12/18/04 One Week Until Christmas
Overstock reported sales for the holiday season peaked yesterday. That was a full week later than in previous years, and mentioned Thursday the 16th was the largest day in the company’s history. Patrick Byrne, Overstock’s president, observed the trend is significant. “Sales historically peak around Dec. 10th and taper off from there… The fact that business has continued to swell so late in the month suggests to me that last-minute shoppers, who have traditionally flocked to the malls in the last few days before Christmas, are increasingly going online. This phenomenon may be the reason why some market tracking firms have recently increased projections for online holiday spending this year.” Consumers are able to buy later online this year. Companies, such as Wal-Mart.com, are providing guaranteed delivery by the 24th if purchasing by the 20th. Blue Nile is going a step further. They are providing free FedEx shipping to attract late holiday shoppers. This new market trend of last-minute shoppers going online is not a one-season phenomenon. Next year it will be bigger. This spells trouble for companies like Kmart and Sears. In my view, that merger will be the vision for shoppers living in the dark ages when online offerings and comparative pricing were not available to the consumer.
The Bush Administration predicted a 3.5% growth rate for the economy in 2005 and an inflation rate of 2%. They are predicting that the economy will add about 175,000 jobs in 2005. The question is how many revisions will be made to this forecast in the coming months?
The Schwartzenegger (remember him?) Administration stated California’s budget deficit for the coming year has grown to $8.1 billion, more than $1 billion higher than previously forecast. How many upward revisions will be made in the coming months?
The Treasury Department reported that the Alternative Minimum Tax currently applies to 3 million taxpayers and that it will strike 30 million Americans by 2010. Bush wants to eliminate the AMT, which brings $1 trillion in revenue to the Treasury. How will this be accomplished? The proposal is to end the deduction for state and local taxes, which generate $900 billion in revenue.
According to SEMI, the November book-to-bill ratio was 1.00. “Total orders for semiconductor equipment have declined about 16% from the peak observed in June of this year,” stated SEMI.
The news on Celebrex created a market cap loss of close to $30 billion for Pfizer shareholders. Astra Zeneca’s marketing suspension of its cancer drug was a blow to its stockholders. As I have stated over the years, more research needs to be done on drug interaction as well as the size of dosages prescribed to patients with cancer, heart disease, and other leading causes of death.
Blinkx TV is a search engine now in beta. I think readers will appreciate its ability to “capture and index video streams across news, sports, and entertainment programming from 22 channels, including Fox News, ESPN, and Biography.” In sum, it is the first search engine to make TV programs searchable on demand.
The WSJ reports that Excelon is in talks to acquire PSEG in a $12 billion stock deal.
American Express will cut 2,000 jobs. Danaher Tool will close its Springfield, Mass plant and idle 335 workers. The average wage at the facility is $14 per hour.
The BLS reported that real average weekly earnings fell by 0.4% from October to November after seasonal adjustment. A 0.1% increase in average hourly earnings was more than offset by a 0.3% decline in average weekly hours and a 0.2% increase in the CPI for urban wage earners and clerical workers. Earnings of both full-time and part-time workers holding production or non-supervisory jobs are included. Average weekly earnings rose by 2.1%, seasonally adjusted, from November 2003 to November 2004. Adjusted for the CPI, average weekly earnings decreased by 1.6%. GDP growth absent an increase in real average weekly earnings is a formula for a dwindling quality of life. This has been the dour landscape throughout the Bush years. There will be a steep payment.
Oil rose 14% this past week to $46.28 a barrel. Gold also had a better week and closed at $442.90 per ounce
AirAsia will buy 40 Airbus A320s for $2.5 billion and phase out its all-Boeing fleet. Boeing is in discussions with All Nippon Airways to sell several 7E7s.
The Department of Energy in its December 2004 Short-Term Energy Outlook forecast a 34% increase in the average Northeasterner’s heating costs, for a total of $1,279, up from $953 last year.
Mexico’s Finance Secretary Francisco Gil Diaz: “Public foreign debt today is just 12.7% of GDP versus 32.4% in 1995. In 1994, we had almost $19 billion dollars worth of internal debt that was indexed to the dollar. Today we have no indexed debt, no short-term debt, and we’re raising the necessary resources to pay debts in 2006. We’ve already financed 2005 debt.”
In this Saturday’s weekly sales update, Wal-Mart maintained its expectations for a 1% to 3% increase in December sales at its U.S. stores open at least one year. The company mentioned that sales of general merchandise and winter items improved in the latest week. Food sales were strong but the star performer was gift sales which were “up significantly over last week.” Customer traffic continued to drive sales this week.
Before the holiday season shopping season began, I predicted that the major growth would be in online shopping and gift cards. It appears that these two areas will be even stronger than I had anticipated, and for mainstream retailing, as a generalization, the results will be mixed and not very promising.
Friday, December 17, 2004
12/17/04 Surprises In Store
As previously mentioned, there are two additional shopping days this season compared with a year ago. Many retail analysts have suggested that may be one reason shoppers are waiting longer to make their holiday purchases. It’s also possible that traditional shopping venues will see less traffic and that this may be the new trend that gains traction. For several years I have written about increased online shopping. This holiday period has been the mother lode. Business is off the charts, and significantly above pre-holiday forecasts. According to comScore Networks, online holiday shopping had been projected to rise 25% this season to $15 billion. ComScore now predicts the figure will exceed $20 billion, up 63% from the 2003 holiday season. Some of the major beneficiaries have been Blockbuster.com, BestBuy.com, Wal-Mart.com, and Target.com.
Combine online sales with the growth in gift card purchases, and one can expect many surprises in store for the traditional retailer. A growing percentage will be disappointed by their results--- even with two more shopping days. This Saturday and Sunday and next Friday, the 24th, will be key days for the malls and free-standing retailers. They need to start moving their winter apparel inventory. Meanwhile, shoppers will find whether late holiday season shopping found more markdowns and bargains. With many online retailers offering free shipping and/or low cost shipping, more shoppers have found their way conveniently to bargains through comparative pricing on the Internet. It sure beats fighting the crowds.
Yesterday, the U.S. National Weather Service predicted that temperatures in the East, Southeast, much of the Midwest extending east from Kansas and Texas, the Pacific Northwest, Idaho, and Wyoming would be below normal for the next six to ten days. This cold snap might spell trouble for near-term heating oil and natural gas prices.
According to Nielsen/NetRatings, online consumers spent $919 million on travel in November 2004, up 11% from November 2003. In fact, 23% of Americans flocked to online travel destinations during this November. That amounted to 68 million people compared with 60 million in the comparable month of 2003, and “during this November, much of online travel spending stemmed from lower to upper middle class households.”
Wal-Mart quietly launched a new house consumer electronics brand named iLo. You might find that brand on DVD recorders, flat-panel TVs, plasma-screen TVs, and portable DVD players. Not all stores will carry the iLo brand. Prices represent significant savings from those found at other consumer electronics stores, such as, Best Buy. You will be seeing more iLo products in the future. That’s good news for Wal-Mart’s customers where over 52% make less than $45,000 a year compared to 29% at Best Buy, according to the NPD Group.
According to AMR, over the next six years, 15% of IT jobs required by U.S. companies will be done in India. The new report estimates that the Indian IT labor force will be larger than 3 million by 2010, and half of the workers will be performing jobs for U.S. companies.
According to the CBO, Social Security represents about 4.4% of our GDP and Medicare accounts for 12% of the Federal Budget.
Yesterday, volatility again returned to the Treasury market, and the 10-year increased in yield from 4.07% to 4.19% and the spread between the 10-year and the 2-year widened a bit to 1.19% from 1.13%. The increase in yields was connected to the dollar and to U.S. weekly jobless claims falling by 43,000. That decline could only be explained by the possible hiring of 43,000 Santa Clauses and/or a combination of increased military troops and/or a combination of double-counting of part-time seasonal jobs. For me, the number of 43,000 is fantasy and akin to wishful market thinking for the new Gillette women’s vibrating.razor.
Cirrus Logic is cutting 100 jobs. Kewaunee Scientific is cutting its workforce by 18% or 100 positions.
Housing starts plummeted 13.1% in November; however, housing permits only declined 1.5%.
In the third quarter, the U.S. current account deficit widened to a record $164.71 billion.
According to Wal-Mart, the average wage for their U.S. employees is $10 an hour. According to Costco, the wage at Costco starts at $10 an hour.
As previously mentioned, there are two additional shopping days this season compared with a year ago. Many retail analysts have suggested that may be one reason shoppers are waiting longer to make their holiday purchases. It’s also possible that traditional shopping venues will see less traffic and that this may be the new trend that gains traction. For several years I have written about increased online shopping. This holiday period has been the mother lode. Business is off the charts, and significantly above pre-holiday forecasts. According to comScore Networks, online holiday shopping had been projected to rise 25% this season to $15 billion. ComScore now predicts the figure will exceed $20 billion, up 63% from the 2003 holiday season. Some of the major beneficiaries have been Blockbuster.com, BestBuy.com, Wal-Mart.com, and Target.com.
Combine online sales with the growth in gift card purchases, and one can expect many surprises in store for the traditional retailer. A growing percentage will be disappointed by their results--- even with two more shopping days. This Saturday and Sunday and next Friday, the 24th, will be key days for the malls and free-standing retailers. They need to start moving their winter apparel inventory. Meanwhile, shoppers will find whether late holiday season shopping found more markdowns and bargains. With many online retailers offering free shipping and/or low cost shipping, more shoppers have found their way conveniently to bargains through comparative pricing on the Internet. It sure beats fighting the crowds.
Yesterday, the U.S. National Weather Service predicted that temperatures in the East, Southeast, much of the Midwest extending east from Kansas and Texas, the Pacific Northwest, Idaho, and Wyoming would be below normal for the next six to ten days. This cold snap might spell trouble for near-term heating oil and natural gas prices.
According to Nielsen/NetRatings, online consumers spent $919 million on travel in November 2004, up 11% from November 2003. In fact, 23% of Americans flocked to online travel destinations during this November. That amounted to 68 million people compared with 60 million in the comparable month of 2003, and “during this November, much of online travel spending stemmed from lower to upper middle class households.”
Wal-Mart quietly launched a new house consumer electronics brand named iLo. You might find that brand on DVD recorders, flat-panel TVs, plasma-screen TVs, and portable DVD players. Not all stores will carry the iLo brand. Prices represent significant savings from those found at other consumer electronics stores, such as, Best Buy. You will be seeing more iLo products in the future. That’s good news for Wal-Mart’s customers where over 52% make less than $45,000 a year compared to 29% at Best Buy, according to the NPD Group.
According to AMR, over the next six years, 15% of IT jobs required by U.S. companies will be done in India. The new report estimates that the Indian IT labor force will be larger than 3 million by 2010, and half of the workers will be performing jobs for U.S. companies.
According to the CBO, Social Security represents about 4.4% of our GDP and Medicare accounts for 12% of the Federal Budget.
Yesterday, volatility again returned to the Treasury market, and the 10-year increased in yield from 4.07% to 4.19% and the spread between the 10-year and the 2-year widened a bit to 1.19% from 1.13%. The increase in yields was connected to the dollar and to U.S. weekly jobless claims falling by 43,000. That decline could only be explained by the possible hiring of 43,000 Santa Clauses and/or a combination of increased military troops and/or a combination of double-counting of part-time seasonal jobs. For me, the number of 43,000 is fantasy and akin to wishful market thinking for the new Gillette women’s vibrating.razor.
Cirrus Logic is cutting 100 jobs. Kewaunee Scientific is cutting its workforce by 18% or 100 positions.
Housing starts plummeted 13.1% in November; however, housing permits only declined 1.5%.
In the third quarter, the U.S. current account deficit widened to a record $164.71 billion.
According to Wal-Mart, the average wage for their U.S. employees is $10 an hour. According to Costco, the wage at Costco starts at $10 an hour.
Thursday, December 16, 2004
12/16/04 The Math Is Undeniable
Our October net capital inflows dropped to $48.1 billion, the lowest in a year. In the same month, the trade deficit was $55.1 billion and that does not include the budget gap or the unfunded liabilities for Medicare and Social Security. At the present rate, we will not meet this generation’s obligations--- never mind the obligations being discussed at the so-called two-day economic conference in DC. As I have stated repeatedly, nations vote with their money. Nations around the globe are expressing a growing no-confidence vote in our economic policies. Meanwhile, by comparison, fixed asset investment in China’s urban areas rose 24.9% in November from year earlier levels. Their economic growth will amount to 9% in 2004 and is projected at 8.5% in 2005.
United Airlines employs more than 6,000 people at its Denver hub. United forecasts an $804 million operating loss in 2004 and a $725 million operating loss in 2005. According to a lending agreement, United must maintain a cash balance of at least $750 million. In early May, the airline anticipates its cash balance will drop below that figure.
ABN Amro, the Dutch bank, will cut 2,850 jobs. Some of the global shared services positions to be cut will be in the U.S. The company did not specify how many. Intermet Corp. intends to close its two Sturtevant, Wisc. plants, and this will result in a loss of 603 jobs.
Yesterday Larry Ellison sent a letter to all PeopleSoft employees and stated “we have agreed to target January 14th to communicate the organizational structure of the combined organization. We will inform all affected employees of their roles by this time wherever possible… we need to understand the need to provide clarity as soon as practicable to all employees.” In a month’s time, the thousands of PeopleSoft employees will learn how many will lose their jobs.
Yesterday, the yield curve became a little flatter with the 10-year Treasury yield dropping to a 6-week low yield of 4.07% and the 2-year closing at 2.94%. Meanwhile,
with inflation supposedly under control, crude, heating oil, and unleaded gas futures closed at their highest levels in two weeks and jumped between 4.7% and 6.4%. The markets realized that the winter months do produce cold weather, and the latter impacts stocks of heating oil.
Who would have thought that a shortage of iPods could take place during the holiday season? Apple didn’t.
Accounting disagreements can take its toll. In the case of Fannie Mae it meant restating various earnings releases. It wasn’t a big deal--- only the creation of a $9 billion loss on derivatives, and that eliminated 38% of its reported income since 2001.
Over the course of decades, it has been proven that only a very small percentage of large mergers work out successfully. Hopefully, JNJ’s $25 billion acquisition of Guidant, the $35 billion merger between Sprint and Nextel, and Symantec’s $13.5 billion purchase of Veritas will prove exceptions. First, government approvals must be forthcoming.
In November, Michigan’s unemployment rate rose to 7%.
The BLS reported that the average employer costs for employee wages, salaries, and benefits amounted to $25.36 per hour, of which wages and salaries were 70.8% and benefits were $7.40 for the remaining 29.2%. With those costs, it’s difficult to compete with China, India, and other low-cost countries.
According to the Defense Department, more than 5,500 personnel have deserted since the Iraq war began. They acknowledge that the Army National Guard is short 5,000 new citizen-soldiers. Ivan Eland, national security analyst at the Independent Institute, stated “when you are risking your life on the battlefield, the importance of knowing why you are doing so cannot be underestimated. If soldiers don’t know why they are fighting there or believe they’ve been hoodwinked, we may see the same phenomenon happen in Iraq as occurred in Vietnam.”
The EU will delay the Jan. 1 removal of trade sanctions against the U.S. because our country continues to provide Boeing with tax credits amounting to more than $150 million annually.
October represented the strongest month for net purchases of foreign equities and foreign fixed income instruments by U.S. investors since July 2000.
Gateway cautioned that its first quarter revenue could fall 15% or more from fourth quarter levels.
Paul Samuelson: “Politicians like to tell people what they want to hear--- and what they want to hear is what won’t happen.”
Our October net capital inflows dropped to $48.1 billion, the lowest in a year. In the same month, the trade deficit was $55.1 billion and that does not include the budget gap or the unfunded liabilities for Medicare and Social Security. At the present rate, we will not meet this generation’s obligations--- never mind the obligations being discussed at the so-called two-day economic conference in DC. As I have stated repeatedly, nations vote with their money. Nations around the globe are expressing a growing no-confidence vote in our economic policies. Meanwhile, by comparison, fixed asset investment in China’s urban areas rose 24.9% in November from year earlier levels. Their economic growth will amount to 9% in 2004 and is projected at 8.5% in 2005.
United Airlines employs more than 6,000 people at its Denver hub. United forecasts an $804 million operating loss in 2004 and a $725 million operating loss in 2005. According to a lending agreement, United must maintain a cash balance of at least $750 million. In early May, the airline anticipates its cash balance will drop below that figure.
ABN Amro, the Dutch bank, will cut 2,850 jobs. Some of the global shared services positions to be cut will be in the U.S. The company did not specify how many. Intermet Corp. intends to close its two Sturtevant, Wisc. plants, and this will result in a loss of 603 jobs.
Yesterday Larry Ellison sent a letter to all PeopleSoft employees and stated “we have agreed to target January 14th to communicate the organizational structure of the combined organization. We will inform all affected employees of their roles by this time wherever possible… we need to understand the need to provide clarity as soon as practicable to all employees.” In a month’s time, the thousands of PeopleSoft employees will learn how many will lose their jobs.
Yesterday, the yield curve became a little flatter with the 10-year Treasury yield dropping to a 6-week low yield of 4.07% and the 2-year closing at 2.94%. Meanwhile,
with inflation supposedly under control, crude, heating oil, and unleaded gas futures closed at their highest levels in two weeks and jumped between 4.7% and 6.4%. The markets realized that the winter months do produce cold weather, and the latter impacts stocks of heating oil.
Who would have thought that a shortage of iPods could take place during the holiday season? Apple didn’t.
Accounting disagreements can take its toll. In the case of Fannie Mae it meant restating various earnings releases. It wasn’t a big deal--- only the creation of a $9 billion loss on derivatives, and that eliminated 38% of its reported income since 2001.
Over the course of decades, it has been proven that only a very small percentage of large mergers work out successfully. Hopefully, JNJ’s $25 billion acquisition of Guidant, the $35 billion merger between Sprint and Nextel, and Symantec’s $13.5 billion purchase of Veritas will prove exceptions. First, government approvals must be forthcoming.
In November, Michigan’s unemployment rate rose to 7%.
The BLS reported that the average employer costs for employee wages, salaries, and benefits amounted to $25.36 per hour, of which wages and salaries were 70.8% and benefits were $7.40 for the remaining 29.2%. With those costs, it’s difficult to compete with China, India, and other low-cost countries.
According to the Defense Department, more than 5,500 personnel have deserted since the Iraq war began. They acknowledge that the Army National Guard is short 5,000 new citizen-soldiers. Ivan Eland, national security analyst at the Independent Institute, stated “when you are risking your life on the battlefield, the importance of knowing why you are doing so cannot be underestimated. If soldiers don’t know why they are fighting there or believe they’ve been hoodwinked, we may see the same phenomenon happen in Iraq as occurred in Vietnam.”
The EU will delay the Jan. 1 removal of trade sanctions against the U.S. because our country continues to provide Boeing with tax credits amounting to more than $150 million annually.
October represented the strongest month for net purchases of foreign equities and foreign fixed income instruments by U.S. investors since July 2000.
Gateway cautioned that its first quarter revenue could fall 15% or more from fourth quarter levels.
Paul Samuelson: “Politicians like to tell people what they want to hear--- and what they want to hear is what won’t happen.”
Wednesday, December 15, 2004
12/15/04 Appropriations And Supplementals
Back in June, only six months ago, the CBO estimated that the 2005 supplemental for Iraq and Afghanistan would be between $55 and $60 billion. This is a non-partisan office; however, being non-partisan is not a pathway leading to accurate forecasting. According to the Pentagon and White House officials, the administration’s funding request for Iraq and Afghanistan will be raised close to $100 billion, and this is on top of the three special budget requests that have provided $152.6 billion through December 31, 2004. As one military think tank member suggested, “I think we’re probably getting up to $2 billion a week fairly soon.”
Abraham Lincoln: “You cannot keep out of trouble by spending more than your income.”
Cold weather provides relief from pests and bugs and fleas but not from spenders in our nation’s capitol.
For the first 10 months of 2004, the trade deficit amounted to $500.5 billion, and exceeded the record gap for all of 2003. The October trade deficit of $55.5 billion placed our nation’s annualized trade deficit rate at $666 billion. You can see that a declining dollar has not been of assistance. As long as we import about 50% more goods and services than we export, this trade gap problem will persist and grow in cancerous proportions.
Charles Jaffe: “It’s not your salary that makes you rich, it’s your spending habits.”
The U.S. trade deficit with China was $16.8 billion in October, and this year’s deficit with China is expected to reach $160 billion by year-end. In the first ten months of 2004, foreign direct investment in China amounted to $53 billion. Their foreign exchange earnings are approaching $515 billion, almost $100 billion greater than the comparable period a year ago. It is not surprising that China’s money supply is growing 17 to 20% annually and that inflation exceeds a 5% rate.
The Reserve Bank of India reported that, in the week ended Dec. 3, the country’s flow of funds from other countries grew by $3.79 billion. India’s foreign exchange reserves now stand at a record-high of $130.72 billion.
Not everyone is excited about Oracle’s acquisition of PeopleSoft. In June 2003, J.D. Edwards agreed to merge with PeopleSoft. J.D. Edwards is the largest sofware company in Denver with 2,000 workers. Many of these workers will be cut by Oracle. During the 18 months that Oracle battled to acquire PeopleSoft, Oracle threatened to layoff 6,000 of PeopleSoft’s workers. The final figure may not be 6,000, but it will be a large number. David Duffield, founder of PeopleSoft, wrote the employees and stated “I offer my sincere apologies for not figuring out a different conclusion to our 18-month saga."
Merck will cut another 700 jobs, bringing the total layoffs to 5,100. Charles Craft Inc. will close its last two remaining textile plants in North Carolina early in 2005, laying off more than 300 people. As of November, Carolina’s textile industry employed 76,600 people, less than half the industry’s 1993 levels. Eaton Corp. announced it will close down part of its automotive components plant in Roxboro, NC and layoff 150 workers or about one-third of its workforce there.
Anew survey of large private employers by the Kaiser Family Foundation and Hewitt Associates found a typical worker under age 65 who retired in 2004 would pay $2,244 annually in premiums--- $4,644 with spousal coverage--- a 27% increase over the cost for a similar worker who retired in 2003. A typical worker 65 or older, and thus eligible for Medicare health coverage, would pay $1,212 annually in premiums--- $2,508 with spousal coverage--- this year, up 24% from 2003.
Kaiser Family Foundation President Drew E. Altman: “The prospects for retiree health coverage are slowly disappearing for America’s workers.” Given the trend towards aging of our population, this is a massive problem. Overall, about 85% of employers expect to raise premiums for retirees next year, and 75% expect to raise them on retirees’ dependents. More than 50% expect to raise co-insurance or co-payments.
In the first seven days on retail shelves, there were 5 million DVD and VHS units sold of “The Bourne Supremacy.” By comparison, the movie grossed $176 million domestically.
Since June, the Fed has raised interest rates five times from 1% to 2.25%. Meanwhile, during this time, the difference between two-year and 10-year Treasury note yields have narrowed from about 2.8 percentage points to roughly 1.2 percentage points. I doubt very much whether the Fed had anticipated the 10-year declining in yield from 4.7% to 4.15% in six months. With more anticipated Fed rate increases in 2005, it’s possible an inverted yield curve might occur.
Veritas is the leader in backup and archiving storage software. It would be an excellent acquisition for Symantec, but it would also be quite a plus for other companies, particularly EMC.
Back in June, only six months ago, the CBO estimated that the 2005 supplemental for Iraq and Afghanistan would be between $55 and $60 billion. This is a non-partisan office; however, being non-partisan is not a pathway leading to accurate forecasting. According to the Pentagon and White House officials, the administration’s funding request for Iraq and Afghanistan will be raised close to $100 billion, and this is on top of the three special budget requests that have provided $152.6 billion through December 31, 2004. As one military think tank member suggested, “I think we’re probably getting up to $2 billion a week fairly soon.”
Abraham Lincoln: “You cannot keep out of trouble by spending more than your income.”
Cold weather provides relief from pests and bugs and fleas but not from spenders in our nation’s capitol.
For the first 10 months of 2004, the trade deficit amounted to $500.5 billion, and exceeded the record gap for all of 2003. The October trade deficit of $55.5 billion placed our nation’s annualized trade deficit rate at $666 billion. You can see that a declining dollar has not been of assistance. As long as we import about 50% more goods and services than we export, this trade gap problem will persist and grow in cancerous proportions.
Charles Jaffe: “It’s not your salary that makes you rich, it’s your spending habits.”
The U.S. trade deficit with China was $16.8 billion in October, and this year’s deficit with China is expected to reach $160 billion by year-end. In the first ten months of 2004, foreign direct investment in China amounted to $53 billion. Their foreign exchange earnings are approaching $515 billion, almost $100 billion greater than the comparable period a year ago. It is not surprising that China’s money supply is growing 17 to 20% annually and that inflation exceeds a 5% rate.
The Reserve Bank of India reported that, in the week ended Dec. 3, the country’s flow of funds from other countries grew by $3.79 billion. India’s foreign exchange reserves now stand at a record-high of $130.72 billion.
Not everyone is excited about Oracle’s acquisition of PeopleSoft. In June 2003, J.D. Edwards agreed to merge with PeopleSoft. J.D. Edwards is the largest sofware company in Denver with 2,000 workers. Many of these workers will be cut by Oracle. During the 18 months that Oracle battled to acquire PeopleSoft, Oracle threatened to layoff 6,000 of PeopleSoft’s workers. The final figure may not be 6,000, but it will be a large number. David Duffield, founder of PeopleSoft, wrote the employees and stated “I offer my sincere apologies for not figuring out a different conclusion to our 18-month saga."
Merck will cut another 700 jobs, bringing the total layoffs to 5,100. Charles Craft Inc. will close its last two remaining textile plants in North Carolina early in 2005, laying off more than 300 people. As of November, Carolina’s textile industry employed 76,600 people, less than half the industry’s 1993 levels. Eaton Corp. announced it will close down part of its automotive components plant in Roxboro, NC and layoff 150 workers or about one-third of its workforce there.
Anew survey of large private employers by the Kaiser Family Foundation and Hewitt Associates found a typical worker under age 65 who retired in 2004 would pay $2,244 annually in premiums--- $4,644 with spousal coverage--- a 27% increase over the cost for a similar worker who retired in 2003. A typical worker 65 or older, and thus eligible for Medicare health coverage, would pay $1,212 annually in premiums--- $2,508 with spousal coverage--- this year, up 24% from 2003.
Kaiser Family Foundation President Drew E. Altman: “The prospects for retiree health coverage are slowly disappearing for America’s workers.” Given the trend towards aging of our population, this is a massive problem. Overall, about 85% of employers expect to raise premiums for retirees next year, and 75% expect to raise them on retirees’ dependents. More than 50% expect to raise co-insurance or co-payments.
In the first seven days on retail shelves, there were 5 million DVD and VHS units sold of “The Bourne Supremacy.” By comparison, the movie grossed $176 million domestically.
Since June, the Fed has raised interest rates five times from 1% to 2.25%. Meanwhile, during this time, the difference between two-year and 10-year Treasury note yields have narrowed from about 2.8 percentage points to roughly 1.2 percentage points. I doubt very much whether the Fed had anticipated the 10-year declining in yield from 4.7% to 4.15% in six months. With more anticipated Fed rate increases in 2005, it’s possible an inverted yield curve might occur.
Veritas is the leader in backup and archiving storage software. It would be an excellent acquisition for Symantec, but it would also be quite a plus for other companies, particularly EMC.
Tuesday, December 14, 2004
12/14/04 Buy And Hold
Generalizations generally do not have much meaning. Examples are often provided about the long-term advances in stock prices that lead to a successful buy and hold strategy. Studies upon studies have been done on this subject. Let’s take some varying examples. Yesterday was a big up-day for stock indices. The S&P 500 rallied up to the 1198 level, up 50% from the low of about 800 reached in early 2003; however, the present near-1200 level has only rallied back to the mid-2001 area. Hence, the success of the buy and hold strategy is highly dependent on your entry point. Here's another example, and one that illustrates my stupidity. On a split-adjusted basis, in 2000, I purchased Krispy Kreme stock at $10. Recently, the stock has been in a major down-draft. Rather than sell it or reduce my holdings, I continue to own the stock and it is back to $10. My substantial profit has disappeared, but the doughnuts still taste great.
The New York Times reports that Symantec of Cupertino is in merger talks to acquire Veritas of Mountain View. Symantec has a market cap of $21 billion and Veritas’ is $11 billion. Here is another example of buy and hold. As you know, I recommended that readers consider the purchase of Veritas stock in July at $18. The stock languished for some weeks and even dropped down close to $16. In my view, the company has good management and superior technology. The stock is back up to $25, but still a long ways from the lofty levels reached some years ago. Should the merger be effectuated, some long-term holders in Veritas may still experience a loss. It will depend on their entry point. Should you decide that a buy and hold strategy is right for you, then it is necessary to be prepared for periods of disappointment that require substantial patience.
Talking about potential mergers, the Wall Street Journal suggests that Vodafone and its U.S. partner Verizon are considering bidding for Sprint, the company supposedly in merger talks with Nextel.
Cardinal Health is the second-largest distributor of pharmaceuticals and other medical supplies and equipment in the U.S. The company announced it would cut 4,200 jobs, or 7% of its workforce and close 25 facilities. Corixa, a maker of cancer drugs, will cut 43% of its workforce, or 160 jobs.
Google will digitize millions of books.
According to the Holiday eSpending Report, 27% of online consumers are reported to have finished their holiday shopping, compared to 31% during the same time-frame in 2003. So far this season, the latest weekly report showed consumers have spent $12.7 billion online to date, excluding travel. Online holiday shopping peaks this week as the free shipping deadline for Dec. 24 delivery arrives in mid-December. In fact, today is the biggest online shopping day of the year.
Yesterday was the peak holiday shipping day for FedEx. The company expected to deliver 7.7 million packages. UPS expects to deliver 20 million packages on its peak day of Dec. 21.
PricewaterhouseCoopers’ “Trendsetter Barometer” interviewed CEOs of 355 privately held product and service companies identified as the fastest growing U.S. businesses over the last five years. The survey revealed that fewer CEOs of America’s fastest-growing companies are optimistic about the U.S. economy’s prospects over the next 12 months, and concern is increasing about weak market demand.
CareerBuilder.com released the findings from its latest survey. Forty-three percent of workers want to change jobs in 2005. The top five areas hiring managers plan to recruit for in 2005 include customer service, sales, healthcare, retail, and accounting/finance. Fifty percent of hiring managers plan to hire temporary workers. Nearly half of hiring managers say that hourly workers will make up to 50% or more of their new hires. Eighty-eight percent of hiring managers will add recent college grads to their staffs and 52% plan to recruit high school students. Next year’s hiring appears to be a continuation of 2004--- more temps and more hourly lower-paying jobs, a lousy landscape for the consumer and the potential saver.
A market-basket survey taken by Prudential Equity Group revealed that Wal-Mart lowered prices on only 23 of 160 items on Dec. 6 compared with late October. A separate report by FTN Midwest Research in Cleveland showed that Wal-Mart, Sears, JC Penney, and other retailers had raised prices on select items after the holiday season started on November 26. In my view, shoppers are not stupid. The Internet makes comparative shopping a great deal easier. Consumers are waiting for prices to be cut. C. Britt Beemer, chairman of America’s Research Group, stated “there are more consumers waiting to finish their holiday shopping on Dec. 24 than any other time in the last five years.”
Philip Arestis of the Cambridge Centre for Economic and Public Policy at the University of Cambridge in England opined “the rate of growth of profits, industrial production, and job creation is slowing. While consumers’ spending continues to grow, their incomes are rising less rapidly, calling into question the sustainability of their purchasing power.”
According to Pittiglio Rabin Todd & McGrath, during the past four years, the 20 largest U.S. and foreign companies in 15 capital-intensive industries reduced their capital expenditures by 17.9 percent. The decline in spending came despite a 9% increase in revenue for the group during the same period.
According to the NY Fed, private sector productivity growth should average 2.6% over the next 10 years. They don’t know what productivity will be next year much less 10 years from now.
India’s exports are up 24% so far in 2004. The U.S. imports 80% of its footwear and toys from China.
Fred Bergsten, director of the Institute for International Economics: “The U.S. already must borrow $5 billion from the rest of the world every working day to finance America’s own foreign investments as well as the trade imbalance.”
As of Jan. 1, 2005, Blockbuster is eliminating late fees.
I am quite enthusiastic about the research conducted by Dr. Vladimir Makarov, founder and CSO of Rubicon Genomics, and his staff at this Ann Arbor, Michigan company. They invented a more effective technology for the diagnosis and prognosis of cancer compared to what hospitals and reference labs use today. Specifically, their methylplex microarray profiling will analyze the methylation patterns from patients in an effort to detect prostate and esophageal cancer. Rubicon hopes to soon prepare for an FDA filing.
Generalizations generally do not have much meaning. Examples are often provided about the long-term advances in stock prices that lead to a successful buy and hold strategy. Studies upon studies have been done on this subject. Let’s take some varying examples. Yesterday was a big up-day for stock indices. The S&P 500 rallied up to the 1198 level, up 50% from the low of about 800 reached in early 2003; however, the present near-1200 level has only rallied back to the mid-2001 area. Hence, the success of the buy and hold strategy is highly dependent on your entry point. Here's another example, and one that illustrates my stupidity. On a split-adjusted basis, in 2000, I purchased Krispy Kreme stock at $10. Recently, the stock has been in a major down-draft. Rather than sell it or reduce my holdings, I continue to own the stock and it is back to $10. My substantial profit has disappeared, but the doughnuts still taste great.
The New York Times reports that Symantec of Cupertino is in merger talks to acquire Veritas of Mountain View. Symantec has a market cap of $21 billion and Veritas’ is $11 billion. Here is another example of buy and hold. As you know, I recommended that readers consider the purchase of Veritas stock in July at $18. The stock languished for some weeks and even dropped down close to $16. In my view, the company has good management and superior technology. The stock is back up to $25, but still a long ways from the lofty levels reached some years ago. Should the merger be effectuated, some long-term holders in Veritas may still experience a loss. It will depend on their entry point. Should you decide that a buy and hold strategy is right for you, then it is necessary to be prepared for periods of disappointment that require substantial patience.
Talking about potential mergers, the Wall Street Journal suggests that Vodafone and its U.S. partner Verizon are considering bidding for Sprint, the company supposedly in merger talks with Nextel.
Cardinal Health is the second-largest distributor of pharmaceuticals and other medical supplies and equipment in the U.S. The company announced it would cut 4,200 jobs, or 7% of its workforce and close 25 facilities. Corixa, a maker of cancer drugs, will cut 43% of its workforce, or 160 jobs.
Google will digitize millions of books.
According to the Holiday eSpending Report, 27% of online consumers are reported to have finished their holiday shopping, compared to 31% during the same time-frame in 2003. So far this season, the latest weekly report showed consumers have spent $12.7 billion online to date, excluding travel. Online holiday shopping peaks this week as the free shipping deadline for Dec. 24 delivery arrives in mid-December. In fact, today is the biggest online shopping day of the year.
Yesterday was the peak holiday shipping day for FedEx. The company expected to deliver 7.7 million packages. UPS expects to deliver 20 million packages on its peak day of Dec. 21.
PricewaterhouseCoopers’ “Trendsetter Barometer” interviewed CEOs of 355 privately held product and service companies identified as the fastest growing U.S. businesses over the last five years. The survey revealed that fewer CEOs of America’s fastest-growing companies are optimistic about the U.S. economy’s prospects over the next 12 months, and concern is increasing about weak market demand.
CareerBuilder.com released the findings from its latest survey. Forty-three percent of workers want to change jobs in 2005. The top five areas hiring managers plan to recruit for in 2005 include customer service, sales, healthcare, retail, and accounting/finance. Fifty percent of hiring managers plan to hire temporary workers. Nearly half of hiring managers say that hourly workers will make up to 50% or more of their new hires. Eighty-eight percent of hiring managers will add recent college grads to their staffs and 52% plan to recruit high school students. Next year’s hiring appears to be a continuation of 2004--- more temps and more hourly lower-paying jobs, a lousy landscape for the consumer and the potential saver.
A market-basket survey taken by Prudential Equity Group revealed that Wal-Mart lowered prices on only 23 of 160 items on Dec. 6 compared with late October. A separate report by FTN Midwest Research in Cleveland showed that Wal-Mart, Sears, JC Penney, and other retailers had raised prices on select items after the holiday season started on November 26. In my view, shoppers are not stupid. The Internet makes comparative shopping a great deal easier. Consumers are waiting for prices to be cut. C. Britt Beemer, chairman of America’s Research Group, stated “there are more consumers waiting to finish their holiday shopping on Dec. 24 than any other time in the last five years.”
Philip Arestis of the Cambridge Centre for Economic and Public Policy at the University of Cambridge in England opined “the rate of growth of profits, industrial production, and job creation is slowing. While consumers’ spending continues to grow, their incomes are rising less rapidly, calling into question the sustainability of their purchasing power.”
According to Pittiglio Rabin Todd & McGrath, during the past four years, the 20 largest U.S. and foreign companies in 15 capital-intensive industries reduced their capital expenditures by 17.9 percent. The decline in spending came despite a 9% increase in revenue for the group during the same period.
According to the NY Fed, private sector productivity growth should average 2.6% over the next 10 years. They don’t know what productivity will be next year much less 10 years from now.
India’s exports are up 24% so far in 2004. The U.S. imports 80% of its footwear and toys from China.
Fred Bergsten, director of the Institute for International Economics: “The U.S. already must borrow $5 billion from the rest of the world every working day to finance America’s own foreign investments as well as the trade imbalance.”
As of Jan. 1, 2005, Blockbuster is eliminating late fees.
I am quite enthusiastic about the research conducted by Dr. Vladimir Makarov, founder and CSO of Rubicon Genomics, and his staff at this Ann Arbor, Michigan company. They invented a more effective technology for the diagnosis and prognosis of cancer compared to what hospitals and reference labs use today. Specifically, their methylplex microarray profiling will analyze the methylation patterns from patients in an effort to detect prostate and esophageal cancer. Rubicon hopes to soon prepare for an FDA filing.
Monday, December 13, 2004
12/13/04 Setting The Record Straight
According to a report released today by the University of Massachusetts and Harvard University school’s of Law and Public Health, 48% of the 19,000 or so Massachusetts workers in construction are misclassified as independent workers. Misclassifications enable employers to avoid payroll taxes, unemployment insurance, and workers’ compensation insurance. Utilizing the state Division of Unemployment Assistance insurance tax audits, researchers discovered that, between 2001 and 2003, 36,531 Massachusetts employers misclassified up to 248,000 workers, robbing the state of $152 million in uncollected income tax revenue. In addition, $35.1 million in unemployment insurance taxes were lost. Often employees will sign waivers absolving the employer from paying unemployment benefits or workers’ comp insurance. Why? That may be a condition to getting hired or not being fired. As medical and workers’ comp premiums continue to increase, you can expect this growing trend towards independent contractors to continue. Misclassifications may also explain some of the differences between the household and non-farm payroll employment surveys.
N.Y and London crude oil futures closed Friday below their average price for the past 52 weeks for the first time that has occurred in a year.
Over the weekend, at least 8 Marines were killed in Iraq. Approximately 1,300 members of the U.S. military have died since the beginning of the Iraq war in March 2003. If there have been nine wounded for every combat death, that would equate to close to 12,000 wounded soldiers.
Oracle announced that it signed a definitive agreement to acquire PeopleSoft for $26.50 per share. Larry Ellison stated “we intend to enhance PeopleSoft 8 and develop PeopleSoft 9 and enhance a JD Edwards 5 and develop a JD Edwards 6. We intend to immediately extend and improve support for existing JD Edwards and PeopleSoft customers worldwide.” In July 2003 Oracle made an offer to acquire PeopleSoft for $16 a share. They objected to the PeopleSoft and JD Edwards merger and stated they would fire 7,500 PeopleSoft employees and deep-six the applications business for PeopleSoft and JD Edwards, thus only leaving the offerings made by Oracle. It reminds me of the movie Pretty Woman where Richard Gere wants to buy Ralph Bellamy’s shipbuilding company and dismantle it, but in the end acquires the company and builds more boats. Maybe Ellison thinks this is a $10.3 billion movie script.
About 800 employees of Swift & Co.’s Greeley, Colorado meatpacking plant will lose their jobs five days before Christmas. Swift stated they have been impacted by restrictions imposed on the export of beef due to the mad cow scare. It has had to supply Asian countries through its plants in Australia. I thought the America public was informed that our beef was safe. I guess foreign countries don’t believe our ag officials.
The Kansas City Board of Trade began overnight electronic trading of wheat futures contracts. It is part of the game plan to make risk-management products available around the clock.
This should be an eventful week. We can expect to read about capital flows, the Fed raising rates, a widening U.S. trade deficit, a slowing rate of U.S. industrial production, Bush’s economic plans for his second term, and the November Treasury budget. With such a backdrop of non-enthusiastic news, I guess the markets will rally. After all, it’s December, the best month for the stock market. That far outweighs five steps and stumble. After all, the market totally ignored three steps and stumble.
U.S. October demand for machine tools plunged in all regions of the nation, declining between about 32% and 52% in the five regions surveyed by the AMTDA and the AMT. Overall, October demand was 38.9% lower than September’s numbers, which had the highest monthly total demand in nearly four years. Unless extended, the administration’s tax relief bill provided for a 50% expensing allowance for machine tools.
According to a report released today by the University of Massachusetts and Harvard University school’s of Law and Public Health, 48% of the 19,000 or so Massachusetts workers in construction are misclassified as independent workers. Misclassifications enable employers to avoid payroll taxes, unemployment insurance, and workers’ compensation insurance. Utilizing the state Division of Unemployment Assistance insurance tax audits, researchers discovered that, between 2001 and 2003, 36,531 Massachusetts employers misclassified up to 248,000 workers, robbing the state of $152 million in uncollected income tax revenue. In addition, $35.1 million in unemployment insurance taxes were lost. Often employees will sign waivers absolving the employer from paying unemployment benefits or workers’ comp insurance. Why? That may be a condition to getting hired or not being fired. As medical and workers’ comp premiums continue to increase, you can expect this growing trend towards independent contractors to continue. Misclassifications may also explain some of the differences between the household and non-farm payroll employment surveys.
N.Y and London crude oil futures closed Friday below their average price for the past 52 weeks for the first time that has occurred in a year.
Over the weekend, at least 8 Marines were killed in Iraq. Approximately 1,300 members of the U.S. military have died since the beginning of the Iraq war in March 2003. If there have been nine wounded for every combat death, that would equate to close to 12,000 wounded soldiers.
Oracle announced that it signed a definitive agreement to acquire PeopleSoft for $26.50 per share. Larry Ellison stated “we intend to enhance PeopleSoft 8 and develop PeopleSoft 9 and enhance a JD Edwards 5 and develop a JD Edwards 6. We intend to immediately extend and improve support for existing JD Edwards and PeopleSoft customers worldwide.” In July 2003 Oracle made an offer to acquire PeopleSoft for $16 a share. They objected to the PeopleSoft and JD Edwards merger and stated they would fire 7,500 PeopleSoft employees and deep-six the applications business for PeopleSoft and JD Edwards, thus only leaving the offerings made by Oracle. It reminds me of the movie Pretty Woman where Richard Gere wants to buy Ralph Bellamy’s shipbuilding company and dismantle it, but in the end acquires the company and builds more boats. Maybe Ellison thinks this is a $10.3 billion movie script.
About 800 employees of Swift & Co.’s Greeley, Colorado meatpacking plant will lose their jobs five days before Christmas. Swift stated they have been impacted by restrictions imposed on the export of beef due to the mad cow scare. It has had to supply Asian countries through its plants in Australia. I thought the America public was informed that our beef was safe. I guess foreign countries don’t believe our ag officials.
The Kansas City Board of Trade began overnight electronic trading of wheat futures contracts. It is part of the game plan to make risk-management products available around the clock.
This should be an eventful week. We can expect to read about capital flows, the Fed raising rates, a widening U.S. trade deficit, a slowing rate of U.S. industrial production, Bush’s economic plans for his second term, and the November Treasury budget. With such a backdrop of non-enthusiastic news, I guess the markets will rally. After all, it’s December, the best month for the stock market. That far outweighs five steps and stumble. After all, the market totally ignored three steps and stumble.
U.S. October demand for machine tools plunged in all regions of the nation, declining between about 32% and 52% in the five regions surveyed by the AMTDA and the AMT. Overall, October demand was 38.9% lower than September’s numbers, which had the highest monthly total demand in nearly four years. Unless extended, the administration’s tax relief bill provided for a 50% expensing allowance for machine tools.
Sunday, December 12, 2004
12/12/04 Chocolate Candy, Social Security, And Medicaid
Cocoa beans contain flavonoids, an antioxidant that some maintain can protect the heart. Walnuts contain omega-3 fatty acids, and studies have linked them to lowering the risk of heart disease. Apricots have healthful beta carotene. Putting all these ingredients together, it is not surprising that St. Louis- based Bissinger’s Handcrafted Chocolatier advertises to their customers to “treat yourself to good health.” The packaging states the candies contain ingredients “linked to improved cardiovascular health, lowered risk for certain types of cancer, a reduction in body weight and a lowing of the aging process.” Bonnie Liebman is the director of nutrition at the Center for Science in the Public Interest and stated “the claims that these candies can help you lose weight, fight cancer, or improve your short-term memory are not supported by good evidence. The bottom line is they’re trying to trick people into thinking these chocolates are good for them.” At a cost of more than $2 each, I know they’re not good for the pocket book.
Yesterday, Bush’s radio address to the nation was on Social Security. He mentioned that “in the 1950s, there were about 16 workers paying for every Social Security beneficiary. Today there are about three…In the year 2018, for the first time ever, Social Security will pay out more in benefits than the government collects in payroll taxes…By the time today’s workers in their mid 20s begin to retire, the system will be bankrupt, unless we act to save it.” The measures taken to save it will be good for you. “Saving Social Security for future generations will not be easy.” It will be hard work. You will be told that the government is trying to trick people into thinking the changes will be good for them. “Nothing will change for those who are receiving Social Security and for those who are near retirement. We must not increase payroll taxes. We must tap into the power of compound interest” and the latter would be accomplished through private accounts giving workers a “better rate of return.” In addition, Bush’s plan will also include shifting the calculation of benefits from the current system of wage indexing (which according to the Heritage Foundation usually rises about 1 to 1.5% faster than the price index) to one that relies on price indexing, and this change will cut benefits by 6.2% for someone turning 65 in the year 2022, stated the Heritage Foundation, while those with a private account would earn 4.7%, plus inflation. If nothing is done, that same person in 2022 would see benefits cut by 10.7% unless the Social Security system cashed in trust funds to offset the shortfall, suggests the Heritage Foundation, a conservative think tank. In sum, the diet of private accounts and re-indexing of benefits will be good for your health. You will now be able to breathe comfortably and exhale without worry. Fortunately, I have been eating a lot of chocolates and my memory is still alive and well. It was in a 2000 presidential debate that Bush stated that he would pay for the overhaul of Social Security by using half of the budget surplus. So much for that plan. You can’t fault the president. After all, about two out of three Americans are overweight (Bush said he has been eating too many doughnuts) and about two out of every three Americans spend and consume too much (Bush is a healthy discretionary spender).
Congress gave the states $10 billion t help cover the costs of Medicaid in 2003. In 2004, no federal funds were forthcoming. Medicaid is the health safety-net program for 52 million disabled and poor Americans. According to the National Council of State Legislatures (NCSL), sixteen states are already over budget and will have to find more money this fiscal year for Medicaid. Michigan, Nebraska, and New Hampshire report that they may run out of money, and will have to find a way to fill the gaps. In sum, spiraling health care costs and less federal aid will mean another year of belt-tightening with budget cuts on the way. Whereas Social Security does not represent a problem in 2005, Medicaid and health matters represent serious hurdles for our states.
Several years ago, Dave Winer and Adam Curry devised the software for blogging. Ever since, I have been posting on a daily basis. I have greatly appreciated their efforts. Blogging has gained tremendous traction, and it has revolutionized written communication. Dave and Adam have turned their attention to audio. They have developed software for the creation of personalized media channels. It is called “podcasting” that delivers audio programming created on a PC, and the latter is distributed via RSS to an iPod or other MP3 device. You can subscribe to the podcast as the software enables the automatic transfer of the RSS feed from the user’s computer to their MP3 device for on-demand listening. Aspiring DJs will now have podcasting, and just as there are hundreds of thousands of blogs, there will be tens of thousands of new radio programs and radio stations. Naturally, you don’t need FCC permission to podcast. There will be talk and there will be music. Adam Curry ventures there are 33 million MPs players and 600 million cell phones with MP3 capability and they have a network connection. Next stop? Incorporating video into podcasting and delivering it to MP3 equipped cell phone screens, thereby creating your personalized broadcast television channel. It may not be a large screen, but it will contain your content of choice.
Yesterday, Wal-Mart reaffirmed their estimate for December U.S. comp sales to rise by 1 to 3%. They “continue to see strength in food sales while general merchandise sales were not as strong. Sales for winter related items are below expectations. Average ticket drove the comp sales this week.” In other words, despite advertising sales, traffic did not drive sales.
When it comes to my investment history in Research in Motion or RIMM, I have made a zillion mistakes. How is that possible if I bought the stock in 1999 at $8 (adjusted for splits) and it’s presently trading at $88? I purchased the stock because I thought, and continue to think, their Blackberry is a great product. It was introduced in 1999. I let my love of the product close my eyes to the volatility in the stock. I have ridden the stock up and down, up and down, up and down. I have had faith in the long-term growth of the company; however, I should have taken some profits off the table. Taking profits too early is not a sin unless it’s in Berkshire Hathaway stock. So why I am writing about RIMM now? Mark Veverka’s article in Barron’s mentioned RIMM and he stated how folks have been predicting for some time that their “proprietary business model would catch up with the company. The question has been, not if, but when?” Along comes this competitor, Visto, a private company out of Redwood Shores, CA, the town Oracle calls home. Brian Bogosian, chairman and CEO of Visto, proclaims “my belief is that, in the long-term, the Blackberry is toast.” Visto has an open system for wireless email and PIM solutions. I visited Visto in 1999. They had some good venture backers. Since 1999, RIMM has run rings around Visto. Maybe that will change, but I’ll continue to stick with RIMM stock. If owning the stock had interfered with my sleeping, I would have sold long ago. I have seen other competition enter the market, and the market is large enough to accommodate many offerings without toast being served. Visto is but one entry in the wireless email market. An open system does not equate to a market leader.
Cocoa beans contain flavonoids, an antioxidant that some maintain can protect the heart. Walnuts contain omega-3 fatty acids, and studies have linked them to lowering the risk of heart disease. Apricots have healthful beta carotene. Putting all these ingredients together, it is not surprising that St. Louis- based Bissinger’s Handcrafted Chocolatier advertises to their customers to “treat yourself to good health.” The packaging states the candies contain ingredients “linked to improved cardiovascular health, lowered risk for certain types of cancer, a reduction in body weight and a lowing of the aging process.” Bonnie Liebman is the director of nutrition at the Center for Science in the Public Interest and stated “the claims that these candies can help you lose weight, fight cancer, or improve your short-term memory are not supported by good evidence. The bottom line is they’re trying to trick people into thinking these chocolates are good for them.” At a cost of more than $2 each, I know they’re not good for the pocket book.
Yesterday, Bush’s radio address to the nation was on Social Security. He mentioned that “in the 1950s, there were about 16 workers paying for every Social Security beneficiary. Today there are about three…In the year 2018, for the first time ever, Social Security will pay out more in benefits than the government collects in payroll taxes…By the time today’s workers in their mid 20s begin to retire, the system will be bankrupt, unless we act to save it.” The measures taken to save it will be good for you. “Saving Social Security for future generations will not be easy.” It will be hard work. You will be told that the government is trying to trick people into thinking the changes will be good for them. “Nothing will change for those who are receiving Social Security and for those who are near retirement. We must not increase payroll taxes. We must tap into the power of compound interest” and the latter would be accomplished through private accounts giving workers a “better rate of return.” In addition, Bush’s plan will also include shifting the calculation of benefits from the current system of wage indexing (which according to the Heritage Foundation usually rises about 1 to 1.5% faster than the price index) to one that relies on price indexing, and this change will cut benefits by 6.2% for someone turning 65 in the year 2022, stated the Heritage Foundation, while those with a private account would earn 4.7%, plus inflation. If nothing is done, that same person in 2022 would see benefits cut by 10.7% unless the Social Security system cashed in trust funds to offset the shortfall, suggests the Heritage Foundation, a conservative think tank. In sum, the diet of private accounts and re-indexing of benefits will be good for your health. You will now be able to breathe comfortably and exhale without worry. Fortunately, I have been eating a lot of chocolates and my memory is still alive and well. It was in a 2000 presidential debate that Bush stated that he would pay for the overhaul of Social Security by using half of the budget surplus. So much for that plan. You can’t fault the president. After all, about two out of three Americans are overweight (Bush said he has been eating too many doughnuts) and about two out of every three Americans spend and consume too much (Bush is a healthy discretionary spender).
Congress gave the states $10 billion t help cover the costs of Medicaid in 2003. In 2004, no federal funds were forthcoming. Medicaid is the health safety-net program for 52 million disabled and poor Americans. According to the National Council of State Legislatures (NCSL), sixteen states are already over budget and will have to find more money this fiscal year for Medicaid. Michigan, Nebraska, and New Hampshire report that they may run out of money, and will have to find a way to fill the gaps. In sum, spiraling health care costs and less federal aid will mean another year of belt-tightening with budget cuts on the way. Whereas Social Security does not represent a problem in 2005, Medicaid and health matters represent serious hurdles for our states.
Several years ago, Dave Winer and Adam Curry devised the software for blogging. Ever since, I have been posting on a daily basis. I have greatly appreciated their efforts. Blogging has gained tremendous traction, and it has revolutionized written communication. Dave and Adam have turned their attention to audio. They have developed software for the creation of personalized media channels. It is called “podcasting” that delivers audio programming created on a PC, and the latter is distributed via RSS to an iPod or other MP3 device. You can subscribe to the podcast as the software enables the automatic transfer of the RSS feed from the user’s computer to their MP3 device for on-demand listening. Aspiring DJs will now have podcasting, and just as there are hundreds of thousands of blogs, there will be tens of thousands of new radio programs and radio stations. Naturally, you don’t need FCC permission to podcast. There will be talk and there will be music. Adam Curry ventures there are 33 million MPs players and 600 million cell phones with MP3 capability and they have a network connection. Next stop? Incorporating video into podcasting and delivering it to MP3 equipped cell phone screens, thereby creating your personalized broadcast television channel. It may not be a large screen, but it will contain your content of choice.
Yesterday, Wal-Mart reaffirmed their estimate for December U.S. comp sales to rise by 1 to 3%. They “continue to see strength in food sales while general merchandise sales were not as strong. Sales for winter related items are below expectations. Average ticket drove the comp sales this week.” In other words, despite advertising sales, traffic did not drive sales.
When it comes to my investment history in Research in Motion or RIMM, I have made a zillion mistakes. How is that possible if I bought the stock in 1999 at $8 (adjusted for splits) and it’s presently trading at $88? I purchased the stock because I thought, and continue to think, their Blackberry is a great product. It was introduced in 1999. I let my love of the product close my eyes to the volatility in the stock. I have ridden the stock up and down, up and down, up and down. I have had faith in the long-term growth of the company; however, I should have taken some profits off the table. Taking profits too early is not a sin unless it’s in Berkshire Hathaway stock. So why I am writing about RIMM now? Mark Veverka’s article in Barron’s mentioned RIMM and he stated how folks have been predicting for some time that their “proprietary business model would catch up with the company. The question has been, not if, but when?” Along comes this competitor, Visto, a private company out of Redwood Shores, CA, the town Oracle calls home. Brian Bogosian, chairman and CEO of Visto, proclaims “my belief is that, in the long-term, the Blackberry is toast.” Visto has an open system for wireless email and PIM solutions. I visited Visto in 1999. They had some good venture backers. Since 1999, RIMM has run rings around Visto. Maybe that will change, but I’ll continue to stick with RIMM stock. If owning the stock had interfered with my sleeping, I would have sold long ago. I have seen other competition enter the market, and the market is large enough to accommodate many offerings without toast being served. Visto is but one entry in the wireless email market. An open system does not equate to a market leader.
Saturday, December 11, 2004
12/11/04 The Cost Of Doing Business
Fed Governor Bernanke: “Under a paper-money system, a determined government can always generate higher spending and hence positive inflation.” Unfortunately, over the last several years, the Fed has reached many irrational conclusions. Growing out of excess capacity so that U.S. businesses would regain their ability to raise prices is but one example. The Fed made a crucial error in judgment. This is not a normal economic expansion. In a real economic expansion, people earn more money. In this so-called period of economic growth, real wages have been declining for four years. As we approach the start of 2005, as a generalization, businesses hope to boost domestic revenues by raising prices. (Please do not write about Dell and others lowering the price of computers. As component prices come down, the cost of the hardware declines.)
There is a growing need for businesses to raise prices. Core intermediate goods prices have risen 8% in the past year, the worst inflation since 1981. In November, the prices of raw materials rose 8.7%, the biggest increase since March 2003. In the midst of this landscape, Philadelphia Fed Bank President Santomero stated “I think, at the moment, inflation is contained.” Maybe his moments are different from my moments. Santomero did, however, state “but I am hearing from businessmen that there is pressure on margins.” You bet there is pressure on margins. To combat that pressure, companies have attempted to first cut costs. Hence, hiring is limited to the have to category, and then, mostly part-time workers to avoid the cost of benefits. Secondly, companies have been closing plants, and mostly because of foreign competition. Thirdly, firms have placed a ceiling on overtime hours and attempt to squeeze more productivity out of their workforce. All the while, workers are seeing their wages, adjusted for inflation, declining. That is not an encouraging backdrop for raising prices. As Santomero remarked, “even though there is some pressure on costs, so far, it’s not translating to inflation at the retail level.”
There are other Fed forces at work. Wages are not rising but the Fed has generated the movement to monetize asset inflation, convert that to consumptive purchasing power despite the national net savings rate at record low levels, and not so gently, assist in making record household debt the icing on the cake. This recipe for disaster cannot be found in a Julia Child cookbook. As our real economic growth, adjusted for inflation, falters, the government appetite for deficits continues to grow. The U.S. government posted a $57.8 billion budget shortfall in November. The deficit for the first two months of the 2005 fiscal year is $115.2 billion versus $112.5 billion in the same period one year ago.
Comerica Bank’s National Recession Watch Index forecasts the likelihood of a national recession occurring six to 12 months in the future. The Index registered a 17% probability in November, up from 12% in October. November’s reading was the least favorable outlook since July 2001.
This past week the U.S. dollar broke an eight-week losing streak.
Crude closed under $41 a barrel for the first time in four months.
Wal-Mart has 40 stores in China and expects to increase that number by about 15 in 2005. In the first six months of 2004, Wal-Mart’s revenues in China increased 32%. IBM, Cisco, and Microsoft’s revenue growth should be so good.
Stephen Roach: “Lacking domestic savings, the U.S. must then import surplus savings from abroad in order to grow--- and then run massive current account and trade deficits to attract that capital.”
John Leahy, Airbus’s chief marketing official: “You will see a significant portion of customers that Boeing thought they might have for the 7E7 now switching to the Airbus A350 because of performance of the aircraft.” The A350 will be offered in two different passenger versions with capacities ranging from 245 to 285 seats with a range of 15,900 km or more. Airbus will soon announce several multi-billion dollar orders for the A350.
Up until now, the State Department’s immigrant visa control division has permitted thousands of foreign nurses to get fast-track work permits. After Jan. 1, this will not be allowed. Beginning in 2005, approval could take several years. Thousands of nurses from the Philippines will be impacted, and they have been our major source of imported nurses. Many hospitals have been experiencing a nursing shortage. That shortage can be expected to get worse in the new year.
China’s consumer prices in November slowed to a rise of 2.8%. This is significantly lower than the 4 to 5% increases over the last several months.
UBS’ Gary Gordon: “You can sustain very high levels of consumer debt when rates are falling, but not when they are rising.”
Fed Governor Bernanke: “Under a paper-money system, a determined government can always generate higher spending and hence positive inflation.” Unfortunately, over the last several years, the Fed has reached many irrational conclusions. Growing out of excess capacity so that U.S. businesses would regain their ability to raise prices is but one example. The Fed made a crucial error in judgment. This is not a normal economic expansion. In a real economic expansion, people earn more money. In this so-called period of economic growth, real wages have been declining for four years. As we approach the start of 2005, as a generalization, businesses hope to boost domestic revenues by raising prices. (Please do not write about Dell and others lowering the price of computers. As component prices come down, the cost of the hardware declines.)
There is a growing need for businesses to raise prices. Core intermediate goods prices have risen 8% in the past year, the worst inflation since 1981. In November, the prices of raw materials rose 8.7%, the biggest increase since March 2003. In the midst of this landscape, Philadelphia Fed Bank President Santomero stated “I think, at the moment, inflation is contained.” Maybe his moments are different from my moments. Santomero did, however, state “but I am hearing from businessmen that there is pressure on margins.” You bet there is pressure on margins. To combat that pressure, companies have attempted to first cut costs. Hence, hiring is limited to the have to category, and then, mostly part-time workers to avoid the cost of benefits. Secondly, companies have been closing plants, and mostly because of foreign competition. Thirdly, firms have placed a ceiling on overtime hours and attempt to squeeze more productivity out of their workforce. All the while, workers are seeing their wages, adjusted for inflation, declining. That is not an encouraging backdrop for raising prices. As Santomero remarked, “even though there is some pressure on costs, so far, it’s not translating to inflation at the retail level.”
There are other Fed forces at work. Wages are not rising but the Fed has generated the movement to monetize asset inflation, convert that to consumptive purchasing power despite the national net savings rate at record low levels, and not so gently, assist in making record household debt the icing on the cake. This recipe for disaster cannot be found in a Julia Child cookbook. As our real economic growth, adjusted for inflation, falters, the government appetite for deficits continues to grow. The U.S. government posted a $57.8 billion budget shortfall in November. The deficit for the first two months of the 2005 fiscal year is $115.2 billion versus $112.5 billion in the same period one year ago.
Comerica Bank’s National Recession Watch Index forecasts the likelihood of a national recession occurring six to 12 months in the future. The Index registered a 17% probability in November, up from 12% in October. November’s reading was the least favorable outlook since July 2001.
This past week the U.S. dollar broke an eight-week losing streak.
Crude closed under $41 a barrel for the first time in four months.
Wal-Mart has 40 stores in China and expects to increase that number by about 15 in 2005. In the first six months of 2004, Wal-Mart’s revenues in China increased 32%. IBM, Cisco, and Microsoft’s revenue growth should be so good.
Stephen Roach: “Lacking domestic savings, the U.S. must then import surplus savings from abroad in order to grow--- and then run massive current account and trade deficits to attract that capital.”
John Leahy, Airbus’s chief marketing official: “You will see a significant portion of customers that Boeing thought they might have for the 7E7 now switching to the Airbus A350 because of performance of the aircraft.” The A350 will be offered in two different passenger versions with capacities ranging from 245 to 285 seats with a range of 15,900 km or more. Airbus will soon announce several multi-billion dollar orders for the A350.
Up until now, the State Department’s immigrant visa control division has permitted thousands of foreign nurses to get fast-track work permits. After Jan. 1, this will not be allowed. Beginning in 2005, approval could take several years. Thousands of nurses from the Philippines will be impacted, and they have been our major source of imported nurses. Many hospitals have been experiencing a nursing shortage. That shortage can be expected to get worse in the new year.
China’s consumer prices in November slowed to a rise of 2.8%. This is significantly lower than the 4 to 5% increases over the last several months.
UBS’ Gary Gordon: “You can sustain very high levels of consumer debt when rates are falling, but not when they are rising.”
12/11/04 The Cost Of Doing Business
Fed Governor Bernanke: “Under a paper-money system, a determined government can always generate higher spending and hence positive inflation.” Unfortunately, over the last several years, the Fed has reached many irrational conclusions. Growing out of excess capacity so that U.S. businesses would regain their ability to raise prices is but one example. The Fed made a crucial error in judgment. This is not a normal economic expansion. In a real economic expansion, people earn more money. In this so-called period of economic growth, real wages have been declining for four years. As we approach the start of 2005, as a generalization, businesses hope to boost domestic revenues by raising prices. (Please do not write about Dell and others lowering the price of computers. As component prices come down, the cost of the hardware declines.)
There is a growing need for businesses to raise prices. Core intermediate goods prices have risen 8% in the past year, the worst inflation since 1981. In November, the prices of raw materials rose 8.7%, the biggest increase since March 2003. In the midst of this landscape, Philadelphia Fed Bank President Santomero stated “I think, at the moment, inflation is contained.” Maybe his moments are different from my moments. Santomero did, however, state “but I am hearing from businessmen that there is pressure on margins.” You bet there is pressure on margins. To combat that pressure, companies have attempted to first cut costs. Hence, hiring is limited to the have to category, and then, mostly part-time workers to avoid the cost of benefits. Secondly, companies have been closing plants, and mostly because of foreign competition. Thirdly, firms have placed a ceiling on overtime hours and attempt to squeeze more productivity out of their workforce. All the while, workers are seeing their wages, adjusted for inflation, declining. That is not an encouraging backdrop for raising prices. As Santomero remarked, “even though there is some pressure on costs, so far, it’s not translating to inflation at the retail level.”
There are other Fed forces at work. Wages are not rising but the Fed has generated the movement to monetize asset inflation, convert that to consumptive purchasing power despite the national net savings rate at record low levels, and not so gently, assist in making record household debt the icing on the cake. This recipe for disaster cannot be found in a Julia Child cookbook. As our real economic growth, adjusted for inflation, falters, the government appetite for deficits continues to grow. The U.S. government posted a $57.8 billion budget shortfall in November. The deficit for the first two months of the 2005 fiscal year is $115.2 billion versus $112.5 billion in the same period one year ago.
Comerica Bank’s National Recession Watch Index forecasts the likelihood of a national recession occurring six to 12 months in the future. The Index registered a 17% probability in November, up from 12% in October. November’s reading was the least favorable outlook since July 2001.
This past week the U.S. dollar broke an eight-week losing streak.
Crude closed under $41 a barrel for the first time in four months.
Wal-Mart has 40 stores in China and expects to increase that number by about 15 in 2005. In the first six months of 2004, Wal-Mart’s revenues in China increased 32%. IBM, Cisco, and Microsoft’s revenue growth should be so good.
Stephen Roach: “Lacking domestic savings, the U.S. must then import surplus savings from abroad in order to grow--- and then run massive current account and trade deficits to attract that capital.”
John Leahy, Airbus’s chief marketing official: “You will see a significant portion of customers that Boeing thought they might have for the 7E7 now switching to the Airbus A350 because of performance of the aircraft.” The A350 will be offered in two different passenger versions with capacities ranging from 245 to 285 seats with a range of 15,900 km or more. Airbus will soon announce several multi-billion dollar orders for the A350.
Up until now, the State Department’s immigrant visa control division has permitted thousands of foreign nurses to get fast-track work permits. After Jan. 1, this will not be allowed. Beginning in 2005, approval could take several years. Thousands of nurses from the Philippines will be impacted, and they have been our major source of imported nurses. Many hospitals have been experiencing a nursing shortage. That shortage can be expected to get worse in the new year.
China’s consumer prices in November slowed to a rise of 2.8%. This is significantly lower than the 4 to 5% increases over the last several months.
UBS’ Gary Gordon: “You can sustain very high levels of consumer debt when rates are falling, but not when they are rising.”
Fed Governor Bernanke: “Under a paper-money system, a determined government can always generate higher spending and hence positive inflation.” Unfortunately, over the last several years, the Fed has reached many irrational conclusions. Growing out of excess capacity so that U.S. businesses would regain their ability to raise prices is but one example. The Fed made a crucial error in judgment. This is not a normal economic expansion. In a real economic expansion, people earn more money. In this so-called period of economic growth, real wages have been declining for four years. As we approach the start of 2005, as a generalization, businesses hope to boost domestic revenues by raising prices. (Please do not write about Dell and others lowering the price of computers. As component prices come down, the cost of the hardware declines.)
There is a growing need for businesses to raise prices. Core intermediate goods prices have risen 8% in the past year, the worst inflation since 1981. In November, the prices of raw materials rose 8.7%, the biggest increase since March 2003. In the midst of this landscape, Philadelphia Fed Bank President Santomero stated “I think, at the moment, inflation is contained.” Maybe his moments are different from my moments. Santomero did, however, state “but I am hearing from businessmen that there is pressure on margins.” You bet there is pressure on margins. To combat that pressure, companies have attempted to first cut costs. Hence, hiring is limited to the have to category, and then, mostly part-time workers to avoid the cost of benefits. Secondly, companies have been closing plants, and mostly because of foreign competition. Thirdly, firms have placed a ceiling on overtime hours and attempt to squeeze more productivity out of their workforce. All the while, workers are seeing their wages, adjusted for inflation, declining. That is not an encouraging backdrop for raising prices. As Santomero remarked, “even though there is some pressure on costs, so far, it’s not translating to inflation at the retail level.”
There are other Fed forces at work. Wages are not rising but the Fed has generated the movement to monetize asset inflation, convert that to consumptive purchasing power despite the national net savings rate at record low levels, and not so gently, assist in making record household debt the icing on the cake. This recipe for disaster cannot be found in a Julia Child cookbook. As our real economic growth, adjusted for inflation, falters, the government appetite for deficits continues to grow. The U.S. government posted a $57.8 billion budget shortfall in November. The deficit for the first two months of the 2005 fiscal year is $115.2 billion versus $112.5 billion in the same period one year ago.
Comerica Bank’s National Recession Watch Index forecasts the likelihood of a national recession occurring six to 12 months in the future. The Index registered a 17% probability in November, up from 12% in October. November’s reading was the least favorable outlook since July 2001.
This past week the U.S. dollar broke an eight-week losing streak.
Crude closed under $41 a barrel for the first time in four months.
Wal-Mart has 40 stores in China and expects to increase that number by about 15 in 2005. In the first six months of 2004, Wal-Mart’s revenues in China increased 32%. IBM, Cisco, and Microsoft’s revenue growth should be so good.
Stephen Roach: “Lacking domestic savings, the U.S. must then import surplus savings from abroad in order to grow--- and then run massive current account and trade deficits to attract that capital.”
John Leahy, Airbus’s chief marketing official: “You will see a significant portion of customers that Boeing thought they might have for the 7E7 now switching to the Airbus A350 because of performance of the aircraft.” The A350 will be offered in two different passenger versions with capacities ranging from 245 to 285 seats with a range of 15,900 km or more. Airbus will soon announce several multi-billion dollar orders for the A350.
Up until now, the State Department’s immigrant visa control division has permitted thousands of foreign nurses to get fast-track work permits. After Jan. 1, this will not be allowed. Beginning in 2005, approval could take several years. Thousands of nurses from the Philippines will be impacted, and they have been our major source of imported nurses. Many hospitals have been experiencing a nursing shortage. That shortage can be expected to get worse in the new year.
China’s consumer prices in November slowed to a rise of 2.8%. This is significantly lower than the 4 to 5% increases over the last several months.
UBS’ Gary Gordon: “You can sustain very high levels of consumer debt when rates are falling, but not when they are rising.”
Friday, December 10, 2004
12/10/04 By The Nation But To The Nation
The mounting debt pile mounts each and every day. We have talked and talked about our national debt of $7.5 trillion that is equal to 7.5 times 1000 billion dollars. We have discussed the unfunded liabilities for Medicare and Social Security that amount to over $43 trillion or 43 times 1000 billion dollars. Let us not forget to include the $10 trillion of debt levels accumulated by U.S. households. The latter increased by an annualized 9.1% in the third quarter while household net worth rose 4.5% in the same period to $46.7 trillion, according to the Federal Reserve. There is more. Total U.S. debt, excluding the aforementioned liabilities, increased at a 7.4% annual rate in the third quarter to $23.6 trillion. Debt owed by U.S. businesses increased at a 5.1% rate, the fastest in five quarters. If you take everything together, we have an $11 trillion economy with a household worth of $46.7 trillion balancing on a debt picture of $23.6 trillion + $43 trillion or rounded out to 67 times 1000 billion dollars. Are you still wondering why the dollar has collapsed against all major currencies?
FDR: “Our national debt after all, is an internal debt, owed not only by the nation but to the nation. If our children have to pay the interest they will pay that interest to themselves.” How about the principal?
Morgan Stanley expects credit card companies in 2004 to lose $17 billion in receivables to mortgage refinancings and $89 billion to home-equity loans.
The Bank Credit Analyst points out that, since 1992, emerging Asia’s exports have grown 80% faster than consumption. It’s no wonder our trade deficit is out of control.
According to Cardweb.com, 20% of all holiday-related transactions this year are being placed on debit cards, and that figure continues to grow at 16% annually.
Greenspan stated that the record weight of debt carried by American households and soaring home prices do not represent serious threats to the U.S. economy. He remarked that the vast majority of consumers “appear to calibrate their borrowing and spending to minimize financial difficulties…household finances appear to be in reasonably good shape.”
Publilius Syrus: “Debt is the slavery of the free.”
Ronald Reagan: “We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.”
According to the recent findings of the Duke University/CFO Magazine Business Outlook survey, chief financial officers of U.S. corporations are less bullish about the economy in 2005, and are particularly concerned about health care costs and operating in an increasingly competitive economic environment. More than two-thirds of the CFOs believe that addressing the U.S. budget deficit should be at the top of the president’s list.
Charlie Chaplin: “The saddest thing I can imagine is to get used to luxury.”
The IEA stated “the market is amply supplied with sour crude which can not be readily processed.”
According to the BLS, import prices for non-petroleum industrial supplies and materials were up 16% over the past 12 months. In contrast, agricultural export prices fell for a fifth time in the past 6 months. Over the past year, agricultural prices were down 5.2%; however, for the year ended November, overall export prices increased 4.3% while overall import prices rose 9.5% for the November 2003-2004 period. That is not a healthy tonic for profit margins.
Halliburton is the largest U.S. contractor in Iraq. They have received $10.8 billion in work orders from the Army. Maybe Boeing and Halliburton should merge.
The Conference Board reported that Japan’s leading economic index declined 0.3% in October. It was the third consecutive monthly decline. At the same time, real GDP growth slowed to a 0.3% annual rate in the third quarter of 2004, down from 1.1% in the second quarter and a 5.2% average rate over the previous year.
Private and foreign investors showed little interest in the sale of $9 billion of 10-year Treasury notes. At a yield of 4.15%, one cannot blame them.
Have you ever considered that Santa Claus rallies coincide with the time of holiday bonuses on Wall Street? As a generality, higher stock prices lead to higher bonuses.
Delphi Corp. will cut 3,000 U.S. hourly employees and 5,500 non-U.S. workers. With lower production levels and higher health care and commodity price increases, the company expects a pro-forma net loss of $200 million in 2005 but operating cash flow of at least $900 million. Sprint will cut 700 jobs. Domtar Ltd. is eliminating 790 jobs. Sitel is cutting170 jobs, Reuters is reducing the number of editing positions by 100.
Over a year ago I wrote about beta glucan. There is an increasing amount of research being done on the medicinal power of maitake mushrooms. This “dancing mushroom” has beta glucan, or polysaccharide, a constituent frequently credited for its immuno-stimulant properties. In a recent issue of the Journal of Medicinal Food, it was noted that a polysaccharide extract of maitake increased both innate and adaptive immune responses in mice. In the Winter 2003 issue there was an article indicating that maitake’s immune-enhancing effects may play a role in cancer prevention. In prior studies, there were indications beta glucan had therapeutic value against type 2 diabetes by reducing fasting blood glucose and insulin resistance. During this study period, Maitake SX-Fraction also lowered systolic blood pressure in subjects.
Reportedly, starting early next year, OPEC will cut production by 1 million barrels per day.
Bernard Baruch: “I made my money by selling too soon.”
The mounting debt pile mounts each and every day. We have talked and talked about our national debt of $7.5 trillion that is equal to 7.5 times 1000 billion dollars. We have discussed the unfunded liabilities for Medicare and Social Security that amount to over $43 trillion or 43 times 1000 billion dollars. Let us not forget to include the $10 trillion of debt levels accumulated by U.S. households. The latter increased by an annualized 9.1% in the third quarter while household net worth rose 4.5% in the same period to $46.7 trillion, according to the Federal Reserve. There is more. Total U.S. debt, excluding the aforementioned liabilities, increased at a 7.4% annual rate in the third quarter to $23.6 trillion. Debt owed by U.S. businesses increased at a 5.1% rate, the fastest in five quarters. If you take everything together, we have an $11 trillion economy with a household worth of $46.7 trillion balancing on a debt picture of $23.6 trillion + $43 trillion or rounded out to 67 times 1000 billion dollars. Are you still wondering why the dollar has collapsed against all major currencies?
FDR: “Our national debt after all, is an internal debt, owed not only by the nation but to the nation. If our children have to pay the interest they will pay that interest to themselves.” How about the principal?
Morgan Stanley expects credit card companies in 2004 to lose $17 billion in receivables to mortgage refinancings and $89 billion to home-equity loans.
The Bank Credit Analyst points out that, since 1992, emerging Asia’s exports have grown 80% faster than consumption. It’s no wonder our trade deficit is out of control.
According to Cardweb.com, 20% of all holiday-related transactions this year are being placed on debit cards, and that figure continues to grow at 16% annually.
Greenspan stated that the record weight of debt carried by American households and soaring home prices do not represent serious threats to the U.S. economy. He remarked that the vast majority of consumers “appear to calibrate their borrowing and spending to minimize financial difficulties…household finances appear to be in reasonably good shape.”
Publilius Syrus: “Debt is the slavery of the free.”
Ronald Reagan: “We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.”
According to the recent findings of the Duke University/CFO Magazine Business Outlook survey, chief financial officers of U.S. corporations are less bullish about the economy in 2005, and are particularly concerned about health care costs and operating in an increasingly competitive economic environment. More than two-thirds of the CFOs believe that addressing the U.S. budget deficit should be at the top of the president’s list.
Charlie Chaplin: “The saddest thing I can imagine is to get used to luxury.”
The IEA stated “the market is amply supplied with sour crude which can not be readily processed.”
According to the BLS, import prices for non-petroleum industrial supplies and materials were up 16% over the past 12 months. In contrast, agricultural export prices fell for a fifth time in the past 6 months. Over the past year, agricultural prices were down 5.2%; however, for the year ended November, overall export prices increased 4.3% while overall import prices rose 9.5% for the November 2003-2004 period. That is not a healthy tonic for profit margins.
Halliburton is the largest U.S. contractor in Iraq. They have received $10.8 billion in work orders from the Army. Maybe Boeing and Halliburton should merge.
The Conference Board reported that Japan’s leading economic index declined 0.3% in October. It was the third consecutive monthly decline. At the same time, real GDP growth slowed to a 0.3% annual rate in the third quarter of 2004, down from 1.1% in the second quarter and a 5.2% average rate over the previous year.
Private and foreign investors showed little interest in the sale of $9 billion of 10-year Treasury notes. At a yield of 4.15%, one cannot blame them.
Have you ever considered that Santa Claus rallies coincide with the time of holiday bonuses on Wall Street? As a generality, higher stock prices lead to higher bonuses.
Delphi Corp. will cut 3,000 U.S. hourly employees and 5,500 non-U.S. workers. With lower production levels and higher health care and commodity price increases, the company expects a pro-forma net loss of $200 million in 2005 but operating cash flow of at least $900 million. Sprint will cut 700 jobs. Domtar Ltd. is eliminating 790 jobs. Sitel is cutting170 jobs, Reuters is reducing the number of editing positions by 100.
Over a year ago I wrote about beta glucan. There is an increasing amount of research being done on the medicinal power of maitake mushrooms. This “dancing mushroom” has beta glucan, or polysaccharide, a constituent frequently credited for its immuno-stimulant properties. In a recent issue of the Journal of Medicinal Food, it was noted that a polysaccharide extract of maitake increased both innate and adaptive immune responses in mice. In the Winter 2003 issue there was an article indicating that maitake’s immune-enhancing effects may play a role in cancer prevention. In prior studies, there were indications beta glucan had therapeutic value against type 2 diabetes by reducing fasting blood glucose and insulin resistance. During this study period, Maitake SX-Fraction also lowered systolic blood pressure in subjects.
Reportedly, starting early next year, OPEC will cut production by 1 million barrels per day.
Bernard Baruch: “I made my money by selling too soon.”
Thursday, December 09, 2004
12/9/04 Is There An Escape Hatch?
The most recent IMF forecast indicated that the U.S. deficit absorbed about one-sixth of the world’s gross savings. Unfortunately, such a statement only factored in the current account deficit of $665 billion. How about the budget deficit of $420 billion? Is that chopped liver? Martin Wolf described the predicament a bit differently when stating “U.S. gross external liabilities are some 11 times export earnings, while net liabilities are about three times exports.” Stated simply, we consume too much, create too much debt, and save too little.
Fear not. Help is on the way. The Snowman will be with us for a second Bush term. Our strong dollar policy is more alive than ever. Some traders must have gotten a whiff of this news a couple of days ago. It was then that the dollar rallied and this led to $15 an ounce collapse in the price of gold and to further strengthening in Treasury prices as the ten-year yield dropped to 4.12%. The timing was perfect and coincided with the five-year Treasury note auction. As the dollar strengthened and our flag waved supreme, foreigners bought almost two-thirds of the $15 billion notes sold. It was a day for rejoicing. We were able to refinance some of our nation’s debt. Another bullet was dodged. The Snowman came to the rescue.
Until one day ago, the Baltic Dry Index had risen for 48 consecutive days. The Index does not measure sobriety but rather reflects dry-bulk shipping rates for coal, grain, and other commodities. Between September 29 and December 7, the Index jumped 51.4%. That beats real estate. Imagine the following. On September 11, 2001 the day rate for a large cargo ship carrying goods from Brazil to Japan was $6,000. Today that rate would approach $100,000. This is not poppy cock.
China mentioned that producer prices rose 8.4% in October from the prior year. Much of that increase was due to oil, steel, and coal. With the Chinese government tightening lending policies, it was not surprising that China’s industrial production grew at the slowest rate in 18 months in November. According to a Dec. 1 survey of purchasing managers by CLSA Asia-Pacific Markets, there is a “weakening of demand across a number of product sectors and indicated sharply rising costs continued to undermine manufacturers’ margins.” This does not bode well for GM’s auto operations in China.
Jesse Livermore: “A loss never bothers me after I take it. I forget it overnight. But being wrong- not taking the loss- that is what does damage to the pocketbook and the soul.”
GM’s Red Tag Sale begins tomorrow. It is geared to sparking lease transactions. The company’s German Opel division will cut 9,500 jobs in that country.
John Challenger: “Higher health care and energy costs for employers are definitely taking a toll. Companies are being forced to enact more cost-containment measures to protect profits.” In case you didn’t believe we have an employment soft patch, 2004 will mark the fourth consecutive year that one million or more job cuts were announced by U.S. employers. The good news is that the latest Business Roundtable survey of CEOs at major companies indicated that only 20% expect employment to fall in the coming months. The bad news is that, in the previous survey, the number was 12%.
If you have the holiday blues, please note that Hanukkah arrived earlier in the week. That means we take a respite from low-carb foods and pig out on potato pancakes called latkes and jelly doughnuts without holes called sufganiyot. You can enjoy these fried foods without being able to pronounce them.
Avon mentioned that fourth-quarter U.S. sales would decline about 5%, and that, in 2005, U.S. sales would decline slightly.
The Deloitte & Touche 2004 holiday shopping survey found that 64% of shoppers plan to buy gift cards. According to the National Retail Federation, more than half of all consumers hope to receive gift cards, and yet, the Retail Council estimates that 12% of gift card recipients don’t redeem their cards.
Kansas, Illinois, Wisconsin, Washington, and Missouri have a combined population of 33 million---one million more than the entire population of Canada. These five states urge their citizens to purchase their prescription medicines through Canadian Internet pharmacies. Unfortunately, Canadian health officials have stated repeatedly that their country cannot supply the U.S. need for prescription drugs.
UCLA economists pointed out that inflation-adjusted home prices have risen more than 5% annually over the last five years, five times the usual rate. They stated that prices nationwide are now 25% above their historical long-term average and that “bubbles, once they get going, tend to take a life of their own.”
Kraft Foods will close its yogurt-making plant in South Edmeston, NY and leave 67 employees without work. Masonite Door Corp. will end production at its Richmond plant, and 111 salaried and hourly employees will be out of work.
George Carlin: “By and large, language is a tool to conceal the truth.”
Chip makers Altera and Xilinx cut their quarterly sales forecasts.
U.S. November non-oil import prices rose 0.7%.
U.S. weekly jobless claims increased by 8,000 to 357,000. At some point, economists will realize that the U.S. recession has begun. Wall Street money managers will come to learn that after their recent portfolio gains turn into losses.
The most recent IMF forecast indicated that the U.S. deficit absorbed about one-sixth of the world’s gross savings. Unfortunately, such a statement only factored in the current account deficit of $665 billion. How about the budget deficit of $420 billion? Is that chopped liver? Martin Wolf described the predicament a bit differently when stating “U.S. gross external liabilities are some 11 times export earnings, while net liabilities are about three times exports.” Stated simply, we consume too much, create too much debt, and save too little.
Fear not. Help is on the way. The Snowman will be with us for a second Bush term. Our strong dollar policy is more alive than ever. Some traders must have gotten a whiff of this news a couple of days ago. It was then that the dollar rallied and this led to $15 an ounce collapse in the price of gold and to further strengthening in Treasury prices as the ten-year yield dropped to 4.12%. The timing was perfect and coincided with the five-year Treasury note auction. As the dollar strengthened and our flag waved supreme, foreigners bought almost two-thirds of the $15 billion notes sold. It was a day for rejoicing. We were able to refinance some of our nation’s debt. Another bullet was dodged. The Snowman came to the rescue.
Until one day ago, the Baltic Dry Index had risen for 48 consecutive days. The Index does not measure sobriety but rather reflects dry-bulk shipping rates for coal, grain, and other commodities. Between September 29 and December 7, the Index jumped 51.4%. That beats real estate. Imagine the following. On September 11, 2001 the day rate for a large cargo ship carrying goods from Brazil to Japan was $6,000. Today that rate would approach $100,000. This is not poppy cock.
China mentioned that producer prices rose 8.4% in October from the prior year. Much of that increase was due to oil, steel, and coal. With the Chinese government tightening lending policies, it was not surprising that China’s industrial production grew at the slowest rate in 18 months in November. According to a Dec. 1 survey of purchasing managers by CLSA Asia-Pacific Markets, there is a “weakening of demand across a number of product sectors and indicated sharply rising costs continued to undermine manufacturers’ margins.” This does not bode well for GM’s auto operations in China.
Jesse Livermore: “A loss never bothers me after I take it. I forget it overnight. But being wrong- not taking the loss- that is what does damage to the pocketbook and the soul.”
GM’s Red Tag Sale begins tomorrow. It is geared to sparking lease transactions. The company’s German Opel division will cut 9,500 jobs in that country.
John Challenger: “Higher health care and energy costs for employers are definitely taking a toll. Companies are being forced to enact more cost-containment measures to protect profits.” In case you didn’t believe we have an employment soft patch, 2004 will mark the fourth consecutive year that one million or more job cuts were announced by U.S. employers. The good news is that the latest Business Roundtable survey of CEOs at major companies indicated that only 20% expect employment to fall in the coming months. The bad news is that, in the previous survey, the number was 12%.
If you have the holiday blues, please note that Hanukkah arrived earlier in the week. That means we take a respite from low-carb foods and pig out on potato pancakes called latkes and jelly doughnuts without holes called sufganiyot. You can enjoy these fried foods without being able to pronounce them.
Avon mentioned that fourth-quarter U.S. sales would decline about 5%, and that, in 2005, U.S. sales would decline slightly.
The Deloitte & Touche 2004 holiday shopping survey found that 64% of shoppers plan to buy gift cards. According to the National Retail Federation, more than half of all consumers hope to receive gift cards, and yet, the Retail Council estimates that 12% of gift card recipients don’t redeem their cards.
Kansas, Illinois, Wisconsin, Washington, and Missouri have a combined population of 33 million---one million more than the entire population of Canada. These five states urge their citizens to purchase their prescription medicines through Canadian Internet pharmacies. Unfortunately, Canadian health officials have stated repeatedly that their country cannot supply the U.S. need for prescription drugs.
UCLA economists pointed out that inflation-adjusted home prices have risen more than 5% annually over the last five years, five times the usual rate. They stated that prices nationwide are now 25% above their historical long-term average and that “bubbles, once they get going, tend to take a life of their own.”
Kraft Foods will close its yogurt-making plant in South Edmeston, NY and leave 67 employees without work. Masonite Door Corp. will end production at its Richmond plant, and 111 salaried and hourly employees will be out of work.
George Carlin: “By and large, language is a tool to conceal the truth.”
Chip makers Altera and Xilinx cut their quarterly sales forecasts.
U.S. November non-oil import prices rose 0.7%.
U.S. weekly jobless claims increased by 8,000 to 357,000. At some point, economists will realize that the U.S. recession has begun. Wall Street money managers will come to learn that after their recent portfolio gains turn into losses.
Wednesday, December 08, 2004
12/8/04 To Acknowledge Risk
Charles Tremper: “The first step in the risk management process is to acknowledge the reality risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning.”
Excluding the $2 trillion cost of partially privatizing the Social Security system, excluding $42 trillion of unfunded obligations on entitlements, such as, Medicare and Social Security, and excluding this year’s $665 billion current account deficit, our national debt is equal to about 70% of our total GDP.
The Snowman: “The U.S. is dealing with its deficit.”
Boston is planning steep property tax increases.
Jim Rogers created the Rogers International Commodity Index in 1997 and 1998. It consists of 35 globally traded commodities based on the cost of doing business worldwide and on liquidity. Since Jan. 1, 2004, the Index has increased by approximately 19%. Since Rogers created the Index on August 1, 1998, it has increased by approximately 185%.
The Chicago Mercantile Exchange is the largest U.S. futures exchange. Yesterday a new volume record was set for total foreign exchange futures contracts with 625,912 contracts with a worth of $72.1 billion in notional value. Yesterday volume contract records were set in the yen, Mexican peso, pound, Swiss francs, and Australian dollar.
Yesterday the Bank of Canada kept interest rates unchanged and today the Reserve Bank of Australia kept its lending rates unchanged. When Britain, New Zealand, and Sweden’s central bankers meet this week, they are expected to keep rates unchanged. Only the Fed is expected to raise rates next week.
Later this week, GM will launch a new incentives program called “GM Red Tag Sale.” Last month’s promotion did not prevent a 13% drop in U.S. sales. Maybe they should consider dropping their prices and then giving an incentive on top of that.
In November, total OPEC crude production fell 480,000 barrels per day to 29.82 barrels per day, according to a Platts survey.
The IBD/TIPP Economic Optimism Index fell 0.6 point to 54.5 in December. It was the second straight monthly decline. The index is made up of three key components and all three declined in December--- the six-month economic outlook, the personal financial outlook, and the confidence in federal economic policies.
AOL is cutting 750 jobs. Hamilton Sunstrand will close its electronic manufacturing facility in Farmington, Conn. next Monday, and about 290 employees will lose their jobs.
According to Challenger, Gray, & Christmas, U.S. corporations announced plans to eliminate 104,530 jobs in November, the third month in a row that planned layoffs exceeded 100,000. Announced plans in November rose 2,6% from October’s level, and importantly, they were up 5.1% from November 2003’s 99,452. It is the first time since early 2002 that layoffs were above 100,000 for three months in a row. If you think this is a soft patch, then you need to get a government job.
The BLS announced revised productivity for the third quarter of 2004. The figures were a rise of 1.8% in the nonfarm sector and 2.4% in the business sector. I guess workers have grown tired of busting their asses only to see their wages go down year by year. Can you blame them? When do the workers get a bigger share of the pie?
According to Global IT Services Report, recent revenue growth among large and mid-sized IT services firms may be short-lived. They find evidence of a brief fall-off in IT services revenue growth in the beginning of 2005 before a recovery sometime in the second quarter. They maintain that growth is likely to continue its choppy pattern as unevenness in bookings persists over the course of 2005.
Yesterday Dell began work on its new campus in Hyderabad, India. It will start operations in March next year, and it will house Dell’s call center.
According to the International Council of Shopping Centers, retail chain store sales declined by 1.7% for the week ending December 4. For December, ICSC expects sales to grow by 3.5% to 4% on a year-over-year basis.
Gartner expects enterprise spending on information communications and technology in India to grow at a 16.6% rate in 2005 as compared to Asia Pacific growth at 7.8% next year.
This may come as a big surprise but Wal-Mart has begun to think outside the box. The company’s new stores will not look all the same. They will no longer be standard blue and gray rectangles. The big box designs will become community-friendly designs and the individual community will have a say in that design. City planners have taken to the new approach, and shoppers should also appreciate the effort.
Nobel Laureate Edward Prescott: “I don’t know why the Chinese are subsidizing the Americans so much, holding all this American debt that pays very, very low interest rates. It’s ridiculous for them to hold too much. It’s not in the interest of the Chinese people.” Maybe they need to acknowledge reality risk.
Although crude declined to a three- month low of $41.47 a barrel yesterday, the market still managed to have six stocks decline for every one that rose on the New York Stock Exchange. Maybe the price of crude doesn’t count any more just as some say deficits don’t matter. Next week these same pundits will state that five consecutive Fed interest rate hikes don’t count.
Charles Tremper: “The first step in the risk management process is to acknowledge the reality risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning.”
Excluding the $2 trillion cost of partially privatizing the Social Security system, excluding $42 trillion of unfunded obligations on entitlements, such as, Medicare and Social Security, and excluding this year’s $665 billion current account deficit, our national debt is equal to about 70% of our total GDP.
The Snowman: “The U.S. is dealing with its deficit.”
Boston is planning steep property tax increases.
Jim Rogers created the Rogers International Commodity Index in 1997 and 1998. It consists of 35 globally traded commodities based on the cost of doing business worldwide and on liquidity. Since Jan. 1, 2004, the Index has increased by approximately 19%. Since Rogers created the Index on August 1, 1998, it has increased by approximately 185%.
The Chicago Mercantile Exchange is the largest U.S. futures exchange. Yesterday a new volume record was set for total foreign exchange futures contracts with 625,912 contracts with a worth of $72.1 billion in notional value. Yesterday volume contract records were set in the yen, Mexican peso, pound, Swiss francs, and Australian dollar.
Yesterday the Bank of Canada kept interest rates unchanged and today the Reserve Bank of Australia kept its lending rates unchanged. When Britain, New Zealand, and Sweden’s central bankers meet this week, they are expected to keep rates unchanged. Only the Fed is expected to raise rates next week.
Later this week, GM will launch a new incentives program called “GM Red Tag Sale.” Last month’s promotion did not prevent a 13% drop in U.S. sales. Maybe they should consider dropping their prices and then giving an incentive on top of that.
In November, total OPEC crude production fell 480,000 barrels per day to 29.82 barrels per day, according to a Platts survey.
The IBD/TIPP Economic Optimism Index fell 0.6 point to 54.5 in December. It was the second straight monthly decline. The index is made up of three key components and all three declined in December--- the six-month economic outlook, the personal financial outlook, and the confidence in federal economic policies.
AOL is cutting 750 jobs. Hamilton Sunstrand will close its electronic manufacturing facility in Farmington, Conn. next Monday, and about 290 employees will lose their jobs.
According to Challenger, Gray, & Christmas, U.S. corporations announced plans to eliminate 104,530 jobs in November, the third month in a row that planned layoffs exceeded 100,000. Announced plans in November rose 2,6% from October’s level, and importantly, they were up 5.1% from November 2003’s 99,452. It is the first time since early 2002 that layoffs were above 100,000 for three months in a row. If you think this is a soft patch, then you need to get a government job.
The BLS announced revised productivity for the third quarter of 2004. The figures were a rise of 1.8% in the nonfarm sector and 2.4% in the business sector. I guess workers have grown tired of busting their asses only to see their wages go down year by year. Can you blame them? When do the workers get a bigger share of the pie?
According to Global IT Services Report, recent revenue growth among large and mid-sized IT services firms may be short-lived. They find evidence of a brief fall-off in IT services revenue growth in the beginning of 2005 before a recovery sometime in the second quarter. They maintain that growth is likely to continue its choppy pattern as unevenness in bookings persists over the course of 2005.
Yesterday Dell began work on its new campus in Hyderabad, India. It will start operations in March next year, and it will house Dell’s call center.
According to the International Council of Shopping Centers, retail chain store sales declined by 1.7% for the week ending December 4. For December, ICSC expects sales to grow by 3.5% to 4% on a year-over-year basis.
Gartner expects enterprise spending on information communications and technology in India to grow at a 16.6% rate in 2005 as compared to Asia Pacific growth at 7.8% next year.
This may come as a big surprise but Wal-Mart has begun to think outside the box. The company’s new stores will not look all the same. They will no longer be standard blue and gray rectangles. The big box designs will become community-friendly designs and the individual community will have a say in that design. City planners have taken to the new approach, and shoppers should also appreciate the effort.
Nobel Laureate Edward Prescott: “I don’t know why the Chinese are subsidizing the Americans so much, holding all this American debt that pays very, very low interest rates. It’s ridiculous for them to hold too much. It’s not in the interest of the Chinese people.” Maybe they need to acknowledge reality risk.
Although crude declined to a three- month low of $41.47 a barrel yesterday, the market still managed to have six stocks decline for every one that rose on the New York Stock Exchange. Maybe the price of crude doesn’t count any more just as some say deficits don’t matter. Next week these same pundits will state that five consecutive Fed interest rate hikes don’t count.
Tuesday, December 07, 2004
12/7/04 Intelligence Overhaul
Maybe it’s the case of the holiday blues, but Pimco’s Bill Gross has questioned the U.S. triple-A bond rating. You might remember that over one year ago I too raised this point.
Napoleon Hill: “Accurate thinkers permit no one to do their thinking for them.”
Talking about accurate thinkers, Marc Faber, in a recent speech, offered a few thoughts: “we are at the highest level of consumption as a percentage of the economy ever…what we have is all the spending in the United States, but production and investment and capital formation in China…today foreigners have assets in the U.S. equivalent to $9 trillion and Americans have assets in foreign countries equivalent to $6 trillion which is a negative net asset balance of around $3 trillion…the Japanese market cap is 9% of total market cap in the world. The U.S. is 52% and the rest of Asia is 3.5%. So for 12.5% you get the whole of Asia’s 3.6 billion people with the fastest growing economies of China, Vietnam, and India but for the U.S. you have to pay 52% for a country that is economically doomed.”
Merrill Lynch points out that corporate Japan has budgeted for a yen to dollar rate of 106.5 in the fiscal year to March 2005. The rate averaged 109.7 in the first six months, and it presently is about 103. If the average were to be 103 until March 2005, the target would be hit for the year. Hence, there is no need for Japan to presently intervene in the currency market.
According to the Holiday eSpending report, online consumers spent $8.8 billion in November 2004, up 19% from the prior November.
The Chicago Fed estimates U.S. GDP growth to slow to 3.3%, and forecasts the average price of crude for 2005 at $43.24 a barrel and an inflation rate at 2.4%. Meanwhile, according to the Bank of America Capital Annual CFO Outlook, 63% of CFOs expect their product pricing to increase in 2005 compared to only 37% last year. It will be interesting to see the pricing power of corporations as China continues to export deflating prices. I say that net margins will take it on the chin for 2005.
Michael D. Stephens: “Imagine believing in the control of inflation by curbing the money supply! That is like deciding to stop your dog fouling the sidewalk by plugging up its rear end. It is highly unlikely to succeed, but if it does it kills the hound.”
According to the AARP, drug prices used by older Americans rose 7.4% for the year ended September 2004; however, quarterly drug prices rose an average of 0.5%, and this compares with 1.8% in the year-ago period.
J&J is in talks to buy Guidant.
The Financial Times reports that OPEC is trying to “protect its purchasing power” and is sharply reducing its dollar exposure. I have written repeatedly that OPEC receives dollars for their oil, and therefore, the ongoing decline of our currency is hurting their profit picture. This dollar flight can only get worse over time. Meanwhile, the dollar fell to new lows versus the euro and the pound.
Colgate will cut 12% of its workforce. Concord Camera will layoff 1,700 workers. Interstate Bakeries is closing its Florence, SC plant and the company will cut about 200 employees. Neuvant Aerospace is cutting 207 jobs. The BBC is cutting 2,900 jobs. Credit Suisse will layoff between 200 and 300 workers. These are not visions of sugar plums.
John Hussman: “The entire expansion in U.S. gross domestic investment since the mid-1990s has been financed not by domestic saving, but by an import of foreign capital. There’s your trouble.” If countries are cutting their exposure to the dollar and reducing the rate of savings flowing into our capital markets, then what is the future for our interest rates and our gross domestic investment? Adhering to liquidity and very limited duration of debt holdings will win the day.
Warren Buffett: “You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right—that’s the only thing that makes you right.”
Marc Faber said it best when he observed “by the way the apostles of the new economy are right, the U.S. has a new economy, it resembles Mexico and Brazil.”
Maybe it’s the case of the holiday blues, but Pimco’s Bill Gross has questioned the U.S. triple-A bond rating. You might remember that over one year ago I too raised this point.
Napoleon Hill: “Accurate thinkers permit no one to do their thinking for them.”
Talking about accurate thinkers, Marc Faber, in a recent speech, offered a few thoughts: “we are at the highest level of consumption as a percentage of the economy ever…what we have is all the spending in the United States, but production and investment and capital formation in China…today foreigners have assets in the U.S. equivalent to $9 trillion and Americans have assets in foreign countries equivalent to $6 trillion which is a negative net asset balance of around $3 trillion…the Japanese market cap is 9% of total market cap in the world. The U.S. is 52% and the rest of Asia is 3.5%. So for 12.5% you get the whole of Asia’s 3.6 billion people with the fastest growing economies of China, Vietnam, and India but for the U.S. you have to pay 52% for a country that is economically doomed.”
Merrill Lynch points out that corporate Japan has budgeted for a yen to dollar rate of 106.5 in the fiscal year to March 2005. The rate averaged 109.7 in the first six months, and it presently is about 103. If the average were to be 103 until March 2005, the target would be hit for the year. Hence, there is no need for Japan to presently intervene in the currency market.
According to the Holiday eSpending report, online consumers spent $8.8 billion in November 2004, up 19% from the prior November.
The Chicago Fed estimates U.S. GDP growth to slow to 3.3%, and forecasts the average price of crude for 2005 at $43.24 a barrel and an inflation rate at 2.4%. Meanwhile, according to the Bank of America Capital Annual CFO Outlook, 63% of CFOs expect their product pricing to increase in 2005 compared to only 37% last year. It will be interesting to see the pricing power of corporations as China continues to export deflating prices. I say that net margins will take it on the chin for 2005.
Michael D. Stephens: “Imagine believing in the control of inflation by curbing the money supply! That is like deciding to stop your dog fouling the sidewalk by plugging up its rear end. It is highly unlikely to succeed, but if it does it kills the hound.”
According to the AARP, drug prices used by older Americans rose 7.4% for the year ended September 2004; however, quarterly drug prices rose an average of 0.5%, and this compares with 1.8% in the year-ago period.
J&J is in talks to buy Guidant.
The Financial Times reports that OPEC is trying to “protect its purchasing power” and is sharply reducing its dollar exposure. I have written repeatedly that OPEC receives dollars for their oil, and therefore, the ongoing decline of our currency is hurting their profit picture. This dollar flight can only get worse over time. Meanwhile, the dollar fell to new lows versus the euro and the pound.
Colgate will cut 12% of its workforce. Concord Camera will layoff 1,700 workers. Interstate Bakeries is closing its Florence, SC plant and the company will cut about 200 employees. Neuvant Aerospace is cutting 207 jobs. The BBC is cutting 2,900 jobs. Credit Suisse will layoff between 200 and 300 workers. These are not visions of sugar plums.
John Hussman: “The entire expansion in U.S. gross domestic investment since the mid-1990s has been financed not by domestic saving, but by an import of foreign capital. There’s your trouble.” If countries are cutting their exposure to the dollar and reducing the rate of savings flowing into our capital markets, then what is the future for our interest rates and our gross domestic investment? Adhering to liquidity and very limited duration of debt holdings will win the day.
Warren Buffett: “You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right—that’s the only thing that makes you right.”
Marc Faber said it best when he observed “by the way the apostles of the new economy are right, the U.S. has a new economy, it resembles Mexico and Brazil.”
Monday, December 06, 2004
12/6/04 Cashouts, Equity Lines Of Credit, Subprime Mortgage Loans, & 0 Down Loans
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
12/6/04 Cashouts, Equity Lines Of Credit, Subprime Mortgage Loans, & 0 Down Loans
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
12/6/04 Cashouts, Equity Lines Of Credit, Subprime Mortgage Loans, & 0 Down Loans
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
12/6/04 Cashouts, Equity Lines Of Credit, Subprime Mortgage Loans, & 0 Down Loans
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
How can there be a real estate bubble when wages adjusted for inflation have gone down for the past three years? The first ingredient required is record-low interest rates. The Fed has financially engineered that process. You need to give the Fed credit. This is not easy to accomplish in the land of yearly record budget and trade deficits. While wages were declining, deficits were climbing. The money must have had some origins.
Freddie Mac’s research provided information on cashout refinancings. This process involves homeowners increasing the size of their loans and lining their pockets with the difference on a tax-free basis. Freddie Mac stated 60% of all refinanced mortgages they purchased during the third quarter of 2004 were these cashout types. For all of 2004, Freddie Mac stated homeowners would cashout $118 billion of their home equity. This makes three-card Monti look like child’s play. How was this accomplished? It was done through price appreciation in home values and declining mortgage rates.
The Mortgage Bankers Association recorded a surge in new applications for home equity lines of credit. They stated the demand rose 77% in the first half of 2004. In addition, the size of the credit lines rose 16% during this period while the initial average drawdown increased just over 8%.
According to Inside Mortgage Finance Publications, $388 billion in subprime-mortgage loans were originated between January and September 2004, and this was over three times the total originated 8 years ago.
Over $80 billion in zero-down loans were made last year, and they are expected to rise even further this year.
It’s been fun in the residential real estate market. The builder, the homeowner, the lender, and the investors are having a ball. Fed members are patting themselves on the back. It is too good to be true. But it is true. No one can tell you for sure when the music will stop. Maybe it will go on forever. Our economy needs the extra cash. With the declining dollar, something has to offset the drop in our purchasing power.
Stuart Wilde: “In bad times, the rich usually get richer.”
China signed a firm contract to purchase 23 A319, A320, and A321 commercial jets from Airbus for about one billion euros.
Retail sales in the eurozone countries declined in November for the fourth consecutive month. Retailers’ gross margins fell in November.
In Nigeria, villagers seized three oil platforms. Gunmen attacked the US. consulate in the Saudi city of Jeddah. OPEC is considering the elimination of extra supplies above official quotas. With all that as a news backdrop, crude is rallying this morning.
The Linux open-source software package can include Samba, a file-sharing and printing software; Firefox and Mozilla Web browsers; OpenOffice; Gimp, which is similar to Adobe Photoshop; fewer virus and spyware attacks than Windows; significant cost savings over the Windows operating system; reduced maintenance expenses; and open-source Internet telephony systems might cost half that of Cysco or Avaya. Over time, Linux will make continued market headway versus Windows. It’s about the money differential.
This might be an opportune time to consider downsizing and liquefying. Taking chips off the table is a viable and rational alternative.
According to the Census Bureau, by the year 2030, aging baby boomers 65 and older will make up 20% of the population.
GM's European operations have not made a profit since 1999.
Saturday, December 04, 2004
12/4/04 Irrational Monologues
The Snowman: “November’s job creation numbers are a confirmation that the American economy is on a steady growth path.” In November 2004, the average unemployed person was out of work for approximately 20 weeks, almost the identical time as in November 2003. In November 2004, the average weekly wages dropped by $1.25 to $533.47 for most workers on private non-farm payrolls. In the latest monthly jobs report manufacturers shed 5,000 jobs and the manufacturing workweek fell by six minutes to 40.5 hours. According to the BLS, adjusted for seasonal hiring patterns, there was a decline of 16,000 retail jobs, and this is the fourth year in succession that retail hiring in November has declined on a seasonally adjusted basis. Just recently, the International Council of Shopping Centers reported that November same-store sales increased by a paltry 1.7%, and this compares with a gain of 3.7% in November 2003.
Maybe the Administration should root for more hurricanes. According to a government report, the nine states recently impacted by hurricanes added 82,000 jobs. Without those storms, only 11,000 construction jobs were added in November, down from 65,000 in October.
ThatOneGirl: “I used to work for Western Union, so I already knew that anyone associated with the company was an unimaginative prick.”
Fed Governor Ben Bernanke stated inflation is “well contained” for now. U.S. consumer prices in October had their biggest gain since May and are rising at a 3.9% annual rate this year. When average weekly wages are declining and consumer prices are rising at a 3.9% annual rate, there is a problem. Any dipstick would know that.
Philadelphia Fed President Anthony Santomero stated yesterday that “looking ahead, I expect real GDP growth to be in the neighborhood of 4% for 2005…Indeed, honoring our commitment to price stability is essential to ensuring the longevity of the expansion.” A measure of new orders for non-manufacturing companies declined in November, and this gauge was joined by a slippage in the employment index.
Services account for roughly 85% of our GDP. Service jobs increased by about 100,000 in November, and that included temp workers. The gains were 8,000 hospital workers, nursery and residential care 7,000, doctors’ offices 6,000, employment in hospitality 18,000 (including 9,000 returning from strikes), computer systems design 10,000, architectural and engineering services 8,000, credit intermediation 14,000, commercial banks 5,000, telecommunications 6,000, and construction 11,000. With average hourly wages up just 0.1% in November, take-home pay for most workers is falling behind the rising costs of energy and healthcare, said Peter Morici, business professor at the University of Maryland. “American workers can expect their paychecks to buy less and less each month. Economic growth is already likely to slow in the first and second quarters of 2005, and further interest rate increases will chill growth and job creation.”
Walter Shapiro: “The crux of the problem is that voters have yet to feel any pain from red-ink budgets and unfunded future bills for Social Security and Medicare. With interest rates at near-historic lows and inflation minimal, Americans do not feel that their jobs or their purchasing power are menaced by this abstract threat.” Maybe the following isn’t so abstract. A trillion is 1000 billion. Line up all the billionaires in the world. Do you get to 1000 billion dollars? Our debt is 7.5 times 1000 billion. That does not include the unfunded liabilities for Social Security and Medicare. They amount to 45 times 1000 billion. If we stretched dollar bills end to end from NY City to Los Angeles, do you think they would equal 7.5 times 1000 billion + 45 times 1000 billion? Maybe we should get volunteers from the Congress to do just that.
Santomero continues with his monologue: “The recent declines in the value of the dollar, combined with reasonable economic growth in the economies of our trading partners, should help stabilize our net export position, significantly diminishing the negative impact on GDP growth.” The dollar traded at a new record low versus the euro on Friday. All major currencies are gaining against the dollar even though the Snowman states, with a straight face, that we have a strong dollar policy. How long are other countries going to stand by and let the falling dollar negatively impact their own economies? They will increasingly move away from the dollar as a medium of trade exchange. Our current account deficit is running at an annual $664 billion or about two-thirds of one trillion dollars. That takes a concerted effort. It is not surprising that China especially, and Japan to a lesser extent, have been slowing their purchase rate of U.S. Treasury bonds.
Cathy Minehan, President of the Boston Fed, speaking in a forthright manner, stated that the “November job report was somewhat disappointing.” How is it that she and Janet Yellen are able to tell the truth? Maybe it’s a gender thing.
Crude closed at $42.54 a barrel, down 14% for the week. Gold rose to $457.80 an ounce.
After the non-farm payroll report, 10-year Treasury yields plummeted from 4.41% to 4.26%. This provides another opportunity for those still holding these suckers to unload them.
IBM is thinking about getting out of the PC business. Being number three behind Dell and HP does not leave much room for profit. A potential buyer would be China’s Lenovo Group that sells computers under the Legend brand. IBM’s PC division calls RTP, NC home. The sale could affect thousands of Triangle workers. Electrolux is cutting 229 jobs at their St. Cloud, Minn. plant. In October, American Airlines stated they panned to layoff 1,100 employees. Now the company is offering incentives for severance to many employees with at least five years seniority.
According to the U.S. Census Bureau and the Mortgage Bankers Association Mortgage Finance Forecast, U.S. single-family homes represent a $22.3 trillion market or 22 times 1000 billion. The Chicago Mercantile Exchange announced it plans to build a derivatives market to protect homeowners from a bursting housing bubble. I’m sure the average homeowner will have no trouble understanding the ins and outs of these new risk management instruments!
ContraryInvestor.com: “We believe the Fed has two clear choices. Accelerate monetary tightening to head off burgeoning inflationary pressures and risk a debt related negative total economy response to rising rates, or keep short term interest rates in negative territory and jawbone about ‘contained’ inflationary pressures. Oh yes, the second choice contains a certain amount of praying.”
The Snowman: “November’s job creation numbers are a confirmation that the American economy is on a steady growth path.” In November 2004, the average unemployed person was out of work for approximately 20 weeks, almost the identical time as in November 2003. In November 2004, the average weekly wages dropped by $1.25 to $533.47 for most workers on private non-farm payrolls. In the latest monthly jobs report manufacturers shed 5,000 jobs and the manufacturing workweek fell by six minutes to 40.5 hours. According to the BLS, adjusted for seasonal hiring patterns, there was a decline of 16,000 retail jobs, and this is the fourth year in succession that retail hiring in November has declined on a seasonally adjusted basis. Just recently, the International Council of Shopping Centers reported that November same-store sales increased by a paltry 1.7%, and this compares with a gain of 3.7% in November 2003.
Maybe the Administration should root for more hurricanes. According to a government report, the nine states recently impacted by hurricanes added 82,000 jobs. Without those storms, only 11,000 construction jobs were added in November, down from 65,000 in October.
ThatOneGirl: “I used to work for Western Union, so I already knew that anyone associated with the company was an unimaginative prick.”
Fed Governor Ben Bernanke stated inflation is “well contained” for now. U.S. consumer prices in October had their biggest gain since May and are rising at a 3.9% annual rate this year. When average weekly wages are declining and consumer prices are rising at a 3.9% annual rate, there is a problem. Any dipstick would know that.
Philadelphia Fed President Anthony Santomero stated yesterday that “looking ahead, I expect real GDP growth to be in the neighborhood of 4% for 2005…Indeed, honoring our commitment to price stability is essential to ensuring the longevity of the expansion.” A measure of new orders for non-manufacturing companies declined in November, and this gauge was joined by a slippage in the employment index.
Services account for roughly 85% of our GDP. Service jobs increased by about 100,000 in November, and that included temp workers. The gains were 8,000 hospital workers, nursery and residential care 7,000, doctors’ offices 6,000, employment in hospitality 18,000 (including 9,000 returning from strikes), computer systems design 10,000, architectural and engineering services 8,000, credit intermediation 14,000, commercial banks 5,000, telecommunications 6,000, and construction 11,000. With average hourly wages up just 0.1% in November, take-home pay for most workers is falling behind the rising costs of energy and healthcare, said Peter Morici, business professor at the University of Maryland. “American workers can expect their paychecks to buy less and less each month. Economic growth is already likely to slow in the first and second quarters of 2005, and further interest rate increases will chill growth and job creation.”
Walter Shapiro: “The crux of the problem is that voters have yet to feel any pain from red-ink budgets and unfunded future bills for Social Security and Medicare. With interest rates at near-historic lows and inflation minimal, Americans do not feel that their jobs or their purchasing power are menaced by this abstract threat.” Maybe the following isn’t so abstract. A trillion is 1000 billion. Line up all the billionaires in the world. Do you get to 1000 billion dollars? Our debt is 7.5 times 1000 billion. That does not include the unfunded liabilities for Social Security and Medicare. They amount to 45 times 1000 billion. If we stretched dollar bills end to end from NY City to Los Angeles, do you think they would equal 7.5 times 1000 billion + 45 times 1000 billion? Maybe we should get volunteers from the Congress to do just that.
Santomero continues with his monologue: “The recent declines in the value of the dollar, combined with reasonable economic growth in the economies of our trading partners, should help stabilize our net export position, significantly diminishing the negative impact on GDP growth.” The dollar traded at a new record low versus the euro on Friday. All major currencies are gaining against the dollar even though the Snowman states, with a straight face, that we have a strong dollar policy. How long are other countries going to stand by and let the falling dollar negatively impact their own economies? They will increasingly move away from the dollar as a medium of trade exchange. Our current account deficit is running at an annual $664 billion or about two-thirds of one trillion dollars. That takes a concerted effort. It is not surprising that China especially, and Japan to a lesser extent, have been slowing their purchase rate of U.S. Treasury bonds.
Cathy Minehan, President of the Boston Fed, speaking in a forthright manner, stated that the “November job report was somewhat disappointing.” How is it that she and Janet Yellen are able to tell the truth? Maybe it’s a gender thing.
Crude closed at $42.54 a barrel, down 14% for the week. Gold rose to $457.80 an ounce.
After the non-farm payroll report, 10-year Treasury yields plummeted from 4.41% to 4.26%. This provides another opportunity for those still holding these suckers to unload them.
IBM is thinking about getting out of the PC business. Being number three behind Dell and HP does not leave much room for profit. A potential buyer would be China’s Lenovo Group that sells computers under the Legend brand. IBM’s PC division calls RTP, NC home. The sale could affect thousands of Triangle workers. Electrolux is cutting 229 jobs at their St. Cloud, Minn. plant. In October, American Airlines stated they panned to layoff 1,100 employees. Now the company is offering incentives for severance to many employees with at least five years seniority.
According to the U.S. Census Bureau and the Mortgage Bankers Association Mortgage Finance Forecast, U.S. single-family homes represent a $22.3 trillion market or 22 times 1000 billion. The Chicago Mercantile Exchange announced it plans to build a derivatives market to protect homeowners from a bursting housing bubble. I’m sure the average homeowner will have no trouble understanding the ins and outs of these new risk management instruments!
ContraryInvestor.com: “We believe the Fed has two clear choices. Accelerate monetary tightening to head off burgeoning inflationary pressures and risk a debt related negative total economy response to rising rates, or keep short term interest rates in negative territory and jawbone about ‘contained’ inflationary pressures. Oh yes, the second choice contains a certain amount of praying.”
Friday, December 03, 2004
12/03/04 Another Look
In a few hours, the BLS will release its November non-farm payroll report. Last year, initial results indicated a gain of 57,000 jobs with an unemployment rate dropping to 5.9%. This was followed by a disappointing 8,000 job gain in December 2003 followed by an addition of 97,000 jobs in January 2004. It is important to keep in mind that today’s numbers are preliminary, and the sampling error is at least 100,000 jobs. The November report will start with an edge. About 11,000 workers ended their strikes and returned to work. In addition, the hurricane storms required additional contractors to work on repairs. There could be an offset. Thanksgiving arrived later this year on the calendar. It is possible that just-in-time holiday seasonal hiring might have begun after the Thanksgiving data was collected for this non-farm payroll report.
Another visit with Wal-Mart might prove helpful. I rarely read about the company’s online retailing efforts. On Black Friday, Walmart.com had 1.4 million online visitors. In addition, visits to their website in October were up 48% over October 2003. Wal-Mart expects 20 to 30% growth for the entire online shopping season. At the present time, their online sales rank in the top five nationally with Dell number one at $5 billion on an annual basis. In a few years you can expect Wal-Mart to take over the number one position. The sales number may not be significant as a percentage of the total company sales; however, during more stressful economic conditions, the online sales will be greatly appreciated by stockholders. As for the fun and games, they are over. Beginning today, Wal-Mart is starting a price-focused ad blitz in newspapers, and on radio and television. Two dozen items will be featured, and prices on the items are being reduced, some by as much as one-third. Customers will be reminded that Wal-Mart is the low price leader—every day.
Interest rates continue to move higher with 10-year Treasury bonds at 4.41% and the 30-year at 5.04%. Mortgage rates are moving higher.
Oneida Ltd. is shutting down its plant near Syracuse, NY in early 2005 and at least 375 workers will lose their jobs. American Greetings is cutting 300 employees. The Robert Bosch Tool Plant in Heber Springs, SC will begin layoffs in 2005, and 565 employees will be impacted. The circular saw plant is not profitable and management stated that “there are cost advantages to manufacturing products in China.” United Airlines is laying off 825 customer service employees, ramp workers, and other airport staffers. The decision by Delta Air Lines to end most flights at DFW International will cost the local economy more than $700 million or about 1% as well as 7,000 jobs, according to a study commissioned by the airport. Bayer to cut 110 jobs in the U.S.
At China’s 3-day Central Economic Work Conference, stated the South China Morning Post, there will be further consideration towards widen the trading band of the yuan in 2005 as well as further interest rate hikes. China’s foreign reserves are currently growing at $15 billion per month. China will soon provide Airbus with a $1+ billion order for A380 jets.
Susuki will cut output due to the steel shortage.
Walgreen’s November same-store sales rose 11.8% and JC Penney’s rose 12%.
The number of people filing for state unemployment insurance for the first time rose 25,000 to 349,000 last week.
IDC predicted that worldwide sales of semiconductors would decline 2% in 2005.
Do the math. New U.S. October factory orders rose 0.5% with an 8% rise in shipments of petroleum and coal products. These figures were not adjusted for price changes. The orders and shipments rose, not from more demand, but from rising petroleum and coal prices.
MSN is moving into blogging with MSN Spaces.
The Energy department stated natural gas supplies for the week ended Nov. 19 fell 17 billion cubic feet and not 49 billion as originally reported. I’m sure it was an honest mistake! Yesterday, crude futures dropped another $1 to $43.25 a barrel.
Just as gas prices at the pump are coming down a bit, people are beginning to receive their 2005 property tax bill. For several years, home prices have been on the rise, and in some areas by double-digits. This has led to rising assessment valuations, and some communities are assessing property values every year. Rising property taxes are especially squeezing those on fixed incomes. Myron Orfield, a property tax expert at the University of Minnesota stated “there is a property tax crisis. It’s especially bad in states like New Jersey, Ohio, Connecticut, and Illinois, which are property-tax dependent.”
After the close of trading yesterday, Intel raised its sales forecast for the fourth quarter while maintaining its prior prediction of margins at roughly the 56% level. Over the last five years, Intel’s fourth-quarter revenue has grown 8% year-over-year. With this latest forecast, this fourth quarter increase would be 7.5% higher than that of the fourth quarter a year ago. In sum, the news was welcome but still not up to the past five-year average. In my view, Intel shareholders will need to have patience if they are to be rewarded.
Between Nov.1 and Nov. 29, excluding auctions and travel, online consumers spent $6.5 billion, a 22+% gain over the prior year’s corresponding period.
The headline read that the November non-farm payrolls rose by a disappointing 112,000. That excludes the downward revision of 54,000 jobs in the prior month's report. The average workweek declined by a tenth of an hour to 33.7 hours, aggregate hours worked declined 0.2%, and average hourly wages rose all of a single penny. Manufacturing jobs declined by 5,000 while service jobs gained 102,000. Let us not forget about the 11,000 striking workers and the added workers performing repairs in the hurricane-damaged regions. This report was not even as good as the disappointing 112,000. There will be more to say tomorrow.
In a few hours, the BLS will release its November non-farm payroll report. Last year, initial results indicated a gain of 57,000 jobs with an unemployment rate dropping to 5.9%. This was followed by a disappointing 8,000 job gain in December 2003 followed by an addition of 97,000 jobs in January 2004. It is important to keep in mind that today’s numbers are preliminary, and the sampling error is at least 100,000 jobs. The November report will start with an edge. About 11,000 workers ended their strikes and returned to work. In addition, the hurricane storms required additional contractors to work on repairs. There could be an offset. Thanksgiving arrived later this year on the calendar. It is possible that just-in-time holiday seasonal hiring might have begun after the Thanksgiving data was collected for this non-farm payroll report.
Another visit with Wal-Mart might prove helpful. I rarely read about the company’s online retailing efforts. On Black Friday, Walmart.com had 1.4 million online visitors. In addition, visits to their website in October were up 48% over October 2003. Wal-Mart expects 20 to 30% growth for the entire online shopping season. At the present time, their online sales rank in the top five nationally with Dell number one at $5 billion on an annual basis. In a few years you can expect Wal-Mart to take over the number one position. The sales number may not be significant as a percentage of the total company sales; however, during more stressful economic conditions, the online sales will be greatly appreciated by stockholders. As for the fun and games, they are over. Beginning today, Wal-Mart is starting a price-focused ad blitz in newspapers, and on radio and television. Two dozen items will be featured, and prices on the items are being reduced, some by as much as one-third. Customers will be reminded that Wal-Mart is the low price leader—every day.
Interest rates continue to move higher with 10-year Treasury bonds at 4.41% and the 30-year at 5.04%. Mortgage rates are moving higher.
Oneida Ltd. is shutting down its plant near Syracuse, NY in early 2005 and at least 375 workers will lose their jobs. American Greetings is cutting 300 employees. The Robert Bosch Tool Plant in Heber Springs, SC will begin layoffs in 2005, and 565 employees will be impacted. The circular saw plant is not profitable and management stated that “there are cost advantages to manufacturing products in China.” United Airlines is laying off 825 customer service employees, ramp workers, and other airport staffers. The decision by Delta Air Lines to end most flights at DFW International will cost the local economy more than $700 million or about 1% as well as 7,000 jobs, according to a study commissioned by the airport. Bayer to cut 110 jobs in the U.S.
At China’s 3-day Central Economic Work Conference, stated the South China Morning Post, there will be further consideration towards widen the trading band of the yuan in 2005 as well as further interest rate hikes. China’s foreign reserves are currently growing at $15 billion per month. China will soon provide Airbus with a $1+ billion order for A380 jets.
Susuki will cut output due to the steel shortage.
Walgreen’s November same-store sales rose 11.8% and JC Penney’s rose 12%.
The number of people filing for state unemployment insurance for the first time rose 25,000 to 349,000 last week.
IDC predicted that worldwide sales of semiconductors would decline 2% in 2005.
Do the math. New U.S. October factory orders rose 0.5% with an 8% rise in shipments of petroleum and coal products. These figures were not adjusted for price changes. The orders and shipments rose, not from more demand, but from rising petroleum and coal prices.
MSN is moving into blogging with MSN Spaces.
The Energy department stated natural gas supplies for the week ended Nov. 19 fell 17 billion cubic feet and not 49 billion as originally reported. I’m sure it was an honest mistake! Yesterday, crude futures dropped another $1 to $43.25 a barrel.
Just as gas prices at the pump are coming down a bit, people are beginning to receive their 2005 property tax bill. For several years, home prices have been on the rise, and in some areas by double-digits. This has led to rising assessment valuations, and some communities are assessing property values every year. Rising property taxes are especially squeezing those on fixed incomes. Myron Orfield, a property tax expert at the University of Minnesota stated “there is a property tax crisis. It’s especially bad in states like New Jersey, Ohio, Connecticut, and Illinois, which are property-tax dependent.”
After the close of trading yesterday, Intel raised its sales forecast for the fourth quarter while maintaining its prior prediction of margins at roughly the 56% level. Over the last five years, Intel’s fourth-quarter revenue has grown 8% year-over-year. With this latest forecast, this fourth quarter increase would be 7.5% higher than that of the fourth quarter a year ago. In sum, the news was welcome but still not up to the past five-year average. In my view, Intel shareholders will need to have patience if they are to be rewarded.
Between Nov.1 and Nov. 29, excluding auctions and travel, online consumers spent $6.5 billion, a 22+% gain over the prior year’s corresponding period.
The headline read that the November non-farm payrolls rose by a disappointing 112,000. That excludes the downward revision of 54,000 jobs in the prior month's report. The average workweek declined by a tenth of an hour to 33.7 hours, aggregate hours worked declined 0.2%, and average hourly wages rose all of a single penny. Manufacturing jobs declined by 5,000 while service jobs gained 102,000. Let us not forget about the 11,000 striking workers and the added workers performing repairs in the hurricane-damaged regions. This report was not even as good as the disappointing 112,000. There will be more to say tomorrow.
12/03/04 Another Look
In a few hours, the BLS will release its November non-farm payroll report. Last year, initial results indicated a gain of 57,000 jobs with an unemployment rate dropping to 5.9%. This was followed by a disappointing 8,000 job gain in December 2003 followed by an addition of 97,000 jobs in January 2004. It is important to keep in mind that today’s numbers are preliminary, and the sampling error is at least 100,000 jobs. The November report will start with an edge. About 11,000 workers ended their strikes and returned to work. In addition, the hurricane storms required additional contractors to work on repairs. There could be an offset. Thanksgiving arrived later this year on the calendar. It is possible that just-in-time holiday seasonal hiring might have begun after the Thanksgiving data was collected for this non-farm payroll report.
Another visit with Wal-Mart might prove helpful. I rarely read about the company’s online retailing efforts. On Black Friday, Walmart.com had 1.4 million online visitors. In addition, visits to their website in October were up 48% over October 2003. Wal-Mart expects 20 to 30% growth for the entire online shopping season. At the present time, their online sales rank in the top five nationally with Dell number one at $5 billion on an annual basis. In a few years you can expect Wal-Mart to take over the number one position. The sales number may not be significant as a percentage of the total company sales; however, during more stressful economic conditions, the online sales will be greatly appreciated by stockholders. As for the fun and games, they are over. Beginning today, Wal-Mart is starting a price-focused ad blitz in newspapers, and on radio and television. Two dozen items will be featured, and prices on the items are being reduced, some by as much as one-third. Customers will be reminded that Wal-Mart is the low price leader—every day.
Interest rates continue to move higher with 10-year Treasury bonds at 4.41% and the 30-year at 5.04%. Mortgage rates are moving higher.
Oneida Ltd. is shutting down its plant near Syracuse, NY in early 2005 and at least 375 workers will lose their jobs. American Greetings is cutting 300 employees. The Robert Bosch Tool Plant in Heber Springs, SC will begin layoffs in 2005, and 565 employees will be impacted. The circular saw plant is not profitable and management stated that “there are cost advantages to manufacturing products in China.” United Airlines is laying off 825 customer service employees, ramp workers, and other airport staffers. The decision by Delta Air Lines to end most flights at DFW International will cost the local economy more than $700 million or about 1% as well as 7,000 jobs, according to a study commissioned by the airport. Bayer to cut 110 jobs in the U.S.
At China’s 3-day Central Economic Work Conference, stated the South China Morning Post, there will be further consideration towards widen the trading band of the yuan in 2005 as well as further interest rate hikes. China’s foreign reserves are currently growing at $15 billion per month. China will soon provide Airbus with a $1+ billion order for A380 jets.
Susuki will cut output due to the steel shortage.
Walgreen’s November same-store sales rose 11.8% and JC Penney’s rose 12%.
The number of people filing for state unemployment insurance for the first time rose 25,000 to 349,000 last week.
IDC predicted that worldwide sales of semiconductors would decline 2% in 2005.
Do the math. New U.S. October factory orders rose 0.5% with an 8% rise in shipments of petroleum and coal products. These figures were not adjusted for price changes. The orders and shipments rose, not from more demand, but from rising petroleum and coal prices.
MSN is moving into blogging with MSN Spaces.
The Energy department stated natural gas supplies for the week ended Nov. 19 fell 17 billion cubic feet and not 49 billion as originally reported. I’m sure it was an honest mistake! Yesterday, crude futures dropped another $1 to $43.25 a barrel.
Just as gas prices at the pump are coming down a bit, people are beginning to receive their 2005 property tax bill. For several years, home prices have been on the rise, and in some areas by double-digits. This has led to rising assessment valuations, and some communities are assessing property values every year. Rising property taxes are especially squeezing those on fixed incomes. Myron Orfield, a property tax expert at the University of Minnesota stated “there is a property tax crisis. It’s especially bad in states like New Jersey, Ohio, Connecticut, and Illinois, which are property-tax dependent.”
After the close of trading yesterday, Intel raised its sales forecast for the fourth quarter while maintaining its prior prediction of margins at roughly the 56% level. Over the last five years, Intel’s fourth-quarter revenue has grown 8% year-over-year. With this latest forecast, this fourth quarter increase would be 7.5% higher than that of the fourth quarter a year ago. In sum, the news was welcome but still not up to the past five-year average. In my view, Intel shareholders will need to have patience if they are to be rewarded.
Between Nov.1 and Nov. 29, excluding auctions and travel, online consumers spent $6.5 billion, a 22+% gain over the prior year’s corresponding period.
The headline read that the November non-farm payrolls rose by a disappointing 112,000. That excludes the downward revision of 54,000 jobs in the prior month's report. The average workweek declined by a tenth of an hour to 33.7 hours, aggregate hours worked declined 0.2%, and average hourly wages rose all of a single penny. Manufacturing jobs declined by 5,000 while service jobs gained 102,000. Let us not forget about the 11,000 striking workers and the added workers performing repairs in the hurricane-damaged regions. This report was not even as good as the disappointing 112,000. There will be more to say tomorrow.
In a few hours, the BLS will release its November non-farm payroll report. Last year, initial results indicated a gain of 57,000 jobs with an unemployment rate dropping to 5.9%. This was followed by a disappointing 8,000 job gain in December 2003 followed by an addition of 97,000 jobs in January 2004. It is important to keep in mind that today’s numbers are preliminary, and the sampling error is at least 100,000 jobs. The November report will start with an edge. About 11,000 workers ended their strikes and returned to work. In addition, the hurricane storms required additional contractors to work on repairs. There could be an offset. Thanksgiving arrived later this year on the calendar. It is possible that just-in-time holiday seasonal hiring might have begun after the Thanksgiving data was collected for this non-farm payroll report.
Another visit with Wal-Mart might prove helpful. I rarely read about the company’s online retailing efforts. On Black Friday, Walmart.com had 1.4 million online visitors. In addition, visits to their website in October were up 48% over October 2003. Wal-Mart expects 20 to 30% growth for the entire online shopping season. At the present time, their online sales rank in the top five nationally with Dell number one at $5 billion on an annual basis. In a few years you can expect Wal-Mart to take over the number one position. The sales number may not be significant as a percentage of the total company sales; however, during more stressful economic conditions, the online sales will be greatly appreciated by stockholders. As for the fun and games, they are over. Beginning today, Wal-Mart is starting a price-focused ad blitz in newspapers, and on radio and television. Two dozen items will be featured, and prices on the items are being reduced, some by as much as one-third. Customers will be reminded that Wal-Mart is the low price leader—every day.
Interest rates continue to move higher with 10-year Treasury bonds at 4.41% and the 30-year at 5.04%. Mortgage rates are moving higher.
Oneida Ltd. is shutting down its plant near Syracuse, NY in early 2005 and at least 375 workers will lose their jobs. American Greetings is cutting 300 employees. The Robert Bosch Tool Plant in Heber Springs, SC will begin layoffs in 2005, and 565 employees will be impacted. The circular saw plant is not profitable and management stated that “there are cost advantages to manufacturing products in China.” United Airlines is laying off 825 customer service employees, ramp workers, and other airport staffers. The decision by Delta Air Lines to end most flights at DFW International will cost the local economy more than $700 million or about 1% as well as 7,000 jobs, according to a study commissioned by the airport. Bayer to cut 110 jobs in the U.S.
At China’s 3-day Central Economic Work Conference, stated the South China Morning Post, there will be further consideration towards widen the trading band of the yuan in 2005 as well as further interest rate hikes. China’s foreign reserves are currently growing at $15 billion per month. China will soon provide Airbus with a $1+ billion order for A380 jets.
Susuki will cut output due to the steel shortage.
Walgreen’s November same-store sales rose 11.8% and JC Penney’s rose 12%.
The number of people filing for state unemployment insurance for the first time rose 25,000 to 349,000 last week.
IDC predicted that worldwide sales of semiconductors would decline 2% in 2005.
Do the math. New U.S. October factory orders rose 0.5% with an 8% rise in shipments of petroleum and coal products. These figures were not adjusted for price changes. The orders and shipments rose, not from more demand, but from rising petroleum and coal prices.
MSN is moving into blogging with MSN Spaces.
The Energy department stated natural gas supplies for the week ended Nov. 19 fell 17 billion cubic feet and not 49 billion as originally reported. I’m sure it was an honest mistake! Yesterday, crude futures dropped another $1 to $43.25 a barrel.
Just as gas prices at the pump are coming down a bit, people are beginning to receive their 2005 property tax bill. For several years, home prices have been on the rise, and in some areas by double-digits. This has led to rising assessment valuations, and some communities are assessing property values every year. Rising property taxes are especially squeezing those on fixed incomes. Myron Orfield, a property tax expert at the University of Minnesota stated “there is a property tax crisis. It’s especially bad in states like New Jersey, Ohio, Connecticut, and Illinois, which are property-tax dependent.”
After the close of trading yesterday, Intel raised its sales forecast for the fourth quarter while maintaining its prior prediction of margins at roughly the 56% level. Over the last five years, Intel’s fourth-quarter revenue has grown 8% year-over-year. With this latest forecast, this fourth quarter increase would be 7.5% higher than that of the fourth quarter a year ago. In sum, the news was welcome but still not up to the past five-year average. In my view, Intel shareholders will need to have patience if they are to be rewarded.
Between Nov.1 and Nov. 29, excluding auctions and travel, online consumers spent $6.5 billion, a 22+% gain over the prior year’s corresponding period.
The headline read that the November non-farm payrolls rose by a disappointing 112,000. That excludes the downward revision of 54,000 jobs in the prior month's report. The average workweek declined by a tenth of an hour to 33.7 hours, aggregate hours worked declined 0.2%, and average hourly wages rose all of a single penny. Manufacturing jobs declined by 5,000 while service jobs gained 102,000. Let us not forget about the 11,000 striking workers and the added workers performing repairs in the hurricane-damaged regions. This report was not even as good as the disappointing 112,000. There will be more to say tomorrow.
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