4/2/05 Liquidity Excesses
The on-going creation of excess liquidity and credit will cause our economic system to lose consciousness. For example, how long can we generate close to $1.2 trillion in mortgage credit on a yearly basis?
Doug Noland: "The market pricing mechanism cannot self-correct in an era of uncontrolled finance."
Yesterday's nonfarm payroll report was pathetic for many reasons-- and not just the low number. The best the Commissioner could say was that 26,000 construction jobs, 16,000 health care jobs, 15,000 wholesale trade jobs, and 5,000 mining jobs were created. That was the extent of the good news. So what did our government do? They compounded the situation with an early release of the ISM Service Index numbers, which weren't due out until Tuesday. They showed greater-than-expected growth in non-manufacturing businesses; however, there was a sharp jump in consumer prices with the ISM Prices Paid Index jumping in March to 73 from 65.5 in February. It was the largest rise in more than one year. So, investors were left with poor job creation and inflation. That's not a tasty meal.
Gasoline futures hit an all-time high of $1.73 per gallon with crude jumping back up to $57.29 a barrel. Heating oil rose to $1.66 a gallon. Natural gas also participated in the inflation onslaught.
UK house prices experienced their biggest monthly fall in almost 10 years as prices fell 0.6% in March.
Sears announced a layoff of at least 250 at their headquarters.
Shanghai Securities News: "The time is right for China to adjust its exchange rate policy and a move may happen at any time."
Best Buy stated their earnings would be below street estimates and Cardinal Health mentioned that their 2005 earnings per share may be 10 cents less than forecast.
Paul Kasriel: "In 2004, total household spending represented a record 75.8% of GDP."
The financing needs of the U.S. government will aproximate $800 billion this year or almost $2.2 billion per day.
Toyota's March U.S. sales rose 12.3% from March 2004. They had the best first quarter sales in its 48 years of business in the U.S.
In the last five weeks, airfares have risen about $60 in price.
Gold is selling at approximately 7.5 times the price of crude oil. This is the lowest historical relationship.
Even with AIG stock selling at a 2-year low, its market cap still is $134 billion. By comparison, Berkshire Hathaway's is $110 billion.
Over the last 26 years, on a daily basis, the Pope has distinguished himself as a leader, and more importantly, as a human being. He will be remembered for his goodness.
Saturday, April 02, 2005
Friday, April 01, 2005
April Fool's Day
4/1/05 April Fool's Day
Would you believe the first quarter turned out the way it did? The dollar gained 4.4%, the biggest increase since the first quarter of 2001, as the Fed continued to raise interest rates and the yield on the 2, 5, and 10-year Treasury bonds all went up. Only the 30-year declined- a mere 5 basis points. You went to the bank owning energy stocks and commodities. Crude rose over 27% to $55.40 per barrel. Heating oil climbed 30%, natural gas just shy of 25%, and unleaded gas a whopping 45.5%. Of course, the Fed stated inflation was not a significant problem; however, workers had a problem as their wages trailed inflation. In addition, personal incomes trailed the rate of spending, and, as a result, savings dropped to 0.6%---essentially no savings at all. Not to worry. We're importing savings from other nations to offset our twin tower deficits. If you owned real estate, the first quarter was certainly kind to you. The insanity continued as the average sale of a Manhattan apartment topped $1.2 million in the first quarter. Unfortunately, equity holders took it on the chin as the quarterly results for the Nasdaq showed a drop of 8.1%, for the Dow 2.59%, and the S&P 500 1.91%. Although the Conference Board's Help Wanted Index remained unchanged at 41, and although jobless claims rose by 20,000 in the latest week, and although the unemployment rate rose in the quarter, non-farm payroll jobs showed increases for each month in the first quarter. Of course, the average workweek did not improve and overtime was not increased. The quality of the jobs remain in question. It's quality not quantity. Even AIG can tell you that. The quarter came to an end with MMM announcing the closing of its plant in Stillwater, Minn. About 200 will lose their jobs as will 700 at DaimlerChrysler, 400 at Blockbuster, and 67 at Transmeta. It wouldn't be right to ignore Qwest's new $27.50 cash and stock bid for MCI. If they raise another 4 times, they'll be on a par with the Fed and the increases in interest rates. Lastly, we cannot ignore the declining consumer confidence in the U.S. It has not hampered spending but why should it? The consumer is borrowing the money. Since when did debt matter? Just look at our federal debt levels? We are not alone in declining confidence as Japan's business confidence fell to the lowest level in 1 year.
Since it is April's Fool Day, maybe a little cheer is in store. Crude spiked to $105 a barrel today. The dollar rose to its highest level in 4 years as nonfarm payrolls zoomed 500,000 in the month of March. Wages increased by 5 cents an hour. The Dow jumped 500 points as ExxonMobil rose to $100 a share. The Nasdaq was able to gain 1 point. Microsoft announced that their next new product would be released on time and without bugs. The Donald will pitch the ads for their new product, and, on the Apprentice, the contestants will have to prepare a market rollout campaign for the product. Coke released a new product-- mystery Coke. The winner must guess correctly what the new flavor is. The hint is--it rhymes with miss.
Back in the real world, all the economists with their doctorate degrees proved once again they know little about hiring. The nonfarm payrolls increased by a mere 110,000, the weakest gain in 8 months. In addition, due to revisions, hiring was reduced by 27,000 jobs for the January-February period. In March, the unemployment rate dropped to 5.2% from 5.4%; however, the average workweek and overtime hours shrank slightly and average hourly wages rose a paltry 4 cents. Nice work if you can get it. Get it if you try.
Would you believe the first quarter turned out the way it did? The dollar gained 4.4%, the biggest increase since the first quarter of 2001, as the Fed continued to raise interest rates and the yield on the 2, 5, and 10-year Treasury bonds all went up. Only the 30-year declined- a mere 5 basis points. You went to the bank owning energy stocks and commodities. Crude rose over 27% to $55.40 per barrel. Heating oil climbed 30%, natural gas just shy of 25%, and unleaded gas a whopping 45.5%. Of course, the Fed stated inflation was not a significant problem; however, workers had a problem as their wages trailed inflation. In addition, personal incomes trailed the rate of spending, and, as a result, savings dropped to 0.6%---essentially no savings at all. Not to worry. We're importing savings from other nations to offset our twin tower deficits. If you owned real estate, the first quarter was certainly kind to you. The insanity continued as the average sale of a Manhattan apartment topped $1.2 million in the first quarter. Unfortunately, equity holders took it on the chin as the quarterly results for the Nasdaq showed a drop of 8.1%, for the Dow 2.59%, and the S&P 500 1.91%. Although the Conference Board's Help Wanted Index remained unchanged at 41, and although jobless claims rose by 20,000 in the latest week, and although the unemployment rate rose in the quarter, non-farm payroll jobs showed increases for each month in the first quarter. Of course, the average workweek did not improve and overtime was not increased. The quality of the jobs remain in question. It's quality not quantity. Even AIG can tell you that. The quarter came to an end with MMM announcing the closing of its plant in Stillwater, Minn. About 200 will lose their jobs as will 700 at DaimlerChrysler, 400 at Blockbuster, and 67 at Transmeta. It wouldn't be right to ignore Qwest's new $27.50 cash and stock bid for MCI. If they raise another 4 times, they'll be on a par with the Fed and the increases in interest rates. Lastly, we cannot ignore the declining consumer confidence in the U.S. It has not hampered spending but why should it? The consumer is borrowing the money. Since when did debt matter? Just look at our federal debt levels? We are not alone in declining confidence as Japan's business confidence fell to the lowest level in 1 year.
Since it is April's Fool Day, maybe a little cheer is in store. Crude spiked to $105 a barrel today. The dollar rose to its highest level in 4 years as nonfarm payrolls zoomed 500,000 in the month of March. Wages increased by 5 cents an hour. The Dow jumped 500 points as ExxonMobil rose to $100 a share. The Nasdaq was able to gain 1 point. Microsoft announced that their next new product would be released on time and without bugs. The Donald will pitch the ads for their new product, and, on the Apprentice, the contestants will have to prepare a market rollout campaign for the product. Coke released a new product-- mystery Coke. The winner must guess correctly what the new flavor is. The hint is--it rhymes with miss.
Back in the real world, all the economists with their doctorate degrees proved once again they know little about hiring. The nonfarm payrolls increased by a mere 110,000, the weakest gain in 8 months. In addition, due to revisions, hiring was reduced by 27,000 jobs for the January-February period. In March, the unemployment rate dropped to 5.2% from 5.4%; however, the average workweek and overtime hours shrank slightly and average hourly wages rose a paltry 4 cents. Nice work if you can get it. Get it if you try.
Wednesday, March 30, 2005
Enthusiasm
3/31/05 Enthusiasm
According to the PricewaterhouseCoopers first quarter 2005 Korpacz
Real Estate Investor Survey(R), “as the U.S. economy continues to expand and market fundamentals continue to improve, more and more investors are feeling confident about the future and are willing to accept more risk,” said Peter Korpacz, director,
PricewaterhouseCoopers' Global Strategic Real Estate Research Practice. "As a
result, an increasing number of investors are pursuing value-added assets and
assets in secondary markets." At the same time, however, a number of investors may be showing a little too much confidence—based on what are perceived to be overly aggressive underwriting assumptions in their acquisitions, Korpacz noted. “The problem with being too aggressive is that underwriting projects may not pan out, especially for assets located in second-tier cities and for less premier assets where rental rates seem to lag national Class-A office trends,” Korpacz stated. And with competition still rampant -- 2004 saw an unprecedented level of capital spent on commercial real estate -- it is just
those secondary markets that are attracting more attention. In addition, with so many potential buyers vying for a limited number of offerings and sellers still controlling the majority of transactions, some potential buyers have begun to approach owners to try to negotiate "offmarket" (unadvertised) deals. By negotiating such deals, potential buyers are hoping to avoid the bidding frenzy that has become all too commonplace and
shows no sign of abating.
As we approached the opening of trading yesterday, only one out of every five stocks were trading above their 40-day moving average. As such, a contrarian would have surmised that a bounce was in order, and that’s what we got—a triple digit bounce in the Dow, the biggest one day advance in 4 months. It helped that the Energy Department stated crude supplies rose 5.4 million barrels for the week ended March 25. As a result, crude dipped below $53 a barrel. However, a rally followed and crude closed at $53.99 as the Energy Department also reported that gasoline inventories fell 2.9 million barrels and distillate supplies dropped 1.1 million barrels.
Johnson Controls plans to close its Goshen, Indiana factory, and 167 workers will lose their jobs. Most of the work will be sent to a company plant in Mexico.
AIG said in a statement today that accounting errors and changes may result in a reduction of as much as 2 percent in shareholders' equity. The company last reported shareholders' equity of $82.9 billion.
We have seen a palace coup at Disney and one may be in the making at Morgan Stanley.
Clif Droke: “A growing list of indicators and data suggest a slowing down of credit growth and a return to a more "normal" level of economic activity. Unfortunately, however, the rate of change slowdown that we'll likely experience this year will seem dramatic to some compared to the opulent growth of the past 2-3 years. Investors who have over-extended themselves with debt will suffer the most while those who have built up ample supplies of cash will fare best.”
The Internal Revenue Service reported Tuesday that the gap between taxes paid and taxes owed stood at more than $300 billion, with a large portion resulting from people not reporting income.
With plummeting profit margins in China, GM’s 2005 net earnings in that country might slide below $100 million, a drop from 2004 of approximately 80%. In my view, China’s housing bubble will be the next to go. China’s economy is on its way to a hard landing.
Robert Wibbelsman: "The problem with the person who thinks he's a long-term investor and impervious to short-term gyrations is that the emotion of fear and pain will eventually make him sell badly."
According to the PricewaterhouseCoopers first quarter 2005 Korpacz
Real Estate Investor Survey(R), “as the U.S. economy continues to expand and market fundamentals continue to improve, more and more investors are feeling confident about the future and are willing to accept more risk,” said Peter Korpacz, director,
PricewaterhouseCoopers' Global Strategic Real Estate Research Practice. "As a
result, an increasing number of investors are pursuing value-added assets and
assets in secondary markets." At the same time, however, a number of investors may be showing a little too much confidence—based on what are perceived to be overly aggressive underwriting assumptions in their acquisitions, Korpacz noted. “The problem with being too aggressive is that underwriting projects may not pan out, especially for assets located in second-tier cities and for less premier assets where rental rates seem to lag national Class-A office trends,” Korpacz stated. And with competition still rampant -- 2004 saw an unprecedented level of capital spent on commercial real estate -- it is just
those secondary markets that are attracting more attention. In addition, with so many potential buyers vying for a limited number of offerings and sellers still controlling the majority of transactions, some potential buyers have begun to approach owners to try to negotiate "offmarket" (unadvertised) deals. By negotiating such deals, potential buyers are hoping to avoid the bidding frenzy that has become all too commonplace and
shows no sign of abating.
As we approached the opening of trading yesterday, only one out of every five stocks were trading above their 40-day moving average. As such, a contrarian would have surmised that a bounce was in order, and that’s what we got—a triple digit bounce in the Dow, the biggest one day advance in 4 months. It helped that the Energy Department stated crude supplies rose 5.4 million barrels for the week ended March 25. As a result, crude dipped below $53 a barrel. However, a rally followed and crude closed at $53.99 as the Energy Department also reported that gasoline inventories fell 2.9 million barrels and distillate supplies dropped 1.1 million barrels.
Johnson Controls plans to close its Goshen, Indiana factory, and 167 workers will lose their jobs. Most of the work will be sent to a company plant in Mexico.
AIG said in a statement today that accounting errors and changes may result in a reduction of as much as 2 percent in shareholders' equity. The company last reported shareholders' equity of $82.9 billion.
We have seen a palace coup at Disney and one may be in the making at Morgan Stanley.
Clif Droke: “A growing list of indicators and data suggest a slowing down of credit growth and a return to a more "normal" level of economic activity. Unfortunately, however, the rate of change slowdown that we'll likely experience this year will seem dramatic to some compared to the opulent growth of the past 2-3 years. Investors who have over-extended themselves with debt will suffer the most while those who have built up ample supplies of cash will fare best.”
The Internal Revenue Service reported Tuesday that the gap between taxes paid and taxes owed stood at more than $300 billion, with a large portion resulting from people not reporting income.
With plummeting profit margins in China, GM’s 2005 net earnings in that country might slide below $100 million, a drop from 2004 of approximately 80%. In my view, China’s housing bubble will be the next to go. China’s economy is on its way to a hard landing.
Robert Wibbelsman: "The problem with the person who thinks he's a long-term investor and impervious to short-term gyrations is that the emotion of fear and pain will eventually make him sell badly."
confidence
3/30/05 Confidence
The Conference Board’s Consumer Confidence Index, a representative sample of 5,000 U.S. households, declined in March to 102.4 from February’s 104.4. It was the second consecutive monthly decline. The Present Situations Index and the Expectations Index both dipped too. The proportion of consumers anticipating their incomes to improve in the months ahead dropped to 16.7% from 18.7% in the prior month.
The Hudson Employment Index declined in March to 101.2 from February’s 102.0. It was the second consecutive decline in worker confidence in the employment market. The crop was driven primarily by declining optimism about personal finances—just 42% of workers now say their finances are getting better, down from 44% a month ago. Additionally, the number reporting that their situation is getting worse rose from 36% to 39%. The current Index figure is significantly lower than one year ago, when the March Index came in at 107.0.
Honda’s U.S. sales declined 8.3% in the first two months of 2005. Over the last 12 months, the company’s U.S. market share has dropped to 6.5% from 7%. The problem lies with declining sales for the Accord and the Civic. Honda offers the lowest incentives in the U.S.
Ralph Waldo Emerson: “ Most of the shadows of this life are caused by standing in one’s sunshine.”
Auto sales in China are expected to increase 10% this year; however, due to rising manufacturing costs, so far this year industry profits are down over 75%. This fact will show up in GM’s quarterly statements.
Daniel Gross: “From the beginning of 2001 to the end of 2003, the economy added $1.317 trillion in GDP and $4.2 trillion in debt. That means that each new dollar of economic output was accompanied by $3.19 in new debt.”
The Nasdaq is trading at a 5-month low. The Dow was recently at 10,900, and last night it settled around 10,400. Last April, Berkshire Hathaway traded at $95,600 a share. Last night it closed at $86,800.
Congressman Ron Paul: “If the federal government won’t stop spending, borrowing, printing, and taxing, we may find ourselves in far worse shape than 30 years ago.”
National Textiles will close its Hodges, Alabama plant and cut 388 jobs. Automotive-parts maker Intermet will close its Decatur, Ill. foundry and 320 employees will lose their jobs. It is too early to tell exactly how the closing could affect its Archer Creek foundry in Lynchburg with its 500 employees.
The British Conservative Party’s commissioned report sated “Britons are facing a $1.92 trillion personal debt time-bomb. The sheer scale of consumer debt has made millions of households extremely vulnerable to shocks in the economy, both from fiscal mismanagement and external factors such as oil price rises, acts of terrorism, and wars. A downturn in the economy would create serious economic and social problems for the 15 million people who struggle with debt repayments.”
Clif Droke, the editor of the daily Durban Deep/XAU Report, mentioned that Dan Ferris, in his Extreme Value Newsletter, referenced a recently published study by real estate economist Michael Sklarz. The latter indicated it is less expensive to rent than to own in Honolulu, New York, Washington, San Francisco, and Southern California. It takes into account the mortgage tax deduction. Ferris observed that “it now makes good financial sense for owners to sell their homes and live in rentals.”
In the week ended March 25, applications for U.S. home mortgages increased 2.4%.
Japan’s February industrial production declined 2.1%, the biggest drop in a year.
China’s stock indexes fell to a 6-year low.
The State Council of China stated “excessive growth in housing prices has directly undermined the ability of city residents to improve their living standards, affected financial and social stability, and even influenced the health of the national economy.”
Ha Jiming, China International’s chief economist: “It’s better for the bubble to burst earlier than later.”
Among Americans who visit a doctor for a new condition, 54% do not treat it with a prescription drug within a year, according to new data from the market research firm Ipsos-Insight.
Albert Szent-Gyorgyi: “Discovery consists of seeing what everybody has seen and thinking what nobody has thought.”
U.S. corporations' before-tax profits from current production jumped 13.4 percent to $1.06 trillion annualized in the fourth quarter, the fastest increase since the second quarter of 1987, the Commerce Department estimated Wednesday. For the year, corporate profits were up 9.5 percent. The government data are adjusted for inventory valuations and capital consumption. There appears to be a disconnect between corporation profits and wages for workers. At what point does employee compensation overtake rising inflation?
The Conference Board’s Consumer Confidence Index, a representative sample of 5,000 U.S. households, declined in March to 102.4 from February’s 104.4. It was the second consecutive monthly decline. The Present Situations Index and the Expectations Index both dipped too. The proportion of consumers anticipating their incomes to improve in the months ahead dropped to 16.7% from 18.7% in the prior month.
The Hudson Employment Index declined in March to 101.2 from February’s 102.0. It was the second consecutive decline in worker confidence in the employment market. The crop was driven primarily by declining optimism about personal finances—just 42% of workers now say their finances are getting better, down from 44% a month ago. Additionally, the number reporting that their situation is getting worse rose from 36% to 39%. The current Index figure is significantly lower than one year ago, when the March Index came in at 107.0.
Honda’s U.S. sales declined 8.3% in the first two months of 2005. Over the last 12 months, the company’s U.S. market share has dropped to 6.5% from 7%. The problem lies with declining sales for the Accord and the Civic. Honda offers the lowest incentives in the U.S.
Ralph Waldo Emerson: “ Most of the shadows of this life are caused by standing in one’s sunshine.”
Auto sales in China are expected to increase 10% this year; however, due to rising manufacturing costs, so far this year industry profits are down over 75%. This fact will show up in GM’s quarterly statements.
Daniel Gross: “From the beginning of 2001 to the end of 2003, the economy added $1.317 trillion in GDP and $4.2 trillion in debt. That means that each new dollar of economic output was accompanied by $3.19 in new debt.”
The Nasdaq is trading at a 5-month low. The Dow was recently at 10,900, and last night it settled around 10,400. Last April, Berkshire Hathaway traded at $95,600 a share. Last night it closed at $86,800.
Congressman Ron Paul: “If the federal government won’t stop spending, borrowing, printing, and taxing, we may find ourselves in far worse shape than 30 years ago.”
National Textiles will close its Hodges, Alabama plant and cut 388 jobs. Automotive-parts maker Intermet will close its Decatur, Ill. foundry and 320 employees will lose their jobs. It is too early to tell exactly how the closing could affect its Archer Creek foundry in Lynchburg with its 500 employees.
The British Conservative Party’s commissioned report sated “Britons are facing a $1.92 trillion personal debt time-bomb. The sheer scale of consumer debt has made millions of households extremely vulnerable to shocks in the economy, both from fiscal mismanagement and external factors such as oil price rises, acts of terrorism, and wars. A downturn in the economy would create serious economic and social problems for the 15 million people who struggle with debt repayments.”
Clif Droke, the editor of the daily Durban Deep/XAU Report, mentioned that Dan Ferris, in his Extreme Value Newsletter, referenced a recently published study by real estate economist Michael Sklarz. The latter indicated it is less expensive to rent than to own in Honolulu, New York, Washington, San Francisco, and Southern California. It takes into account the mortgage tax deduction. Ferris observed that “it now makes good financial sense for owners to sell their homes and live in rentals.”
In the week ended March 25, applications for U.S. home mortgages increased 2.4%.
Japan’s February industrial production declined 2.1%, the biggest drop in a year.
China’s stock indexes fell to a 6-year low.
The State Council of China stated “excessive growth in housing prices has directly undermined the ability of city residents to improve their living standards, affected financial and social stability, and even influenced the health of the national economy.”
Ha Jiming, China International’s chief economist: “It’s better for the bubble to burst earlier than later.”
Among Americans who visit a doctor for a new condition, 54% do not treat it with a prescription drug within a year, according to new data from the market research firm Ipsos-Insight.
Albert Szent-Gyorgyi: “Discovery consists of seeing what everybody has seen and thinking what nobody has thought.”
U.S. corporations' before-tax profits from current production jumped 13.4 percent to $1.06 trillion annualized in the fourth quarter, the fastest increase since the second quarter of 1987, the Commerce Department estimated Wednesday. For the year, corporate profits were up 9.5 percent. The government data are adjusted for inventory valuations and capital consumption. There appears to be a disconnect between corporation profits and wages for workers. At what point does employee compensation overtake rising inflation?
Tuesday, March 29, 2005
Ebb And Flow
3/29/05 Ebb And Flow
Yesterday, the dollar traded at a 6-week high versus the euro, the Swiss franc, and sterling, and a 5-week high versus the yen. With a vision of higher interest rates in coming months, there has been a greater appetite for the greenback. The rally is welcome; however, it is but a bounce within a bear market for the dollar. We’ll see how large everyone’s dollar balls are after China revalues the yuan.
Crude declined 79 cents to $54.05 a barrel. However, gas at the pump rose to $2.19 a gallon.
The Conference Board’s Consumer Confidence Index likely declined in March. It still stands at lofty levels. Until real estate prices undermine confidence, downward direction will be limited. At the same time, the Rydex Advisor Confidence Index, modeled after the Consumer Confidence Index, captures the sentiments of 150 independent registered investment advisors. The Index has been on the decline since December, but edged up in March to 119.90 from 118.08 in February. In March 2004, the Index stood at 122.06.
Mark Twain: “All you need in this life is ignorance and confidence, and then success is sure.”
Steelcase will close two Eastern Avenue plants in Michigan and cut 600 jobs. Delta Airlines will reduce employment by 6,000 to 7,000.
Frank Zarb will replace Hank Greenberg as chairman of AIG.
Wal-Mart shares are edging closer to $50 and Coke’s stock is approaching $40.
France’s business confidence dropped to its lowest level in 15 months. Japan’s household spending declined and unemployment rose. Presently, about one-fifth of Japan’s trade is with China and rising on a yearly basis.
2-year Treasury bonds are yielding 3.86%. The Treasury is auctioning $24 billion of these notes tomorrow. As the yield approaches 4%, they should represent significant competition for equities.
Howard Silverblatt of Standard & Poor’s noted the spread between operating earnings and generally accepted accounting principles rose to 22.3% in the fourth quarter of 2004 versus only 11.3% in the like period one year earlier. Frequently, a high spread can equate to lower quality of earnings. Silverblatt mentioned GE cutting its tax liability in 2004. This provided a non-operational boost to earnings.
More than $20 billion in major cardiovascular drug revenues will be exposed to patent
expiration in the next three to five years.
On April 1, the Skagit County (WA) Tulip Festival begins. For those of you who have not been to Holland, I strongly recommend a visit to Roozengaarde’s acres upon acres of tulips. They also ship bulbs and fresh tulips. The variety is remarkable.
Earl Gray Stevens: “Confidence, like art, never comes from having all the answers; it comes from being open to all the questions.”
Retail sales fell 1.0 percent in the week ended March 26, compared with a 0.2 percent increase the previous week, the International Council of Shopping Centers and UBS said in a joint report. “This past week, the overall pace of sales was inflated by holiday shopping for Easter food, candy and seasonal apparel,'' said Michael Niemira, ICSC's chief economist and director of research.
Yesterday, the dollar traded at a 6-week high versus the euro, the Swiss franc, and sterling, and a 5-week high versus the yen. With a vision of higher interest rates in coming months, there has been a greater appetite for the greenback. The rally is welcome; however, it is but a bounce within a bear market for the dollar. We’ll see how large everyone’s dollar balls are after China revalues the yuan.
Crude declined 79 cents to $54.05 a barrel. However, gas at the pump rose to $2.19 a gallon.
The Conference Board’s Consumer Confidence Index likely declined in March. It still stands at lofty levels. Until real estate prices undermine confidence, downward direction will be limited. At the same time, the Rydex Advisor Confidence Index, modeled after the Consumer Confidence Index, captures the sentiments of 150 independent registered investment advisors. The Index has been on the decline since December, but edged up in March to 119.90 from 118.08 in February. In March 2004, the Index stood at 122.06.
Mark Twain: “All you need in this life is ignorance and confidence, and then success is sure.”
Steelcase will close two Eastern Avenue plants in Michigan and cut 600 jobs. Delta Airlines will reduce employment by 6,000 to 7,000.
Frank Zarb will replace Hank Greenberg as chairman of AIG.
Wal-Mart shares are edging closer to $50 and Coke’s stock is approaching $40.
France’s business confidence dropped to its lowest level in 15 months. Japan’s household spending declined and unemployment rose. Presently, about one-fifth of Japan’s trade is with China and rising on a yearly basis.
2-year Treasury bonds are yielding 3.86%. The Treasury is auctioning $24 billion of these notes tomorrow. As the yield approaches 4%, they should represent significant competition for equities.
Howard Silverblatt of Standard & Poor’s noted the spread between operating earnings and generally accepted accounting principles rose to 22.3% in the fourth quarter of 2004 versus only 11.3% in the like period one year earlier. Frequently, a high spread can equate to lower quality of earnings. Silverblatt mentioned GE cutting its tax liability in 2004. This provided a non-operational boost to earnings.
More than $20 billion in major cardiovascular drug revenues will be exposed to patent
expiration in the next three to five years.
On April 1, the Skagit County (WA) Tulip Festival begins. For those of you who have not been to Holland, I strongly recommend a visit to Roozengaarde’s acres upon acres of tulips. They also ship bulbs and fresh tulips. The variety is remarkable.
Earl Gray Stevens: “Confidence, like art, never comes from having all the answers; it comes from being open to all the questions.”
Retail sales fell 1.0 percent in the week ended March 26, compared with a 0.2 percent increase the previous week, the International Council of Shopping Centers and UBS said in a joint report. “This past week, the overall pace of sales was inflated by holiday shopping for Easter food, candy and seasonal apparel,'' said Michael Niemira, ICSC's chief economist and director of research.
Ebb And Flow
3/29/05 Ebb And Flow
Yesterday, the dollar traded at a 6-week high versus the euro, the Swiss franc, and sterling, and a 5-week high versus the yen. With a vision of higher interest rates in coming months, there has been a greater appetite for the greenback. The rally is welcome; however, it is but a bounce within a bear market for the dollar. We’ll see how large everyone’s dollar balls are after China revalues the yuan.
Crude declined 79 cents to $54.05 a barrel. However, gas at the pump rose to $2.19 a gallon.
The Conference Board’s Consumer Confidence Index likely declined in March. It still stands at lofty levels. Until real estate prices undermine confidence, downward direction will be limited. At the same time, the Rydex Advisor Confidence Index, modeled after the Consumer Confidence Index, captures the sentiments of 150 independent registered investment advisors. The Index has been on the decline since December, but edged up in March to 119.90 from 118.08 in February. In March 2004, the Index stood at 122.06.
Mark Twain: “All you need in this life is ignorance and confidence, and then success is sure.”
Steelcase will close two Eastern Avenue plants in Michigan and cut 600 jobs. Delta Airlines will reduce employment by 6,000 to 7,000.
Frank Zarb will replace Hank Greenberg as chairman of AIG.
Wal-Mart shares are edging closer to $50 and Coke’s stock is approaching $40.
France’s business confidence dropped to its lowest level in 15 months. Japan’s household spending declined and unemployment rose. Presently, about one-fifth of Japan’s trade is with China and rising on a yearly basis.
2-year Treasury bonds are yielding 3.86%. The Treasury is auctioning $24 billion of these notes tomorrow. As the yield approaches 4%, they should represent significant competition for equities.
Howard Silverblatt of Standard & Poor’s noted the spread between operating earnings and generally accepted accounting principles rose to 22.3% in the fourth quarter of 2004 versus only 11.3% in the like period one year earlier. Frequently, a high spread can equate to lower quality of earnings. Silverblatt mentioned GE cutting its tax liability in 2004. This provided a non-operational boost to earnings.
More than $20 billion in major cardiovascular drug revenues will be exposed to patent
expiration in the next three to five years.
On April 1, the Skagit County (WA) Tulip Festival begins. For those of you who have not been to Holland, I strongly recommend a visit to Roozengaarde’s acres upon acres of tulips. They also ship bulbs and fresh tulips. The variety is remarkable.
Earl Gray Stevens: “Confidence, like art, never comes from having all the answers; it comes from being open to all the questions.”
Retail sales fell 1.0 percent in the week ended March 26, compared with a 0.2 percent increase the previous week, the International Council of Shopping Centers and UBS said in a joint report. “This past week, the overall pace of sales was inflated by holiday shopping for Easter food, candy and seasonal apparel,'' said Michael Niemira, ICSC's chief economist and director of research.
Yesterday, the dollar traded at a 6-week high versus the euro, the Swiss franc, and sterling, and a 5-week high versus the yen. With a vision of higher interest rates in coming months, there has been a greater appetite for the greenback. The rally is welcome; however, it is but a bounce within a bear market for the dollar. We’ll see how large everyone’s dollar balls are after China revalues the yuan.
Crude declined 79 cents to $54.05 a barrel. However, gas at the pump rose to $2.19 a gallon.
The Conference Board’s Consumer Confidence Index likely declined in March. It still stands at lofty levels. Until real estate prices undermine confidence, downward direction will be limited. At the same time, the Rydex Advisor Confidence Index, modeled after the Consumer Confidence Index, captures the sentiments of 150 independent registered investment advisors. The Index has been on the decline since December, but edged up in March to 119.90 from 118.08 in February. In March 2004, the Index stood at 122.06.
Mark Twain: “All you need in this life is ignorance and confidence, and then success is sure.”
Steelcase will close two Eastern Avenue plants in Michigan and cut 600 jobs. Delta Airlines will reduce employment by 6,000 to 7,000.
Frank Zarb will replace Hank Greenberg as chairman of AIG.
Wal-Mart shares are edging closer to $50 and Coke’s stock is approaching $40.
France’s business confidence dropped to its lowest level in 15 months. Japan’s household spending declined and unemployment rose. Presently, about one-fifth of Japan’s trade is with China and rising on a yearly basis.
2-year Treasury bonds are yielding 3.86%. The Treasury is auctioning $24 billion of these notes tomorrow. As the yield approaches 4%, they should represent significant competition for equities.
Howard Silverblatt of Standard & Poor’s noted the spread between operating earnings and generally accepted accounting principles rose to 22.3% in the fourth quarter of 2004 versus only 11.3% in the like period one year earlier. Frequently, a high spread can equate to lower quality of earnings. Silverblatt mentioned GE cutting its tax liability in 2004. This provided a non-operational boost to earnings.
More than $20 billion in major cardiovascular drug revenues will be exposed to patent
expiration in the next three to five years.
On April 1, the Skagit County (WA) Tulip Festival begins. For those of you who have not been to Holland, I strongly recommend a visit to Roozengaarde’s acres upon acres of tulips. They also ship bulbs and fresh tulips. The variety is remarkable.
Earl Gray Stevens: “Confidence, like art, never comes from having all the answers; it comes from being open to all the questions.”
Retail sales fell 1.0 percent in the week ended March 26, compared with a 0.2 percent increase the previous week, the International Council of Shopping Centers and UBS said in a joint report. “This past week, the overall pace of sales was inflated by holiday shopping for Easter food, candy and seasonal apparel,'' said Michael Niemira, ICSC's chief economist and director of research.
Monday, March 28, 2005
The Nuance Of Thinking
3/28/05 The Nuance Of Thinking
Yuan deposits continue to mount. The time is approaching for the Chinese Premier to alter the current peg to the dollar by at least 4 to 5%. When he makes that decision, he will sleep better.
Henry Ford: “Thinking is the hardest work there is, which is probably the reason so few engage in it.”
Some weeks back, I mentioned the Motorola iRadio, a new service to download radio and MP3 music collections to cell phones with “seamless mobility.” With 10 hours of continuous programming, the music can be heard in a car, in a gym, or on the beach. Robert Unmacht, partner in In3 Partners, stated “iRadio is the beginning of many things to come.”
Silver Lake Partners and six other LBO firms announced an agreement to purchase SunGuard Data Systems for $36 a hare in cash or $11.3 billion. It is the largest LBO since the 1989 purchase of RJR Nabisco. Hopefully, this latest deal will prove more successful. Big is not necessarily better.
Qatar’s Abdullah bin Hamad al-Attiyah is a former president of OPEC. He stated yesterday that “we believe there is no shortage of supply. Traders aren’t asking for extra cargoes, so any output increase by the group must be carefully considered.” Last week the price of crude declined 3.3%. With well-stocked supplies, crude prices should continue to decline—at least in the short term. This should place a lid on energy related securities.
According to the Miami Herald, more than 55,000 residential condo units are in “some phase” of development. By comparison, only 7,000 condo units, according to the Miami Herald, were built over the last 10 years. The Florida Association of Realtors estimates the median sales price of an existing home at more than $300,000 in Miami-Dade. That’s up more than 28% in a year. As an officer of a large South Florida mortgage told the Herald, “our median incomes would indicate an affordable home is sub-$200,000.”
This Friday is April 1, the beginning of the second quarter. The Labor Department will release its employment report for March and GM and Ford will provide their sales for the month of March. In the meantime, the next four trading days shall be comprised of much window-dressing for the quarter. It can be compared to the world of staging prior to placing a home on the market for sale. Both are an illusion. It requires some original thought to realize what the true inside of a portfolio or the real inside of a home looks like in the day-to-day world.
Albert Einstein: “I think and think for months and years. Ninety-nine times, the conclusion is false. The hundredth time I am right.”
People getting tax refunds this year are averaging amounts of $2,294, according to the IRS.
BlogMatrix is first to market with an integrated podcasting/podcatching application. With BlogMatrix Sparks! podcasters can record podcasts directly on their computer with a microphone and a mouse click. Music can be mixed with the podcast. One can record up to 8 tracks for a single podcast. In addition, podcasts can be automatically stored on the BlogMatrix server for others to enjoy. As previously mentioned, a podcast is an online audio file stored on a website that can be automatically downloaded to your iPod or other portable media player. It enables the development of independent radio station programs as well as a usage for training and promotional messaging.
Yuan deposits continue to mount. The time is approaching for the Chinese Premier to alter the current peg to the dollar by at least 4 to 5%. When he makes that decision, he will sleep better.
Henry Ford: “Thinking is the hardest work there is, which is probably the reason so few engage in it.”
Some weeks back, I mentioned the Motorola iRadio, a new service to download radio and MP3 music collections to cell phones with “seamless mobility.” With 10 hours of continuous programming, the music can be heard in a car, in a gym, or on the beach. Robert Unmacht, partner in In3 Partners, stated “iRadio is the beginning of many things to come.”
Silver Lake Partners and six other LBO firms announced an agreement to purchase SunGuard Data Systems for $36 a hare in cash or $11.3 billion. It is the largest LBO since the 1989 purchase of RJR Nabisco. Hopefully, this latest deal will prove more successful. Big is not necessarily better.
Qatar’s Abdullah bin Hamad al-Attiyah is a former president of OPEC. He stated yesterday that “we believe there is no shortage of supply. Traders aren’t asking for extra cargoes, so any output increase by the group must be carefully considered.” Last week the price of crude declined 3.3%. With well-stocked supplies, crude prices should continue to decline—at least in the short term. This should place a lid on energy related securities.
According to the Miami Herald, more than 55,000 residential condo units are in “some phase” of development. By comparison, only 7,000 condo units, according to the Miami Herald, were built over the last 10 years. The Florida Association of Realtors estimates the median sales price of an existing home at more than $300,000 in Miami-Dade. That’s up more than 28% in a year. As an officer of a large South Florida mortgage told the Herald, “our median incomes would indicate an affordable home is sub-$200,000.”
This Friday is April 1, the beginning of the second quarter. The Labor Department will release its employment report for March and GM and Ford will provide their sales for the month of March. In the meantime, the next four trading days shall be comprised of much window-dressing for the quarter. It can be compared to the world of staging prior to placing a home on the market for sale. Both are an illusion. It requires some original thought to realize what the true inside of a portfolio or the real inside of a home looks like in the day-to-day world.
Albert Einstein: “I think and think for months and years. Ninety-nine times, the conclusion is false. The hundredth time I am right.”
People getting tax refunds this year are averaging amounts of $2,294, according to the IRS.
BlogMatrix is first to market with an integrated podcasting/podcatching application. With BlogMatrix Sparks! podcasters can record podcasts directly on their computer with a microphone and a mouse click. Music can be mixed with the podcast. One can record up to 8 tracks for a single podcast. In addition, podcasts can be automatically stored on the BlogMatrix server for others to enjoy. As previously mentioned, a podcast is an online audio file stored on a website that can be automatically downloaded to your iPod or other portable media player. It enables the development of independent radio station programs as well as a usage for training and promotional messaging.
The Nuance Of Thinking
3/28/05 The Nuance Of Thinking
Yuan deposits continue to mount. The time is approaching for the Chinese Premier to alter the current peg to the dollar by at least 4 to 5%. When he makes that decision, he will sleep better.
Henry Ford: “Thinking is the hardest work there is, which is probably the reason so few engage in it.”
Some weeks back, I mentioned the Motorola iRadio, a new service to download radio and MP3 music collections to cell phones with “seamless mobility.” With 10 hours of continuous programming, the music can be heard in a car, in a gym, or on the beach. Robert Unmacht, partner in In3 Partners, stated “iRadio is the beginning of many things to come.”
Silver Lake Partners and six other LBO firms announced an agreement to purchase SunGuard Data Systems for $36 a hare in cash or $11.3 billion. It is the largest LBO since the 1989 purchase of RJR Nabisco. Hopefully, this latest deal will prove more successful. Big is not necessarily better.
Qatar’s Abdullah bin Hamad al-Attiyah is a former president of OPEC. He stated yesterday that “we believe there is no shortage of supply. Traders aren’t asking for extra cargoes, so any output increase by the group must be carefully considered.” Last week the price of crude declined 3.3%. With well-stocked supplies, crude prices should continue to decline—at least in the short term. This should place a lid on energy related securities.
According to the Miami Herald, more than 55,000 residential condo units are in “some phase” of development. By comparison, only 7,000 condo units, according to the Miami Herald, were built over the last 10 years. The Florida Association of Realtors estimates the median sales price of an existing home at more than $300,000 in Miami-Dade. That’s up more than 28% in a year. As an officer of a large South Florida mortgage told the Herald, “our median incomes would indicate an affordable home is sub-$200,000.”
This Friday is April 1, the beginning of the second quarter. The Labor Department will release its employment report for March and GM and Ford will provide their sales for the month of March. In the meantime, the next four trading days shall be comprised of much window-dressing for the quarter. It can be compared to the world of staging prior to placing a home on the market for sale. Both are an illusion. It requires some original thought to realize what the true inside of a portfolio or the real inside of a home looks like in the day-to-day world.
Albert Einstein: “I think and think for months and years. Ninety-nine times, the conclusion is false. The hundredth time I am right.”
People getting tax refunds this year are averaging amounts of $2,294, according to the IRS.
BlogMatrix is first to market with an integrated podcasting/podcatching application. With BlogMatrix Sparks! podcasters can record podcasts directly on their computer with a microphone and a mouse click. Music can be mixed with the podcast. One can record up to 8 tracks for a single podcast. In addition, podcasts can be automatically stored on the BlogMatrix server for others to enjoy. As previously mentioned, a podcast is an online audio file stored on a website that can be automatically downloaded to your iPod or other portable media player. It enables the development of independent radio station programs as well as a usage for training and promotional messaging.
Yuan deposits continue to mount. The time is approaching for the Chinese Premier to alter the current peg to the dollar by at least 4 to 5%. When he makes that decision, he will sleep better.
Henry Ford: “Thinking is the hardest work there is, which is probably the reason so few engage in it.”
Some weeks back, I mentioned the Motorola iRadio, a new service to download radio and MP3 music collections to cell phones with “seamless mobility.” With 10 hours of continuous programming, the music can be heard in a car, in a gym, or on the beach. Robert Unmacht, partner in In3 Partners, stated “iRadio is the beginning of many things to come.”
Silver Lake Partners and six other LBO firms announced an agreement to purchase SunGuard Data Systems for $36 a hare in cash or $11.3 billion. It is the largest LBO since the 1989 purchase of RJR Nabisco. Hopefully, this latest deal will prove more successful. Big is not necessarily better.
Qatar’s Abdullah bin Hamad al-Attiyah is a former president of OPEC. He stated yesterday that “we believe there is no shortage of supply. Traders aren’t asking for extra cargoes, so any output increase by the group must be carefully considered.” Last week the price of crude declined 3.3%. With well-stocked supplies, crude prices should continue to decline—at least in the short term. This should place a lid on energy related securities.
According to the Miami Herald, more than 55,000 residential condo units are in “some phase” of development. By comparison, only 7,000 condo units, according to the Miami Herald, were built over the last 10 years. The Florida Association of Realtors estimates the median sales price of an existing home at more than $300,000 in Miami-Dade. That’s up more than 28% in a year. As an officer of a large South Florida mortgage told the Herald, “our median incomes would indicate an affordable home is sub-$200,000.”
This Friday is April 1, the beginning of the second quarter. The Labor Department will release its employment report for March and GM and Ford will provide their sales for the month of March. In the meantime, the next four trading days shall be comprised of much window-dressing for the quarter. It can be compared to the world of staging prior to placing a home on the market for sale. Both are an illusion. It requires some original thought to realize what the true inside of a portfolio or the real inside of a home looks like in the day-to-day world.
Albert Einstein: “I think and think for months and years. Ninety-nine times, the conclusion is false. The hundredth time I am right.”
People getting tax refunds this year are averaging amounts of $2,294, according to the IRS.
BlogMatrix is first to market with an integrated podcasting/podcatching application. With BlogMatrix Sparks! podcasters can record podcasts directly on their computer with a microphone and a mouse click. Music can be mixed with the podcast. One can record up to 8 tracks for a single podcast. In addition, podcasts can be automatically stored on the BlogMatrix server for others to enjoy. As previously mentioned, a podcast is an online audio file stored on a website that can be automatically downloaded to your iPod or other portable media player. It enables the development of independent radio station programs as well as a usage for training and promotional messaging.
The Nuance Of Thinking
3/28/05 The Nuance Of Thinking
Yuan deposits continue to mount. The time is approaching for the Chinese Premier to alter the current peg to the dollar by at least 4 to 5%. When he makes that decision, he will sleep better.
Henry Ford: “Thinking is the hardest work there is, which is probably the reason so few engage in it.”
Some weeks back, I mentioned the Motorola iRadio, a new service to download radio and MP3 music collections to cell phones with “seamless mobility.” With 10 hours of continuous programming, the music can be heard in a car, in a gym, or on the beach. Robert Unmacht, partner in In3 Partners, stated “iRadio is the beginning of many things to come.”
Silver Lake Partners and six other LBO firms announced an agreement to purchase SunGuard Data Systems for $36 a hare in cash or $11.3 billion. It is the largest LBO since the 1989 purchase of RJR Nabisco. Hopefully, this latest deal will prove more successful. Big is not necessarily better.
Qatar’s Abdullah bin Hamad al-Attiyah is a former president of OPEC. He stated yesterday that “we believe there is no shortage of supply. Traders aren’t asking for extra cargoes, so any output increase by the group must be carefully considered.” Last week the price of crude declined 3.3%. With well-stocked supplies, crude prices should continue to decline—at least in the short term. This should place a lid on energy related securities.
According to the Miami Herald, more than 55,000 residential condo units are in “some phase” of development. By comparison, only 7,000 condo units, according to the Miami Herald, were built over the last 10 years. The Florida Association of Realtors estimates the median sales price of an existing home at more than $300,000 in Miami-Dade. That’s up more than 28% in a year. As an officer of a large South Florida mortgage told the Herald, “our median incomes would indicate an affordable home is sub-$200,000.”
This Friday is April 1, the beginning of the second quarter. The Labor Department will release its employment report for March and GM and Ford will provide their sales for the month of March. In the meantime, the next four trading days shall be comprised of much window-dressing for the quarter. It can be compared to the world of staging prior to placing a home on the market for sale. Both are an illusion. It requires some original thought to realize what the true inside of a portfolio or the real inside of a home looks like in the day-to-day world.
Albert Einstein: “I think and think for months and years. Ninety-nine times, the conclusion is false. The hundredth time I am right.”
People getting tax refunds this year are averaging amounts of $2,294, according to the IRS.
BlogMatrix is first to market with an integrated podcasting/podcatching application. With BlogMatrix Sparks! podcasters can record podcasts directly on their computer with a microphone and a mouse click. Music can be mixed with the podcast. One can record up to 8 tracks for a single podcast. In addition, podcasts can be automatically stored on the BlogMatrix server for others to enjoy. As previously mentioned, a podcast is an online audio file stored on a website that can be automatically downloaded to your iPod or other portable media player. It enables the development of independent radio station programs as well as a usage for training and promotional messaging.
Yuan deposits continue to mount. The time is approaching for the Chinese Premier to alter the current peg to the dollar by at least 4 to 5%. When he makes that decision, he will sleep better.
Henry Ford: “Thinking is the hardest work there is, which is probably the reason so few engage in it.”
Some weeks back, I mentioned the Motorola iRadio, a new service to download radio and MP3 music collections to cell phones with “seamless mobility.” With 10 hours of continuous programming, the music can be heard in a car, in a gym, or on the beach. Robert Unmacht, partner in In3 Partners, stated “iRadio is the beginning of many things to come.”
Silver Lake Partners and six other LBO firms announced an agreement to purchase SunGuard Data Systems for $36 a hare in cash or $11.3 billion. It is the largest LBO since the 1989 purchase of RJR Nabisco. Hopefully, this latest deal will prove more successful. Big is not necessarily better.
Qatar’s Abdullah bin Hamad al-Attiyah is a former president of OPEC. He stated yesterday that “we believe there is no shortage of supply. Traders aren’t asking for extra cargoes, so any output increase by the group must be carefully considered.” Last week the price of crude declined 3.3%. With well-stocked supplies, crude prices should continue to decline—at least in the short term. This should place a lid on energy related securities.
According to the Miami Herald, more than 55,000 residential condo units are in “some phase” of development. By comparison, only 7,000 condo units, according to the Miami Herald, were built over the last 10 years. The Florida Association of Realtors estimates the median sales price of an existing home at more than $300,000 in Miami-Dade. That’s up more than 28% in a year. As an officer of a large South Florida mortgage told the Herald, “our median incomes would indicate an affordable home is sub-$200,000.”
This Friday is April 1, the beginning of the second quarter. The Labor Department will release its employment report for March and GM and Ford will provide their sales for the month of March. In the meantime, the next four trading days shall be comprised of much window-dressing for the quarter. It can be compared to the world of staging prior to placing a home on the market for sale. Both are an illusion. It requires some original thought to realize what the true inside of a portfolio or the real inside of a home looks like in the day-to-day world.
Albert Einstein: “I think and think for months and years. Ninety-nine times, the conclusion is false. The hundredth time I am right.”
People getting tax refunds this year are averaging amounts of $2,294, according to the IRS.
BlogMatrix is first to market with an integrated podcasting/podcatching application. With BlogMatrix Sparks! podcasters can record podcasts directly on their computer with a microphone and a mouse click. Music can be mixed with the podcast. One can record up to 8 tracks for a single podcast. In addition, podcasts can be automatically stored on the BlogMatrix server for others to enjoy. As previously mentioned, a podcast is an online audio file stored on a website that can be automatically downloaded to your iPod or other portable media player. It enables the development of independent radio station programs as well as a usage for training and promotional messaging.
The Nuance Of Thinking
3/28/05 The Nuance Of Thinking
Yuan deposits continue to mount. The time is approaching for the Chinese Premier to alter the current peg to the dollar by at least 4 to 5%. When he makes that decision, he will sleep better.
Henry Ford: “Thinking is the hardest work there is, which is probably the reason so few engage in it.”
Some weeks back, I mentioned the Motorola iRadio, a new service to download radio and MP3 music collections to cell phones with “seamless mobility.” With 10 hours of continuous programming, the music can be heard in a car, in a gym, or on the beach. Robert Unmacht, partner in In3 Partners, stated “iRadio is the beginning of many things to come.”
Silver Lake Partners and six other LBO firms announced an agreement to purchase SunGuard Data Systems for $36 a hare in cash or $11.3 billion. It is the largest LBO since the 1989 purchase of RJR Nabisco. Hopefully, this latest deal will prove more successful. Big is not necessarily better.
Qatar’s Abdullah bin Hamad al-Attiyah is a former president of OPEC. He stated yesterday that “we believe there is no shortage of supply. Traders aren’t asking for extra cargoes, so any output increase by the group must be carefully considered.” Last week the price of crude declined 3.3%. With well-stocked supplies, crude prices should continue to decline—at least in the short term. This should place a lid on energy related securities.
According to the Miami Herald, more than 55,000 residential condo units are in “some phase” of development. By comparison, only 7,000 condo units, according to the Miami Herald, were built over the last 10 years. The Florida Association of Realtors estimates the median sales price of an existing home at more than $300,000 in Miami-Dade. That’s up more than 28% in a year. As an officer of a large South Florida mortgage told the Herald, “our median incomes would indicate an affordable home is sub-$200,000.”
This Friday is April 1, the beginning of the second quarter. The Labor Department will release its employment report for March and GM and Ford will provide their sales for the month of March. In the meantime, the next four trading days shall be comprised of much window-dressing for the quarter. It can be compared to the world of staging prior to placing a home on the market for sale. Both are an illusion. It requires some original thought to realize what the true inside of a portfolio or the real inside of a home looks like in the day-to-day world.
Albert Einstein: “I think and think for months and years. Ninety-nine times, the conclusion is false. The hundredth time I am right.”
People getting tax refunds this year are averaging amounts of $2,294, according to the IRS.
BlogMatrix is first to market with an integrated podcasting/podcatching application. With BlogMatrix Sparks! podcasters can record podcasts directly on their computer with a microphone and a mouse click. Music can be mixed with the podcast. One can record up to 8 tracks for a single podcast. In addition, podcasts can be automatically stored on the BlogMatrix server for others to enjoy. As previously mentioned, a podcast is an online audio file stored on a website that can be automatically downloaded to your iPod or other portable media player. It enables the development of independent radio station programs as well as a usage for training and promotional messaging.
Yuan deposits continue to mount. The time is approaching for the Chinese Premier to alter the current peg to the dollar by at least 4 to 5%. When he makes that decision, he will sleep better.
Henry Ford: “Thinking is the hardest work there is, which is probably the reason so few engage in it.”
Some weeks back, I mentioned the Motorola iRadio, a new service to download radio and MP3 music collections to cell phones with “seamless mobility.” With 10 hours of continuous programming, the music can be heard in a car, in a gym, or on the beach. Robert Unmacht, partner in In3 Partners, stated “iRadio is the beginning of many things to come.”
Silver Lake Partners and six other LBO firms announced an agreement to purchase SunGuard Data Systems for $36 a hare in cash or $11.3 billion. It is the largest LBO since the 1989 purchase of RJR Nabisco. Hopefully, this latest deal will prove more successful. Big is not necessarily better.
Qatar’s Abdullah bin Hamad al-Attiyah is a former president of OPEC. He stated yesterday that “we believe there is no shortage of supply. Traders aren’t asking for extra cargoes, so any output increase by the group must be carefully considered.” Last week the price of crude declined 3.3%. With well-stocked supplies, crude prices should continue to decline—at least in the short term. This should place a lid on energy related securities.
According to the Miami Herald, more than 55,000 residential condo units are in “some phase” of development. By comparison, only 7,000 condo units, according to the Miami Herald, were built over the last 10 years. The Florida Association of Realtors estimates the median sales price of an existing home at more than $300,000 in Miami-Dade. That’s up more than 28% in a year. As an officer of a large South Florida mortgage told the Herald, “our median incomes would indicate an affordable home is sub-$200,000.”
This Friday is April 1, the beginning of the second quarter. The Labor Department will release its employment report for March and GM and Ford will provide their sales for the month of March. In the meantime, the next four trading days shall be comprised of much window-dressing for the quarter. It can be compared to the world of staging prior to placing a home on the market for sale. Both are an illusion. It requires some original thought to realize what the true inside of a portfolio or the real inside of a home looks like in the day-to-day world.
Albert Einstein: “I think and think for months and years. Ninety-nine times, the conclusion is false. The hundredth time I am right.”
People getting tax refunds this year are averaging amounts of $2,294, according to the IRS.
BlogMatrix is first to market with an integrated podcasting/podcatching application. With BlogMatrix Sparks! podcasters can record podcasts directly on their computer with a microphone and a mouse click. Music can be mixed with the podcast. One can record up to 8 tracks for a single podcast. In addition, podcasts can be automatically stored on the BlogMatrix server for others to enjoy. As previously mentioned, a podcast is an online audio file stored on a website that can be automatically downloaded to your iPod or other portable media player. It enables the development of independent radio station programs as well as a usage for training and promotional messaging.
Sunday, March 27, 2005
Trends And Services
3/27/05 Trends And Services
Andrew E. Fekete: “There is no valid argument why the Treasury or the Federal Reserve banks should be given the privilege to issue liabilities which they had neither the means nor the intention to honor while the same, if committed by private parties, is treated as a serious crime punishable by severe penalties as specified by the Criminal Code. On the contrary, in jurisprudence the principle of double standard of justice is rejected, not just because it is unfair but, for the stronger reason, because it is self-defeating.” Basically, Professor Fekete is maintaining that the on-going issuance of Treasury debt securities can be likened to check kiting.
With the newly-found strength in the dollar, continued upward commodity prices are suspect at best. This is why I suggested cutting back on positions in both commodities and their sister stocks. Until the dollar fades once again, and it will, I would use short-term rallies to reduce positions in commodities and related stocks.
Wal-Mart, in its weekly Saturday update, stated the sale of Easter merchandise has been running slightly less than last year. In addition, because of unseasonable weather, the company is behind plan to launch sales for spring products.
Amazon recently launched a search engine called A9 that remembers everything you’ve searched for on its website.
Beginning in April, Visa will tack on a 1% charge any time its plastic card is utilized abroad.
The new Napster To Go music service, at $14.95 a month, offers the right to download as much music as you can get into a portable player. You can listen as often as you wish as log as you maintain your monthly subscription to the service.
GE’s finance arm is planning to acquire a bank in India.
India’s Science and Technology Minister stated the country’s biotech industry will achieve its target market size of $1 billion in 2005 and $5 billion by 2010.
Americans ponder what is left of our manufacturing base. The answer is our defense industry. For example, we are selling F-16 fighter planes to Pakistan. Another potential customer for our array of defense products is India.
As of March 15, short interest on the Nasdaq rose to 5.577 billion shares, its highest level ever, up from 5.357 billion in the previous month. Short interest on the NYSE, as of March 15, rose to 8.419 billion shares, up from 8.007 billion shares on February 15.
Andrew E. Fekete: “There is no valid argument why the Treasury or the Federal Reserve banks should be given the privilege to issue liabilities which they had neither the means nor the intention to honor while the same, if committed by private parties, is treated as a serious crime punishable by severe penalties as specified by the Criminal Code. On the contrary, in jurisprudence the principle of double standard of justice is rejected, not just because it is unfair but, for the stronger reason, because it is self-defeating.” Basically, Professor Fekete is maintaining that the on-going issuance of Treasury debt securities can be likened to check kiting.
With the newly-found strength in the dollar, continued upward commodity prices are suspect at best. This is why I suggested cutting back on positions in both commodities and their sister stocks. Until the dollar fades once again, and it will, I would use short-term rallies to reduce positions in commodities and related stocks.
Wal-Mart, in its weekly Saturday update, stated the sale of Easter merchandise has been running slightly less than last year. In addition, because of unseasonable weather, the company is behind plan to launch sales for spring products.
Amazon recently launched a search engine called A9 that remembers everything you’ve searched for on its website.
Beginning in April, Visa will tack on a 1% charge any time its plastic card is utilized abroad.
The new Napster To Go music service, at $14.95 a month, offers the right to download as much music as you can get into a portable player. You can listen as often as you wish as log as you maintain your monthly subscription to the service.
GE’s finance arm is planning to acquire a bank in India.
India’s Science and Technology Minister stated the country’s biotech industry will achieve its target market size of $1 billion in 2005 and $5 billion by 2010.
Americans ponder what is left of our manufacturing base. The answer is our defense industry. For example, we are selling F-16 fighter planes to Pakistan. Another potential customer for our array of defense products is India.
As of March 15, short interest on the Nasdaq rose to 5.577 billion shares, its highest level ever, up from 5.357 billion in the previous month. Short interest on the NYSE, as of March 15, rose to 8.419 billion shares, up from 8.007 billion shares on February 15.
Saturday, March 26, 2005
A Season For Change
3/26/05 A Season For Change
"Indiscriminate support of exports and foreign capital influx has created short-term economic problems, including excessive speculation in the property market and the economic decoupling of the fast-growing coastal areas with the rest of China," Guo Shuqing, director of the State Administration of Foreign Exchange (SAFE), said in an interview with China Daily. On Friday, Guo was named candidate chairman of the China Construction Bank Ltd. Guo observed "we should gradually reduce the preferential treatment to exports and seriously review our foreign investment policy...And trade surplus is not necessarily a good thing all the time...This kind of export growth is not sustainable...More than half of China's exports and overwhelming majority of high-tech manufacturing and trade are generated by foreign companies...China needs a strategy for more of a balanced development."
The dollar had its biggest weekly rise in 11 against both the euro and the yen. In a shortened trading week, the dollar index rose more than 2%. Do you think any of those short the dollar are getting nervous?
Bob Hoye: "Investors and traders should get prepared for a cyclical bear market in commodities."
Imported goods represent at least 36% of retail sales. How many apparel and textile jobs will be lost in 2005? More than 100,000?
At least 1,527 members of the U.S. military have died since the beginning of the Iraq war in March 2003.
The Challenger, Gray & Christmas layoff data indicate that job cut announcements have averaged twice the level that held through the mid-1990s.
Ralph Wanger: “Deciding on an investment philosophy is kind of like picking a spouse. Do you want someone who is volatile and romantic and emotional, or do you want someone who is steady and trustworthy and down to earth. If you want a successful investment career, you'd better bind yourself to a style you can live with.”
A new USA/CNN/Gallup survey found Bush's approval rating dropped 7 points to 45%, representing the lowest point since taking office in January 2001.
2-year Treasury yields stand at 3.85%, the highest level in over 3 1/2 years. The spread between 2-year and 30-year Treasury bonds is down to 99 basis points. So much for concerns with the risk of time.
Henry Ford: “Speculation is only a word covering the making of money out of the manipulation of prices, instead of supplying goods and services.”
In the week of March 14, M3 declined $11.8 billion to $9.49 trillion; however, bank credit jumped by $40.3 billion to an all-time high of $7.04 trillion.
The Center for Drug Evaluation and Research stated this week that it approved 474 generic drugs in 2004, up from 364 in 2003. The Center approved 29 non-generic drugs ("priority drugs") in 2004, up from only 14 in 2003.
Thor Industries makes Citation and Chateau recreational vehicles at its plant in the Susquehanna Valley, PA. The union and the company have been unable to agree on a new contract. The company wanted to reduce seniority benefits, increase employee contributions for health insurance benefits, and reduce the present $15 per hour pay but provide bonuses if production incentives were met. The union voted 89 to 4 to reject the proposed contract. Thor stated that, unless the contract was approved, they would close the plant by April 15. The company employs about 160 union and management personnel at the plant.
Wal-Mart Stores Inc. stated this morning it expects March sales at U.S. stores to be similar to or greater than the 4.1 percent rise recorded for February.
According to the National Retail Federation, Easter is the fourth-largest spending holiday in the U.S. Easter arrived early this year, and that fact aided this month’s results for Wal-Mart, and that would be true for other retailers, such as, Target.
Mark Twain: "If you pick up a starving dog and make him prosperous,
he will not bite you. This is the principal difference between a dog and a man.”
"Indiscriminate support of exports and foreign capital influx has created short-term economic problems, including excessive speculation in the property market and the economic decoupling of the fast-growing coastal areas with the rest of China," Guo Shuqing, director of the State Administration of Foreign Exchange (SAFE), said in an interview with China Daily. On Friday, Guo was named candidate chairman of the China Construction Bank Ltd. Guo observed "we should gradually reduce the preferential treatment to exports and seriously review our foreign investment policy...And trade surplus is not necessarily a good thing all the time...This kind of export growth is not sustainable...More than half of China's exports and overwhelming majority of high-tech manufacturing and trade are generated by foreign companies...China needs a strategy for more of a balanced development."
The dollar had its biggest weekly rise in 11 against both the euro and the yen. In a shortened trading week, the dollar index rose more than 2%. Do you think any of those short the dollar are getting nervous?
Bob Hoye: "Investors and traders should get prepared for a cyclical bear market in commodities."
Imported goods represent at least 36% of retail sales. How many apparel and textile jobs will be lost in 2005? More than 100,000?
At least 1,527 members of the U.S. military have died since the beginning of the Iraq war in March 2003.
The Challenger, Gray & Christmas layoff data indicate that job cut announcements have averaged twice the level that held through the mid-1990s.
Ralph Wanger: “Deciding on an investment philosophy is kind of like picking a spouse. Do you want someone who is volatile and romantic and emotional, or do you want someone who is steady and trustworthy and down to earth. If you want a successful investment career, you'd better bind yourself to a style you can live with.”
A new USA/CNN/Gallup survey found Bush's approval rating dropped 7 points to 45%, representing the lowest point since taking office in January 2001.
2-year Treasury yields stand at 3.85%, the highest level in over 3 1/2 years. The spread between 2-year and 30-year Treasury bonds is down to 99 basis points. So much for concerns with the risk of time.
Henry Ford: “Speculation is only a word covering the making of money out of the manipulation of prices, instead of supplying goods and services.”
In the week of March 14, M3 declined $11.8 billion to $9.49 trillion; however, bank credit jumped by $40.3 billion to an all-time high of $7.04 trillion.
The Center for Drug Evaluation and Research stated this week that it approved 474 generic drugs in 2004, up from 364 in 2003. The Center approved 29 non-generic drugs ("priority drugs") in 2004, up from only 14 in 2003.
Thor Industries makes Citation and Chateau recreational vehicles at its plant in the Susquehanna Valley, PA. The union and the company have been unable to agree on a new contract. The company wanted to reduce seniority benefits, increase employee contributions for health insurance benefits, and reduce the present $15 per hour pay but provide bonuses if production incentives were met. The union voted 89 to 4 to reject the proposed contract. Thor stated that, unless the contract was approved, they would close the plant by April 15. The company employs about 160 union and management personnel at the plant.
Wal-Mart Stores Inc. stated this morning it expects March sales at U.S. stores to be similar to or greater than the 4.1 percent rise recorded for February.
According to the National Retail Federation, Easter is the fourth-largest spending holiday in the U.S. Easter arrived early this year, and that fact aided this month’s results for Wal-Mart, and that would be true for other retailers, such as, Target.
Mark Twain: "If you pick up a starving dog and make him prosperous,
he will not bite you. This is the principal difference between a dog and a man.”
Friday, March 25, 2005
A Budding Star
3/25/05 A Budding Star
It is Good Friday and the markets are closed. As such, I will take the opportunity to discuss a private company. If I could make just one investment for the next ten years, it would be in Zyvex of Richardson, Texas, the first molecular nanotechnology company. Their vision “is to be the leading worldwide supplier of tools, products, and services that enable adaptable, affordable, and molecularly precise manufacturing.” Clearly, the company is the leading supplier of molecular nanotechnology tools. Zyvex was founded in 1997, and reported its first revenues in 2001, grossing only $150,000. Revenues grew to $1.2 million in 2002, $4.3 million in 2003, and $8.6 million in 2004. Management anticipates that the company will achieve a cash-flow break-even level by Q1 2006, and become bottom-line profitable by the end of 2006. With top-notch management, a growing customer base, and numerous key alliances with industry leaders, I believe Zyvex is a star in the making.
U.S. February home sales surged 9.4%, the second highest sales rate ever. However, the supply of homes jumped to a record 444,000, a 4.4 month supply at the February sales pace.
30-year mortgages are back up to 6%.
Around the globe, it appears that central banks are reducing the availability of credit.
Sony’s PSP went on sale with 1 million units and a back up of another 1 million units. The initial demand appears quite robust despite the product being non-transferable. If you have a movie on DVD, it won’t play on the Sony PSP. You need to buy another copy of the same DVD specifically for the Sony PSP.
Brilliance China Automotive Holdings warned about the slowing demand for autos in China in 2005. This is bad news for GM.
John Challenger stated that higher oil prices and rising interest rates may affect hiring plans due to added costs crimping corporate budgets. He stated “something has to give. For many employers the most cost-effective step is to put the brakes on hiring plans. Companies that go ahead with hiring plans are going to want the most bang for their buck which means adding workers who will make an immediate contribution to the bottom line.”
The final showing of “Wall Street Week” will be produced June 24. The series has been running for 35 years.
Federal revenue from corporate taxation has declined from 2.2% of GDP in 1998 to 1.6% today.
Andy Bechtolsheim, a co-founder of Sun Microsystems and one of the inventors of network computing, has returned to Sun. The stockholders should bear the fruits arising from his efforts.
It is Good Friday and the markets are closed. As such, I will take the opportunity to discuss a private company. If I could make just one investment for the next ten years, it would be in Zyvex of Richardson, Texas, the first molecular nanotechnology company. Their vision “is to be the leading worldwide supplier of tools, products, and services that enable adaptable, affordable, and molecularly precise manufacturing.” Clearly, the company is the leading supplier of molecular nanotechnology tools. Zyvex was founded in 1997, and reported its first revenues in 2001, grossing only $150,000. Revenues grew to $1.2 million in 2002, $4.3 million in 2003, and $8.6 million in 2004. Management anticipates that the company will achieve a cash-flow break-even level by Q1 2006, and become bottom-line profitable by the end of 2006. With top-notch management, a growing customer base, and numerous key alliances with industry leaders, I believe Zyvex is a star in the making.
U.S. February home sales surged 9.4%, the second highest sales rate ever. However, the supply of homes jumped to a record 444,000, a 4.4 month supply at the February sales pace.
30-year mortgages are back up to 6%.
Around the globe, it appears that central banks are reducing the availability of credit.
Sony’s PSP went on sale with 1 million units and a back up of another 1 million units. The initial demand appears quite robust despite the product being non-transferable. If you have a movie on DVD, it won’t play on the Sony PSP. You need to buy another copy of the same DVD specifically for the Sony PSP.
Brilliance China Automotive Holdings warned about the slowing demand for autos in China in 2005. This is bad news for GM.
John Challenger stated that higher oil prices and rising interest rates may affect hiring plans due to added costs crimping corporate budgets. He stated “something has to give. For many employers the most cost-effective step is to put the brakes on hiring plans. Companies that go ahead with hiring plans are going to want the most bang for their buck which means adding workers who will make an immediate contribution to the bottom line.”
The final showing of “Wall Street Week” will be produced June 24. The series has been running for 35 years.
Federal revenue from corporate taxation has declined from 2.2% of GDP in 1998 to 1.6% today.
Andy Bechtolsheim, a co-founder of Sun Microsystems and one of the inventors of network computing, has returned to Sun. The stockholders should bear the fruits arising from his efforts.
Thursday, March 24, 2005
BP's Texas City Refinery
3/24/05 BP’s Texas City Refinery
With U.S. inventories of crude rising to their highest level since July 2002, it appeared that crude might have topped out for the time being. Stockpiles gained 4.1 million barrels to 309.3 million and the price of crude declined by over 4% during regular trading hours to $53.81 a barrel. Then an explosion occurred at 1:20 PM Houston time at BP’s Texas City refinery, the third largest in the U.S. with daily production of 11 million gallons of gasoline. (Last week gasoline supplies fell 4.1 million barrels to 217.3 million.) There are 14 known fatalities and 70 people were hurt. In late trading, gasoline futures rose 3 cents a gallon to $1.6075, an all-time high. Crude jumped back up to $56.62 a barrel.
Yesterday, the BLS reported that real average weekly earnings fell by 0.4% from January 2005 to February 2005 after seasonal adjustment and adjusting for the 0.4% increase in the CPI. After deflation by the CPI-W, average weekly earnings decreased by 0.8%. How long can the consumer continue to spend at the present rate with earnings continually trailing inflation and how long can our economy grow with a savings rate that is declining to almost nothing?
GM may phase out its Pontiac and Buick brands but it will rush the introduction of its new full-size SUVs. How large will the incentives be on those new SUV’s?
The dollar reached a 6-week high versus the yen and a 5-week high against the euro.
Kellogg will close its Keebler plant located in Macon and 400 employees will be cut from the payroll.
Two independent trustees overseeing Social Security and Medicare presented data that showed Medicare’s total unfunded liability at $65.4 trillion (that is not a misprint), almost six times that of Social Security’s. They stated that Medicare’s trust fund would be depleted in 2020 and Social Security’s trust fund in 2041. It’s obvious why the Administration is focusing on Social Security rather than Medicare---they don’t want to touch a problem where Medicare costs are growing faster than that of Social Security and where no one has developed a long-term solution.
According to the California Association of Realtors, the median price of an existing single-family detached home in California declined 2.9% in February from the prior month; however, year-over-year, the median price increased 20.4% to $471,620.
U.S. trade with Canada and Mexico amounted to $712.7 billion in 2004, according to the Commerce Department. Including oil, the U.S. buys 85% of the exports from both countries.
A new study by A.T. Kearney revealed that three-in-ten North American and European executives believe 20% or more of their company’s annual IT budget is wasted, and only 20% of the companies’ IT investment is allocated to IT innovation, a 30% decrease from 2000.
According to a new study by Yale economist Robert J. Shiller, workers who opt to invest in personal accounts outlined in Bush’s Social Security reform plan are likely to earn less to retire on than those who stay in the traditional system. His research finds that on the date of retirement, the personal accounts would have negative values 71% of the time. Shiller stated “to say that there is a money machine in the stock market, that it can be tapped to yield great wealth without significant risk if one uses life-cycle investment methods, is a big mistake.”
Yesterday, the Labor Department reported that February’s CPI rose 0.4%, more than forecast, and prices excluding food and energy rose 0.3%, the most since September. In its entirety, prices had their biggest increase since August 2002.
New orders for durable goods increased a smaller-than-expected 0.3 percent in February following a revised 1.1 percent decline in January, the Commerce Department reported today. Economists were expecting a 1 percent gain. Excluding transportation goods, durable-goods orders sank 0.2 percent. Shipments of durable goods dropped 1.6 percent in February, the largest decline in 18 months, after a 0.9 percent gain in January. Inventories increased 0.6 percent. Unfilled orders increased 0.6 percent. Orders for core capital goods fell 2.1 percent.
As of the week ending March 12, the number of people collecting unemployment benefits rose by 31,000 to 2.7 million.
Employees hired after Jan. 1 won't be eligible for retiree health benefits, nor can they participate in the firm's regular pension plan, Motorola disclosed in a recent report to federal securities regulators.
According to a new government report, because of higher payments to doctors, Medicare may increase seniors’ health insurance premiums by 12% next year.
With U.S. inventories of crude rising to their highest level since July 2002, it appeared that crude might have topped out for the time being. Stockpiles gained 4.1 million barrels to 309.3 million and the price of crude declined by over 4% during regular trading hours to $53.81 a barrel. Then an explosion occurred at 1:20 PM Houston time at BP’s Texas City refinery, the third largest in the U.S. with daily production of 11 million gallons of gasoline. (Last week gasoline supplies fell 4.1 million barrels to 217.3 million.) There are 14 known fatalities and 70 people were hurt. In late trading, gasoline futures rose 3 cents a gallon to $1.6075, an all-time high. Crude jumped back up to $56.62 a barrel.
Yesterday, the BLS reported that real average weekly earnings fell by 0.4% from January 2005 to February 2005 after seasonal adjustment and adjusting for the 0.4% increase in the CPI. After deflation by the CPI-W, average weekly earnings decreased by 0.8%. How long can the consumer continue to spend at the present rate with earnings continually trailing inflation and how long can our economy grow with a savings rate that is declining to almost nothing?
GM may phase out its Pontiac and Buick brands but it will rush the introduction of its new full-size SUVs. How large will the incentives be on those new SUV’s?
The dollar reached a 6-week high versus the yen and a 5-week high against the euro.
Kellogg will close its Keebler plant located in Macon and 400 employees will be cut from the payroll.
Two independent trustees overseeing Social Security and Medicare presented data that showed Medicare’s total unfunded liability at $65.4 trillion (that is not a misprint), almost six times that of Social Security’s. They stated that Medicare’s trust fund would be depleted in 2020 and Social Security’s trust fund in 2041. It’s obvious why the Administration is focusing on Social Security rather than Medicare---they don’t want to touch a problem where Medicare costs are growing faster than that of Social Security and where no one has developed a long-term solution.
According to the California Association of Realtors, the median price of an existing single-family detached home in California declined 2.9% in February from the prior month; however, year-over-year, the median price increased 20.4% to $471,620.
U.S. trade with Canada and Mexico amounted to $712.7 billion in 2004, according to the Commerce Department. Including oil, the U.S. buys 85% of the exports from both countries.
A new study by A.T. Kearney revealed that three-in-ten North American and European executives believe 20% or more of their company’s annual IT budget is wasted, and only 20% of the companies’ IT investment is allocated to IT innovation, a 30% decrease from 2000.
According to a new study by Yale economist Robert J. Shiller, workers who opt to invest in personal accounts outlined in Bush’s Social Security reform plan are likely to earn less to retire on than those who stay in the traditional system. His research finds that on the date of retirement, the personal accounts would have negative values 71% of the time. Shiller stated “to say that there is a money machine in the stock market, that it can be tapped to yield great wealth without significant risk if one uses life-cycle investment methods, is a big mistake.”
Yesterday, the Labor Department reported that February’s CPI rose 0.4%, more than forecast, and prices excluding food and energy rose 0.3%, the most since September. In its entirety, prices had their biggest increase since August 2002.
New orders for durable goods increased a smaller-than-expected 0.3 percent in February following a revised 1.1 percent decline in January, the Commerce Department reported today. Economists were expecting a 1 percent gain. Excluding transportation goods, durable-goods orders sank 0.2 percent. Shipments of durable goods dropped 1.6 percent in February, the largest decline in 18 months, after a 0.9 percent gain in January. Inventories increased 0.6 percent. Unfilled orders increased 0.6 percent. Orders for core capital goods fell 2.1 percent.
As of the week ending March 12, the number of people collecting unemployment benefits rose by 31,000 to 2.7 million.
Employees hired after Jan. 1 won't be eligible for retiree health benefits, nor can they participate in the firm's regular pension plan, Motorola disclosed in a recent report to federal securities regulators.
According to a new government report, because of higher payments to doctors, Medicare may increase seniors’ health insurance premiums by 12% next year.
Wednesday, March 23, 2005
Lost Integrity
3/23/05 Lost Integrity
There were many stories yesterday. The BLS reported that, in the past year, the PPI rose 4.7%, the core PPI increased 2.8%, the fastest advance in more than 9 years, and the finished consumer foods index climbed 4.9%. For the 12 months ended February 2005, prices for intermediate goods increased 8.4%, and the crude goods index rose 8.1%. By contrast, subsequent to a 0.6% gain in January, the index for capital equipment decreased 0.2% in February. Prices for materials for durable manufacturing moved up 0.9% in February, compared with a 1.8% gain in the preceding month. The index for materials for nondurable manufacturing rose 0.2% in February, after climbing 0.6% in the prior month. Additionally, the PPI for crude materials for further processing declined 1.6% in February, following a 2% fall in January, and the crude foodstuffs and feedstuffs index declined 3.2% in February, after advancing 1.9% in January. Interestingly, the U.S. economy is dominated by service industries. The BLS reported that among service industries in February, prices received by commercial bankers, lawyers, savings institutions, cellular and other wireless carriers, and courier services turned down in February following increases in the preceding month. Prices received by real estate agents and brokers were unchanged, after advancing in January.
I have provided a highlight of the BLS report. What do all these statistics show us? They show me that the Fed is comprised of either very stupid people or people who go around the country telling lies. Up until yesterday, Fed Governors took turns expounding on how inflation was well contained. All you had to do was look at the CRB or the Goldman Sachs Commodity Index to see that many commodities were making all-time highs, and not just crude oil. Yesterday, out of the blue, the FOMC changed their tune and stated “though longer-term inflation expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident. The rise in energy prices, however, has not notably fed through to core consumer prices.” Obviously, the FOMC members don’t drive or fly. If one had any doubts or reservations, yesterday cemented the loss of integrity at the FOMC.
The fallout from the FOMC meeting was not pretty. The Dow closed down 94 points and below the 10,500 level. The Nasdaq dropped 18 points and closed below 2000. The S&P declined over 1%. Most importantly, 10-year Treasury bond yields jumped to 4.65%, the highest level since July 28, 2004. Of course, this means mortgage rates will climb dramatically this week.
While the FOMC expressed a concern with inflation, the CRB declined and crude dropped about $2 a barrel and is approaching $55 a barrel. Platinum, silver, heating oil, and copper also declined. As a generalization, I believe we have experienced the worst of inflation. As such, as I have previously mentioned, I would cut back on commodity holdings--- especially energy, copper, and aluminum stocks. Below $6.40 for silver and below $406 for gold, I would look to add to those holdings. Why? It’s something I read in a piece by Roach of Morgan Stanley. He quoted China’s Premier Wen Jiabao. The latter stated “I cannot sleep well at night with this issue of the RMB (the yuan).” That spoke volumes to me. There is an old saying on Wall Street “to sell to the sleeping point.” Jiabao’s remark tells me that China will soon revalue its currency and widen the range on the peg versus the dollar or peg the currency to a basket of currencies. The latter makes more sense to me but I am not the one to make the decision.
Despite the problem of rising inventories, the BLS reported that passenger car prices decreased 0.9% in February, the most since July, following an increase of 1.2%. Costs of light trucks dropped 2.8%, the biggest decline since a 4% slump in April 2003.
It should be noted that there is one reason inflation is not higher. The largest percentage of business costs rest with expenses for labor. For several years, the increase in labor costs has trailed the rate of inflation.
Richard Wills, CEO of Tektronix: “We have to continue to add more value to our products so that we can have the same price scenario that we have today.”
The Society for Human Resource Management (SHRM) and the School of Management and Labor Relations at Rutgers University combine to provide the SHRM/Rutgers LINE that identifies early economic trends and growth in the national job market by surveying HR professionals at manufacturing firms. According to new numbers from the Leading Indicator of National Employment (LINE), an increased number of new vacant positions exist in the manufacturing sector. While there was a dip in employment numbers from February to March, the outlook remains positive because of an increase in vacant positions and the hiring outlook for April appears strong in the manufacturing sector.
Pfizer will hold a meeting with security analysts on April 5th. Management will discuss cost-cutting strategies as well as recent developments in their pill to halt smoking, an inhaled insulin system, and a cholesterol drug. Meanwhile, yesterday, the company announced its plans to end production at its plant 25 miles southwest of Grand Rapids, Mich. The facility has 328 employees.
Covergys Corp. will close a call center in Fort Pierce, Florida and layoff 200 employees. UBE, a unit of UBE Machinery Corp. Ltd. of Japan, plans to close its plant in Mason, Ohio and layoff all 310 workers. This plant has experienced long labor disputes. It produces aluminum wheels for the auto industry.
German business confidence fell to an 18-month low in March.
Higher interest rates helped reduce volumes of mortgage applications by 9.5 percent in the week ended March 18 compared to the prior week, the Mortgage Bankers Association said. On a seasonally adjusted basis, applications to purchase homes dropped by 3.5 percent, while refinancings fell 16.5 percent. Compared to this time last year, refinancing applications are running more than 60 percent lower, MBA senior director Michael Fratantoni said.
There were many stories yesterday. The BLS reported that, in the past year, the PPI rose 4.7%, the core PPI increased 2.8%, the fastest advance in more than 9 years, and the finished consumer foods index climbed 4.9%. For the 12 months ended February 2005, prices for intermediate goods increased 8.4%, and the crude goods index rose 8.1%. By contrast, subsequent to a 0.6% gain in January, the index for capital equipment decreased 0.2% in February. Prices for materials for durable manufacturing moved up 0.9% in February, compared with a 1.8% gain in the preceding month. The index for materials for nondurable manufacturing rose 0.2% in February, after climbing 0.6% in the prior month. Additionally, the PPI for crude materials for further processing declined 1.6% in February, following a 2% fall in January, and the crude foodstuffs and feedstuffs index declined 3.2% in February, after advancing 1.9% in January. Interestingly, the U.S. economy is dominated by service industries. The BLS reported that among service industries in February, prices received by commercial bankers, lawyers, savings institutions, cellular and other wireless carriers, and courier services turned down in February following increases in the preceding month. Prices received by real estate agents and brokers were unchanged, after advancing in January.
I have provided a highlight of the BLS report. What do all these statistics show us? They show me that the Fed is comprised of either very stupid people or people who go around the country telling lies. Up until yesterday, Fed Governors took turns expounding on how inflation was well contained. All you had to do was look at the CRB or the Goldman Sachs Commodity Index to see that many commodities were making all-time highs, and not just crude oil. Yesterday, out of the blue, the FOMC changed their tune and stated “though longer-term inflation expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident. The rise in energy prices, however, has not notably fed through to core consumer prices.” Obviously, the FOMC members don’t drive or fly. If one had any doubts or reservations, yesterday cemented the loss of integrity at the FOMC.
The fallout from the FOMC meeting was not pretty. The Dow closed down 94 points and below the 10,500 level. The Nasdaq dropped 18 points and closed below 2000. The S&P declined over 1%. Most importantly, 10-year Treasury bond yields jumped to 4.65%, the highest level since July 28, 2004. Of course, this means mortgage rates will climb dramatically this week.
While the FOMC expressed a concern with inflation, the CRB declined and crude dropped about $2 a barrel and is approaching $55 a barrel. Platinum, silver, heating oil, and copper also declined. As a generalization, I believe we have experienced the worst of inflation. As such, as I have previously mentioned, I would cut back on commodity holdings--- especially energy, copper, and aluminum stocks. Below $6.40 for silver and below $406 for gold, I would look to add to those holdings. Why? It’s something I read in a piece by Roach of Morgan Stanley. He quoted China’s Premier Wen Jiabao. The latter stated “I cannot sleep well at night with this issue of the RMB (the yuan).” That spoke volumes to me. There is an old saying on Wall Street “to sell to the sleeping point.” Jiabao’s remark tells me that China will soon revalue its currency and widen the range on the peg versus the dollar or peg the currency to a basket of currencies. The latter makes more sense to me but I am not the one to make the decision.
Despite the problem of rising inventories, the BLS reported that passenger car prices decreased 0.9% in February, the most since July, following an increase of 1.2%. Costs of light trucks dropped 2.8%, the biggest decline since a 4% slump in April 2003.
It should be noted that there is one reason inflation is not higher. The largest percentage of business costs rest with expenses for labor. For several years, the increase in labor costs has trailed the rate of inflation.
Richard Wills, CEO of Tektronix: “We have to continue to add more value to our products so that we can have the same price scenario that we have today.”
The Society for Human Resource Management (SHRM) and the School of Management and Labor Relations at Rutgers University combine to provide the SHRM/Rutgers LINE that identifies early economic trends and growth in the national job market by surveying HR professionals at manufacturing firms. According to new numbers from the Leading Indicator of National Employment (LINE), an increased number of new vacant positions exist in the manufacturing sector. While there was a dip in employment numbers from February to March, the outlook remains positive because of an increase in vacant positions and the hiring outlook for April appears strong in the manufacturing sector.
Pfizer will hold a meeting with security analysts on April 5th. Management will discuss cost-cutting strategies as well as recent developments in their pill to halt smoking, an inhaled insulin system, and a cholesterol drug. Meanwhile, yesterday, the company announced its plans to end production at its plant 25 miles southwest of Grand Rapids, Mich. The facility has 328 employees.
Covergys Corp. will close a call center in Fort Pierce, Florida and layoff 200 employees. UBE, a unit of UBE Machinery Corp. Ltd. of Japan, plans to close its plant in Mason, Ohio and layoff all 310 workers. This plant has experienced long labor disputes. It produces aluminum wheels for the auto industry.
German business confidence fell to an 18-month low in March.
Higher interest rates helped reduce volumes of mortgage applications by 9.5 percent in the week ended March 18 compared to the prior week, the Mortgage Bankers Association said. On a seasonally adjusted basis, applications to purchase homes dropped by 3.5 percent, while refinancings fell 16.5 percent. Compared to this time last year, refinancing applications are running more than 60 percent lower, MBA senior director Michael Fratantoni said.
Tuesday, March 22, 2005
Rising Interest Rates
3/22/05 Rising Interest Rates
As interest rates rise, dollar-denominated bonds lose value. The latter compounds the loss for those holding U.S. dollars over the past two plus years. It will be most interesting to view the reaction of the bond market today after the release of the PP and tomorrow after the CPI numbers are provided. It is well to remember that this is a holiday-shortened week with the bond market closing early Thursday and remaining closed the day after in observance of Good Friday. Meanwhile, interest rates on 3-month Treasury bills rose in Monday’s auction to a discount rate of 2.80%, the highest level in 3 ½ years.
German Proverb: “He who borrows sells his freedom.”
Over the weekend, I suggested taking some money off the table in commodities. Yesterday, gold dropped $8 an once. The next shoe to drop maybe the price of oil. The headline stories surround record gas prices of $2.10 a gallon at the pump. For many in California, the price is closer to $3 a gallon.
Some months back, China’s central bank raised interest rates. On Monday, Hong Kong’s prime rate was raised to 5.25%, up from 5%. This is significant. Over the first six interest rate increases announced by the Fed, Hong Kong rates remained unchanged. Both China’s and Hong Kong’s currencies have a fixed peg to our dollar.
William J.H. Boetcker: “You cannot establish security on borrowed money.”
Harley-Davidson’s market cap exceeds that of GM’s by $1 billion.
Oracle beat out SAP for Retek with the final price of $11.25 a share.
French consumer spending fell 1% in February, the largest decline in 7 months.
In February, insiders sold $70 of stock for each $1 purchased. That should serve as a warning call.
Another warning call is the growing sub-prime mortgage market that has tripled in size over the last 24 months. According to SourceMedia, sub-prime mortgage originations increased 56% in 2004 to $607 billion.
Northwest Airlines is grounding another 24 jets and cutting hundreds of jobs. Tenneco is laying off 128 employees in South Carolina. Elk Brand Manufacturing is closing its Cadiz, KY facility and laying off 89 workers. Alcoa just announced the layoff of 2,000 employees.
Lower than expected sales in both North America and Europe are the reason Electronic Arts expects to miss previously announced revenue and profit targets for its fiscal 2005 year that ends this month.
GE Capital has withdrawn a $2 billion loan facility for GM and its suppliers. However, the good news is that GM states it has $23 billion of cash and liquid securities in its industrial unit and another $9 billion remaining under its bank loan facilities. GM Acceptance has another $24 billion of cash and $64 billion of committed credit lines. On the other hand, the company has a total of $301 billion of secured and unsecured debt outstanding.
HP announced an interesting move yesterday with the acquisition of Snapfish. Based in San Francisco, Snapfish provides online photo service and claims to have more than 13 million registered members and is growing at a rate of more than 500,000 members per month. The company competes with Kodak’s Ofoto service.
Lennar, the homebuilder, raised its full-year earnings estimate to $7.15 per share, up from $6.90 previously stated. At $54.87, there don’t seem to be a great many believers in the company’s picture.
As interest rates rise, dollar-denominated bonds lose value. The latter compounds the loss for those holding U.S. dollars over the past two plus years. It will be most interesting to view the reaction of the bond market today after the release of the PP and tomorrow after the CPI numbers are provided. It is well to remember that this is a holiday-shortened week with the bond market closing early Thursday and remaining closed the day after in observance of Good Friday. Meanwhile, interest rates on 3-month Treasury bills rose in Monday’s auction to a discount rate of 2.80%, the highest level in 3 ½ years.
German Proverb: “He who borrows sells his freedom.”
Over the weekend, I suggested taking some money off the table in commodities. Yesterday, gold dropped $8 an once. The next shoe to drop maybe the price of oil. The headline stories surround record gas prices of $2.10 a gallon at the pump. For many in California, the price is closer to $3 a gallon.
Some months back, China’s central bank raised interest rates. On Monday, Hong Kong’s prime rate was raised to 5.25%, up from 5%. This is significant. Over the first six interest rate increases announced by the Fed, Hong Kong rates remained unchanged. Both China’s and Hong Kong’s currencies have a fixed peg to our dollar.
William J.H. Boetcker: “You cannot establish security on borrowed money.”
Harley-Davidson’s market cap exceeds that of GM’s by $1 billion.
Oracle beat out SAP for Retek with the final price of $11.25 a share.
French consumer spending fell 1% in February, the largest decline in 7 months.
In February, insiders sold $70 of stock for each $1 purchased. That should serve as a warning call.
Another warning call is the growing sub-prime mortgage market that has tripled in size over the last 24 months. According to SourceMedia, sub-prime mortgage originations increased 56% in 2004 to $607 billion.
Northwest Airlines is grounding another 24 jets and cutting hundreds of jobs. Tenneco is laying off 128 employees in South Carolina. Elk Brand Manufacturing is closing its Cadiz, KY facility and laying off 89 workers. Alcoa just announced the layoff of 2,000 employees.
Lower than expected sales in both North America and Europe are the reason Electronic Arts expects to miss previously announced revenue and profit targets for its fiscal 2005 year that ends this month.
GE Capital has withdrawn a $2 billion loan facility for GM and its suppliers. However, the good news is that GM states it has $23 billion of cash and liquid securities in its industrial unit and another $9 billion remaining under its bank loan facilities. GM Acceptance has another $24 billion of cash and $64 billion of committed credit lines. On the other hand, the company has a total of $301 billion of secured and unsecured debt outstanding.
HP announced an interesting move yesterday with the acquisition of Snapfish. Based in San Francisco, Snapfish provides online photo service and claims to have more than 13 million registered members and is growing at a rate of more than 500,000 members per month. The company competes with Kodak’s Ofoto service.
Lennar, the homebuilder, raised its full-year earnings estimate to $7.15 per share, up from $6.90 previously stated. At $54.87, there don’t seem to be a great many believers in the company’s picture.
Monday, March 21, 2005
It Can Happen
3/21/05 It Can Happen
Yesterday was Palm Sunday. For most of the world's locations, the day started and ended in a normal fashion. Of course, there are usually exceptions, and Japan experienced a 7.0 earthquake. San Francisco was treated with a visit by Dick Cheney, and this alone might have explained an unheard of occurrence. South San Francisco was greeted with a "probable tornado." A twister by the Bay at 3:40pm. At least 40 buildings were damaged but no one was seriously hurt. It touched down an estimated six times accompanied by 3 miles of wild swirling winds. South San Francisco Battalion Chief Tom Azzopardi stated "it is something. Here we are paying Bay Area prices for Kansas weather." A meteorologist with the National Weather Service in Monterey explained the happening was caused by "an unstable atmosphere combined with upper level energy." Funnel clouds occur about once or twice a year in San Francisco. No one I spoke with can remember ever seeing a tornado in this city by the bay. The unheard of can happen---especially when the atmosphere is unstable. Do you think the economic atmosphere is unstable in the U.S.? If not, then you have no worries.
The dollar rose to a two-week high against the euro after Hong Kong Monetary Authority Chief Executive Joseph Yam suggested Asian central banks shouldn't rush to boost euro holdings at the expense of the U.S. currency. Mr. Yam has no worries.
GM has worries. The WSJ reports the company will cut salaried staff. That's like a funnel cloud. You don't think there will be more plant closings and more layoffs and fighting with the unions over health care costs?
Barry Diller's IAC/Interactive is near agreement to acquire Ask Jeeves for $1.9 billion. In addition, they are launching a web service called gifts.com.
Warren Buffett: "I'd be a bum on a street with a tin cup if the markets were efficient."
The Fed will give you a nice sleeping pill this week. While raising rates for the seventh straight time, they will tell you inflation is well contained, that there is remaining slack in the economy, and GDP growth can expected to grow between 3.5% and 4% in 2005. In reality, inflation is increasing at rates not seen over the last two years while twin tower deficits rise to record levels. Does this make for an unstable economic atmosphere?
Yesterday was Palm Sunday. For most of the world's locations, the day started and ended in a normal fashion. Of course, there are usually exceptions, and Japan experienced a 7.0 earthquake. San Francisco was treated with a visit by Dick Cheney, and this alone might have explained an unheard of occurrence. South San Francisco was greeted with a "probable tornado." A twister by the Bay at 3:40pm. At least 40 buildings were damaged but no one was seriously hurt. It touched down an estimated six times accompanied by 3 miles of wild swirling winds. South San Francisco Battalion Chief Tom Azzopardi stated "it is something. Here we are paying Bay Area prices for Kansas weather." A meteorologist with the National Weather Service in Monterey explained the happening was caused by "an unstable atmosphere combined with upper level energy." Funnel clouds occur about once or twice a year in San Francisco. No one I spoke with can remember ever seeing a tornado in this city by the bay. The unheard of can happen---especially when the atmosphere is unstable. Do you think the economic atmosphere is unstable in the U.S.? If not, then you have no worries.
The dollar rose to a two-week high against the euro after Hong Kong Monetary Authority Chief Executive Joseph Yam suggested Asian central banks shouldn't rush to boost euro holdings at the expense of the U.S. currency. Mr. Yam has no worries.
GM has worries. The WSJ reports the company will cut salaried staff. That's like a funnel cloud. You don't think there will be more plant closings and more layoffs and fighting with the unions over health care costs?
Barry Diller's IAC/Interactive is near agreement to acquire Ask Jeeves for $1.9 billion. In addition, they are launching a web service called gifts.com.
Warren Buffett: "I'd be a bum on a street with a tin cup if the markets were efficient."
The Fed will give you a nice sleeping pill this week. While raising rates for the seventh straight time, they will tell you inflation is well contained, that there is remaining slack in the economy, and GDP growth can expected to grow between 3.5% and 4% in 2005. In reality, inflation is increasing at rates not seen over the last two years while twin tower deficits rise to record levels. Does this make for an unstable economic atmosphere?
Sunday, March 20, 2005
Inflation
3/20/05 Inflation
According to the BLS, overall import prices jumped for the second consecutive month in February, led again by rising petroleum prices. After declining 16.8 percent over the final two months of 2004, petroleum prices have resumed a nearly two-year upward trend, rising 3.9 percent in February and 3.4 percent in January.Import petroleum prices were up 29.6 percent for the year ended in February.In addition, nonpetroleum import prices increased for the fourth consecutivemonth, rising 0.2 percent in February after increasing 1.6 percent over thethree previous months. Over the past year, prices of nonpetroleum imports rose 2.9 percent, while overall import prices advanced 6.1 percent. Higher prices for foods, feeds, and beverages; for consumer goods; and for nonpetroleum industrial supplies and materials contributed to theFebruary increase in nonpetroleum prices. The price index for foods, feeds,and beverages advanced 1.3 percent in February and 7.3 percent over the past 12 months. Consumer goods prices rose for the fifth consecutive month, rising 0.2 percent in February after increasing 0.5 percent in January. Prices for nonpetroleum industrial supplies and materials rose 0.3 percent for the second consecutive month. The increases continued the upward trend for the index over the past two years, albeit at a slower rate than that recorded over most of that period. The index advanced 11.3 percent for theyear ended in February. In contrast, the price indexes for capital goods and for automotivevehicles were both unchanged in February. Capital goods prices had been up in each of the previous three months, rising 0.8 percent over that period, the largest three-month change in almost ten years. Despite those increases, capital goods prices decreased 0.6 percent over the past 12 months. Automotive vehicle prices rose 1.5 percent over the same period.
Edith Sitwell: "The public will believe anything, so long as it is not founded on truth."
In yesterday's radio address to the nation, Bush stated "on this day two years ago, we launched Operation Iraqi Freedom to disarm a brutal regime, free its people, and defend the world from a grave danger." The gravest danger for a democracy is for its leader to depart from the truth. Bush never mentioned WMD. Edith Sitwell knew of what she was speaking.
Joseph Goebbels: "If you tell a lie big enough and keep repeating it, people will eventually come to believe it."
This week's focus will be on the Fed raising rates and on the language following its meeting. One might consider slight of hand artistry. The real news is the contraction in money supply rate of change and its impact on the dollar and the economy in the months to come.
Michigan Sugar Co, a cooperative owned by 1,300 growers, is Saginaw County's (Michigan) 20th top employer. Soon, their sugar processing plant will cease operations and the company will layoff 65 full-time employees and another 100 seasonal workers. Under the new sugar legislation, room is being made for imports. Domestic producers are no longer able to run at full capacity because overall domestic demand is not large enough to accomodate maximum production in the U.S. as well as the supply from foreign sources. There will be more sugar plants closing in the future and more layoffs. Local communities will feel the pain. I know from experience that payments to employees and growers turn over 7 times. Aaddionally, in the case of Michigan Sugar, their $278,000 in tax payments to Saginaw County paid the salary for five county employees. The company stated it pumps nearly $300 million in direct economic activity in the communities in which it operates.
Demosthenes: "There is one safeguard known generally to the wise, which is an advantage and security to all, but especially to democracies as against despots. What is it? Distrust."
According to the BLS, overall import prices jumped for the second consecutive month in February, led again by rising petroleum prices. After declining 16.8 percent over the final two months of 2004, petroleum prices have resumed a nearly two-year upward trend, rising 3.9 percent in February and 3.4 percent in January.Import petroleum prices were up 29.6 percent for the year ended in February.In addition, nonpetroleum import prices increased for the fourth consecutivemonth, rising 0.2 percent in February after increasing 1.6 percent over thethree previous months. Over the past year, prices of nonpetroleum imports rose 2.9 percent, while overall import prices advanced 6.1 percent. Higher prices for foods, feeds, and beverages; for consumer goods; and for nonpetroleum industrial supplies and materials contributed to theFebruary increase in nonpetroleum prices. The price index for foods, feeds,and beverages advanced 1.3 percent in February and 7.3 percent over the past 12 months. Consumer goods prices rose for the fifth consecutive month, rising 0.2 percent in February after increasing 0.5 percent in January. Prices for nonpetroleum industrial supplies and materials rose 0.3 percent for the second consecutive month. The increases continued the upward trend for the index over the past two years, albeit at a slower rate than that recorded over most of that period. The index advanced 11.3 percent for theyear ended in February. In contrast, the price indexes for capital goods and for automotivevehicles were both unchanged in February. Capital goods prices had been up in each of the previous three months, rising 0.8 percent over that period, the largest three-month change in almost ten years. Despite those increases, capital goods prices decreased 0.6 percent over the past 12 months. Automotive vehicle prices rose 1.5 percent over the same period.
Edith Sitwell: "The public will believe anything, so long as it is not founded on truth."
In yesterday's radio address to the nation, Bush stated "on this day two years ago, we launched Operation Iraqi Freedom to disarm a brutal regime, free its people, and defend the world from a grave danger." The gravest danger for a democracy is for its leader to depart from the truth. Bush never mentioned WMD. Edith Sitwell knew of what she was speaking.
Joseph Goebbels: "If you tell a lie big enough and keep repeating it, people will eventually come to believe it."
This week's focus will be on the Fed raising rates and on the language following its meeting. One might consider slight of hand artistry. The real news is the contraction in money supply rate of change and its impact on the dollar and the economy in the months to come.
Michigan Sugar Co, a cooperative owned by 1,300 growers, is Saginaw County's (Michigan) 20th top employer. Soon, their sugar processing plant will cease operations and the company will layoff 65 full-time employees and another 100 seasonal workers. Under the new sugar legislation, room is being made for imports. Domestic producers are no longer able to run at full capacity because overall domestic demand is not large enough to accomodate maximum production in the U.S. as well as the supply from foreign sources. There will be more sugar plants closing in the future and more layoffs. Local communities will feel the pain. I know from experience that payments to employees and growers turn over 7 times. Aaddionally, in the case of Michigan Sugar, their $278,000 in tax payments to Saginaw County paid the salary for five county employees. The company stated it pumps nearly $300 million in direct economic activity in the communities in which it operates.
Demosthenes: "There is one safeguard known generally to the wise, which is an advantage and security to all, but especially to democracies as against despots. What is it? Distrust."
Saturday, March 19, 2005
Sentiment
3/19/05 Sentiment
We are approaching a change in the seasons. We are approaching the second anniversary of our invasion of Iraq. We are approaching a lull between the peak heating oil period and the peak driving season. There are only 9 trading days left in the first quarter, and then we arrive in April. The period between April and October are often disappointing for stock returns. Not surprisingly, sentiment frequently turns more negative. Interestingly, February marked the third consecutive month for declining consumer confidence. Despite rising net worth resulting from escalating real estate values, record gas prices at the pump have hastened consumer worries and a loss of confidence. As a contrarian, this may prove a good time to take some money off the table in your energy stocks. The price of crude is up about 30% this year, and the head of the IMF stated we will face high oil prices for the next two years. I would not want to follow in the mental footsteps of the IMF.
Following the money trail has been an adventure in 2005. Surprisingly, year-to-date, M3 has only expanded at a 2% rate. On the other hand, bank credit has expanded at a 19.4% rate and real estate loans by 19% year-to-date. The Goldman Sachs Commodity Index continues to expand off the chart as it's up 24.1% year-to-date. This type of increase is unsustainable, and is one more reason to take some money off the commodity table.
In a new Harris Poll, a 58% to 35% majority disapproves of the president's position on Social Security.
India's government proposed on Friday to change the country's patent laws to make it illegal to copy patented drugs. The existing patent law has allowed drug makers to copy patented drugs as long as they use a different process. India is the fourth largest producer of medicines by volume in the world.
Yesterday, Palatin Technologies and King Pharmaceuticals announced positive results from a clinical study evaluating the effect of co-administration of intranasal PY-141 and Viagra in patients with erectile dysfunction. On average, erectile activity duration was increased by a factor of 5.3, which is statistically significant. The mechanism of action of PT-141 may offer important benefits over currently available products for the treatment of erectile dysfunction because it appears to act on the pathway that controls sexual function without acting directly on the vascular system.
We are approaching a change in the seasons. We are approaching the second anniversary of our invasion of Iraq. We are approaching a lull between the peak heating oil period and the peak driving season. There are only 9 trading days left in the first quarter, and then we arrive in April. The period between April and October are often disappointing for stock returns. Not surprisingly, sentiment frequently turns more negative. Interestingly, February marked the third consecutive month for declining consumer confidence. Despite rising net worth resulting from escalating real estate values, record gas prices at the pump have hastened consumer worries and a loss of confidence. As a contrarian, this may prove a good time to take some money off the table in your energy stocks. The price of crude is up about 30% this year, and the head of the IMF stated we will face high oil prices for the next two years. I would not want to follow in the mental footsteps of the IMF.
Following the money trail has been an adventure in 2005. Surprisingly, year-to-date, M3 has only expanded at a 2% rate. On the other hand, bank credit has expanded at a 19.4% rate and real estate loans by 19% year-to-date. The Goldman Sachs Commodity Index continues to expand off the chart as it's up 24.1% year-to-date. This type of increase is unsustainable, and is one more reason to take some money off the commodity table.
In a new Harris Poll, a 58% to 35% majority disapproves of the president's position on Social Security.
India's government proposed on Friday to change the country's patent laws to make it illegal to copy patented drugs. The existing patent law has allowed drug makers to copy patented drugs as long as they use a different process. India is the fourth largest producer of medicines by volume in the world.
Yesterday, Palatin Technologies and King Pharmaceuticals announced positive results from a clinical study evaluating the effect of co-administration of intranasal PY-141 and Viagra in patients with erectile dysfunction. On average, erectile activity duration was increased by a factor of 5.3, which is statistically significant. The mechanism of action of PT-141 may offer important benefits over currently available products for the treatment of erectile dysfunction because it appears to act on the pathway that controls sexual function without acting directly on the vascular system.
Friday, March 18, 2005
Say It Isn't So
3/18/05 Say It Isn't So
Last month's U.S. import prices rose 6.1% year-over-year with oil import prices up 0.8%. Meanwhile, our export prices were flat. That doesn't make for good news on company margins.
Yesterday, gas prices at the pump reached a new all-time high with a national average of $2.055 a gallon.
Last year, China's imports of crude grew by 34.8% over the year ago period. They get 50% of their crude supplies from the Middle East, while the U.S. gets but 10%.
Due to a deceleration of wireless sales, RadioShack warned that 1st quarter earnings would be 30-34 cents and not 39-41. In addition, they stated full year results would trail previous estimates.
Oracle raised their offer for Retek to $11.25, and topped SAP's $11 bid. Multiple offers and bidding wars remind me of the real estate market in the Bay Area and Malibu.
According to SEMI, the February 2005 Book-To-Bill Report Ratio was 0.78 or $78 worth of orders were received for every $100 of product billed for the month. The senior director of SEMI remarked that "current three-month average bookings are at a level observed in late 2003. Given the 300-mm investment and ramp underway worldwide, the expectation remains for a much more moderated equipment cycle in 2005 compared to the 2001/2002 time frame."
Aftertax corporate profits as a percentage of GDP equated to 7.92% in 2004. The last time this percentage was exceeded was in 1929. With rising inflation, one can expect this percentage to drop closer to the norm, which is between 4% and 6.5%. As corporate profit margins decline, so should P/E ratios, and therefore, stock prices. Just be patient. They don't ring a bell.
China's central bank raised the interest rate on mortgages and encouraged down payments equal to 30% of the purchase price, instead of 20%. China's real estate prices rose close to 11% in the fourth quarter of last year.
The Senate voted to eliminate all Medicaid cuts from the proposed 2006 fiscal budget.
Health care costs amount to $1,400 per vehicle at GM and at least $1,000 per vehicle at Ford.
In a new study by the UCLA Anderson Forecast team, it was revealed that half of the private-sector jobs created in California in the last two years are connected in some way to real estate. Meanwhile, property values in the last four years have swelled $1.7 trillion, the equivalent of about 35% of the total personal income in the state since 2001. California had better pray the real estate bubble does not burst. Incredibly, there are 423,000 licensed real estate agents and brokers in the state now, up 25% from 2003. The number represents 2% of all working-age Californians.
The Philly Fed Index fell to a 20-month low of 11.4 in March from 23.9 in February. Economists were expecting 19.9.
The Dallas Morning News reported that $640 billion has been cashed out from homes. That's one active ATM.
During the six-month span through February, the Conference Board's Index of Leading Economic Indicators decreased 0.1%.
Total public debt in the U.S. in 1984 was just short of $1.7 trillion. Currently, it is $7.7 trillion. If this 20-year growth rate were for a high-tech company, the P/E ratio would probably be off the charts.
Section 13301 of the Budget Enforcement Act of 1990 (The Fritz Hollings Amendment) prohibits commingly Social Security funds with general revenue funds.
Last month's U.S. import prices rose 6.1% year-over-year with oil import prices up 0.8%. Meanwhile, our export prices were flat. That doesn't make for good news on company margins.
Yesterday, gas prices at the pump reached a new all-time high with a national average of $2.055 a gallon.
Last year, China's imports of crude grew by 34.8% over the year ago period. They get 50% of their crude supplies from the Middle East, while the U.S. gets but 10%.
Due to a deceleration of wireless sales, RadioShack warned that 1st quarter earnings would be 30-34 cents and not 39-41. In addition, they stated full year results would trail previous estimates.
Oracle raised their offer for Retek to $11.25, and topped SAP's $11 bid. Multiple offers and bidding wars remind me of the real estate market in the Bay Area and Malibu.
According to SEMI, the February 2005 Book-To-Bill Report Ratio was 0.78 or $78 worth of orders were received for every $100 of product billed for the month. The senior director of SEMI remarked that "current three-month average bookings are at a level observed in late 2003. Given the 300-mm investment and ramp underway worldwide, the expectation remains for a much more moderated equipment cycle in 2005 compared to the 2001/2002 time frame."
Aftertax corporate profits as a percentage of GDP equated to 7.92% in 2004. The last time this percentage was exceeded was in 1929. With rising inflation, one can expect this percentage to drop closer to the norm, which is between 4% and 6.5%. As corporate profit margins decline, so should P/E ratios, and therefore, stock prices. Just be patient. They don't ring a bell.
China's central bank raised the interest rate on mortgages and encouraged down payments equal to 30% of the purchase price, instead of 20%. China's real estate prices rose close to 11% in the fourth quarter of last year.
The Senate voted to eliminate all Medicaid cuts from the proposed 2006 fiscal budget.
Health care costs amount to $1,400 per vehicle at GM and at least $1,000 per vehicle at Ford.
In a new study by the UCLA Anderson Forecast team, it was revealed that half of the private-sector jobs created in California in the last two years are connected in some way to real estate. Meanwhile, property values in the last four years have swelled $1.7 trillion, the equivalent of about 35% of the total personal income in the state since 2001. California had better pray the real estate bubble does not burst. Incredibly, there are 423,000 licensed real estate agents and brokers in the state now, up 25% from 2003. The number represents 2% of all working-age Californians.
The Philly Fed Index fell to a 20-month low of 11.4 in March from 23.9 in February. Economists were expecting 19.9.
The Dallas Morning News reported that $640 billion has been cashed out from homes. That's one active ATM.
During the six-month span through February, the Conference Board's Index of Leading Economic Indicators decreased 0.1%.
Total public debt in the U.S. in 1984 was just short of $1.7 trillion. Currently, it is $7.7 trillion. If this 20-year growth rate were for a high-tech company, the P/E ratio would probably be off the charts.
Section 13301 of the Budget Enforcement Act of 1990 (The Fritz Hollings Amendment) prohibits commingly Social Security funds with general revenue funds.
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