Today the Census Bureau released its report on incomes, poverty and health insurance coverage for 2008. Most of it was (not surprisingly) bad news. Here are some of the highlights (lowlights?): The U.S. Census Bureau announced today that real median household income in the United States fell 3.6 percent between 2007 and 2008, from $52,163 to $50,303. The nation’s official poverty rate in 2008 was 13.2 percent, up from 12.5 percent in 2007. There were 39.8 million people in poverty in 2008, up from 37.3 million in 2007. The number of people without health insurance coverage rose from 45.7 million in 2007 to 46.3 million in 2008, In 2008, the earnings of women who worked full time, year-round was 77 percent of that for corresponding men, not statistically different from the 2007 ratio. The ...

The trade deficit in July came in at $32.0 billion -- a significant increase from the $27.5 billion in June. The consensus expectation was that it would be close to unchanged. Since the trade deficit is a direct input into GDP (net exports), this will moderately reduce the expected growth rate for the third quarter. There was, however, some good news in the report: both imports and exports rose, imports just rose faster. Trade now seems to be in a sustainable uptrend, after falling off a cliff in the second half of last year and then stabilizing in the spring. This can be seen in the first graph below (from http://www.calculatedriskblog.com/). A year ago, the trade deficit peaked at $64.9 billion on much higher levels of both imports and exports. The world-wide slowdown has dropped our exports by 22.4% from $164.4 billion to $127.6 billion this year, ...

Key Points:

Growth Second-quarter total net income down 31.0% year-over-year Third quarter expected to be down 22.9% year-over-year Fourth quarter to more than double a year ago, but it is all in the Financials Health Care only sector to post positive growth in second quarter Only 32.4% of companies posted earnings growth last quarter; 25.0% post sales growth year-over-year

Surprise Results much stronger than feared; median surprise was 6.7% Positive surprises lead disappointments by 3.4:1 margin (surprise ratio) Surprise ratio above 8:1 for Health Care and above 4:1 for Tech, Staples and Discretionary Margins the cause, not revenue growth 71.2% of firms beat on earnings; 45.9% beat sales estimates

Levels Bottom-up estimate for S&P 500 now $60.97 in 2009 versus $60.60 last week. S&P 500 now expected to earn $75.09 in 2010 versus $74.90 last week Top down estimates $52.94 and $67.09, respectively

Revisions Total estimate increases outnumber cuts by than 7:4 for 2009 Upward revisions outnumber cuts by more than 3:2 for 2010 Revisions ratios

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Sometimes in investing there is a tendency to over think things, to get bogged down in the details, to lose the forest through a close study of the trees. It is not that such matters are irrelevant, but that if you get the big major questions right you will be most of the way there. Unfortunately, most investors tend to avoid even asking the big really important questions, or at least don't act on them. The big questions really tend to boil down to what sectors you should be investing in. Yet, many investors simply rely on indexing instead. Even worse, those that do not explicitly index often invest in mutual funds that "closet index". Investment managers will do that because there is a big premium put on not being too far away from the "bogey", usually the S&P 500. Sure, it's great if they are ...

Raise High the Roofbeam, Carpenter! More good news on the housing front: new home sales jumped 9.6% in July to a seasonally adjusted annual rate of 433,000. In addition, June sales were revised up from 384,000 to 395,000. The jump in sales brought down inventories to 271,000 from 280,000 in June. This brought the months supply metric down to 7.5 months, a full month less than in June, and well below the 10.1 months of a year ago, when inventories stood at 419,000. That is a 35.4% year-over-year drop, far exceeding the 13.4% decline in sales from a year ago. We are now almost down to a normal months supply, which is around six months, although during the boom years it was consistently around four months. Homebuilders like D.R. Horton (DHI) and Ryland (RYL) will be able to pick up the pace of housing ...

The Conference Board's Consumer Confidence index soared to 54.1 in August, up from 47.4 (upwardly revised from 46.6) and blowing away expectations of just a slight increase to 47.5. However, while improving, it still remains very low; 90 is about normal. On the other hand, it sure beats the record low 25.3 set back in February. Since the Consumer represents over 70% of the economy, this is very good news indeed -- especially coupled with the better news on housing prices we got today. The total index has two major components: the present situation and expectations for the future.  The big imporvement came on the expectations side, where that sub-index rose to 73.5 from 63.5. The increase in the present situation was more muted, and remains well below the expectations index at 24.9 up from 23.3 in July. The difference between the present situation and the expectations components ...

Key Points:

Growth

Second-quarter total net income down 31.0% year-over-year Third quarter expected to be down 27.5% year-over-year Staples and Health Care only sectors to post positive growth in second quarter Only 30.9% of companies posted earnings growth; 23.7% posted sales growth year-over-year

Surprise

Results much stronger than feared with median surprise of 6.7% Positive surprises lead disappointments by 3.4:1 margin (surprise ratio) Surprise ratio above 8:1 for Health Care and above 4:1 for Tech, Staples and Discretionary Margins the cause, not revenue growth 71.2% of firms beat on earnings: 45.9% beat sales estimates

Levels

Bottom-up estimate for S&P 500 now $60.60 in 2009 versus $60.41 last week. S&P 500 now expected to earn $74.90 in 2010 versus $74.74 last week Top down estimates $53.84 and $67.44, respectively

Revisions

Total estimate increases outnumber cuts by more than 5:3 for 2009 Upward revisions outnumber cuts by more than 4:3 for 2010 Revisions ratios for both years have risen consistently through earnings season For

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