude materials rose 4.3% in October compared with a decline of 4.2% in September. U.S. October PPI intermediate prices rose 0.9% with core prices up 0.3% for the second consecutive month. The PPI is now up 4.4% in the past 12 months, with the core rate up 1.8% in the past year. The good news is that crude reached $55.67 on October 25, and it’s now trading around the $46 level. Longer-term inflation worries remain subdued as the difference between the 10-year Treasury bond and 10-year TIPS is about 2.5 percentage points, close to the 10-year average.
Money Foods is closing its three U.S. mushroom operations in Michigan, Indiana, and San Mateo County, CA. The farms have not made any money in the last four years. Several hundred workers will lose their jobs. Osram Sylvania will close its Waldoboro, Maine light bulb filament plant and 134 workers will lose jobs. Most of the production will be shifted to the Czech Republic, where labor costs are cheaper.
There are many ways to accomplish this endeavor. One is through merging. Kmart will Buy Sears, creating the third largest retailer with about 3,500 stores. The transaction is valued at $11 billion, and the new company will be called Sears Holdings even though each business will be operated separately under their respective brand names. Eddie Lampert, the largest shareholder in each company, will look to sell more stores and unleash underlying shareholder value. So far, he has done just that after Kmart came out of bankruptcy. This is a merger of two weak retailers.
Then there is the case of HP. They grew quarterly revenue 8% year-over-year. The problem is that their receivables increased $1.8 billion from the prior quarter to $10.2 billion and inventory ended the quarter at $7.1 billion, up $1 billion or 16+% year-over-year. In other words, the headlines read great with respect to sales and earnings but beneath the surface potential problems loom.
Then there is cost cutting in an effort to unlock shareholder value. GM plans to close its Baltimore assembly plant next year. The plant makes the Chevy Astro and the GMC Safari. There is practically no demand for these vehicles, and hasn’t been in well over a year. The shutdown will impact about 1,000 hourly and 100 salaried workers.
Bertrand Russell: “The fact that an opinion has been widely held is no evidence whatever that it is not utterly absurd.”
Marcel Proust: “The voyage of discovery is not in seeking new landscapes but in having new eyes.”
One of the problems with security analysts and market sages is that they look at the landscape with old eyes. Often, one hears the same stories about year-end rallies and rallies after presidential elections. Unfortunately, the landscape’s underpinnings change through the years. It requires new eyes. On Thursday night, the Senate will take up the vote for increasing the debt limit. Since Bush took office, the debt limit has been increased by more than $2 trillion to its present $7.4 trillion. Now, Republicans want to raise the debt limit for the third time in three years. This has never taken place in our nation’s history. Will this vote be accompanied by a vote on spending measures to control the budget deficit?
Nancy Pelosi: “We must return to fiscal responsibility, because no nation has ever been strong, free, and bankrupt.” If the Senate does not put forth any pay-as-you-go measures, I urge investors to sharply reduce their holdings in equities, and begin with those companies not central to your long-term objectives.
General Omar Bradley: “Our is a world of nuclear giants and ethical infants. If we continue to develop our technology without wisdom or prudence, our servant may prove to be our executioner.”
Wal-Mart’s CFO stated current U.S. quarterly sales remain sluggish.
GM’s October sales in western Europe fell 9.5%.
Goldman Sachs suggests that 2005 will prove to be another year of modest tech spending.
According to Cendant, there are more than 89 million members of frequent flyer programs today, and $1.9 billion is spent annually as part of loyalty programs.
The Association of Flight Attendants represents more than 46,000 flight attendants at 26 airlines. The president of the AFA urged union leaders to authorize a nationwide strike and railed against U.S. airlines for slashing flight attendants’ pay and benefits.
The euro traded at a record high and gold hit a new 16-year high.
The index for crude materials rose 4.3% in October compared with a decline of 4.2% in September. U.S. October PPI intermediate prices rose 0.9% with core prices up 0.3% for the second consecutive month. The PPI is now up 4.4% in the past 12 months, with the core rate up 1.8% in the past year. The good news is that crude reached $55.67 on October 25, and it’s now trading around the $46 level. Longer-term inflation worries remain subdued as the difference between the 10-year Treasury bond and 10-year TIPS is about 2.5 percentage points, close to the 10-year average.
Money Foods is closing its three U.S. mushroom operations in Michigan, Indiana, and San Mateo County, CA. The farms have not made any money in the last four years. Several hundred workers will lose their jobs. Osram Sylvania will close its Waldoboro, Maine light bulb filament plant and 134 workers will lose jobs. Most of the production will be shifted to the Czech Republic, where labor costs are cheaper.
Tuesday, November 16, 2004
11/16/04 U.S. Small Business Owners’ Early Holiday Sales Forecast
According to the recent DollarDays survey, 48% of small business owners say their customers are more focused on price this year than they were last year, while 33% say their customers will be about as cost-conscious as last year. Only 13% expect their shoppers to be less frugal. Importantly, 13% say 2004 holiday sales to date are ahead of last year’s sales, while 27% sat sales are even and 26% say sales are behind. Sixteen percent say they will hire additional help for the busiest shopping season of the year, while 70% say they won’t. Twelve percent say they will begin marking down seasonal merchandise right after Thanksgiving, while 19% say their first markdowns will occur by Dec. 10. In sum, Marc Joseph, COO of DollarDays, stated “small business owners are clearly walking the line between being optimistic about their busiest income-generating season and being pragmatic.”
Marc Joseph’s comments could also characterize the situation at Wal-Mart, the ultimate proxy for the nation’s average paycheck-to-paycheck consumer. The company’s CEO is optimistic heading into the holiday shopping season; however, the results just reported for the third quarter were not pleasing. The Wal-Mart stores unit “had a poor quarter” with same-store sales rising only 1.3%. Sam’s Club comp sales growth was somewhat better at 4%, but compared to the results at Costco, they too were disappointing. The International division continues as the star performer with comp sales for the quarter rising 18%. In sum, overall corporate sales were below forecasts and net income benefited from a work opportunity tax credit, which acts as an incentive to hire certain workers, such as, former welfare recipients. One might also note that, as lower margin grocery sales grow as a percentage of sales, it can be expected that profit margins will be tested. International operations will need to carry a larger share of the growth story.
Justice Brandeis: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
Office Depot is cutting 819 workers. Detroit Public Schools announced it will have to cut 4,000 jobs and close as many as 40 of the district’s 255 schools due to the latest projected budget crisis. Putnam is cutting 100 jobs.
The UK is experiencing a soft patch in its housing sector.
The Pension Benefit Guaranty Corp. lost $12.1 billion in fiscal 2004, boosting its year-end deficit to $23.3 billion, the federal agency stated yesterday. Most of the loss came from $14.7 billion in terminated pension plans. In addition, the agency calculated $96 billion in unfunded vested benefits in other plans as “reasonably possible” at risk of default, up from $82 billion a year earlier. I wonder how long this growing financial cancer can be swept under the rug?
December crude closed yesterday at $46.87 a barrel, a two-month low.
Justice Brandeis: “Experience teaches us to be most on our guard to protect liberty when the government purposes are beneficent.” When those in elected office choose power for the few over the well-being of the majority, then it’s time to watch the burning fuse on the exposed time-bomb.
Many are adept at spouting statistics. One must be wary of those that tell half the story. For example, according to Taxprof, the tax burden in the U.S. is the second lowest of the 30 most advanced nations in OECD. As a percentage of GDP, the OECD stated it is 25.4% in the U.S., and that only Mexico at 19.5% is lower. Under Carter, the percentage was 18.4% and under Reagan it was 18.2%. Even that only tells part of the story. There is a growing gap between tax revenues and expenditures, and that’s why we have record budget deficits. In addition, we should take one further look at the OECD data. Finland is the 4th highest taxed country on the OECD list but the World Economic Forum ranks Finland as the most competitive global economy. Sweden is the highest taxed country and yet it is the third most competitive after the U.S. Statistics can play games with the full story.
Gold hit $440 per ounce.
IDC stated that PC sales growth will slow to 10.5% in 2005 “based on the economic assumption that the current boom is fairly weak as far as booms go and is going to be relatively short.” The last recession was a short one so why can’t this “boom” be relatively short?
Laurence Kotlikoff, professor of economics at Boston University, stated that Medicare and Social Security represent unfunded future liabilities of $43 trillion. He asks “how are we going to pay these bills? The government will have to print more money and you’d want to sell your bonds.” I would also add, as I have done so for two years, you should maintain the smallest holding possible in U.S. dollars. They represent an accident waiting to happen.
U.S. retail chains' same-store sales fell 0.4% in the week ended Nov. 13 compared to the prior week.
According to the recent DollarDays survey, 48% of small business owners say their customers are more focused on price this year than they were last year, while 33% say their customers will be about as cost-conscious as last year. Only 13% expect their shoppers to be less frugal. Importantly, 13% say 2004 holiday sales to date are ahead of last year’s sales, while 27% sat sales are even and 26% say sales are behind. Sixteen percent say they will hire additional help for the busiest shopping season of the year, while 70% say they won’t. Twelve percent say they will begin marking down seasonal merchandise right after Thanksgiving, while 19% say their first markdowns will occur by Dec. 10. In sum, Marc Joseph, COO of DollarDays, stated “small business owners are clearly walking the line between being optimistic about their busiest income-generating season and being pragmatic.”
Marc Joseph’s comments could also characterize the situation at Wal-Mart, the ultimate proxy for the nation’s average paycheck-to-paycheck consumer. The company’s CEO is optimistic heading into the holiday shopping season; however, the results just reported for the third quarter were not pleasing. The Wal-Mart stores unit “had a poor quarter” with same-store sales rising only 1.3%. Sam’s Club comp sales growth was somewhat better at 4%, but compared to the results at Costco, they too were disappointing. The International division continues as the star performer with comp sales for the quarter rising 18%. In sum, overall corporate sales were below forecasts and net income benefited from a work opportunity tax credit, which acts as an incentive to hire certain workers, such as, former welfare recipients. One might also note that, as lower margin grocery sales grow as a percentage of sales, it can be expected that profit margins will be tested. International operations will need to carry a larger share of the growth story.
Justice Brandeis: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
Office Depot is cutting 819 workers. Detroit Public Schools announced it will have to cut 4,000 jobs and close as many as 40 of the district’s 255 schools due to the latest projected budget crisis. Putnam is cutting 100 jobs.
The UK is experiencing a soft patch in its housing sector.
The Pension Benefit Guaranty Corp. lost $12.1 billion in fiscal 2004, boosting its year-end deficit to $23.3 billion, the federal agency stated yesterday. Most of the loss came from $14.7 billion in terminated pension plans. In addition, the agency calculated $96 billion in unfunded vested benefits in other plans as “reasonably possible” at risk of default, up from $82 billion a year earlier. I wonder how long this growing financial cancer can be swept under the rug?
December crude closed yesterday at $46.87 a barrel, a two-month low.
Justice Brandeis: “Experience teaches us to be most on our guard to protect liberty when the government purposes are beneficent.” When those in elected office choose power for the few over the well-being of the majority, then it’s time to watch the burning fuse on the exposed time-bomb.
Many are adept at spouting statistics. One must be wary of those that tell half the story. For example, according to Taxprof, the tax burden in the U.S. is the second lowest of the 30 most advanced nations in OECD. As a percentage of GDP, the OECD stated it is 25.4% in the U.S., and that only Mexico at 19.5% is lower. Under Carter, the percentage was 18.4% and under Reagan it was 18.2%. Even that only tells part of the story. There is a growing gap between tax revenues and expenditures, and that’s why we have record budget deficits. In addition, we should take one further look at the OECD data. Finland is the 4th highest taxed country on the OECD list but the World Economic Forum ranks Finland as the most competitive global economy. Sweden is the highest taxed country and yet it is the third most competitive after the U.S. Statistics can play games with the full story.
Gold hit $440 per ounce.
IDC stated that PC sales growth will slow to 10.5% in 2005 “based on the economic assumption that the current boom is fairly weak as far as booms go and is going to be relatively short.” The last recession was a short one so why can’t this “boom” be relatively short?
Laurence Kotlikoff, professor of economics at Boston University, stated that Medicare and Social Security represent unfunded future liabilities of $43 trillion. He asks “how are we going to pay these bills? The government will have to print more money and you’d want to sell your bonds.” I would also add, as I have done so for two years, you should maintain the smallest holding possible in U.S. dollars. They represent an accident waiting to happen.
U.S. retail chains' same-store sales fell 0.4% in the week ended Nov. 13 compared to the prior week.
11/16/04 U.S. Small Business Owners’ Early Holiday Sales Forecast
According to the recent DollarDays survey, 48% of small business owners say their customers are more focused on price this year than they were last year, while 33% say their customers will be about as cost-conscious as last year. Only 13% expect their shoppers to be less frugal. Importantly, 13% say 2004 holiday sales to date are ahead of last year’s sales, while 27% sat sales are even and 26% say sales are behind. Sixteen percent say they will hire additional help for the busiest shopping season of the year, while 70% say they won’t. Twelve percent say they will begin marking down seasonal merchandise right after Thanksgiving, while 19% say their first markdowns will occur by Dec. 10. In sum, Marc Joseph, COO of DollarDays, stated “small business owners are clearly walking the line between being optimistic about their busiest income-generating season and being pragmatic.”
Marc Joseph’s comments could also characterize the situation at Wal-Mart, the ultimate proxy for the nation’s average paycheck-to-paycheck consumer. The company’s CEO is optimistic heading into the holiday shopping season; however, the results just reported for the third quarter were not pleasing. The Wal-Mart stores unit “had a poor quarter” with same-store sales rising only 1.3%. Sam’s Club comp sales growth was somewhat better at 4%, but compared to the results at Costco, they too were disappointing. The International division continues as the star performer with comp sales for the quarter rising 18%. In sum, overall corporate sales were below forecasts and net income benefited from a work opportunity tax credit, which acts as an incentive to hire certain workers, such as, former welfare recipients. One might also note that, as lower margin grocery sales grow as a percentage of sales, it can be expected that profit margins will be tested. International operations will need to carry a larger share of the growth story.
Justice Brandeis: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
Office Depot is cutting 819 workers. Detroit Public Schools announced it will have to cut 4,000 jobs and close as many as 40 of the district’s 255 schools due to the latest projected budget crisis. Putnam is cutting 100 jobs.
The UK is experiencing a soft patch in its housing sector.
The Pension Benefit Guaranty Corp. lost $12.1 billion in fiscal 2004, boosting its year-end deficit to $23.3 billion, the federal agency stated yesterday. Most of the loss came from $14.7 billion in terminated pension plans. In addition, the agency calculated $96 billion in unfunded vested benefits in other plans as “reasonably possible” at risk of default, up from $82 billion a year earlier. I wonder how long this growing financial cancer can be swept under the rug?
December crude closed yesterday at $46.87 a barrel, a two-month low.
Justice Brandeis: “Experience teaches us to be most on our guard to protect liberty when the government purposes are beneficent.” When those in elected office choose power for the few over the well-being of the majority, then it’s time to watch the burning fuse on the exposed time-bomb.
Many are adept at spouting statistics. One must be wary of those that tell half the story. For example, according to Taxprof, the tax burden in the U.S. is the second lowest of the 30 most advanced nations in OECD. As a percentage of GDP, the OECD stated it is 25.4% in the U.S., and that only Mexico at 19.5% is lower. Under Carter, the percentage was 18.4% and under Reagan it was 18.2%. Even that only tells part of the story. There is a growing gap between tax revenues and expenditures, and that’s why we have record budget deficits. In addition, we should take one further look at the OECD data. Finland is the 4th highest taxed country on the OECD list but the World Economic Forum ranks Finland as the most competitive global economy. Sweden is the highest taxed country and yet it is the third most competitive after the U.S. Statistics can play games with the full story.
Gold hit $440 per ounce.
IDC stated that PC sales growth will slow to 10.5% in 2005 “based on the economic assumption that the current boom is fairly weak as far as booms go and is going to be relatively short.” The last recession was a short one so why can’t this “boom” be relatively short?
Laurence Kotlikoff, professor of economics at Boston University, stated that Medicare and Social Security represent unfunded future liabilities of $43 trillion. He asks “how are we going to pay these bills? The government will have to print more money and you’d want to sell your bonds.” I would also add, as I have done so for two years, you should maintain the smallest holding possible in U.S. dollars. They represent an accident waiting to happen.
U.S. retail chains' same-store sales fell 0.4% in the week ended Nov. 13 compared to the prior week.
According to the recent DollarDays survey, 48% of small business owners say their customers are more focused on price this year than they were last year, while 33% say their customers will be about as cost-conscious as last year. Only 13% expect their shoppers to be less frugal. Importantly, 13% say 2004 holiday sales to date are ahead of last year’s sales, while 27% sat sales are even and 26% say sales are behind. Sixteen percent say they will hire additional help for the busiest shopping season of the year, while 70% say they won’t. Twelve percent say they will begin marking down seasonal merchandise right after Thanksgiving, while 19% say their first markdowns will occur by Dec. 10. In sum, Marc Joseph, COO of DollarDays, stated “small business owners are clearly walking the line between being optimistic about their busiest income-generating season and being pragmatic.”
Marc Joseph’s comments could also characterize the situation at Wal-Mart, the ultimate proxy for the nation’s average paycheck-to-paycheck consumer. The company’s CEO is optimistic heading into the holiday shopping season; however, the results just reported for the third quarter were not pleasing. The Wal-Mart stores unit “had a poor quarter” with same-store sales rising only 1.3%. Sam’s Club comp sales growth was somewhat better at 4%, but compared to the results at Costco, they too were disappointing. The International division continues as the star performer with comp sales for the quarter rising 18%. In sum, overall corporate sales were below forecasts and net income benefited from a work opportunity tax credit, which acts as an incentive to hire certain workers, such as, former welfare recipients. One might also note that, as lower margin grocery sales grow as a percentage of sales, it can be expected that profit margins will be tested. International operations will need to carry a larger share of the growth story.
Justice Brandeis: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
Office Depot is cutting 819 workers. Detroit Public Schools announced it will have to cut 4,000 jobs and close as many as 40 of the district’s 255 schools due to the latest projected budget crisis. Putnam is cutting 100 jobs.
The UK is experiencing a soft patch in its housing sector.
The Pension Benefit Guaranty Corp. lost $12.1 billion in fiscal 2004, boosting its year-end deficit to $23.3 billion, the federal agency stated yesterday. Most of the loss came from $14.7 billion in terminated pension plans. In addition, the agency calculated $96 billion in unfunded vested benefits in other plans as “reasonably possible” at risk of default, up from $82 billion a year earlier. I wonder how long this growing financial cancer can be swept under the rug?
December crude closed yesterday at $46.87 a barrel, a two-month low.
Justice Brandeis: “Experience teaches us to be most on our guard to protect liberty when the government purposes are beneficent.” When those in elected office choose power for the few over the well-being of the majority, then it’s time to watch the burning fuse on the exposed time-bomb.
Many are adept at spouting statistics. One must be wary of those that tell half the story. For example, according to Taxprof, the tax burden in the U.S. is the second lowest of the 30 most advanced nations in OECD. As a percentage of GDP, the OECD stated it is 25.4% in the U.S., and that only Mexico at 19.5% is lower. Under Carter, the percentage was 18.4% and under Reagan it was 18.2%. Even that only tells part of the story. There is a growing gap between tax revenues and expenditures, and that’s why we have record budget deficits. In addition, we should take one further look at the OECD data. Finland is the 4th highest taxed country on the OECD list but the World Economic Forum ranks Finland as the most competitive global economy. Sweden is the highest taxed country and yet it is the third most competitive after the U.S. Statistics can play games with the full story.
Gold hit $440 per ounce.
IDC stated that PC sales growth will slow to 10.5% in 2005 “based on the economic assumption that the current boom is fairly weak as far as booms go and is going to be relatively short.” The last recession was a short one so why can’t this “boom” be relatively short?
Laurence Kotlikoff, professor of economics at Boston University, stated that Medicare and Social Security represent unfunded future liabilities of $43 trillion. He asks “how are we going to pay these bills? The government will have to print more money and you’d want to sell your bonds.” I would also add, as I have done so for two years, you should maintain the smallest holding possible in U.S. dollars. They represent an accident waiting to happen.
U.S. retail chains' same-store sales fell 0.4% in the week ended Nov. 13 compared to the prior week.
11/16/04 U.S. Small Business Owners’ Early Holiday Sales Forecast
According to the recent DollarDays survey, 48% of small business owners say their customers are more focused on price this year than they were last year, while 33% say their customers will be about as cost-conscious as last year. Only 13% expect their shoppers to be less frugal. Importantly, 13% say 2004 holiday sales to date are ahead of last year’s sales, while 27% sat sales are even and 26% say sales are behind. Sixteen percent say they will hire additional help for the busiest shopping season of the year, while 70% say they won’t. Twelve percent say they will begin marking down seasonal merchandise right after Thanksgiving, while 19% say their first markdowns will occur by Dec. 10. In sum, Marc Joseph, COO of DollarDays, stated “small business owners are clearly walking the line between being optimistic about their busiest income-generating season and being pragmatic.”
Marc Joseph’s comments could also characterize the situation at Wal-Mart, the ultimate proxy for the nation’s average paycheck-to-paycheck consumer. The company’s CEO is optimistic heading into the holiday shopping season; however, the results just reported for the third quarter were not pleasing. The Wal-Mart stores unit “had a poor quarter” with same-store sales rising only 1.3%. Sam’s Club comp sales growth was somewhat better at 4%, but compared to the results at Costco, they too were disappointing. The International division continues as the star performer with comp sales for the quarter rising 18%. In sum, overall corporate sales were below forecasts and net income benefited from a work opportunity tax credit, which acts as an incentive to hire certain workers, such as, former welfare recipients. One might also note that, as lower margin grocery sales grow as a percentage of sales, it can be expected that profit margins will be tested. International operations will need to carry a larger share of the growth story.
Justice Brandeis: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
Office Depot is cutting 819 workers. Detroit Public Schools announced it will have to cut 4,000 jobs and close as many as 40 of the district’s 255 schools due to the latest projected budget crisis. Putnam is cutting 100 jobs.
The UK is experiencing a soft patch in its housing sector.
The Pension Benefit Guaranty Corp. lost $12.1 billion in fiscal 2004, boosting its year-end deficit to $23.3 billion, the federal agency stated yesterday. Most of the loss came from $14.7 billion in terminated pension plans. In addition, the agency calculated $96 billion in unfunded vested benefits in other plans as “reasonably possible” at risk of default, up from $82 billion a year earlier. I wonder how long this growing financial cancer can be swept under the rug?
December crude closed yesterday at $46.87 a barrel, a two-month low.
Justice Brandeis: “Experience teaches us to be most on our guard to protect liberty when the government purposes are beneficent.” When those in elected office choose power for the few over the well-being of the majority, then it’s time to watch the burning fuse on the exposed time-bomb.
Many are adept at spouting statistics. One must be wary of those that tell half the story. For example, according to Taxprof, the tax burden in the U.S. is the second lowest of the 30 most advanced nations in OECD. As a percentage of GDP, the OECD stated it is 25.4% in the U.S., and that only Mexico at 19.5% is lower. Under Carter, the percentage was 18.4% and under Reagan it was 18.2%. Even that only tells part of the story. There is a growing gap between tax revenues and expenditures, and that’s why we have record budget deficits. In addition, we should take one further look at the OECD data. Finland is the 4th highest taxed country on the OECD list but the World Economic Forum ranks Finland as the most competitive global economy. Sweden is the highest taxed country and yet it is the third most competitive after the U.S. Statistics can play games with the full story.
Gold hit $440 per ounce.
IDC stated that PC sales growth will slow to 10.5% in 2005 “based on the economic assumption that the current boom is fairly weak as far as booms go and is going to be relatively short.” The last recession was a short one so why can’t this “boom” be relatively short?
Laurence Kotlikoff, professor of economics at Boston University, stated that Medicare and Social Security represent unfunded future liabilities of $43 trillion. He asks “how are we going to pay these bills? The government will have to print more money and you’d want to sell your bonds.” I would also add, as I have done so for two years, you should maintain the smallest holding possible in U.S. dollars. They represent an accident waiting to happen.
U.S. retail chains' same-store sales fell 0.4% in the week ended Nov. 13 compared to the prior week.
According to the recent DollarDays survey, 48% of small business owners say their customers are more focused on price this year than they were last year, while 33% say their customers will be about as cost-conscious as last year. Only 13% expect their shoppers to be less frugal. Importantly, 13% say 2004 holiday sales to date are ahead of last year’s sales, while 27% sat sales are even and 26% say sales are behind. Sixteen percent say they will hire additional help for the busiest shopping season of the year, while 70% say they won’t. Twelve percent say they will begin marking down seasonal merchandise right after Thanksgiving, while 19% say their first markdowns will occur by Dec. 10. In sum, Marc Joseph, COO of DollarDays, stated “small business owners are clearly walking the line between being optimistic about their busiest income-generating season and being pragmatic.”
Marc Joseph’s comments could also characterize the situation at Wal-Mart, the ultimate proxy for the nation’s average paycheck-to-paycheck consumer. The company’s CEO is optimistic heading into the holiday shopping season; however, the results just reported for the third quarter were not pleasing. The Wal-Mart stores unit “had a poor quarter” with same-store sales rising only 1.3%. Sam’s Club comp sales growth was somewhat better at 4%, but compared to the results at Costco, they too were disappointing. The International division continues as the star performer with comp sales for the quarter rising 18%. In sum, overall corporate sales were below forecasts and net income benefited from a work opportunity tax credit, which acts as an incentive to hire certain workers, such as, former welfare recipients. One might also note that, as lower margin grocery sales grow as a percentage of sales, it can be expected that profit margins will be tested. International operations will need to carry a larger share of the growth story.
Justice Brandeis: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
Office Depot is cutting 819 workers. Detroit Public Schools announced it will have to cut 4,000 jobs and close as many as 40 of the district’s 255 schools due to the latest projected budget crisis. Putnam is cutting 100 jobs.
The UK is experiencing a soft patch in its housing sector.
The Pension Benefit Guaranty Corp. lost $12.1 billion in fiscal 2004, boosting its year-end deficit to $23.3 billion, the federal agency stated yesterday. Most of the loss came from $14.7 billion in terminated pension plans. In addition, the agency calculated $96 billion in unfunded vested benefits in other plans as “reasonably possible” at risk of default, up from $82 billion a year earlier. I wonder how long this growing financial cancer can be swept under the rug?
December crude closed yesterday at $46.87 a barrel, a two-month low.
Justice Brandeis: “Experience teaches us to be most on our guard to protect liberty when the government purposes are beneficent.” When those in elected office choose power for the few over the well-being of the majority, then it’s time to watch the burning fuse on the exposed time-bomb.
Many are adept at spouting statistics. One must be wary of those that tell half the story. For example, according to Taxprof, the tax burden in the U.S. is the second lowest of the 30 most advanced nations in OECD. As a percentage of GDP, the OECD stated it is 25.4% in the U.S., and that only Mexico at 19.5% is lower. Under Carter, the percentage was 18.4% and under Reagan it was 18.2%. Even that only tells part of the story. There is a growing gap between tax revenues and expenditures, and that’s why we have record budget deficits. In addition, we should take one further look at the OECD data. Finland is the 4th highest taxed country on the OECD list but the World Economic Forum ranks Finland as the most competitive global economy. Sweden is the highest taxed country and yet it is the third most competitive after the U.S. Statistics can play games with the full story.
Gold hit $440 per ounce.
IDC stated that PC sales growth will slow to 10.5% in 2005 “based on the economic assumption that the current boom is fairly weak as far as booms go and is going to be relatively short.” The last recession was a short one so why can’t this “boom” be relatively short?
Laurence Kotlikoff, professor of economics at Boston University, stated that Medicare and Social Security represent unfunded future liabilities of $43 trillion. He asks “how are we going to pay these bills? The government will have to print more money and you’d want to sell your bonds.” I would also add, as I have done so for two years, you should maintain the smallest holding possible in U.S. dollars. They represent an accident waiting to happen.
U.S. retail chains' same-store sales fell 0.4% in the week ended Nov. 13 compared to the prior week.
11/16/04 U.S. Small Business Owners’ Early Holiday Sales Forecast
According to the recent DollarDays survey, 48% of small business owners say their customers are more focused on price this year than they were last year, while 33% say their customers will be about as cost-conscious as last year. Only 13% expect their shoppers to be less frugal. Importantly, 13% say 2004 holiday sales to date are ahead of last year’s sales, while 27% sat sales are even and 26% say sales are behind. Sixteen percent say they will hire additional help for the busiest shopping season of the year, while 70% say they won’t. Twelve percent say they will begin marking down seasonal merchandise right after Thanksgiving, while 19% say their first markdowns will occur by Dec. 10. In sum, Marc Joseph, COO of DollarDays, stated “small business owners are clearly walking the line between being optimistic about their busiest income-generating season and being pragmatic.”
Marc Joseph’s comments could also characterize the situation at Wal-Mart, the ultimate proxy for the nation’s average paycheck-to-paycheck consumer. The company’s CEO is optimistic heading into the holiday shopping season; however, the results just reported for the third quarter were not pleasing. The Wal-Mart stores unit “had a poor quarter” with same-store sales rising only 1.3%. Sam’s Club comp sales growth was somewhat better at 4%, but compared to the results at Costco, they too were disappointing. The International division continues as the star performer with comp sales for the quarter rising 18%. In sum, overall corporate sales were below forecasts and net income benefited from a work opportunity tax credit, which acts as an incentive to hire certain workers, such as, former welfare recipients. One might also note that, as lower margin grocery sales grow as a percentage of sales, it can be expected that profit margins will be tested. International operations will need to carry a larger share of the growth story.
Justice Brandeis: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
Office Depot is cutting 819 workers. Detroit Public Schools announced it will have to cut 4,000 jobs and close as many as 40 of the district’s 255 schools due to the latest projected budget crisis. Putnam is cutting 100 jobs.
The UK is experiencing a soft patch in its housing sector.
The Pension Benefit Guaranty Corp. lost $12.1 billion in fiscal 2004, boosting its year-end deficit to $23.3 billion, the federal agency stated yesterday. Most of the loss came from $14.7 billion in terminated pension plans. In addition, the agency calculated $96 billion in unfunded vested benefits in other plans as “reasonably possible” at risk of default, up from $82 billion a year earlier. I wonder how long this growing financial cancer can be swept under the rug?
December crude closed yesterday at $46.87 a barrel, a two-month low.
Justice Brandeis: “Experience teaches us to be most on our guard to protect liberty when the government purposes are beneficent.” When those in elected office choose power for the few over the well-being of the majority, then it’s time to watch the burning fuse on the exposed time-bomb.
Many are adept at spouting statistics. One must be wary of those that tell half the story. For example, according to Taxprof, the tax burden in the U.S. is the second lowest of the 30 most advanced nations in OECD. As a percentage of GDP, the OECD stated it is 25.4% in the U.S., and that only Mexico at 19.5% is lower. Under Carter, the percentage was 18.4% and under Reagan it was 18.2%. Even that only tells part of the story. There is a growing gap between tax revenues and expenditures, and that’s why we have record budget deficits. In addition, we should take one further look at the OECD data. Finland is the 4th highest taxed country on the OECD list but the World Economic Forum ranks Finland as the most competitive global economy. Sweden is the highest taxed country and yet it is the third most competitive after the U.S. Statistics can play games with the full story.
Gold hit $440 per ounce.
IDC stated that PC sales growth will slow to 10.5% in 2005 “based on the economic assumption that the current boom is fairly weak as far as booms go and is going to be relatively short.” The last recession was a short one so why can’t this “boom” be relatively short?
Laurence Kotlikoff, professor of economics at Boston University, stated that Medicare and Social Security represent unfunded future liabilities of $43 trillion. He asks “how are we going to pay these bills? The government will have to print more money and you’d want to sell your bonds.” I would also add, as I have done so for two years, you should maintain the smallest holding possible in U.S. dollars. They represent an accident waiting to happen.
U.S. retail chains' same-store sales fell 0.4% in the week ended Nov. 13 compared to the prior week.
According to the recent DollarDays survey, 48% of small business owners say their customers are more focused on price this year than they were last year, while 33% say their customers will be about as cost-conscious as last year. Only 13% expect their shoppers to be less frugal. Importantly, 13% say 2004 holiday sales to date are ahead of last year’s sales, while 27% sat sales are even and 26% say sales are behind. Sixteen percent say they will hire additional help for the busiest shopping season of the year, while 70% say they won’t. Twelve percent say they will begin marking down seasonal merchandise right after Thanksgiving, while 19% say their first markdowns will occur by Dec. 10. In sum, Marc Joseph, COO of DollarDays, stated “small business owners are clearly walking the line between being optimistic about their busiest income-generating season and being pragmatic.”
Marc Joseph’s comments could also characterize the situation at Wal-Mart, the ultimate proxy for the nation’s average paycheck-to-paycheck consumer. The company’s CEO is optimistic heading into the holiday shopping season; however, the results just reported for the third quarter were not pleasing. The Wal-Mart stores unit “had a poor quarter” with same-store sales rising only 1.3%. Sam’s Club comp sales growth was somewhat better at 4%, but compared to the results at Costco, they too were disappointing. The International division continues as the star performer with comp sales for the quarter rising 18%. In sum, overall corporate sales were below forecasts and net income benefited from a work opportunity tax credit, which acts as an incentive to hire certain workers, such as, former welfare recipients. One might also note that, as lower margin grocery sales grow as a percentage of sales, it can be expected that profit margins will be tested. International operations will need to carry a larger share of the growth story.
Justice Brandeis: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
Office Depot is cutting 819 workers. Detroit Public Schools announced it will have to cut 4,000 jobs and close as many as 40 of the district’s 255 schools due to the latest projected budget crisis. Putnam is cutting 100 jobs.
The UK is experiencing a soft patch in its housing sector.
The Pension Benefit Guaranty Corp. lost $12.1 billion in fiscal 2004, boosting its year-end deficit to $23.3 billion, the federal agency stated yesterday. Most of the loss came from $14.7 billion in terminated pension plans. In addition, the agency calculated $96 billion in unfunded vested benefits in other plans as “reasonably possible” at risk of default, up from $82 billion a year earlier. I wonder how long this growing financial cancer can be swept under the rug?
December crude closed yesterday at $46.87 a barrel, a two-month low.
Justice Brandeis: “Experience teaches us to be most on our guard to protect liberty when the government purposes are beneficent.” When those in elected office choose power for the few over the well-being of the majority, then it’s time to watch the burning fuse on the exposed time-bomb.
Many are adept at spouting statistics. One must be wary of those that tell half the story. For example, according to Taxprof, the tax burden in the U.S. is the second lowest of the 30 most advanced nations in OECD. As a percentage of GDP, the OECD stated it is 25.4% in the U.S., and that only Mexico at 19.5% is lower. Under Carter, the percentage was 18.4% and under Reagan it was 18.2%. Even that only tells part of the story. There is a growing gap between tax revenues and expenditures, and that’s why we have record budget deficits. In addition, we should take one further look at the OECD data. Finland is the 4th highest taxed country on the OECD list but the World Economic Forum ranks Finland as the most competitive global economy. Sweden is the highest taxed country and yet it is the third most competitive after the U.S. Statistics can play games with the full story.
Gold hit $440 per ounce.
IDC stated that PC sales growth will slow to 10.5% in 2005 “based on the economic assumption that the current boom is fairly weak as far as booms go and is going to be relatively short.” The last recession was a short one so why can’t this “boom” be relatively short?
Laurence Kotlikoff, professor of economics at Boston University, stated that Medicare and Social Security represent unfunded future liabilities of $43 trillion. He asks “how are we going to pay these bills? The government will have to print more money and you’d want to sell your bonds.” I would also add, as I have done so for two years, you should maintain the smallest holding possible in U.S. dollars. They represent an accident waiting to happen.
U.S. retail chains' same-store sales fell 0.4% in the week ended Nov. 13 compared to the prior week.
Monday, November 15, 2004
11/15/04 It’s The Season To Hire Seasonal Workers
According to Manpower, 38% of national employers in the retail and wholesale trade sectors plan to boost staffing levels during this shopping season. The sector includes merchandise department stores, restaurants, grocery stores, and wholesale dealers and distributors, among others. According to the Illinois Retail Merchants Association, those seasonal hiring plans aren’t necessarily motivated by an anticipated hike in sales. The association states “it has to do with competition.” It’s often part of the effort to keep lines short because “they don’t want to lose sales. Competition is so tight.” Sears is a good example. They expect flat sales in the fourth quarter, but will still hire holiday workers because “it’s tied to customer service.” Limited Brands has 3,835 stores and will add 80,000 seasonal workers. Target will hire between 50,000 and 80,000 seasonal workers. UPS reports they will hire roughly 70,000 loaders, sorters, and drivers for the holidays. Marshall Field’s is hiring 7,000 for the holidays, and that’s slightly more than last year. Interestingly, the National Retail Federation projects holiday spending will rise 4.5% this year to $219.9 billion. Hiring rose 3.9% last year, but they are projecting head counts will be flat this time overall.
Ogden Nash: “The most exciting happiness is the happiness generated by forces beyond your control.”
After cutting incentives 16% in October, Gm ended the month with a larger than expected inventory of cars and trucks.
GM, Ford, and Chrysler are paying bonuses of $500 to $1,500 to U.S. buyers who finance through captive lenders.
Tower Semiconductor will cut 170 jobs, or 12% of its employees.
Sun Microsystems is introducing its next-generation operating system, the n0-cost Solaris 10. There will be a charge for support and service programs. Sun also promises to make the underlying code of Solaris available under an open-source license.
State media reports a coal shortage for this heating season for 200 million city dwellers in China.
Akimbo introduced the first Internet-to-TV-On Demand service. Kleiner Perkins, Sprout, and Draper Fisher Jurvetson are lead investors in Akimbo. This is a company that could go places.
Milton Berle: “Anytime a person goes into a delicatessen and orders a pastrami on white bread, somewhere a Jew dies.”
Crude fell 53 cents to an eight-week low to $46.59 a barrel.
Federal Judge A. Wallace Tashima: “The war on terrorism threatens to destroy the very values of a democratic society governed by the rule of law.”
Lockheed Martin refiled protests seeking to revoke Boeing’s contracts valued at more than $6 billion, part of the biggest Pentagon procurement scandal in more than a decade.
Last week, Korea’s central bank reduced its lending rate between banks by a quarter point to 3.25%. The decline is an effort to combat a slowing economy. How come their central bank is on the money and our Fed doesn’t get it right?
According to Manpower, 38% of national employers in the retail and wholesale trade sectors plan to boost staffing levels during this shopping season. The sector includes merchandise department stores, restaurants, grocery stores, and wholesale dealers and distributors, among others. According to the Illinois Retail Merchants Association, those seasonal hiring plans aren’t necessarily motivated by an anticipated hike in sales. The association states “it has to do with competition.” It’s often part of the effort to keep lines short because “they don’t want to lose sales. Competition is so tight.” Sears is a good example. They expect flat sales in the fourth quarter, but will still hire holiday workers because “it’s tied to customer service.” Limited Brands has 3,835 stores and will add 80,000 seasonal workers. Target will hire between 50,000 and 80,000 seasonal workers. UPS reports they will hire roughly 70,000 loaders, sorters, and drivers for the holidays. Marshall Field’s is hiring 7,000 for the holidays, and that’s slightly more than last year. Interestingly, the National Retail Federation projects holiday spending will rise 4.5% this year to $219.9 billion. Hiring rose 3.9% last year, but they are projecting head counts will be flat this time overall.
Ogden Nash: “The most exciting happiness is the happiness generated by forces beyond your control.”
After cutting incentives 16% in October, Gm ended the month with a larger than expected inventory of cars and trucks.
GM, Ford, and Chrysler are paying bonuses of $500 to $1,500 to U.S. buyers who finance through captive lenders.
Tower Semiconductor will cut 170 jobs, or 12% of its employees.
Sun Microsystems is introducing its next-generation operating system, the n0-cost Solaris 10. There will be a charge for support and service programs. Sun also promises to make the underlying code of Solaris available under an open-source license.
State media reports a coal shortage for this heating season for 200 million city dwellers in China.
Akimbo introduced the first Internet-to-TV-On Demand service. Kleiner Perkins, Sprout, and Draper Fisher Jurvetson are lead investors in Akimbo. This is a company that could go places.
Milton Berle: “Anytime a person goes into a delicatessen and orders a pastrami on white bread, somewhere a Jew dies.”
Crude fell 53 cents to an eight-week low to $46.59 a barrel.
Federal Judge A. Wallace Tashima: “The war on terrorism threatens to destroy the very values of a democratic society governed by the rule of law.”
Lockheed Martin refiled protests seeking to revoke Boeing’s contracts valued at more than $6 billion, part of the biggest Pentagon procurement scandal in more than a decade.
Last week, Korea’s central bank reduced its lending rate between banks by a quarter point to 3.25%. The decline is an effort to combat a slowing economy. How come their central bank is on the money and our Fed doesn’t get it right?
Sunday, November 14, 2004
11/14/04 Bulls In An “Unstable” Shop
There have been many claims that humans use only 10% of their brains. Up until now, I had serious questions about such claims; however, recently, I have had a more open mind. In the face of the dollar being down for seven straight weeks, the euro making a new all-time high, gold reaching 16-year highs, and the Fed raising interest rates for the fourth time this year, the S&P Index had its best 3-week rally in 2 years. Yesterday, Federal Reserve Governor Edward Gramlich, who was appointed to the Fed in 1997 by Clinton, gave a speech at the Gerald R. Ford School of Public Policy in Ann Arbor, Michigan. His comments are worth noting- both for bulls and for bears. In particular, he observed that “our low national savings rate and our high public deficits have in effect translated into national borrowing. If we were any other country in international history, it would have long ago been stopped.” He called the world situation “unstable.”
In the third quarter the private savings rate fell to a record low o.4%. The U.S. Treasury budget deficit weighed in at a record $412 billion for fiscal 2004. The trade deficit for the first nine months placed us on a path towards a yearly deficit of at least $600 billion. Third quarter worker productivity rose at a modest 1.9%, the slowest growth rate in 2 years. Meanwhile, unit labor costs rose at a 1.6% rate, the largest rise since the second quarter of 2001. In the past, Gramlich has noted that “because productivity growth is an important component of earnings growth, stock market valuations depend on the outlook for productivity.” The trend for productivity growth has been steadily dropping for several quarters. Gramlich has observed that “productivity alone determines the long-run path of income per capita, or living standards.” One should note that, in spite of increased productivity gains over the last three years, the average worker’s wages, adjusted for inflation, declined over that same period. As productivity gains continue to evaporate, one can expect further declines in the standard of living for the average American. This backdrop adds to the “unstable” situation described by Gramlich.
As Gamlich sees it, the solution is to cut the federal deficit. He mentioned that “the budget enforcement acts that we had in the late ‘90s proved to be successful.” In my view, there will be a severe dollar correction long before Bush vetoes a spending bill. The buck stops with foreign countries. The same countries that subsidize more than two out of every three dollars of the savings in this world also subsidize our nation’s growing habit to consume. That is an unstable situation, and unsustainable. If fiscal austerity is to find itself to our shores, it will be forced on us by other nations.
This week we will be reading some displeasing news. It will be reported that the PPI was sharply higher in October. The Index of Leading Economic Indicators will be down for October. The CPI will not be as tame as originally projected. The Congress will return to a Federal debt ceiling that is at the max. How many fiscally responsible senators and representatives will tie an increase in the debt ceiling to spending curbs and/or a pay-as-you-go budget?
George Roche: “You can like the company without liking the stock.”
Rick Sherlund: “We just don’t have a Next Big Thing stimulating demand.”
Michael Kelly, Techtel CEO: “Buyers are buying IT only when needed and when benefit is proven and the benefit is related to current important business objectives…Investment spending is being made to keep capacity across the board as close as possible to actual demand.”
One can also see the sparse inventory levels maintained by corporations. Inventory as a percentage of sales has been declining for some time. It reflects uneasiness on the part of CEOs and CFOs about near and intermediate term demand. It also reflects doubt on their pricing power ability. In light of the trend of decreasing worker productivity, one can expect profit margins to decline. Corporations can no longer depend on over-leveraged consumers to bail them out. Wage growth is not on the horizon to bail out consumers. All of the aforementioned does not comprise a wall of worry. It is more than that. It represents a pile of trouble, and that unstable pile is getting bigger every day.
Charlie Maxwell: “We are running out of the ability to produce 2% more barrels each year to meet world demand that increases about 2% annually.”
You can borrow money but you can’t borrow time. There are times when time is not your friend. This is one of those times.
Arnie Berman of CreditSights: “You need a pervasive sense that there is a next obvious thing to do, and that if you don’t do it, you will get left behind. Right now, there is nothing like that. Companies are doing ‘keep the lights on’ spending, and I don’t see that changing anytime soon.”
John Plender of the Financial Times: “GM’s equity is a slender $28 billion wedge that supports hundreds of billions of dollars in debt, healthcare liabilities and pension obligations. It is more of a social insurance for employees and retirees than an exemplar of shareholder capialism.”
Americans continue to import more food than they export.
A new study has been completed by four business scholol professors. The study analyzed 438,00 stock recommendations issued on more than 12,000 companies by 463 investment banks and brokerage frms between January 1996 and June 2003. The best analyst recommendations were those that went against the grain of the securities firms issuing them.
There have been many claims that humans use only 10% of their brains. Up until now, I had serious questions about such claims; however, recently, I have had a more open mind. In the face of the dollar being down for seven straight weeks, the euro making a new all-time high, gold reaching 16-year highs, and the Fed raising interest rates for the fourth time this year, the S&P Index had its best 3-week rally in 2 years. Yesterday, Federal Reserve Governor Edward Gramlich, who was appointed to the Fed in 1997 by Clinton, gave a speech at the Gerald R. Ford School of Public Policy in Ann Arbor, Michigan. His comments are worth noting- both for bulls and for bears. In particular, he observed that “our low national savings rate and our high public deficits have in effect translated into national borrowing. If we were any other country in international history, it would have long ago been stopped.” He called the world situation “unstable.”
In the third quarter the private savings rate fell to a record low o.4%. The U.S. Treasury budget deficit weighed in at a record $412 billion for fiscal 2004. The trade deficit for the first nine months placed us on a path towards a yearly deficit of at least $600 billion. Third quarter worker productivity rose at a modest 1.9%, the slowest growth rate in 2 years. Meanwhile, unit labor costs rose at a 1.6% rate, the largest rise since the second quarter of 2001. In the past, Gramlich has noted that “because productivity growth is an important component of earnings growth, stock market valuations depend on the outlook for productivity.” The trend for productivity growth has been steadily dropping for several quarters. Gramlich has observed that “productivity alone determines the long-run path of income per capita, or living standards.” One should note that, in spite of increased productivity gains over the last three years, the average worker’s wages, adjusted for inflation, declined over that same period. As productivity gains continue to evaporate, one can expect further declines in the standard of living for the average American. This backdrop adds to the “unstable” situation described by Gramlich.
As Gamlich sees it, the solution is to cut the federal deficit. He mentioned that “the budget enforcement acts that we had in the late ‘90s proved to be successful.” In my view, there will be a severe dollar correction long before Bush vetoes a spending bill. The buck stops with foreign countries. The same countries that subsidize more than two out of every three dollars of the savings in this world also subsidize our nation’s growing habit to consume. That is an unstable situation, and unsustainable. If fiscal austerity is to find itself to our shores, it will be forced on us by other nations.
This week we will be reading some displeasing news. It will be reported that the PPI was sharply higher in October. The Index of Leading Economic Indicators will be down for October. The CPI will not be as tame as originally projected. The Congress will return to a Federal debt ceiling that is at the max. How many fiscally responsible senators and representatives will tie an increase in the debt ceiling to spending curbs and/or a pay-as-you-go budget?
George Roche: “You can like the company without liking the stock.”
Rick Sherlund: “We just don’t have a Next Big Thing stimulating demand.”
Michael Kelly, Techtel CEO: “Buyers are buying IT only when needed and when benefit is proven and the benefit is related to current important business objectives…Investment spending is being made to keep capacity across the board as close as possible to actual demand.”
One can also see the sparse inventory levels maintained by corporations. Inventory as a percentage of sales has been declining for some time. It reflects uneasiness on the part of CEOs and CFOs about near and intermediate term demand. It also reflects doubt on their pricing power ability. In light of the trend of decreasing worker productivity, one can expect profit margins to decline. Corporations can no longer depend on over-leveraged consumers to bail them out. Wage growth is not on the horizon to bail out consumers. All of the aforementioned does not comprise a wall of worry. It is more than that. It represents a pile of trouble, and that unstable pile is getting bigger every day.
Charlie Maxwell: “We are running out of the ability to produce 2% more barrels each year to meet world demand that increases about 2% annually.”
You can borrow money but you can’t borrow time. There are times when time is not your friend. This is one of those times.
Arnie Berman of CreditSights: “You need a pervasive sense that there is a next obvious thing to do, and that if you don’t do it, you will get left behind. Right now, there is nothing like that. Companies are doing ‘keep the lights on’ spending, and I don’t see that changing anytime soon.”
John Plender of the Financial Times: “GM’s equity is a slender $28 billion wedge that supports hundreds of billions of dollars in debt, healthcare liabilities and pension obligations. It is more of a social insurance for employees and retirees than an exemplar of shareholder capialism.”
Americans continue to import more food than they export.
A new study has been completed by four business scholol professors. The study analyzed 438,00 stock recommendations issued on more than 12,000 companies by 463 investment banks and brokerage frms between January 1996 and June 2003. The best analyst recommendations were those that went against the grain of the securities firms issuing them.
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