Stock Market News & Stocks to Watch from StraightStocks » Christmas

Gold on Your Gift List

Frank Holmes — Thu, 19 Nov 2009 06:00:00 +0000

While the Indian government buys its gold in the hundred of tons, a growing number of people around the world are buying by the ounce. For years Irsquo;ve been saying on TV and elsewhere that one-ounce coins like the American Eagle and the Canadian Maple Leaf make excellent gifts that the recipients will always remember and treasure. The same goes for 24-karat gold jewelry. The U.S. Mint seems to be thinking the same thing ndash; it plans to restart the sale of half-ounce, quarter-ounce and one-tenth-ounce gold coins on December 3, just in time for Christmas gift-giving. Last year, the Mint ran out. Coin sales have been impressive this year ndash; the Mint has sold more than 1.1 million of the one-ounce American Eagles and 140,000 American Buffalo coins, also one ounce. In Britain, the Royal Mint quadrupled its gold-coin output in the third quarter of 2009 to meet demand. The World Gold Council says gold demand overall was up 10 percent in the third quarter of 2009 compared to the second quarter. The council says jewelry demand was up 17 percent to 473 metric tons, and that 81 tons worth of gold bars were purchased, up 30 percent from the previous quarter. Even at the current record prices, gold in the form of coins and jewelry may prove to be gifts of good value. If someone offered to sell you a one-ounce gold coin for $50, would you buy it? It may seem like a silly question, but apparently not everyone would make that deal. Watch this humorous video to see. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. #09-816

What could be worse than a housing bust?

Contrarian Profits — Fri, 13 Nov 2009 13:18:09 +0000

pIf You Thought the Housing Meltdown Was Bad…br / Doug Hornig, Senior Editor, (a href="http://www.caseyresearch.com/crpmkt/crpSolo.php?id=168#038;ppref=CTP168ED1109A"Casey Research/a):/p p…wait until you see what’s in the cards for commercial real estate./p pThat’s right, the next train wreck will be in commercial real estate. Couldn’t be worse than last year’s residential market crash? That remains to be seen. But it’s coming soon, probably as early as the second quarter of next year, and there’s nothing that can prevent it. The government will intervene, trying desperately to delay the day of reckoning, and may even succeed. For a while. But make no mistake about it, that train is going off the tracks no matter what./p pEvery part of the sector – from multifamily apartment buildings to retail shopping centers, suburban office#8230;/p

Zacks Bull and Bear of the Day Highlights: Expedia Inc., Triumph Group, Inc., Target, TJ Maxx/Marshall’s and Abercrombie & Fitch – Press Releases

Zacks Market Commentaries — Fri, 13 Nov 2009 13:00:41 +0000

For Immediate Release

Chicago, IL – November 13, 2009 – Zacks Equity Research highlights Expedia Inc. (EXPE) as the Bull of the Day and Triumph Group, Inc. (TGI) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Target (TGT), TJ Maxx/Marshall’s (TJX) and Abercrombie & Fitch (ANF).

Full analysis of all these stocks is available at http://at.zacks.com/?id=5506

Here is a synopsis of all five stocks:

Bull of the Day:

Expedia Inc. (EXPE) is one of the leading online travel companies in the world. The company reported strong results in the last quarter, beating the Zacks Consensus Estimate. Promotional activity continues to have a positive impact on the conversion rate, and spending is expected to strengthen in the next few quarters.

We are also positive about international initiatives, which we think will be the key to future growth. Cost management, a favorable online advertising environment and solid financials are other encouraging factors.

By comparison, the possibility of increased occupancy taxes and low growth in Egencia (the smallest segment) seem less significant. However, the declining average daily rates could be something to watch. We are reiterating our Outperform rating on EXPE shares.

Bear of the Day:

We maintain our Underperform rating on Triumph Group, Inc. (TGI) based on the belief that there will be no significant recovery in the delivery of new commercial aircraft in the medium term. A weak commercial OEM market is likely to continue for the coming months.

Huge dependence on government spending as well as on Boeing, its largest customer, is also discouraging. Intense competition in the aerospace is likely to have an adverse impact on the company.

The company's strategy to grow through acquisition involves risks that could adversely affect the operating results, including difficulties in integrating its recently acquired business.

Initial Jobless Claims Fall Again – Analyst Blog

Dirk Van Dijk — Thu, 12 Nov 2009 17:24:40 +0000

Initial claims for unemployment insurance (or jobless claims) fell to 502,000 last week -- a drop of 12,000 from last week's revised level (and 10,000 from last week’s unrevised level). That brought the four-week moving average down to 519,750 -- a decline of 4,500 from last week, and of 139,000 from its mid-April peak. That was the lowest level of initial claims since the first week of January (when the numbers were distorted due to the New Years Holiday).

As the chart below (from http://www.calculatedriskblog.com/) shows, that was probably the high point for this cycle. The decline has been quite smooth and steady -- unlike the experience of the last two economic downturns, where after an initial decline, claims leveled off and remained high for an extended period of time.

The fact that we are back to around the same levels we were in January points to the danger of doing a straight extrapolation from the level of initial claims to job losses in the overall economy. Back then we were dropping jobs at a rate of over 700,000 per month, now we are losing jobs at less than 200,000 per month. If history is much of a guide, we will not be adding jobs until we see in four-week average drop below 400,000 or so.

Still, things age going in the right direction, and at a reasonable pace. The problem is that it is still a long journey from where we are to where we need to go. If initial jobless claims were to continue to fall at the pace they have been (after revisions) for the last two months, we would get below that 400,000 around the Christmas holidays. That would indeed make it a Happy New Year.

However, even if we get to the point where the economy is adding jobs, we still have population growth to contend with. Due to the growth of the population, we need to be adding about 100,000 jobs a month just to keep the unemployment rate stable, let alone bring it down significantly. That is a tall order.

There was also some good news on the Continuing Claims front as they dropped by 139,000 to 5.631 million. That is 1.27 million below the peak set at the end of June of 6.904 million. However, that decline has to be taken with a grain of salt since continuing claims only tracks those in regular state unemployment programs, which run out after 26 weeks.

With the average duration of unemployment at 26.9 weeks, and the median at 18.7 weeks (both all-time records by a very long shot versus other recessions) regular continuing claims is clearly a flawed measure. After regular claims run out, people are then covered under emergency extended claims, paid by the Federal government as part of the stimulus package. Those, too, were in danger of running out for many until they were finally extended earlier this week.

There are now 4.043 million people in the two major extended benefit programs, a decline of just over 5,000 this week (actually two weeks ago, the extended numbers are reported with a delay). That decline is just as likely from people simply running out of their extended benefits as from them getting new jobs. The data should be interesting to look at in a few weeks to see if the numbers shoot back up as the new extension kicks in.

I am encouraged by the steady decline in the initial jobs numbers. They show that we are getting closer to the day when businesses finally, on balance, start to hire people again. That will provide people with the income and confidence in the future that we need to get the economy humming again. It would be the start of a virtuous cycle, as that extra income feeds back into the econo0my creating yet more jobs, and more income.

Right now, we are more likely in "no man's land," where the back of the vicious cycle has been broken, but a virtuous one has not yet taken its place. The hope of this happening could help out the retailers just in time for Christmas. However, I would bet that the discounters like Target (TGT) and TJ Maxx/Marshall’s (TJX) do better than the higher end stores like Abercrombie & Fitch (ANF) this year. Still, it's better to see an economy where people are shopping at Wal-Mart (WMT) than one where the only place doing any business is the Salvation Army.

Read the full analyst report on "TGT"
Read the full analyst report on "TJX"
Read the full analyst report on "ANF"
Read the full analyst report on "WMT"
Zacks Investment Research

Initial Jobless Claims Fall Again – Analyst Blog

Dirk Van Dijk — Thu, 12 Nov 2009 17:24:40 +0000

THE ART OF TRADING VERSUS THE ART OF DECEPTION

David Blair — Tue, 10 Nov 2009 18:44:07 +0000

Just when you think you have the market figured out it changes course leaving you scratching your head in frustration.

Post from: The CrossHairs Trader

THE ART OF TRADING VERSUS THE ART OF DECEPTION

Weak Employment Report – Analyst Blog

Dirk Van Dijk — Fri, 06 Nov 2009 17:27:38 +0000

The October employment report came in weaker than expected as the country lost 190,000 jobs, rather than the 175,000 expectation. It was, however, an improvement over the 219,000 lost in September, but worse than the 154,000 jobs lost in August. Both the September and August job losses were revised sharply lower. As of last month it was thought that we lost 263,000 jobs in September and 201,000 in August. So in that context, missing expectations for October by 15,000 does not seem that bad. Of course, it is bad if you happen to be one of those losing your job. Based on the establishment survey we have now lost 7.3 million jobs since the recession started.

In general though, the pace of job losses has been slowing, especially if you step back and look at the big picture. Over the last three months, the economy has been dropping an average of 188,000 jobs a month, which is of course a disaster. However, in the prior three months, we were losing an average of 357,000 jobs a month and in the six months from November 2008 to April 2009 (inclusive), we were losing 645,000 jobs per month. In percentage terms, we have lost 4.41% of our jobs over the last year.

The graph below (from http://www.calculatedriskblog.com/) tracks both the unemployment rate, which is rapidly approaching a post war record (10.7% in 1983) and the year-over-year change in employment, which is actually starting to turn up (become slightly less negative). As the horrific job losses of last winter start to roll off, that measure should improve more in coming months. But remember: job losses have been going on since December 2007, which is closer to two years ago than one year ago. That can make the year-over-year change a bit misleading. Even with the improvement, the year-over-year job change is still far worse than previous recessions.

The job losses were wide spread by sector. In goods-producing industries we lost a total of 129,000 jobs, including 62,000 construction jobs and 61,000 manufacturing jobs. Since the recession started we have seen 1.6 million construction jobs go away and 2.1 million manufacturing jobs. Just to put in context how devastating the losses have been in those areas, there are only 5.966 million construction jobs and 11.675 million manufacturing jobs left in the country. The sharp loss in manufacturing jobs is in distinct contrast to the ISM survey earlier this week that indicated that manufacturing jobs were expanding. It does look like ADP got it pretty much right in their survey on Wednesday when they predicted a total of 203,000 jobs lost, including 65,000 in manufacturing.

The service sector lost a total of 61,000 jobs. The bulk came from retail, which lost 40,000 jobs. That's not exactly what you want to see leading up to the holiday shopping season. Health care and education continued to buck the trend and added 45,000 jobs, including 29,000 in health care. In one encouraging sign, looking forward, temporary jobs increased by 44,000. At the bottom of a cycle those are often the first jobs to show an increase as employers realize they need more staff, but are not confident to add permanent employees. At least it is good news for firms like Kelly Services (KELYA).

The Unemployment rate, which is calculated from a different survey, painted a much gloomier picture, jumping to 10.2% from 9.8% in September and reaching its highest level since April of 1983. That survey showed the number of unemployed spiking by 558,000 in October, for a total of 8.3 million jobs lost since the start of the recession in December of 2007. Demographically all major groups saw their unemployment rate rise. For men, the rate is now 10.7%, an increase of 0.4% from September's 10.3% and up from 6.4% a year ago. For women, the unemployment rate increased to 8.1% from 7.8% last month and 5.4% in October of 2008. Teen unemployment soared to 27.6% from 25.9% last month and 20.7% a year ago.

It is true that a job for most teens means money to put in the gas tank (or maybe to spend on clothing at Abercrombie and Fitch (ANF)), not a matter of paying the mortgage or keeping the lights on. However those first jobs teach important skills for the future, like the importance of showing up on time. Unemployment rates in the high 20s are something you associate with third-world countries, not the U.S.

By race, the unemployment rate among whites is now 9.5%, up from 9.0% in September and 6.0% a year ago. Hispanic unemployment is now 13.1%, up from 12.7% in September. Among blacks, 15.7% are now unemployed, up from 15.4% last month and 11.3% a year ago.

If one is looking for silver linings in the report, there are a few. The average manufacturing work week increased by 0.1 hour to 40.0, and average overtime increased by 0.2 hours. Employers will usually lengthen the number of hours their current employees are working before they start to add new staff, especially if those hours had already been drastically cut back. Also, for those with jobs, average hourly earnings increased by $0.05 or 0.3%, versus just a 0.1% increase last month. Over the last year average hourly earnings have increased by 2.4%. However, since people are working fewer hours, average weekly earnings are up just 0.9%. That does not provide a lot of firepower for people to take to the malls this Christmas season. The number of people working part time for economic reasons was unchanged at 9.3 million. That number had been increasing rapidly, so perhaps there is a little bit of stabilization on that front.

Still there are other measures in the internals of this report that are a troubling. One number that does not get nearly enough attention is the ratio of people working to the total population, what I like to call the employment rate. While it will never get close to 100%, unless you plan on eliminating child labor laws and have people in their 90s work, it is a very important measure. Ultimately it is the employed in a society that support everyone else, either directly or indirectly. The employment rate fell to 58.5% in October from 58.5% in September and 61.7% a year ago. The high for this cycle, was 63.4% in December 2006.

This cycle broke a long string of higher highs and lower lows stretching back over 50 years. That massive uptrend was largely the function of demographic changes that have largely played themselves out. Women are pretty much fully integrated into the work force and the baby boomer pig has pretty much moved through the python.

However, view this graph in conjunction with the first one. When a related measure, the civilian labor force participation rate was rising (it was unchanged in October at 65.1%), the rate of job creation (red line above) had to be much higher to generate the same unemployment rate (blue line above). The employment rate is now down to its lowest level since October 1983. Back then we still had large numbers of baby boomers that were trying to enter the job market for the first time, and far fewer women worked outside the home.

This has easily been the worst recession from the point of view of employment since the Great Depression, even though the unemployment rate was marginally higher under Reagan, hitting 10.7%. Consider the next graph (also from http://www.calculatedriskblog.com/). It shows the job losses as a percentage of the prior peak employment levels for every recession since the end of WWII. We have now exceeded the prior record set by the 1948 recession in terms of depth. We were going through a huge structural adjustment in 1948 as we demobilized the wartime economy and shifted back to civilian production. Nothing of the sort is occurring now.

Also in all but four of the prior recessions, not only had we stopped losing jobs by this point, but we had actually gained back all the jobs lost and had more people working than at the start of the recession. Next month we will pass that mark for the 1958 recession. The scary part is that the three recessions that took longer than 22 months to get back above the prior peak employment levels are the three most recent downturns, the ones that stated in 2001, 1990, and in 1981. Further, each of those lasted longer than the one before. Since we are still losing jobs at a fairly rapid rate, it could be October 2011 before we have more people working than we did in December 2007, and that is if we were to match the record of 2001. If the pattern of lengthening the time to get back to even continues, it could be far longer than that.

One of the most disturbing signatures of this recession is the length of time that people are out of work. There are now 5.594 million people who have been out of work for more than six months. The median duration of unemployment is now 18.7 weeks, a jump of 1.4 weeks from September’s 17.3 weeks. The previous record was set in June at 17.9 weeks, but prior to this downturn we have never seen anything remotely comparable to this level. The only other post-war recession that challenges this one in terms of severity is the 1981-83 downturn. The peak in the median length of unemployment in 1983 was just 12.3 weeks. A year ago we were at 10.6 weeks. The average (mean) duration of unemployment tells a very similar story. Since it is impossible to be unemployed for fewer than 0 weeks, the mean will always be higher than the median. On average if a person is out of work, he or she has now been out of work for 26.9 weeks, up from 26.2 weeks in September and 19.8 weeks a year ago.

As the chart below shows, it has historically been very rare for the average to exceed 20 weeks (and for the median to exceed 10 weeks). The only good sign I could find in the unemployment duration numbers was that the ratio of long term (over 26 weeks) to short term (less than 5 weeks) unemployed dropped slightly to 1.78 from 1.83 in September. However, let's not get too excited about that. A year ago it stood at 0.74, and prior to this cycle had never gone above 0.80. The reason for the decline was a 6.1% increase in the number of short term unemployed, which is disturbing since that number had been trending down. The number of long-term unemployed increased by 2.9% on the month and is up 146% from a year ago. If those long-term unemployed were members of the middle class, it is unlikely that they are any more, and as the length of their unemployment continues to grow, their chances of rejoining the middle class diminish. This long term unemployment is going to cause a serious increase in poverty.

All in all, a disappointing jobs report. Yes we are making some progress, but it is not nearly fast enough. The unemployment rate is now far above the peak seen even in the "more adverse" scenario of the bank stress tests. People who are out of work for extended periods of time are going to have a hard time paying their mortgages. This means more foreclosures are going to be in the pipeline, and hurting the earnings of major mortgage lenders like Bank of America (BAC) as well as Fannie (FNM) and Freddie (FRE). By extension, it is also going to hurt us, the taxpayers, who now own 80% of both of them.

Read the full analyst report on "ANF"
Read the full analyst report on "KELYA"
Read the full analyst report on "BAC"
Read the full analyst report on "FNM"
Read the full analyst report on "FRE"
Zacks Investment Research

Zacks Bull and Bear of the Day Highlights: Acorda Therapeutics, Canon, Big Lots, Wal-Mart and Nordstrom – Press Releases

Zacks Market Commentaries — Fri, 06 Nov 2009 12:40:14 +0000

For Immediate Release

Chicago, IL – November 6, 2009 – Zacks Equity Research highlights Acorda Therapeutics (ACOR) as the Bull of the Day and Canon (CAJ) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Big Lots (BIG), Wal-Mart (WMT) and Nordstrom (JWN).

Full analysis of all these stocks is available at http://at.zacks.com/?id=5506

Here is a synopsis of all five stocks:

Bull of the Day:

Acorda Therapeutics (ACOR) is one of the more interesting biotechnology companies under our coverage. The company's key pipeline drug, Fampridine-SR, is currently under U.S. FDA review, with a decision expected in late January 2010.

Outside the U.S., Acorda has partnered with Biogen Idec under very favorable terms. Fampridine-SR has blockbuster potential worldwide in our view. Plus, the company is extremely well-capitalized with over $290 million in cash, and management has commercial experience with current approved product Zanaflex.

These are among the best fundamentals in all of biotech. We reiterate our Outperform rating on the stock.

Bear of the Day:

We believe the sharp appreciation of the yen is eroding Canon’s (CAJ) revenue and profits. The company expects to improve profitability through product launches and cost-cutting efforts, and Canon has maintained its revenue and earnings forecast even though the third quarter was below expectations.

We expect revenue in 2009 to be hurt by weak consumer spending and the poor global economy, and believe the company will struggle to meet expectations in fiscal 2010. We maintain our estimates for the full year 2009. 2011 estimates have been added.

We also maintain our Underperform recommendation on CAJ shares, but increased our six-month target price to $30.00.

Latest Posts on the Zacks Analyst Blog:

Initial Jobless Claims Down

Initial claims for unemployment insurance fell by 20,000 this week to 512,000. Last week's numbers were revised slightly higher, so arguably the drop was 18,000, but that's still a nice improvement.

The four-week moving average dropped by 3,000 to 523,750. Since new claims can be volatile from week to week, the four-week moving average is generally considered a better gauge of where we are.

However, we remain above the highest levels seen in either of the last two recessions. The level indicates that we are still losing jobs, but at a slower rate than we had been. In the past we did not start to see actual increases in the number of jobs in the economy until after the average fell well below 400,000, so we still have some work to do. The good news, though, is that the decrease has been pretty steady, and we have not started to plateau the way we did after the last two recessions.

Most economists agree that unemployment benefits are among the most effective ways to spend stimulus dollars, since the money goes directly to people in need, and those people are highly likely to spend the money quickly, thus providing a multiplier effect. The problem, though, is that you don’t want unemployment insurance to become a permanent welfare program. The idea has to be that it is a temporary bridge during tough times, not a way of life.

Still, new job creation at historically low rates -- leaving millions of people with out any income at all -- not only would cause huge humanitarian problems, it also causes big economic problems. While most of the unemployed are likely to be far more frugal this year in their Christmas shopping, doing more buying at Big Lots (BIG) and Wal-Mart (WMT) than Nordstrom (JWN), without the extended benefits they would not be spending at all, not even for basics -- let alone Christmas presents.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

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Initial Jobless Claims Down – Analyst Blog

Dirk Van Dijk — Thu, 05 Nov 2009 16:16:07 +0000

Initial claims for unemployment insurance fell by 20,000 this week to 512,000. Last week's numbers were revised slightly higher, so arguably the drop was 18,000, but that's still a nice improvement.

The four-week moving average dropped by 3,000 to 523,750. Since new claims can be volatile from week to week, the four-week moving average is generally considered a better gauge of where we are. The graph below (from http://www.calculatedriskblog.com/) shows the history of that average. We are now 135,000 below the peak set back in April. This is a key piece of evidence that the recession is over.

However, we remain above the highest levels seen in either of the last two recessions. The level indicates that we are still losing jobs, but at a slower rate than we had been. In the past we did not start to see actual increases in the number of jobs in the economy until after the average fell well below 400,000, so we still have some work to do. The good news, though, is that the decrease has been pretty steady, and we have not started to plateau the way we did after the last two recessions.

On the continuing claims front, the data was mixed. While regular continuing claims fell to 5.479 million, a drop of 68,000, those only count regular state benefits which generally run out after 26 weeks. One of the key signatures of this downturn has been the incredible duration of unemployment for those who lose their jobs.

The average person (mean) who is out of work has been so for more than 26 weeks, and the median by more than 17 weeks. We will see tomorrow if those duration figures changed in October.

When people run out of regular state benefits, they move to emergency extended benefits, mostly paid for by federal money related to the American Reinvestment and Recovery Act, of ARRA, otherwise known as the stimulus package. Extended claims rose by 115,000 to 4.01 million. Thus 9.759 million people are now getting unemployment checks, an increase of 47,000 from last week.

After weeks and weeks of dithering, the Senate finally passed an extension of those emergency benefits last night. This will prevent over 1.4 million people from losing their last financial lifeline before the end of the year.

Most economists agree that unemployment benefits are among the most effective ways to spend stimulus dollars, since the money goes directly to people in need, and those people are highly likely to spend the money quickly, thus providing a multiplier effect. The problem, though, is that you don’t want unemployment insurance to become a permanent welfare program. The idea has to be that it is a temporary bridge during tough times, not a way of life.

Still, new job creation at historically low rates -- leaving millions of people with out any income at all -- not only would cause huge humanitarian problems, it also causes big economic problems. While most of the unemployed are likely to be far more frugal this year in their Christmas shopping, doing more buying at Big Lots (BIG) and Wal-Mart (WMT) than Saks (SKS) or Nordstrom’s (JWN), without the extended benefits they would not be spending at all, not even for basics -- let alone Christmas presents.

Read the full analyst report on "BIG"
Read the full analyst report on "WMT"
Read the full analyst report on "SKS"
Read the full analyst report on "JWN"
Zacks Investment Research

DrStockPick.com Stock Report! 11/04/09, MPAA, PWRM, UTR, MMS, PNNW, JCP

Dr. Stock Pick — Wed, 04 Nov 2009 19:10:53 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ Wednesday November 4, 2009 DrStockPick.com Stock Report! ************************************************************** Power3 Medical Products, Inc. (OTCBB: PWRM), a leader in neurodegenerative disease and cancer biomarkers and diagnostic tests, announces further international recognition of validity as the company’s President and CSO, Dr. Ira Goldknopf, will deliver an [...]

ADP Sees 203,000 Jobs Lost – Analyst Blog

Dirk Van Dijk — Wed, 04 Nov 2009 16:17:23 +0000

This morning, Automatic Data Processing (ADP), the biggest payroll processing firm, estimated that the economy lost 203,000 private sector jobs in October. That was more than the consensus estimate of 190,000 jobs lost. However, the September job loss numbers were revised to a loss of just 227,000 from the original read of 254,000. Thus the losses are coming from a higher base level, and if the revisions are included, this report was in line with consensus or perhaps a bit better.

Still, it indicates that while the economy might be expanding, employment isn’t. However, this is the seventh straight month where ADP has seen fewer jobs lost than the month before. This is similar to the pattern that we saw following the last two recessions.

While employment has always been considered a lagging indicator, it has been becoming more so with each passing decade. In part this reflects the changing nature of the workplace, with manufacturing jobs making up a much smaller part of the total.

Also, this time around an unusually high percentage of the job cuts are of the permanent variety (see "Permanent vs. Temporary Layoffs"). The graph below, originally from the Atlanta Fed, was also used in that post. The job loss numbers are a net number, with new jobs created offsetting other job losses. The rate of layoffs has slowed down, but the rate of job creation has not yet picked up (see "It's the Lack of Job Creation, Stupid!").

By sector, ADP saw 86,000 jobs lost in the service sector, which is far larger, but more stable than the goods producing sector. The service sector losses included 18,000 from financial services -- the 23rd straight month of declines there. The goods producing sector lost 117,000 jobs, including 65,000 in manufacturing and 51,000 in construction.

The read on manufacturing is in direct contrast with the ISM manufacturing survey which came out on Monday and indicated that manufacturing was actually gaining jobs in October. We will see on Friday which one was right when the Bureau of Labor Statistics (BLS) comes out with the official employment numbers. The consensus for the BLS (which includes government jobs, while ADP does not) report is for a decline of 175,000 jobs. The ADP report might make people a little bit more inclined to take the over on that number, but I don’t think by a lot.

By firm size, it looks like large firms, which tend to have better access to financing, are faring better than their little brothers. They lost a total of 53,000, while medium and small firms each lost 75,000 thousand. Traditionally, small businesses are one of the main engines of job creation in the country, something I wrote about here: "A Rarity: The Small-Business Loan." However those numbers are a little bit deceptive since small businesses employ more people overall than do large businesses.

Specifically, there are 17.9 million people working for firms with more than 500 employees, 42.3 million working for firms between 50 and 499 employees and 48.1 million working for firms with fewer than 50 workers. Thus on a percentage basis, large employers dropped 0.3% of their payroll in October, while medium-sized firms dropped 0.18% and small firms dropped less than 0.16%. As evidenced by the announcement yesterday by Johnson & Johnson (JNJ) that it would be trimming back its worldwide workforce by 7%, even the largest, most well-financed and stable of companies have not been immune from layoffs in this cycle.

All of this, however, is prelude to the big number on Friday. The September number was a major disappointment after months of steady improvement. The October report (and the revisions to September and August) will tell us if that was simply a temporary aberration, or the start of a new trend that we should be worried about. My gut tells me that it was an aberration.

The economy is getting back on track, but it seems like it is likely to be stuck in first gear for a while, but at least that is better than going in reverse. Of course there is a bit of a "chicken-and-the-egg" problem, since continued job losses tend to hurt the economy and can lead to further job losses.

A rising unemployment rate at a level over 10% is a recipe for Scrooge to rule Christmas, not Santa. However, it looks as if the fiscal and monetary stimulus program have managed to break that vicious cycle enough to generate at least some economic growth, but not yet enough to cause net job growth. History suggests that it will come, but might take a few more months.

Read the full analyst report on "ADP"
Read the full analyst report on "JNJ"
Zacks Investment Research

Zacks Analyst Blog Highlights: Family Dollar, Costco, Macy’s, JC Penney and L-3 Communications Holdings Inc. – Press Releases

Zacks Market Commentaries — Wed, 28 Oct 2009 12:30:17 +0000

For Immediate Release

Chicago, IL – October 28, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Family Dollar (FDO), Costco (COST), Macy’s (M), JC Penney (JCP) and L-3 Communications Holdings Inc. (LLL).

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Here are highlights from Tuesday’s AnalystBlog:

Consumer Confidence Crumbles

As for expectations about the future, there are still more people out there who expect things to get better over then next six months rather than deteriorate, but the margin is closing. In October, 20.8% expected to see things get better versus 18.3% who thought things will get worst by next spring, a 2.5% margin. Last month 21.3% expected improvement while 14.6% expected things to get worse, a margin of 6.7%. Only 10.3% expect their personal incomes will be going up over the next six months, down from 11.2% last month.

If people are not confident about the future, they are less likely to open up their wallets. As we move into the Christmas shopping season, this drop in confidence could be setting the stage for a very weak retail season, although last year was not exactly great and so retailers will have the benefit of easy comps.

I suspect that the discount-oriented stores like Family Dollar (FDO) and Costco (COST) will be better positioned to weather the storm than mid-priced retailers like Macy’s (M) and JC Penney (JCP). Over the long term, less consumer spending is a good thing, since it is the only way that we will get the savings rate back up. However, in the short term it directly causes economic weakness, and with it even fewer jobs and less confidence.

L-3 Tops Estimates, Raises Guidance

Before the opening bell, L-3 Communications Holdings Inc. (LLL) released strong third quarter results. In the reported quarter, the company clocked earnings per share (EPS) of $2.12, soundly beating both the Zacks Consensus Estimate of $1.85 and the year-ago quarterly EPS of $1.73.

Net sales rose 5% to $3.8 billion in the reported quarter from $3.7 billion in the year-ago quarter. The upside came mainly from the Command, Control, Communications, Intelligence, Surveillance and Reconnaissance (C3ISR) and Aircraft Modernization and Maintenance (AM&M) segments. However, these were partially offset by decrease in the Government Services and Specialized Products segments sales year-over-year.

C3ISR segment sales rose 21% year-over-year primarily due to increased demand and new business from the U.S. Department of Defense (DoD) for airborne ISR and networked communication systems for manned and unmanned platforms. AM&M sales increased 17% due to higher revenues from systems field support services, Special Operations Forces logistics support and higher sales for Joint Cargo Aircraft (JCA).

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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Zacks Investment Research

Consumer Confidence Crumbles – Analyst Blog

Dirk Van Dijk — Tue, 27 Oct 2009 17:34:26 +0000

The Conference Boards Index of Consumer Confidence dropped to 47.7 from 53.4 in September. While this is much higher than the readings in the low 20’s earlier this year, it is a very disappointing reading. Both the current situations index, and the expectations for conditions over the next six months dropped.

The present situation index fell to 20.7 from 23.0 and now stands at its lowest point since February of 1983, when it hit 17.5. The expectations component had seen a much larger recovery earlier this year, but it dropped from 73.7 last month to 65.7 in October. The number of people who see business as bad increased to 47.1% from 46.3% in September, while the percentage who saw business as good fell to 7.7% from 8.6% in September (where are those 7.7% of people located I wonder -- North Dakota?).

The main factor weighing on consumer sentiment is the awful labor market. Almost half (49.6%) see jobs as hard to get, up from 47.0% last month. While the pace of job losses has declined over recent months, it did tick up fairly significantly in the September report, breaking the downward string.

Next Friday we will get the October jobs report, and we will see if that was just a blip or the start of a new downward trend. Believe it or not, there are still a few people out there who think that jobs are plentiful -- a whopping 3.3% of them, down from 3.6% last month.

As for expectations about the future, there are still more people out there who expect things to get better over then next six months rather than deteriorate, but the margin is closing. In October, 20.8% expected to see things get better versus 18.3% who thought things will get worst by next spring, a 2.5% margin. Last month 21.3% expected improvement while 14.6% expected things to get worse, a margin of 6.7%. Only 10.3% expect their personal incomes will be going up over the next six months, down from 11.2% last month.

If people are not confident about the future, they are less likely to open up their wallets. As we move into the Christmas shopping season, this drop in confidence could be setting the stage for a very weak retail season, although last year was not exactly great and so retailers will have the benefit of easy comps.

I suspect that the discount-oriented stores like Family Dollar (FDO) and Costco (COST) will be better positioned to weather the storm than mid-priced retailers like Macy’s (M) and JC Penney’s (JCP). Over the long term, less consumer spending is a good thing, since it is the only way that we will get the savings rate back up. However, in the short term it directly causes economic weakness, and with it even fewer jobs and less confidence.

Thus the best we can hope for is that the savings rate rises, but does so in a gradual way. We will get a more direct reading on consumer spending and income when that data is released on Friday morning.
Read the full analyst report on "FDO"
Read the full analyst report on "COST"
Read the full analyst report on "M"
Read the full analyst report on "JCP"
Zacks Investment Research

Nokia Hurt by Impairment Charges – Analyst Blog

Zacks Market Commentaries — Thu, 15 Oct 2009 18:23:34 +0000

Nokia Corp. (NOK) today declared financial results for the third quarter of fiscal 2009. Total revenue of Euro 9.8 billion was a decrease of 19.8% year-over-year as well as down 1% sequentially. The significant decline in year-over-year revenue is the result of the global economic recession and an extremely challenging market environment for the company’s Mobile Devices and Services segment as well as the telecom infrastructure development segment of Nokia Siemens Network.

Net loss in the third quarter was Euro 559 million or a loss of Euro 15 per share, compared to a net income of Euro 1,087 million (an income of Euro 29 per share) in the prior-year quarter. Nokia incurred a massive loss in the reported quarter due to a whopping Euro 1,167 million of non-cash impairment charge. Out of this, Euro 908 million was expensed as the goodwill impairment charges for the Nokia Siemens Network. However, adjusted net income (excluding special items) in the third quarter was Euro 610 million or an income of Euro 17 per share.

Quarterly operating loss was Euro 426 million compared to an operating profit of Euro 1.5 billion in the prior-year quarter and Euro 427 million in the previous quarter. Operating margin in the same quarter was a negative 4.3% compared to 12% in the year-ago quarter and 4.3% in the previous quarter. Excluding non-cash charges, third quarter operating profit was Euro 741 million compared to an operating profit of Euro 1.8 billion in the year-ago quarter Euro 775 million in the previous quarter.

Operating cash flow for the third quarter 2009 was Euro 720 million, compared with Euro 1.3 billion in the prior-year quarter. Total cash and marketable securities were Euro 7.4 billion at Sept. 30, 2009, compared with Euro 7.2 billion at Sept. 30, 2008. At Sept. 30, 2009, Nokia’s net debt-equity ratio was -15%, compared to -18% at Sept. 30, 2008.

Devices & Services Segment

Quarterly revenue was Euro 6.9 billion, down 20% year-over-year but up 5% sequentially. This segment continues to generate the bulk (more than 70%) of total revenue. In the reported quarter, Nokia shipped 108.5 million mobile handsets, down 8% year-over-year but an improvement of 5% sequentially. Average selling price in the same quarter was Euro 62 compared to Euro 72 in the year-ago quarter but remains flat sequentially. Gross margin was 30.9% compared to 34% in the same quarter of the previous year. Operating profit was Euro 785 million down 51% year-over-year.

Nokia Siemens Network Segment

Quarterly revenue was Euro 2.8 billion, down 21% year-over-year and also down 14% sequentially. Gross margin was 28.2% compared to 30.8% in the same quarter of the previous year. Operating loss was Euro 1.2 billion compared to an operating loss of Euro 1 million in the prior-year quarter.

NAVTEQ Segment

Quarterly revenue was Euro 166 million, up 6.4% year-over-year and also up 13% sequentially. Gross margin was 88% compared to 88.5% in the same quarter of the previous year. Operating loss was Euro 68 million compared to an operating loss of Euro 80 million in the prior-year quarter.

Future Industry Outlook by Management

Nokia announced that shipment of mobile devices will be up sequentially during the fourth quarter, primarily due to Christmas season. The company estimated that it has controlled approximately 38% of the global mobile handset market during the third quarter and also expects to maintain that market share. The average selling price is also expected to remain firm. Management now estimated that mobile handset sales may decline 7% globally year-over-year, compared to its prior estimate of a 10% decline.

Similarly, management upwardly revised its estimate for the Mobile Infrastructure and Fixed Infrastructure and Related Services market from a year-over-year decline of 5% from 10%. However, the company is also expecting that Nokia Siemens Network may lose its share in this market due to severe competition.
Read the full analyst report on "NOK"
Zacks Investment Research

Zacks Bull and Bear of the Day Highlights: Valspar Corporation, Cadence Design Systems, Saks, Family Dollar and Wal-Mart – Press Releases

Zacks Market Commentaries — Fri, 09 Oct 2009 12:00:09 +0000

For Immediate Release

Chicago, IL – October 9, 2009 – Zacks Equity Research highlights Valspar Corporation (VAL) as the Bull of the Day and Cadence Design Systems (CDNS) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Saks (SKS), Family Dollar (FDO) and Wal-Mart (WMT).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676

Here is a synopsis of all five stocks:

Bull of the Day:

We are upgrading Valspar Corporation (VAL) shares to Outperform with a target price of $32.00. The company's solid results and robust margin gains over the past few quarters reflect the dramatic raw material cost reduction, increasing product prices and productivity gains.

We expect the company's earnings momentum to remain in place over the next few quarters driven by volume increases in the Paint category. Robust growth in China industrial and consumer activity as well as structural and feedstock cost relief are expected to fuel margin expansion for Coating.

Not only were Valspar's recent quarterly earnings ahead of the Zacks Consensus Estimate, but the company has also raised guidance for the rest of the year.

Bear of the Day:

Cadence Design Systems (CDNS) reported weak results for the second quarter, and blamed the shortfall on softness in EDA spending. We expect that a turnaround is going to take time due to mounting financial problems leading to a lackluster growth.

3Q and 2009 guidance was not encouraging. Although Cadence is offering new products and taking cost-cutting measures, we are not confident in the company's ability to grow and show healthy fundamentals over the near term. Cadence also withdrew its bid for Mentor Graphics in 2008, further dimming its growth prospects.

Cadence recently came out with enhanced versions of its products, but it will take time for these to generate additional revenue. 2011 estimates have been added. We maintain an Underperform rating on the shares a six-month price target of $4.50.

Zacks Analyst Blog Highlights: Target Corporation, Wal-Mart Stores Inc., Hasbro Inc., Mattel Inc. and Citigroup Inc. – Press Releases

Zacks Market Commentaries — Fri, 09 Oct 2009 11:30:13 +0000

For Immediate Release

Chicago, IL – October 9, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Target Corporation (TGT), Wal-Mart Stores Inc. (WMT), Hasbro Inc. (HAS), Mattel Inc. (MAT) and Citigroup Inc. (C).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Thursday’s Analyst Blog:

Target Lowers Toy Prices

Target slashed the price of selective toys by up to 50%, which include the Barbie Fashion Doll ($5), GI Joe Tough Troopers Figure ($14.99), and the Fisher-Price Little People Play 'N Go Farm Set 50th Anniversary edition ($11).

The holiday seasons are generally important for toymakers and retailers, who expect an uptick in demand with more children splurging in toy stores. However, toy companies did not reap any benefit in the 2008 holiday sales season due to recessionary effects, as consumers cut back their spending and prioritized their purchases.

Realizing the fact that customers may be reluctant to shell out more for toys, toy companies like Hasbro Inc. (HAS) and Mattel Inc. (MAT) are introducing new items at lower prices, and retailers are offering discounts to offset the impact of economic headwinds.

Citi's External Review - A Positive

The management team of Citigroup Inc. (C) received a positive review in an outside appraisal but some shuffling of senior executives could be on the anvil.

The review was conducted this summer for Citi's board by recruiting and consulting firm Egon Zehnder International. It was triggered by the government's stress tests on top banks. Companies found to be in need of additional capital were required to conduct assessments of their management and report the findings to federal regulators. The Federal Deposit Insurance Corp. (FDIC), which had concerns about the qualifications of Chief Executive Vikram Pandit and his top management team, required Citigroup to hire an outside firm to perform the review.

The report, delivered to Citigroup's board on last Friday, gave strong overall marks to Citigroup's management team and to CEO Vikram Pandit in particular.

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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

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Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Zacks Investment Research

Target Lowers Toy Prices – Analyst Blog

Zacks Market Commentaries — Thu, 08 Oct 2009 21:29:48 +0000

In order to woo customers this holiday season, major discount retailer Target Corporation (TGT) recently announced an aggressive price cut on toys. The announcement came on the back of the Wal-Mart Stores Inc. (WMT) news on offering 100 toys for $10 each through the Christmas holiday, up from 10 toys offered last year.

Target slashed the price of selective toys by up to 50%, which include the Barbie Fashion Doll ($5), GI Joe Tough Troopers Figure ($14.99), and the Fisher-Price Little People Play 'N Go Farm Set 50th Anniversary edition ($11).

The holiday seasons are generally important for toymakers and retailers, who expect an uptick in demand with more children splurging in toy stores. However, toy companies did not reap any benefit in the 2008 holiday sales season due to recessionary effects, as consumers cut back their spending and prioritized their purchases.

Realizing the fact that customers may be reluctant to shell out more for toys, toy companies like Hasbro Inc. (HAS) and Mattel Inc. (MAT) are introducing new items at lower prices, and retailers are offering discounts to offset the impact of economic headwinds.

In a separate story, Target is slated to open 26 new stores that will create 5,000 new jobs. The news definitely gives a boost to the dwindling job market. The stores are scheduled to open on Oct. 11, 2009.

Of these 26 stores, 21 are general merchandise stores, of which 18 also have expanded food options, whereas the remaining five are full-grocery SuperTarget stores.
Read the full analyst report on "TGT"
Read the full analyst report on "WMT"
Read the full analyst report on "HAS"
Read the full analyst report on "MAT"
Zacks Investment Research

The Eternal Depression

The Daily Reckoning — Thu, 08 Oct 2009 15:16:36 +0000

Yesterday was another exciting day on Wall Street. The Dow rose 131 points…and gold shot up $25 to a new record, $1043. Investors must be pondering the future. What will the future look like? No one knows. But investors thought they saw things they liked. For one thing, there was the Federal Reserve governor from New York, who [...]

The Eternal Depression

Bill Bonner — Thu, 08 Oct 2009 11:19:53 +0000

pYesterday was another exciting day on Wall Street. The Dow rose 131 points…and gold shot up $25 to a new record, $1043./p pstrongInvestors must be pondering the future./strong/p pWhat will the future look like? No one knows. But investors thought they saw things they liked./p pFor one thing, there was the Federal Reserve governor from New York, who told the world that there was no risk of a rate hike anytime soon. Bill Dudley knows which way the wind is blowing. He said the Fed would hold money policy loose “indefinitely.”/p pstrongIndefinitely is otherwise known as “as long as it takes.”/strong/p pBut as long as it takes for what? Ah…as long as it takes until the economy appears strong again./p pHow long will that be? Ah…maybe#8230;/p

Gold Hits New All-Time High, Yamana Close to 52-week High

Stockmasters Staff — Tue, 06 Oct 2009 18:04:37 +0000

p a href=http://goldprice.org/spot-gold.htmlimg align=right width=180 src=http://goldprice.org/NewCharts/gold/images/gold_1d_o_USD.png alt=Price of Gold height=114 //aGold notches a new all-time high today, taking out the previous high of $1,033.90 (Mar. 17, 2008), and is currently +1.9% to $1,037. That has helped moved span style=background-color: #ccffffstrongspan style=color: #3366ff; background-color: #ffff00Yamana Gold (NYSE:AUY) shares up 12% /span/strong/spanin two days, closing in on $12 a share on heavy volume. /p ppa href=http://thestockmasters.com/node/1743read more/a/p

Muscle Flex, Inc. (MFLI.PK) Applies for the Beagle StepFit(TM) Trademark

QualityStocks — Wed, 23 Sep 2009 21:30:02 +0000

Muscle Flex Inc. announced that it has submitted its trademark application for The Beagle StepFit with the USPTO (United States Patent and Trademark Office). The Beagle StepFit is a multi-functional pedometer that clips onto the waist of an individual for walking or running and provides the wearer with detailed information as to how many steps [...]

The Reason Why Gold Hasn’t Skyrocketed.(new video)

Trading School — Tue, 22 Sep 2009 05:00:00 +0000

The Reason Why Gold Hasn’t Skyrocketed. With the printing presses in full printing mode, many people are questioning why gold prices haven’t gone higher - much higher. In my new video, I explain some of the subtle market cycles that are at play right now in this market. These short-term cycles have been the dominant force in [...]

Muscle Flex Inc. (MFLI.PK) Announces Second Product Release; The Beagle StepFit(TM) Pedometer and the Beagle Mini

QualityStocks — Mon, 21 Sep 2009 12:43:28 +0000

Muscle Flex Inc. was pleased to announce this morning the details of its second product release, The Beagle StepFit(TM) Pedometer (www.BeagleStepFit.com), a multi-functional pedometer. Clipping onto the waist of an individual for walking or running, the device provides the wearer with detailed information as to how many steps the person has taken as well as [...]

Prieur’s readings (September 16, 2009)

Prieur du Plessis — Wed, 16 Sep 2009 09:35:52 +0000

This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy. Please also add the links to any other worthwhile articles you would like to share to the comments section.

More on gold seasonality

Frank Holmes — Tue, 08 Sep 2009 05:00:00 +0000

With gold topping $1,000 an ounce today, what else is there to really talk about? Not long ago, we had a commentary on September having the best month-over-month price gains for gold and gold-mining stocks. You havenrsquo;t been able to argue with that so far this month. Read History Lesson: September Is Best Month for Gold. Martin Murenbeeld at Dundee Wealth used our commentary as a starting point to do some more research and add to the seasonality discussion. Murenbeeld used seasonally adjusted data for both the month-end and average monthly prices going back to 1972 (we used month-to-month total returns, no adjustments). Based on this, he concluded that the best months of the year are January and February, with seasonally adjusted price gains averaging between 1.5 percent and 2 percent. Did Murenbeeld dispute our focus on September? Not at allmdash;he ran the numbers our way and got the same result. His broader point is that gold is in its best time of year, reflecting the upswing in seasonal gold demand during holiday and wedding seasons now under way in India and the Middle East, carrying on through the Christmas season, and culminating with the gift-giving that accompanies the Chinese New Year in February. 09-612

More on gold seasonalityMore on gold seasonality

Frank Holmes — Tue, 08 Sep 2009 05:00:00 +0000

China’s Energy Acquisition: Three Ways to Invest in China

Contrarian Profits — Fri, 04 Sep 2009 18:30:12 +0000

pEvery country needs a few basic ingredients in order to achieve healthy, sustained economic growth./p ul type="disc" liReliable sources of energy./li liA modern, efficient infrastructure, consisting of a good road and rail system, reliable power grids and high-speed digital communications networks./li /ul pAnd if a country wants to be considered a “global economic powerhouse,” it’s nearly impossible for it to do so without these critical building blocks./p pSo it’s not too surprising that China is spending unprecedented amounts of money to beef up its infrastructure./p pIt’s also spending huge amounts of money on long-term oil and gas contracts. And with nearly $2 trillion on hand, it’s the perfect time for China to go on an energy acquisition spree./p pRight now, it’s spending like a thirsty sailor on shore leave…/p pYou#8230;/p

China’s Energy Acquisition: Three Ways To Invest In China

Investment U — Thu, 03 Sep 2009 20:17:38 +0000

China’s Energy Acquisition: Three Ways To Invest In China by David Fessler, Advisory Panelist Every country needs a few basic ingredients in order to achieve healthy, sustained economic growth. Reliable sources of energy. A modern, efficient infrastructure, consisting of a good road and rail system, reliable power grids and high-speed digital communications networks. And if a country wants [...]

Jobs Report Worse than Expected – Analyst Blog

Dirk Van Dijk — Wed, 02 Sep 2009 14:25:19 +0000

This morning, ADP (ADP), the nation’s largest payroll processing firm, released its estimate of job losses in August. They came in at a decline of 298,000 jobs for the private sector. This is significantly worse than the consensus expectations of a decline of 250,000.

There was a little bit of good news in the report in that this is still an improvement over the 360,000 lost in July -- a number that was revised from an original read of 371,000 jobs lost.

The losses in August were almost evenly split between the Goods Producing Sector (Construction & Manufacturing), which lost 152,000 jobs, and the Service sector, which dropped 146,000.

By size of business, the big firms are holding up best with a decline of 60,000. Medium-sized firms (between 50 and 499 employees) shed 116,000 jobs while small businesses slashed their payrolls by 122,000.

Even the Auto industry, which benefited from the Cash for Clunkers program in August, dropped 74,000 jobs. Ford (F) and General Motors have recently announced production increases and are calling some workers back, but it did not show up in the August numbers.

However, in a separate report, the big outplacement firm Challenger, Gray and Christmas reported that layoffs dropped to 76,000 in August -- a 21% decline from July. Generally, however, the ADP data set is bigger and gives a more accurate read on the employment picture than does the Challanger data.

While we have seen many indications that the economy is starting to recover, it has not yet translated over to the employment picture. On the plus side, this should be very good for corporate profits, since the pick-up in sales has not been matched by a increase in labor expense. On the minus side, it will be very hard to sustain a recovery if people do not have jobs (and the income from having them).

It is not as if people can take on debt to tide them over and keep spending anymore. They were able to do so in the last recession since the housing ATM was still working. Not the case today, when most people have very little equity in their houses (or are underwater in them).

The ADP report sets the stage for the Government employment report. As of this morning, the consensus estimate was that it would show a decline of 225,000 jobs in August. The numbers are not directly comparable to the ADP numbers since ADP only covers the private sector. However, it is not likely that the government added 73,000 jobs in the month -- not with the stress that state and local governments are under with falling sales and property tax revenues.

ADP and the Bureau of Labor Statistics have disagreed in the past. After all, the BLS number in July was a decline of 247,000, which is much lower than the even revised -360,000 number from ADP. Still, I think the ADP numbers will make people a bit more pessimistic going into Friday’s big report.

One of the key things to look for in Friday’s report will be the length of the average work week, since businesses will first start to extend the hours of the employees they have when things pick up, and then only later when they feel confident that the recovery is sustainable will they bring more hands on deck.

I will also be looking closely at the indicators of unemployment duration. Being out of work for almost a year is a very different experience -- and one with vastly different economic consequences -- than being out of work for just a few weeks. This recession has been extreme in the length of time people spend on the unemployment line once they are laid off.
Read the full analyst report on "ADP"
Read the full analyst report on "F"
Zacks Investment Research

TEN, SPNG, DrStockPick Watch List! for Tuesday September 1st, 2009, Tenneco Inc. and SpongeTech Delivery Systems Inc, SPNG.OB

Dr. Stock Pick — Tue, 01 Sep 2009 01:58:46 +0000

TEN, Tenneco Inc. SPNG, SpongeTech Delivery Systems Inc, SPNG.OB DrStockPick Watch List! DrStockPick Watch List! for Tuesday September 1st, 2009 My Picks for Tuesday September 1st, 2009 are: ************************************************************** TEN, Tenneco Inc. TEN has grown to become one of the world’s leading designers, manufacturers and distributors of emission control and ride control products and systems for the automotive original equipment market [...]

History Lesson: September Is Best Month for Gold

Frank Holmes — Mon, 31 Aug 2009 05:00:00 +0000

Wersquo;re heading into September this week, so itrsquo;s a good time to revisit the historic seasonality of gold and gold stocks. Over the past four decades, September has been the best time for gold in terms of its month-over-month price appreciation. You can see this on the chart belowmdash;in a typical year, the price of gold in September rises 2.5 percent above its August price. The gold price has risen in 16 of the 20 Septembers since 1989, by far the best success ratio of any month of the year. What accounts for this predictable trend? September kicks off several of the planetrsquo;s most potent gold-demand drivers: The post-monsoon wedding season in India and Diwali, one of the countryrsquo;s most important festivals; Restocking by jewelry makers in advance of the Christmas shopping season in the United States; The holy month of Ramadan in the Muslim world, whose end in late September is marked by a period of celebration and gift-giving; And in China, the week-long National Day celebration starting October 1 and the run-up to the Chinese New Year in early 2010. This could be a challenging September in India, the worldrsquo;s largest gold consumer. The economic slowdown and gold prices near record highs drove jewelry demand down 31 percent in the second quarter compared to the same period in 2008. On the other hand, the World Gold Council says Indiarsquo;s bank deposits saw 22 percent year-over-year growth in the second quarter of 2009, so cash is available to be spent if the rupee price for gold weakens even slightly. The WGC also expects the wedding and Diwali season to ldquo;underpin a seasonal improvement over the remainder of 2009.rdquo; China, the worldrsquo;s #2 gold market, actually saw a year-over-year gold demand increase of 6 percent in the latest quarter, with buyers favoring 24-carat gold jewelry for its quality and as a store of value. The WGC says that trend toward the purer form of gold should continue, though the third quarter is usually the low season for this segment of the market. While September is a good month for gold, it is historically a great month for gold stocks as measured by the NYSE Arca Gold Miners Index (ticker GDM), as seen in the chart above. The GDM index comprises a broader collection of gold minersmdash;including more smaller-cap companiesmdash;than either the NYSE Arca Gold Bugs Index (HUI) or the Philadelphia Stock Exchange Gold and Silver Index (XAU). After the typically soft months of June and July, the gold miners start to bounce back with a 2 percent bump in August before shooting up another 8 percent in September. Since 1993, when it was created, the GDM has been up 11 times in September and down just five times. In September 1998, the GDM had by far its best-ever month (up 54.3 percent) when the bullion was bouncing off a two-decade low price of less than $275 per ounce. A decade later in September 2008, however, amid the severe credit squeeze triggered by the global financial crisis, the GDM fell 10.2 percent. The strong correlation between the gold price and the value of gold-mining stocks explains much of the average September jump for gold stocks. But the relationship is not lock-stepmdash;gold stocks (particularly for companies that do not hedge their production) have historically offered leverage to the gold price. In up markets, earnings growth has tended to exceed the increase in gold price. Of course, the leverage also works in the opposite directionmdash;gold stocks also tend to decline more when the price of bullion is falling. One of the most consistent correlations for gold is its inverse relationship with the U.S. dollarmdash;when gold is up, the dollar tends to be down, and vice versa. Looking at weekly data going back 20 years, this relationship occurs nearly 70 percent of the time. The seasonality chart above shows that September is only second to December in terms of dollar weakness, the average result for the U.S. Trade Weighted Dollar Index (DXY) being a 0.66 percent decline from August. Looking at the 39 Septembers going back to 1970, the dollar has seen negative performance 26 times, more than any other month of the year. The Federal Reserversquo;s massive stimulus spending and the expectation that the current low-interest-rate environment will continue for many more months are additional headwinds for the dollar, and thus tend to be positive for gold. In our June commentary ldquo;Why the Time Could Be Right for Gold Stocks,rdquo; we pointed out that gold stocks tend to outperform the overall stock market when the federal government is engaged in deficit spending. This yearrsquo;s federal deficit is expected to be a record $1.6 trillion, and the White House projected this week that the deficit will grow another $9 trillion between 2010 and 2019. These huge deficits will fan inflation fears and keep downward pressure on the dollar. Based on the long-term record, this may represent a good time for investors who want to establish or add to a gold or gold-stock position in advance of seasonal demand growth. The guidance provided by historical patterns may improve the chances for investment success, but of course, there are no guarantees that this September will follow the well-established trend. The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. The index benchmark value was 500.0 at the close of trading on December 20, 2002. The NYSE Arca Gold Bugs Index (HUI) is a modified equal-dollar weighted index of companies involved in major gold mining. The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver. The U.S. Trade Weighted Dollar Index (DXY) provides a general indication of the international value of the U.S. dollar. 09-589

History Lesson: September Is Best Month for GoldHistory Lesson: September Is Best Month for Gold

Frank Holmes — Mon, 31 Aug 2009 05:00:00 +0000

Prieur’s readings (August 22, 2009)

Prieur du Plessis — Sat, 22 Aug 2009 06:25:43 +0000

This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy. Please also add the links to any other thought-provoking articles you would like to share to the comments section.

Why You Need to Buy Apple and Sell Palm Short

Investment U — Fri, 21 Aug 2009 20:07:56 +0000

Why You Need to Buy Apple and Sell Palm Short by David Fessler, Advisory Panelist Regular readers, my colleagues and just about everyone else I come in contact with know I’m a big fan of Apple, Inc. (Nasdaq: AAPL). I’ve written about it here on several occasions, my family and I own a number [...]

PetSmart (NASDAQ:PETM): Colour on quarter

Notable Calls — Thu, 20 Aug 2009 10:54:00 +0000

div style="text-align: justify;"span style="font-weight: bold;"PetSmart (NASDAQ:PETM)/span is getting at least 2 downgrades this morning following weaker than expected results and guidance out last night:br /br /span style="font-weight: bold;"- Credit Suisse/span is downgrading PETM to Neutral from Outperform as, unlike other industry leaders, PETM is not only seeing sales slow, but is seeing margins decline as its mix deteriorates. Taking away the earnings upside moves PETM down on firm's investment attractiveness scale. Firm is lowering their price target to $21.br /br /span style="font-weight: bold;"Investment case:/span PetSmart has always been a tween’er that has moved on its own results. It does not offer the cyclicality due to its food sales that investors looking for an economic uplift can find in many of firm's names. Nor does it offer the secular story that CSFB's DIY auto names do. However, the growth of services, lower expense growth and premium food inflation seemed enough to keep this stock beating expectations. That is no longer the case, with PETM losing some of the inflation push from premium, facing some pricing battles in commodity and watching its high margin hard goods comp more negatively. That makes for a less attractive near term story.br /br /span style="font-weight: bold;"Catalysts:/span The near term catalyst for the downgrade was management’s lowering of second half earnings guidance while leaving sales guidance the same. That points to weaker than expected margins in the key hard goods category for Christmas as well as more competitive pressures than previously projected. CSFB believes that they will have opportunities into next year to revisit this well managed chain.br /br /a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_YzBo7Kz5y1M/So0rpBqoKnI/AAAAAAAAAIo/_uOrGRG9LqM/s1600-h/PETM.GIF"img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 400px; height: 213px;" src="http://4.bp.blogspot.com/_YzBo7Kz5y1M/So0rpBqoKnI/AAAAAAAAAIo/_uOrGRG9LqM/s400/PETM.GIF" alt="" id="BLOGGER_PHOTO_ID_5371997914344729202" border="0" //aspan style="font-weight: bold;"Lower comps in 2H as expected, but a headwind for stock: /spanAs CSFB's shows above, PETM’s quarter over quarter relative stock performance has historically been tied to its same store sales growth. While it has been well documented that comps would be weaker in 2H as PETM anniversaries the significant inflation benefit it got last year and now even less inflation. Therefore, they believe it will be difficult for its stock to outperform as comps get worse, particularly as most other retailers show sequentially better comps against easing comparisons in 2H. PETM management is projecting comps to be flat in Q3 and while that is essentially flat on a 2 year basis with Q2’s trend, headline comps will still be weaker than Q2’s +3.9% as shown below. The difference for PETM is lower inflation and trade downs by consumer.br /br /span style="font-weight: bold;"- Piper Jaffray /spanis lowering PETM to Neutral from Overweight and lowering their target to $21 from $25. While the firm notes they do not like to downgrade stocks on the heels of a negative guidance revision, they see two notable headwinds that will likely mute EPS growth through 2009 and into 2010. In particular, they now believe price deflation on the pet food category is a strong possibility (likely in early 2010), which has negative implications for both comp and gross margin dollars. Also, missteps in the hardgoods business during the first half now removes their confidence that this higher margin category will improve meaningfully in the near future. As a result, Piper is now estimating EPS to decline y/y for the next 4 quarters.br /br /span style="font-weight: bold;"- JP Morgan/span maintains their Neutral rating but is lowering target to $21 from $25. Firm notes it all really comes down to merchandising and hardgoods sales. PETM reduced its annual guidance due a weaker than forecasted recovery in the highmargin hardgoods business. Food comps (50% of the mix) are driven by price, market growth, and market share. JP Morgan believes that food prices will be flat and the market outside of food is shrinking (perhaps offsetting market share gains; PETM grew share 80 bps LY and expect a similar amount in 2009). Hence, looking over the next twelve months, the ability for PETM to comp is all about driving units per transaction or seeing a recovery in traffic (in other words, hardgood sales). As noted in firm's August 10th downgrade “Back on the Leash”, the secular tailwinds of pet adoption and innovation have (at best) slowed. Thus, sales growth is about PETM being a better merchant, which is also the critical lever to merchandise margin expansion.br /br /span style="color: rgb(255, 0, 0);"Notablecalls:/span PETM's a tough one here. To get any fills early on one would need to short it down -10%. If you look at PETM's past gap-downs you will see -10% is actually the magic level for the stock. It's loved by many and is likely to bounce.br /br /Yet, the headwinds here look to be for real, so I would expect the stock to drift down a cpl of pts from the $20 level over the next weeks or so.br /br /So, the only way to really play this one is to short the upcoming bounce (if they let you in).br //divdiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/29297569-9130530506073455862?l=notablecalls.blogspot.com'//div

Fred’s, Inc. (Nasdaq: FRED): Stock of the Day

Contrarian Profits — Thu, 13 Aug 2009 18:14:20 +0000

pSometimes, all the reasons others are shunning a company are the same reasons to initiate a position in it./p pTake strongFred’s, Inc./strong (NASDAQ:a href="http://www.google.com/finance?q=FRED" target="_ blank"FRED/a), for instance, a deep-discount retailer with 600 stores in 15 southeastern states. Investors have punished the stock, sending it to levels that value it less than half of its competitors./p pIt’s differentiator is serving low-income customers in rural and inner-city neighborhoods, far from Target and Walmart stores. Many customers prefer the ease of access to Fred’s stores, as opposed to having to drive to the nearest big box retailer./p pWith annual sales of $1.8 billion, its merchandise and business model is similar to that of its two biggest competitors: strongDollar Tree /strong(NASDAQ:a href="http://www.google.com/finance?q=NASDAQ%3ADLTR" target="_ blank"DLTR/a) and strongFamily Dollar Stores, Inc./strong(NYSE:a href="http://www.google.com/finance?q=NYSE%3AFDO" target="_ blank"FDO/a)./p pBut that’s where the similarities end. In the#8230;/p

The Catastrophe Conundrum – Healthcare Revisited

Justice Litle — Thu, 13 Aug 2009 17:39:32 +0000

pGood news, Canadians – the president does not think you are scary. You have become a bit of a #8220;bogeyman,#8221; however, in regard to the growing din over U.S. healthcare reform. And a Canadian style government-run system wouldn#8217;t fly in the United States./p pThat#8217;s the president talking, not ema href="http://www.taipanpublishing.com" class="alinks_links"Taipan/a Daily/em. Mr. Obama#8217;s remarks came in response to a question from a Canadian journalist, at a North American summit held in Guadalajara, Mexico./p pMeanwhile, U.S. Representative John Dingell was shouted down by an angry protester at a town hall meeting in Romulus, Mich., last week. The protester, pushing his wheelchair-bound son to the podium, called Dingell a #8220;fraud#8221; and said that proposed changes would not help his son./p pEmotions are heating up all around the#8230;/p

Next Group PLC – What NEXT? Short or Long?

Jim Musselwhite — Wed, 12 Aug 2009 12:44:17 +0000

By Guest Author: Andy Richardson (http://www.financial-spread-betting.com) Most traders who I spoke to about 12 months ago were forecasting a gloomy future ahead for the UK clothing retail giants such as Next Group PLC, Debenhams or Marks & Spencer. Let’s take the case of Next Group PLC. Although the recession was not full blown at the time, fierce [...]

Fred’s, Inc. (Nasdaq: FRED): Stock of the Day

Investment U — Tue, 11 Aug 2009 15:39:12 +0000

Fred’s, Inc. (Nasdaq: FRED): Stock of the Day by David Fessler, Advisory Panelist Sometimes, all the reasons others are shunning a company are the same reasons to initiate a position in it. Take Fred’s, Inc. (NASDAQ:FRED), for instance, a deep-discount retailer with 600 stores in 15 southeastern states. Investors have punished the stock, sending it [...]

U.S. Consumers Come Out for CARS

Investment U — Mon, 03 Aug 2009 15:59:18 +0000

U.S. Consumers Come Out for CARS by The Investment U Research Team Christmas can come in July, or at least late July for auto dealers and automakers. The CARS program, better know as cash for clunkers, is doing exceedingly well for the auto industry. On Friday when we heard the money was running out, we [...]

Zacks Analyst Blog Highlights: Apple Inc., Hewlett Packard Company, Dell, Amazon and Sony – Press Releases

Zacks Market Commentaries — Tue, 28 Jul 2009 13:20:34 +0000

For Immediate Release

Chicago, IL – July 28, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Apple Inc. (AAPL), Hewlett Packard Company (HPQ), Dell (DELL), Amazon (AMZN) and Sony (SNE).

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Here are highlights from Monday’s Analyst Blog:

Apple Prescribes Tablet

Internet connectivity brings the tablet on par with other netbooks such as those offered by Hewlett Packard Company (HPQ), Dell (DELL) and Asustek. However, the company’s ability to offer rich content distinguishes it from the others. Apple already offers music on its iPods. It is expected that the netbook will offer music, movies and video games, making it the ideal all-in-one entertainment device.

Apple also intends to offer new services such as interactive booklets and liner notes. Several book publishers have expressed interest, and could be expected to offer content. If all goes well, this could be an alternative to Amazon’s (AMZN) Kindle or Sony’s (SNE) Reader. Hollywood content is expected to be higher than the iPod and video game producers are also likely to customize their games to fit hardware requirements.

While this looks like an ideal product for the holiday season, pricing is likely to be an important factor, especially given the pressure on consumer spending.

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

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Zacks Investment Research

Apple Prescribes Tablet – Analyst Blog

Zacks Market Commentaries — Mon, 27 Jul 2009 21:17:24 +0000

Apple Inc. (AAPL) is expected to launch a tablet PC (netbook) targeting the Christmas season this year. It is reported that the Apple netbook will come with a touch-sensitive screen, measuring up to 9.7 inches diagonally and will be CD compatible, enabling music playback. Three Taiwanese companies -- Foxconn, Wintek and Dynapack -- are expected to be part of the deal.

Internet connectivity brings the tablet on par with other netbooks such as those offered by Hewlett Packard Company (HPQ), Dell (DELL) and Asustek. However, the company’s ability to offer rich content distinguishes it from the others. Apple already offers music on its iPods. It is expected that the netbook will offer music, movies and video games, making it the ideal all-in-one entertainment device.

Apple also intends to offer new services such as interactive booklets and liner notes. Several book publishers have expressed interest, and could be expected to offer content. If all goes well, this could be an alternative to Amazon’s (AMZN) Kindle or Sony’s (SNE) Reader. Hollywood content is expected to be higher than the iPod and video game producers, are also likely to customize their games to fit hardware requirements.

While this looks like an ideal product for the holiday season, pricing is likely to be an important factor, especially given the pressure on consumer spending.

Apple reported strong results in the first nine months of 2009, beating consensus estimates and its own guidance. However, the company provided a cautious outlook for the fourth quarter. Apple’s major growth drivers are the Mac and iPhone product lines, which have been a huge success. That said, the MP3 market was weak in the third quarter, leading to lower iPod sales.

While the new tablet PC is expected to add value to its existing product portfolio, its exact impact is hard to estimate. Therefore, we maintain our Hold rating on AAPL shares.
Read the full analyst report on "AAPL"
Read the full analyst report on "HPQ"
Read the full analyst report on "DELL"
Read the full analyst report on "AMZN"
Read the full analyst report on "SNE"
Zacks Investment Research

Buy, Sell or Hold: Capitalize on Resurgent Commodities Prices with the Market Vectors Steel (NYSE: SLX)

Contrarian Profits — Mon, 20 Jul 2009 16:19:35 +0000

div class="entry" pWith the market very near critical support levels, critical earnings reports on the docket, and inflation and employment data set for release, it was more prudent last week to keep the powder dry. But the market surprised to the upside, as key companies reported better than expectations./p pParticipation in fixed income issuance and trading, gave investment banks buoyancy. But JP Morgan Chase #38; Co. (NYSE: a href="http://www.google.com/finance?q=NYSE%3AJPM" target="_blank"JPM/a) actuallya href="http://www.moneymorning.com/2009/07/13/ishares-barclays/" target="_blank"c/aa href="http://www.moneymorning.com/2009/07/13/ishares-barclays/" target="_blank"onfirmed two of the three fears that I outlined last Monday/a: A bleak commercial real estate outlook – which will have little consequence for the bank given its limited exposure in this area – and a spike in credit card delinquencies./p pThe third fear I had, the rise in residential foreclosures, was confirmed by a report from RealtyTrac#8230;/p/div

Navigating the turn as green shoots sprout

Prieur du Plessis — Tue, 14 Jul 2009 11:10:34 +0000

By Cees Bruggemans After massive shocks savaged the economy last year, by 4Q2008 (really already 3Q2008) putting us into recession, the only question basically mattering now is whether there are yet more of these massive shocks to be absorbed shortly. For if we are, we will remain probably repressed, recessed if not depressed for much longer. But [...]

The Ordinary Evil of Bernie Madoff

Bill Bonner — Tue, 30 Jun 2009 21:00:50 +0000

pBernie Madoff and his Finacial Crime./p pLet the punishment fit the crime!/p pPoor Bernie. The man has been ordered to spend 150 years in the hoosegow. What for? Who did he kill? A century-and-a-half seems a little excessive for a financial crime. You could hold up three liquor stores and rape a whole convent and still not get 150 years. With a little good lawyering, a history of child abuse in the family and good behavior in the big house, you’d be back on the street in 18 months./p pBut all the papers seem delighted. “Locked up for Life!” says one of today’s headlines. The judge “threw the book at him,” says another. His victims wanted him to get no mercy. The judge#8230;/p

Nothing Fails Like Success

Bill Bonner — Wed, 17 Jun 2009 20:14:57 +0000

pWith the Rally Nearly Over the Germans are Buying Gold./p pThe Dow fell another 107 points yesterday. Oil held steady at $70. The dollar fell to $1.38. And gold rose $4 to 932./p pWhat if the rally is over? Could be#8230; It began on 9 March. That makes it more than 3 months old. Most likely, it will continue through the summer. But who knows?/p pThe important thing to remember is this: there can be no major, sustained bull market without one of two things happening./p pEither#8230; the mistakes of the Bubble Epoque must be cleared away#8230; allowing for a new era of genuine growth and real prosperity. At best, this would take a few years to achieve. Just imagine how long it will#8230;/p

The Fate of This Rally May Rest in China’s Hands

Justice Litle — Fri, 12 Jun 2009 21:00:57 +0000

pThe fate of the global equity market rally now comes down to China. Will it continue to stockpile hard assets? Will the data points continue to soothe and impress? Much is at stake either way#8230; /p pIf you grew up in the United States, you know that English literature is one of those subjects they foist upon you in 10th grade or so. I recall very little from English Lit 101. Most of the stories and poems we read (or pretended to read) have become a hazy blur./p pBut after all these years, one poem still stands out. Due to its oddness and simplicity, I have never forgotten it. The poem is #8220;Red Wheelbarrow#8221; by William Carlos Williams, and it goes like#8230;/p

Will Oil Prices Prevent a Recovery? – Analyst Blog

Dirk Van Dijk — Tue, 09 Jun 2009 20:19:07 +0000

The following two charts (and the comments in between them) are part of a very interesting article by James Hamilton. The collapse in oil prices last fall acted as a key economic stabilizer and helped ameliorate the economic decline.

It showed up in two key places. The first was in the trade deficit numbers, which have shown a very dramatic improvement over the last year (see here and here). The other place it showed up was in retail sales, since a dollar spent at the gas pump is a dollar that can not be spent elsewhere.

Since last Christmas, prices at the pump have climbed sharply, as shown in the first graph. While prices are still far below the levels of a year ago, the current levels are high enough to start hurting, especially those who have seen their incomes drop due to the recession. Dr. Hamilton calculates that the current prices would be consistent with energy taking up over 6% of total personal consumption expenditures, up from 4.85% back in December.

As the second graph shows, that would be about the share of spending energy had back in the mid-1980’s. The mid-1980’s were not exactly the worst period of our economic history, so such a level in and of itself should not be a real problem for the economy. And we faced a far more serious problem with energy prices in the 1970’s than we did even at the worst energy price levels we saw a year ago.

Still, this is coming at a time when the economy is still very fragile. Retail spending on goods other than energy face strong headwinds from both the need for consumers to rebuild their personal balance sheets (pay down past debts and build up savings) and from much worse personal income statements (unemployment, hours and wages cut, lower interest rates on savings). This is just one more unhelpful factor that will pressure sales, particularly for stores that sell discretionary items, including clothing stores like The Gap (GPS) and appliance stores like Rex Stores (RSC) and HH Gregg (HGG). Higher oil prices are of course good news for the energy sector, but for the overall economy high energy prices are a significant negative.

The rise in oil prices does not seem to be consistent with the overall weakness of the world economy, but there are several reasons why it just may be sustained or extended, even in the absence of a global economic rebound. The first is that oil is a good hedge against future inflation, and given the expansion of the Fed balance sheet, that may be a very serious concern down the road. Currently the bigger threat is deflation, but it will be hard for the Fed to sop up all the liquidity that has been created to fight the deflationary fire.

A second and somewhat related reason is that China has been increasing its purchases of all sorts of commodities, trying to take advantage of the lower prices (note that the price of other commodities like copper have also increased sharply from the lows of last winter, but remain well off the highs of last summer). OPEC has also shown greater discipline this time around than they have in the past. How long that will last nobody knows, but so far they have been keeping it together.

The third reason is that the looming danger of peak oil has not gone away, it has only been masked by "peak demand" caused by the economic downturn worldwide. Any incremental oil is now coming from very expensive sources like the Canadian oil sands or the very deep waters of Brazil, both of which require oil prices in the mid-$60’s to be economically viable.

With oil prices rising above those levels, the drilling off Brazil should pick up steam. There are, however, very few rigs capable of drilling at such depths. Most of those are controlled by two firms, Transocean (RIG) and Diamond Offshore (DO), both of which will benefit enormously if oil prices stay high.

In short, the current levels of oil prices are not exactly fertilizer for the "green shoots," but will not kill them off either. Other developments, such as long-term interest rates, will have more of an impact. The very low prices a the pump in the first quarter may have been one of the key reasons why consumer spending in the quarter was higher than expected (but probably not as big a factor as increases in transfer payments). However, if they continue to rise towards the $100 level, the world economy could easily fall back into the abyss.

National average U.S. gasoline retail price. Source: NewJerseyGasPrices.com.

"The 16% increase in gasoline prices between December and February resulted in an additional $37 billion spending by consumers at an annual rate on gasoline and fuel oil, increasing the share of energy purchases in consumer budgets from 4.85% in December to 5.17% in February. The additional 40% increase we've seen in the retail price of gasoline since February has likely brought that expenditure share back up above 6%."

Read the full analyst report on "GPS"
Read the full analyst report on "RSC"
Read the full analyst report on "HGG"
Read the full analyst report on "RIG"
Read the full analyst report on "DO"
Zacks Investment Research

What the Very Smart Money is Doing

Bill Bonner — Mon, 08 Jun 2009 19:28:37 +0000

pWhere the Smart Money is in the Housing Market./p pStocks#8230; oil#8230; both held steady on Friday./p pGold, however, took a big hit – minus $26./p pThere are three kinds of money in the marketplace. There’s the smart money that goes with the trend. There’s the dumb money that bets against the trend. And there’s the money that doesn’t know whether it is coming or going./p pThe trouble is always figuring out which is which./p pThe markets are clearly in a deflationary downturn. No doubt about it. After a long period of credit expansion credit is finally contracting. The smart money is probably betting on lower asset prices./p p“Consumer credit falls the second most on record,” a style="font-weight: bold; color: #006b99;" href="http://bloomberg.com/apps/news?pid=20601087#38;sid=aQIewec5NTh4" target="_blank"reported Bloomberg/a last Thursday./p pHouses, as everyone knows, are deflating. There are signs#8230;/p

DAC Technologies Group International Inc. (DAAT.OB) Recognizes Double Digit Increase in Sales for April and May

QualityStocks — Mon, 08 Jun 2009 15:21:29 +0000

DAC Technologies Group International Inc., an outsource manufacturer of high quality, reasonably priced security safes, gunlocks, gun cleaning kits, sporting goods, household cleaning products and various hardware items, reported this morning net sales of $2,161,691 for April and May, a 23% increase compared to $1,760,412 for the same two months in 2008. David A. Collins, [...]

North Korea, Iran and Israel – The Return of Geopolitical Risk

Justice Litle — Tue, 26 May 2009 19:42:31 +0000

pSuddenly, and with little warning, geopolitical risk is back. With all the thundering force of an underground nuclear explosion, our heads are turned to the globe#8217;s unstable flashpoints once again#8230; Suddenly, and with little warning, geopolitical risk is back./p pNot that it ever really left, of course. Preoccupied with a sea of financial troubles, the world had simply put it out of sight and out of mind for a while./p pNow, with all the thundering force of an underground nuclear explosion, our heads are turned to the globe#8217;s unstable flashpoints once again#8230;/p pstrongNorth Korea: #8220;Look at Me#8221;/strong/p pIn North Korea, the Kim Jong Il Regime has just conducted a fresh nuclear test (and fired three short-range missiles). #8220;World leaders reacted with outrage,#8221; according to#8230;/p

The Banks are Insolvent

Contrarian Profits — Mon, 18 May 2009 14:47:22 +0000

pBuy-out fund manager Mark Patterson won’t be high up on Tim Geithner’s Christmas card list this year. The chairman of MatlinPatterson Advisers says Geithner’s effort to stabilize the banking system through the TARP is a hopelessly ill-conceived policy that enriches speculators at public expense./p pWhat makes Patterson’s comments particularly interesting is that he’s a TARP insider. He used TARP matching funds to buy Michegan bank Flagstar Bancorp. Patterson’s firm ended up with 80% of the Flagstar shares. The government managed to secure a mere 10% stake./p pPatterson reckons Team Obama is only putting off the necessary day of reckoning by pretending the US banking system is still solvent. Speaking at the Qatar Global Investment Forum he had this to say about the#8230;/p

On to Moscow!

Bill Bonner — Fri, 15 May 2009 19:28:42 +0000

pLast week, the European Central Bank squared its shoulders and joined ranks of the damned. emThe Times/em of London reported that in joining up with the US Federal Reserve Bank and the Bank of England, strongthe European Central Bank “pulled out all the stops” in their drive to revive their economies./strong /p pThe ECB announced that it will cut its key lending rate to its lowest level ever and begin a form of “quantitative easing,” in which it will buy corporate debt in order to reduce commercial interest rates. Details to follow, it said. “Stops” are to central bankers what safety fuses are to electricians. You may take them out when you really want to get the juice flowing; but your house might#8230;/p

Better Dead Than Alive

Bill Bonner — Fri, 08 May 2009 20:00:25 +0000

pWhen Ronald Reagan moved into the White House, total U.S. debt equaled 168% of GDP. The next 27 years took the total to 370%; it was heralded as a triumph of the Anglo-Saxon free enterprise system, but it left people with an additional $27 trillion of debt. strongAnd now, the economic system that created so many heavy balls and such long chains is in the recovery room – looked after by quacks and prayed for by most of the world./strong/p pYou can explain the model in a few simple sentences: Encourage people to spend. When they run out of money, encourage them to borrow. When they tire of borrowing and spending, lend them more at lower rates./p pAs a way for people#8230;/p

GDP Awful, But Some Positives – Analyst Blog

Dirk Van Dijk — Wed, 29 Apr 2009 19:03:12 +0000

We highlight Wal-Mart Stores, Inc. (WMT) and Target Corp. (TGT).

In the first reading of the first quarter, GDP declined by 6.1%, which was almost as bad as the -6.3% decline in the fourth quarter. This is the first time we have booked back to back quarters of down 6% or more since the end of WWII. The number was also far worse than the consensus expectation of a 4.7% decline.

However, digging deeper into the numbers there is some reason for optimism going forward. In this analysis I will focus on the percentage contributions to GDP rather than the percentage change in the individual components. After all, a 30% decline in a component that makes up 1% of GDP is not as significant as a 5% decline in a component that makes up 20% of GDP.

Perhaps the biggest positive surprise in the report was that Personal Consumption Expenditures (PCE) actually contributed 1.50% to GDP, after subtracting 2.99% points of growth in the fourth quarter. Regular readers of this blog will recall that I forecast that PCE would be stronger than most expected. However, I thought we might just marginally break into the plus column on the biggest part of GDP.

A contribution of 1.50% is much higher than I was expecting. All three parts of PCE were up, with spending on Durable Goods adding 0.61 (vs. -1.67 in the 4Q), Non-Durable Goods kicking in 0.26 (vs. -1.97 in the 4Q) and Services adding 0.63 (vs. +0.66 in 4Q).

Going forward, there is a big question if this strong performance can continue in the face of rapidly rising unemployment. However, in the first quarter it is clear that consumers were taking advantage of post-Christmas sales.

Looking forward, perhaps the best part of the report was that inventory investment subtracted 2.79 points from growth (vs. -0.11 in 4Q). Large inventory draw-downs in one quarter have a tendency to be reversed in the next quarter. When the shelves are bare, people start to order more to restock them, causing output to rebound.

The drop off in inventories contributed to a horrific 8.83 point decline in Gross Private Domestic Investment (GPDI). This was more than twice as bad as the already ugly -3.47 point decline in the fourth quarter.

Essentially all investment in the real economy, both fixed and inventory, residential and non-residential, came to a screeching halt in the quarter. While ugly contributions from inventories are a good thing, the same cannot be said about fixed investments. There, bad is bad, and this was real bad.

Total fixed investment subtracted 6.04 growth points, or on a stand alone basis was responsible for the entire decline in GDP (everything else offset each other). This came on the heels of a 3.36 point drag in the 4Q. Of that 6.04 point decline, 4.68 points came from non-residential investment (vs. -2.56 in the 4Q). That in turn was split between a 2.13 point drag from non-residential structures (vs. -0.38 in 4Q) and a 2.55 point drag from spending on equipment and software (vs. -2.18 in the 4Q).

Businesses simply stopped investing in new productive capacity. It is not hard to see why, when over 30% of current capacity is sitting idle. Why buy that new machine tool when you have a dozen of them sitting around gathering dust? Why build a new office building when the place across the street is half empty and the tenant is laying off workers? Expect this part of the economy to remain weak for at least several more quarters.

This is particularly true on the structures side. I suspect that most of the spending we did see in the quarter was simply finishing off projects that were started in earlier quarters. The Commercial Real Estate (CRE) bust is just getting started and will last at least another year (see graph below, larger version available at http://www.calculatedriskblog.com/). Investment in structures (blue line) has only started to decline and was a major contributor to GDP up until the third quarter of last year.

The decline in equipment and software has been unusually steep, and it now represents the smallest share of the economy since the mid-1960's. The decline will probably continue, but is may be at a slower rate in coming quarters.

Perhaps the most surprising number on the downside in fixed investment was the subtraction of 1.36 points from Residential Investment (RI). This was the 13th straight quarter that RI was a drag on GDP growth, and the biggest subtraction since a 1.40 point drag in the 3Q of 2006. RI is now only 2.7% of GDP, down from a peak of 6.3% in the 4Q of 2005.

At some point RI will have to stop being a big drag on GDP simply because it no longer exists. It is now at by far its lowest level relative to GDP since the end of WWII (see graph below, larger version available at http://www.calculatedriskblog.com/). Note that RI turning up is a classic signal that a recession is ending.

Normally the rebound is very sharp, but I have my doubts that it will be so this time around, given the huge inventory of unsold houses -- both new and used -- and the second wave of foreclosures that is starting to crash upon the shore.

Net exports helped prevent the quarter from being a total disaster, adding 1.99 points to growth, versus a subtraction of 0.11 points in the fourth quarter. This was, however, not due to a surge of exports, but rather a collapse of imports. Declining exports subtracted 4.06 points from growth in the first quarter, following a 3.44 point decline in the fourth quarter.

With the rest of the world in recession along with us, don't look for a surge in exports to help out the GDP figures anytime soon. The decline in imports was stunning (imports are a subtraction from GDP so when they fall GDP goes up) and it contributed 6.05 points to growth. Put another way, if we had continued to import in the first quarter at the rate we had in the fourth quarter, then GDP would have crashed at an annualized rate of over 12% in the first quarter.

A good part of the decline in imports can be traced to lower oil prices, but even our non-energy imports have been declining fast. When inventories are drawn down, we buy less from China as well as less from domestic manufacturers. In case you have not noticed a lot of the stuff on the shelves of Wal-Mart (WMT) and Target (TGT) comes from overseas. If PCE can continue its surprising strength going forward, the decline in imports is unlikely to continue.

Finally, and probably surprising to many in view of the concerns about the budget deficits and federal spending, the government was overall a drag on GDP -- subtracting 0.81 points after it had added 0.26 points in the fourth quarter. The Federal government was a drag of 0.32 points, more than reversing its 0.52 point addition to growth in the fourth quarter.

Defense spending swung from adding 0.18 points in the fourth quarter to subtracting 0.35 points in the first quarter. Non-defense spending added just 0.03 points vs. adding 0.34 points in the fourth quarter.

The stimulus bill had not kicked in the first quarter, and I would expect that Federal spending, particularly non-defense spending will be a much larger positive contributor to GDP in future quarters.

State and Local spending subtracted 0.49 points (vs. -0.25 in 4Q). With local tax revenues plunging and an inability to engage in deficit spending, S&L will be an increasing drag on the economy for the rest of the year. Yes, there was some support in the stimulus bill for S&L governments, but it is no where near enough to prevent them from being a big drag on the economy going forward.

Barring a negative revision in the figures, it now looks like the worst of the recession was in the fourth quarter. The second quarter will probably be very negative, but not nearly as bad as the first quarter. In turn, the third quarter will also be negative, but again less than the second quarter decline. The earliest we are likely to see a positive print for real GDP growth is the fourth quarter of this year.

If a negative revision does come for the first quarter, the most likely place to look would be in the surprisingly good PCE numbers. I would not be surprised to see inventory investment actually add to GDP in the second quarter. Even if it proves to be a zero, it would greatly help the overall GDP numbers.

On the other hand, I wonder if the PCE numbers are sustainable going forward. Non-residential investment is going to continue to be a drag on the economy for the foreseeable future, particularly in structures. Residential Investment will be less of a drag for the rest of the year.

We cannot count on net exports to continue to help as much as they did in the first quarter. Federal spending will turn into an addition to GDP by the second quarter, and will continue to grow into next year. This will only be partially offset by S&L spending being more of a drag on the economy.

The longest recession since the Great Depression is not over by a long shot, but it will not last forever. We are past the steepest rate of decline, but are still going down. As the third graph shows, the worst damage done in this quarter came from the parts of the economy that tend to be coincident or lagging to the overall economy, not those that have historically been leading indicators of the economy (once again, larger version available at http://www.calculatedriskblog.com/).

There are still very substantial risks out there that could cause the rate of decline to accelerate again, most notably the prospect of long messy bankruptcies in Detroit, and the worst fears of the Flu epidemic coming true (almost impossible to tell at this point).

However, the seeds of recovery have been planted. Inventory will need to be restocked and eventually businesses will have to replace some of their equipment and will start to spend again. Then again, I would not expect a bumper crop from those seeds. The recovery, when it comes, is likely to be very anemic.

Zacks Investment Research

Semiconductors & Electrical Components – Industry Outlook

Zacks Market Commentaries — Tue, 28 Apr 2009 20:22:52 +0000

Not Your Father's Semi Industry

In the past 10 years, the fundamental shift in the semiconductor industry from corporate IT to consumer demand is very important to consider. It has created a different playing field. There are more products that use semi components (MP3s, cell phones, autos, "smart" houses). Seasonal demand is now an issue, such as Christmas and the Chinese New Year. Finally, the potential exists for more commoditized products and ASP [average selling price] erosion.

Firms that will out-perform in a slightly negative GDP environment include:

Firms with the strongest balance sheets, such as Intel Corp. (INTC)
Companies that make specialized semiconductors (i.e. chips used in dentist X rays)
Firms that sell products that are technology-driven rather than capacity-driven
Companies that are gaining market share because of superior technology, like Varian Semi (VSEA)
Firms that sell products associated with regulation (e.g. power conservation), such as Power Integrations (POWI)

Texas Instruments (TXN) and Intel's quarter provide a good look into what is occurring within the industry. Both beat estimates and believe the industry is returning to more seasonal levels. Intel called a bottom in PC sales, while TXN reported better-than-expected demand from notebooks and LCD-based HDTVs.

OPPORTUNITIES

Older technologies deliver power inefficiently, often consuming two or three times the amount of power needed by the end product and wasting substantial amounts of energy. Firms that provide solutions to so-called "energy vampires" will outperform. Our favorite name in this arena is Power Integrations, Inc. (POWI).

Intel's "Netbooks" are expected to attract first-time buyers in developing economies, while in developed economies, their pricing and portability are expected to help second- and third-unit sales per household. Although they are unlikely to be as efficient as some of the latest chips for desktops and servers, there is a longer-term potential for adoption in consumer electronic devices, embedded applications and thin clients.

Since the chip is specially designed for the portable market, the design excludes some features that lower the manufacturing cost. This is expected to help maintain margins even as volumes ramp up. Management stated that the Atom processor would generate margins in the 58% range. Given the enormous prospects, revenues are being broken out separately.

SITUATIONS TO AVOID

Trimble Navigation (TRMB) is an OEM of GPS-based products and control systems. December quarter results were short of consensus and management expectations, although they were in-line with management's preannouncement. Forward guidance is for a 6-18% sequential increase in Q1.

International markets will be the key to growth in 2009, as the negative impact of the recession on E&C is likely to be even more pronounced. We expect further declines in the share price as investors react to management conservatism, and the weakening market overall.

The E&C unit shrunk to 49% of revenue in the last quarter. The revenue share has been declining gradually, as the TFS and TMS segments experienced stronger growth. The problems in this business continued in the last quarter, with revenue declining double-digits, both sequentially and year over year.

The Middle East is undergoing temporary softness due to the fall-off in oil revenues. The traditionally strong U.S. and European construction markets experienced unprecedented weakness. A couple of factors indicate that the weakness could continue.

The first is the slower economy, which resulted in weaker demand for new construction products. The second is related to the uncertainty in the credit market. As construction companies are less certain about the availability of funds, they have cut back investment in new contruction equipment. While a lot of the order pullback may return as revenue, delayed decision-making is likely to continue for the next few quarters. Customers depleted inventories in the last quarter in favor of using cash for new equipment.

Zacks Investment Research

The Coming Siege of Austerity

Contrarian Profits — Fri, 17 Apr 2009 14:59:57 +0000

pIt’s a curious symptom of the consensus trance zombifying the American public and its auditors in the media that something like a “recovery” is now deemed to be underway. And, as events compel me to repeat in this space, it begs the question: recovery to what? /p pTo Wall Street booking stupendous profits by laundering “risk” out of bad loans with new issues of tranche-o-matic securitized paper? This I doubt, since there isn’t a pension fund left from San Jose to Bratislava that would touch this stuff with a stick, even if it could be turned out in collector’s editions of boxed sets./p pDoes it mean that American “consumers” (so-called) are awaited momentarily in the flat-screen TV sales parlors with their credit#8230;/p

Budget Deficit Triples!

Contrarian Profits — Mon, 13 Apr 2009 15:00:12 +0000

pCurrencies rebound #8230; Budget Deficit makes up for Trade data#8230; China#8217;s currency reserves continue to grow#8230; High yielders are best performers#8230; And Now#8230; Today#8217;s Pfennig!br / /p pThe lack of volume on Friday didn#8217;t yield any wild swings, and the currencies pared their losses from the day before (trade deficit plunges)#8230; This morning, the currencies, led by the euro, are moving higher VS the dollar, but at this point it#8217;s baby steps#8230; The bias to sell dollars hangs over the currencies however#8230; It seems to me that it#8217;s very much like trying to hold a kid back from ripping open their Christmas presents#8230; It sure seems inevitable, but when is the question#8230; As I used to say in my presentations, imagine if you#8230;/p

Spain’s Unemployment Continues Its Sharp Upward Surge

Edward Hugh — Fri, 03 Apr 2009 09:41:00 +0000

by Edward Hugh: Barcelona br /br /The number of unemployed in Spain was up again in March - by "only" 123,543. I say "only" since it is evidently less than the 154,508 increase registered in February, or the 198,538 registered in January. And indeed many of the newspaper stories have been full of arguments from Employment Minister Maravillas Rojo (would that she could work "Maravillas") about how Spain registered the weakest unemployment gain in six months in March (when compared to the previous month). However, as those who look into the economic analysis side of this a bit more (and who don't believe in either wonders or "miracles) point out, taking seasonal factors into account the monthly 3.55% rise in March shows a more or less steady trend, and no special sign of improvement, despite the large stimulus programme. Last March, for example, unemployment strongfell by 0.62%./strongbr /br /So when we come to look at the year on year situation (which more or less eliminates the seasonal variation) we find that the year on year rate of increase of 56.69% was the highest so far, and if we look at the chart we will see there is no sign of a softening in the curve.br /br /br /pa href="http://2.bp.blogspot.com/_ngczZkrw340/SdUtkM_ey8I/AAAAAAAANaI/lGUdWGDcaAU/s1600-h/spain+unemployment.png"img id="BLOGGER_PHOTO_ID_5320208634794134466" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 220px; TEXT-ALIGN: center" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SdUtkM_ey8I/AAAAAAAANaI/lGUdWGDcaAU/s400/spain+unemployment.png" border="0" //abr /br /So the overall jobless total rose to 3,605,402 the highest since 1996, and the 3.5 percent or 123,543 March increase was the highest number since 1996 when the current method of calculation was introduced, according to the ministry statement. This was the 12th straight monthly increase and the sixth consecutive montly rise of more than 100,000 registered unemployed in Spain.br /br /Which brings us to the forecast. Basically we could now take two scenarios, a moderate and a worse case one. On the moderate scenario, total unemployment will now hit 4.5 million by December, and 6 million by December 2010. On the worst case scenario we will already be at 5 million by christmas, and be pushing 7 million by the end of 2010. It all depends.br /br /In terms of unemployment rate, the latest quarterly estimate we have from the national statistics agency (INE) was 13.9 percent for the fourth quarter of 2008. However according to European Union statistics agency Eurostat, Spain's unemployment rate rose to 15.5 percent in February, the highest level in the whole 27-nation bloc. (The EU average was 7.9 percent). Spain's unemployment rate has now risen each quarter since it dipped to 7.95 percent in the second quarter of 2007, its lowest level since 1978. The government currently expects unemployment to rise to 15.9 percent by the end of the year, but this is obviously hopelessly unrealistic, since we are nearly at that level now, and even the European Commission, which is normally fairly conservative with downside estimates, is more pessimistic, since it forecasts Spain's jobless rate continuing to rise in Spain to 16.1 percent in 2010 and 18.7 percent in 2011. br /br /br /My own forcasts would be on the moderate forecast around 20% by the end of 2009 and 25% by end 2010, and on the worst case scenario possibly 22% by the end of this year, and 27% to 30% by the end of 2010. These latter numbers look horrific, and seem hard to believe, but we are currently set on a path (especially now with the "breakages" in the banking system - today there is growing and informed specultion here in Catalonia that Caixa Penedes, and Caixa Catalunya may be the next to go) where it is hard to see how we won't get to that horrible place if no one does anything. And since at this moment the entire European leadership seems to be in denial that there is any special problem in Spain nothing looks likely to be done. (Jean Claude Trichet simply said what he had to to the Spanish journalist who questioned him on the Spanish banking system in yesterdays press conference - "I have every confidence in the strength of the Spanish banking system). Even that G20 meeting that is hitting the headlines seems to have had little to offer for countries like Spain, there were plenty of ideas about how to avoid falling into another bubble situation in - say - 2020, but virtually none about how to drag us out of the one we are currently stuck in.br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SdUxOlbqQNI/AAAAAAAANaQ/e72CJgjzaBg/s1600-h/spain+unemployment+2.png"img id="BLOGGER_PHOTO_ID_5320212661444165842" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 215px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SdUxOlbqQNI/AAAAAAAANaQ/e72CJgjzaBg/s400/spain+unemployment+2.png" border="0" //abr /br /br /strongConsumer Confidence Rebounds Slightly/strongbr /br /br /Due you believe in the "earthquake" theory of probability? You know, the one which goes that if you didn't have an earthquake yesterday, and you didn't have an earthquake today, then the probability of having one today strongmust/strong be higher, right? Well something like this seems to be the theory of probability that Spanish consumers inherently believe in./ppWhy? Because Spanish consumer confidence rose again this month, to 53.7 points, up from 48.6 points in February, The Confidence Index which is provided by Spain's Official Credit Institute (ICO ) was at 73.1 in March last year, hit a record low of 46.3 in July as oil prices soared and European Central Bank interest rates hit 4.25 percent, and has since oscillated around the 50 point level amid easing commodity prices and following ECB decisions to sharply reduce interets rates. br /br /br /a href="http://2.bp.blogspot.com/_ngczZkrw340/SdUrKxFjaAI/AAAAAAAANZ4/ePIIESCbKf0/s1600-h/spain+consumer+c.png"img id="BLOGGER_PHOTO_ID_5320205998783424514" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 215px; TEXT-ALIGN: center" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SdUrKxFjaAI/AAAAAAAANZ4/ePIIESCbKf0/s400/spain+consumer+c.png" border="0" //a br /br /br /But if we look at the breakdown in the individual components, we will see that the current conditions, employment and state of the country readings have long been trawling the bottom. The only component which gas really not hit lows (yet) is the expectations one. The Spanish are ever optimistic (until they get really pessimistic that is) and this component has been rising in recent months, even as conditions have continued to deteriorate. Which is why I say they must believe something like the "earthquake" theory of probability, the more days that pass with things getting worse must mean that tomorrow they are likely to get better, right?br /br //pa href="http://2.bp.blogspot.com/_ngczZkrw340/SdUrYVq9f4I/AAAAAAAANaA/ln8i9A7AEig/s1600-h/spain+cc2.png"img id="BLOGGER_PHOTO_ID_5320206231942299522" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 217px; TEXT-ALIGN: center" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SdUrYVq9f4I/AAAAAAAANaA/ln8i9A7AEig/s400/spain+cc2.png" border="0" //abr /br /strongIndustrial Contraction Continues Unabated/strongbr /br /The JPMorgan Global Manufacturing PMI – which provides a single figure snapshot of operating conditions across the planet – was out earlier this week and posted 37.2 in March. Although substantially below the no-change mark of 50.0, the PMI was up for the third month in row and at its highest level since last October. The vast majority of the national manufacturing PMIs rose in March, including the US, Russia, Japan, China, most Eurozone nations and the UK.br /br /This is however the most sustained period of contraction in the series history, and it still remains very unclear where we go from here. In general the drop in output reflects weak demand, with new orders declining for the twelfth month in a row. The trouble is, it is not at all clear where the rebound in demand that is needed for a recovery is actually going to come from.br /br /The Markit Eurozone Final Manufacturing PMI for March rose from February's all-time low, up to 33.9 from 33.5. Thus the PMI signalled a marginal easing in the rate of decline from the previous month's record pace. Output showed the weakest decline for five months, and a smaller fall than the Flash estimate, although the rate of decline remained well above that seen prior to last October. With the exception of Italy, Austria and Greece, rates of contraction eased in each of the eight countries surveyed. /ppThe Netherlands saw the smallest (though still steep) drop in production, while Spain saw the sharpest decline for the eleventh straight month. By product, investment goods producers reported the steepest fall in production for the third successive month, closely followed by intermediate goods producers. Consumer goods firms meanwhile reported the weakest rate of decline for the seventh consecutive month. Stocks of both raw materials and finished goods fell at record rates, as companies focused on lowering their operating capacity and controlling costs. The reduction in unsold goods stock was especially steep in Ireland, Germany and France.br /br /br /strongSpain/strongbr /br /The pace of decline in Spanish manufacturing slowed in March but remained at the steepest contraction rate of any eurozone country. The PMI rose in March to 32.9 from 31.8 in February and thus further off from December's record low of 28.5. All the survey's main indicators remain far below the 50 level that divides growth from contraction. Output and new orders continued to contract sharply in March but at slower rates than recorded in the last six months, with panellists blaming falling demand as the principal cause as clients cut back on spending. /pblockquote"The March PMI data suggests that the pace of decline in the Spanish manufacturing sector has slowed," said economist Andrew Harker at Markit Economics, adding that new orders and output indices are well above record lows posted late last year. /blockquotepBut Harker was at pains to stress that the March figures should not be interpreted as any sort of sign of a turnaround in the Spanish economy. Unemployment in the sector continued to rise in line with falling output requirements as joblessness in the wider Spanish economy stood at 15 percent, the highest rate in the European Union. More than 34 percent of those surveyed by Markit said they had noted reduced employment levels at the end of the first quarter. Staffing levels have shrunken continuously since September 2007, according to the survey.br /br /Slumping demand also hit input and output costs, which both dropped to series lows in March. Input costs fell as firms negotiated better prices from suppliers, while output prices fell as these savings were passed on to customers and as scarce business fuelled greater pricing competition.br /br /Spain's preliminary harmonised inflation fell to -0.1 percent in March, according to government data on Monday, the first negative result for over 45 years as the deepening recession weighed on price gains.br /br /a href="http://2.bp.blogspot.com/_ngczZkrw340/SdN5CG0MY1I/AAAAAAAANYI/p1-5jcO2oNc/s1600-h/spain+pmi.png"img id="BLOGGER_PHOTO_ID_5319728661950915410" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 219px; TEXT-ALIGN: center" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SdN5CG0MY1I/AAAAAAAANYI/p1-5jcO2oNc/s400/spain+pmi.png" border="0" //adiv class="blogger-post-footer"img width='1' height='1' src='http://res1.blogblog.com/tracker/8991369883287712098-1187896803775174429?l=globaleconomydoesmatter.blogspot.com'//div

Money creation and the Fed

James Hamilton — Fri, 27 Mar 2009 23:47:16 +0000

A lot of people have seen this picture of the recent behavior of the monetary base and wondered what it means.

**Figure 1. Adjusted monetary base.** Source: FRED.

To understand the explosion in the monetary base since September, let's begin with a little background. The Federal Reserve has the ability to purchase assets or make loans with funds (money) that are created by the Fed itself. To buy a billion dollars worth of assets, the Fed doesn't show up with new cash in a wheelbarrow. Instead the Fed pays for any assets it purchases or loans it extends by crediting the funds that the recipient bank has in an account with the Fed, known as reserve deposits. A bank can later withdraw those deposits in the form of green currency, if it chooses, and that's the point at which an armored truck from the Fed would be involved with physical delivery of cash.

The monetary base is essentially the sum of (1) the currency that's been withdrawn from private banks and is being held by the public, (2) the currency that's sitting in the vaults of private banks that could potentially be withdrawn by the banks' customers if they wanted, and (3) banks' reserve deposits, which you could think of as electronic credits for currency that the banks could ask for from the Fed any time the banks choose. Historically, newly created reserve deposits have usually shown up pretty quickly as currency withdrawn by banks and then by the public. Choosing a pace at which to allow that supply of currency to grow so as to accommodate the increased currency demands from a growing economy without cultivating excessive inflation is one of the main responsibilities of the Fed.

Figure 2 below plots the assorted "factors absorbing reserve funds" from the Fed's H41 release during the halcyon period from 2003 to the middle of 2007. At that time, currency held by the public was by far the biggest component in the liabilities side of the Fed's balance sheet, with the currency supply increasing 20% over these 5 years and with temporary seasonal bumps to accommodate the annual Christmas surge in currency demand. Reserve deposits (the sum of the "reserves" and "service" components in Figure 2) were quite minor relative to total quantity of currency in circulation.

**Figure 2. Factors absorbing reserve funds, in billions of dollars, seasonally unadjusted, from Jan 7, 2003 to June 27, 2007.** Wednesday values, from Federal Reserve H41 release. Treasury: sum of U.S. Treasury general and supplementary funding accounts; reserves: reserve balances with Federal Reserve Banks; misc: sum of Treasury cash holdings, foreign official accounts, and other deposits; other: other liabilities and capital; service: sum of required clearing balance and adjustments to compensate for float; reverse RP: reverse repurchase agreements; Currency: currency in circulation.

With this increase in newly created money, the Fed was over this period acquiring assets primarily in the form of short-term Treasury securities, which holdings grew 25% over this 5-year period. The Fed at that time used short-term repurchase agreements as a device for adjusting the supply of reserves on a temporary basis. Note that for each date the height of the components in Figure 3 below (essentially the asset side of the Fed's balance sheet) is exactly equal, by definition, to the height of the liabilities portrayed in the previous Figure 2.

**Figure 3. Factors supplying reserve funds, in billions of dollars, seasonally unadjusted, from Jan 7, 2003 to June 27, 2007.** Wednesday values, from Federal Reserve H41 release. Agency: federal agency debt securities held outright; swaps: central bank liquidity swaps; Maiden 1: net portfolio holdings of Maiden Lane LLC; MMIFL: net portfolio holdings of LLCs funded through the Money Market Investor Funding Facility; MBS: mortgage-backed securities held outright; CPLF: net portfolio holdings of LLCs funded through the Commercial Paper Funding Facility; TALF: loans extended through Term Asset-Backed Securities Loan Facility; AIG: sum of credit extended to American International Group, Inc. plus net portfolio holdings of Maiden Lane II and III; ABCP: loans extended to Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility; PDCF: loans extended to primary dealer and other broker-dealer credit; discount: sum of primary credit, secondary credit, and seasonal credit; TAC: term auction credit; RP: repurchase agreements; misc: sum of float, gold stock, special drawing rights certificate account, and Treasury currency outstanding; other FR: Other Federal Reserve assets; treasuries: U.S. Treasury securities held outright.

Beginning in September 2007, the Fed began a process of systematically changing the nature of its asset holdings. Over the course of the next year, the Fed sold off over $300 billion in Treasury securities (about 40% of its holdings of Treasury securities), and replaced them with $150 billion in direct bank lending in the form of term auction credit, $60 billion in loans to foreign central banks in the form of liquidity swaps, and $100 billion in repurchase agreements, used now not for temporary adjustments but instead as a device to create a market for MBS by accepting alternative assets as collateral.

**Figure 4. Factors supplying reserve funds, in billions of dollars, seasonally unadjusted, from Jan 3, 2007 to August 27, 2008.** Wednesday values, from Federal Reserve H41 release. Agency: federal agency debt securities held outright; swaps: central bank liquidity swaps; Maiden 1: net portfolio holdings of Maiden Lane LLC; MMIFL: net portfolio holdings of LLCs funded through the Money Market Investor Funding Facility; MBS: mortgage-backed securities held outright; CPLF: net portfolio holdings of LLCs funded through the Commercial Paper Funding Facility; TALF: loans extended through Term Asset-Backed Securities Loan Facility; AIG: sum of credit extended to American International Group, Inc. plus net portfolio holdings of Maiden Lane II and III; ABCP: loans extended to Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility; PDCF: loans extended to primary dealer and other broker-dealer credit; discount: sum of primary credit, secondary credit, and seasonal credit; TAC: term auction credit; RP: repurchase agreements; misc: sum of float, gold stock, special drawing rights certificate account, and Treasury currency outstanding; other FR: Other Federal Reserve assets; treasuries: U.S. Treasury securities held outright.

Because the Fed funded those measures through August 2008 by selling off its holdings of Treasuries, there was little effect on either currency in circulation or the monetary base through that time.

**Figure 5. Factors absorbing reserve funds, in billions of dollars, seasonally unadjusted, from Jan 3, 2007 to August 27, 2008.** Wednesday values, from Federal Reserve H41 release. Treasury: sum of U.S. Treasury general and supplementary funding accounts; reserves: reserve balances with Federal Reserve Banks; misc: sum of Treasury cash holdings, foreign official accounts, and other deposits; other: other liabilities and capital; service: sum of required clearing balance and adjustments to compensate for float; reverse RP: reverse repurchase agreements; Currency: currency in circulation.

Beginning in September of 2008, the Fed embarked on a huge expansion in its lending efforts and holdings of alternative assets. The biggest items among assets currently held are $469 billion in term auction credit, $328 billion in currency swaps, $241 billion leant through the CPLF, and $236 billion in mortgage-backed securities now held outright.

**Figure 6. Factors supplying reserve funds, in billions of dollars, seasonally unadjusted, from Jan 3, 2007 to March 25, 2009.** Wednesday values, from Federal Reserve H41 release. Agency: federal agency debt securities held outright; swaps: central bank liquidity swaps; Maiden 1: net portfolio holdings of Maiden Lane LLC; MMIFL: net portfolio holdings of LLCs funded through the Money Market Investor Funding Facility; MBS: mortgage-backed securities held outright; CPLF: net portfolio holdings of LLCs funded through the Commercial Paper Funding Facility; TALF: loans extended through Term Asset-Backed Securities Loan Facility; AIG: sum of credit extended to American International Group, Inc. plus net portfolio holdings of Maiden Lane II and III; ABCP: loans extended to Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility; PDCF: loans extended to primary dealer and other broker-dealer credit; discount: sum of primary credit, secondary credit, and seasonal credit; TAC: term auction credit; RP: repurchase agreements; misc: sum of float, gold stock, special drawing rights certificate account, and Treasury currency outstanding; other FR: Other Federal Reserve assets; treasuries: U.S. Treasury securities held outright.

Where did the Fed get the resources to do all this? In part, it asked the Treasury to borrow on its behalf, represented by the pale yellow region in Figure 7 below, and a sum that last week amounted to a quarter trillion dollars. Note that magnitude is not part of the monetary base drawn in Figure 1. Some of the Fed expansion has shown up as additional currency held by the public, which made a modest contribution to the explosion of the monetary base seen in Figure 1. But by far the biggest factor was a 100-fold increase in excess reserves, the green region in Figure 7. These excess reserves mean that for the most part, banks are just sitting on the newly created reserve deposits, holding these funds idle at the end of each day rather than trying to invest them anywhere.

**Figure 7. Factors absorbing reserve funds, in billions of dollars, seasonally unadjusted, from Jan 3, 2007 to March 25, 2009.** Wednesday values, from Federal Reserve H41 release. Treasury: sum of U.S. Treasury general and supplementary funding accounts; reserves: reserve balances with Federal Reserve Banks; misc: sum of Treasury cash holdings, foreign official accounts, and other deposits; other: other liabilities and capital; service: sum of required clearing balance and adjustments to compensate for float; reverse RP: reverse repurchase agreements; Currency: currency in circulation.

That idleness, as I read the situation, was something the Fed initially actually wanted, and deliberately cultivated by choosing to pay an interest rate on excess reserves that is equal to what banks could expect to obtain by lending them overnight. As long as banks do just sit on these excess reserves, the Fed has found close to a trillion dollars it can use for the various targeted programs.

But what would happen if those electronic credits start to be redeemed for actual cash? Then we would have a concern, and the Fed would need to call the reserves back in by selling assets or failing to renew loans. But that presents a potential problem, as noted by Charles Plosser, President of the Federal Reserve Bank of Philadelphia:

It is true that a number of the Fed's new programs will unwind naturally and fairly quickly as they are terminated because they involve primarily short-term assets. Yet we must anticipate that special interests and political pressures may make it harder to terminate these programs in a timely manner, thus making it difficult to shrink our balance sheet when the time comes. Moreover, some of these programs involve longer-term assets-- like the agency MBS. Such assets may prove difficult to sell for an extended period of time if markets are viewed as "fragile" or specific interest groups are strongly opposed, which could prove very damaging to our longer-term objective of price stability.

Last Monday's joint statement by the Treasury and the Fed indicated that the plan is for the worst of the Fed's assets (reported as "Maiden Lane" and part of the "AIG" sums in Figure 4) to be taken over by the Treasury, and Plosser for one wants the Treasury to take all the non-Treasury assets off the Fed's balance sheet. But as the Fed has declared its intention to raise its MBS holdings to $1.25 trillion it seems the current plan calls for more, not less of non-Treasury assets. And the following clause in the joint Fed-Treasury statement suggests that perhaps the Fed intends this, like most of the previous balance sheet changes, to not be allowed to impact total currency in circulation:

the Treasury and the Federal Reserve are seeking legislative action to provide additional tools the Federal Reserve can use to sterilize the effects of its lending or securities purchases on the supply of bank reserves.

John Jansen (hat tip: Tim Duy) construes that clause to mean that the Fed is going to request the ability to borrow directly as well as for exemption of any borrowing done by the Treasury on behalf of the Fed from the congressional debt ceiling. Also via Tim, FRB San Francisco President Janet Yellen offers this elaboration:

As the economy recovers, the Fed will eventually have to reduce the quantity of excess reserves. To some extent, this will occur naturally as markets heal and some programs consequently shrink. It can also be accomplished, in part, through outright asset sales. And finally, several exit strategies may be available that would allow the Fed to tighten monetary policy even as it maintains a large balance sheet to support credit markets. Indeed, the joint Treasury-Fed statement indicated that legislation will be sought to provide such tools. One possibility is that Congress could give the Fed the authority to issue interest-bearing debt in addition to currency and bank reserves. Issuing such debt would reduce the volume of reserves in the financial system and push up the funds rate without shrinking the total size of our balance sheet.

In other words, if the Fed decides that, as a result of inflationary pressures, it needs to undo some of the expansion in its liabilities at a time when it is not prepared to unwind its asset positions, Plan B is for the Fed to borrow directly from the public.

Which brings me back to the original question. Does the explosive growth of the monetary base in Figure 1 imply uncontrollable inflationary pressures? My answer: not yet, but stay tuned.

Technorati Tags: macroeconomics, economics, Federal Reserve, term auction facility, deflation, inflation, credit crunch

Dollar Sinks Against The Euro

Doug Casey — Thu, 05 Mar 2009 19:21:27 +0000

p class="maintextDRP"In the currency market, the dollar sunk against the euro. Late Wednesday, the euro was trading at $1.2651 vs. $1.2560 on Tuesday. /p pThe dollar declined against most major currencies yesterday, losing ground as equity markets shifted to the black./p pIn economic news, it appears investors were encouraged by details of a government program designed to help as many as 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments, as stocks broke a five-day losing streak./p p“Virtually everyone was expecting some sort of a bounce, we just didn’t know exactly when that would occur,” said Randy Frederick, director of trading and derivatives at Charles Schwab. “You can’t go down forever.”/p pThat’s a pretty stupid#8230;/p

Corporate Layoffs Subsiding Substantially

Eldon Mast — Thu, 05 Mar 2009 06:15:00 +0000

pa href="http://feedads.googleadservices.com/~a/ia2JQl69Udr53U14D2pLw5yMcPQ/a"img src="http://feedads.googleadservices.com/~a/ia2JQl69Udr53U14D2pLw5yMcPQ/i" border="0" ismap="true"/img/a/pThe good news for jobs this week is that a major study now shows that corporations have either finished their layoffs for now or have significantly curbed those actions.br /br /"The decline in job cuts last month offers some hope that January was the peak and we will now see layoffs begin to fall or at least stabilize," said John Challenger, chief executive officer of Challenger Gray amp; Christmas the authors of the study.br /br /According to the report, major U.S. companies surveyed in the study announced only 186,350 job reductions in February, down significantly from January when the cuts totaled 241,749.br /br /On Thursday all eyes will be on a href="http://bloomberg.econoday.com/byshoweventfull.asp?fid=437656amp;cust=bloombergamp;year=2009"initial claims for unemployment/a. Following the Challenger, Gray amp; Christmas report it will likely also show those initial claims falling.br /br /If so, we may just be reaching an important tipping point. You might just be observing a style="color: rgb(51, 51, 255);" href="http://mast-economy.blogspot.com/2009/02/101-economic-postives.html"one more catalyst/aspan style="color: rgb(51, 51, 255);" /spanto fuel another significant a style="color: rgb(51, 51, 255);" href="http://mast-economy.blogspot.com/2009/02/bull-market-move-swift-and-steep.html"rally in the equities markets/a.div class="blogger-post-footer"div/div No Gloom here. Only Good News. div/div a href="http://www.amazon.com/gp/product/1416560610?ie=UTF8tag=thegooneweco-20linkCode=as2camp=1789creative=9325creativeASIN=1416560610"The Power of Positive Thinking/a div/div a href="http://www.amazon.com/gp/product/0743243153?ie=UTF8tag=thegooneweco-20linkCode=as2camp=1789creative=390957creativeASIN=0743243153"The Road Less Traveled/a div/div/divdiv class="feedflare" a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=Tpoqhm95q7U:RaHARa6MFNM:yIl2AUoC8zA"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?d=yIl2AUoC8zA" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=Tpoqhm95q7U:RaHARa6MFNM:63t7Ie-LG7Y"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?d=63t7Ie-LG7Y" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=Tpoqhm95q7U:RaHARa6MFNM:dnMXMwOfBR0"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?d=dnMXMwOfBR0" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=Tpoqhm95q7U:RaHARa6MFNM:F7zBnMyn0Lo"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?i=Tpoqhm95q7U:RaHARa6MFNM:F7zBnMyn0Lo" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=Tpoqhm95q7U:RaHARa6MFNM:7Q72WNTAKBA"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?d=7Q72WNTAKBA" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=Tpoqhm95q7U:RaHARa6MFNM:V_sGLiPBpWU"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?i=Tpoqhm95q7U:RaHARa6MFNM:V_sGLiPBpWU" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=Tpoqhm95q7U:RaHARa6MFNM:qj6IDK7rITs"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?d=qj6IDK7rITs" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=Tpoqhm95q7U:RaHARa6MFNM:KwTdNBX3Jqk"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?i=Tpoqhm95q7U:RaHARa6MFNM:KwTdNBX3Jqk" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=Tpoqhm95q7U:RaHARa6MFNM:l6gmwiTKsz0"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?d=l6gmwiTKsz0" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=Tpoqhm95q7U:RaHARa6MFNM:gIN9vFwOqvQ"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?i=Tpoqhm95q7U:RaHARa6MFNM:gIN9vFwOqvQ" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=Tpoqhm95q7U:RaHARa6MFNM:TzevzKxY174"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?d=TzevzKxY174" border="0"/img/a /divimg src="http://feeds2.feedburner.com/~r/TheGoodNewsEconomist/~4/Tpoqhm95q7U" height="1" width="1"/

US Mint Bullion Coin Sales

Alex Stanczyk — Tue, 17 Feb 2009 15:52:42 +0000

US Mint Bullion Coin Sales Adam Hamilton February 13, 2009 3342 Words Back in late 1985, the US Congress authorized the Gold Bullion Coin Act of 1985 which President Ronald Reagan promptly signed into law. It ordered the US Treasury, through its US Mint branch, to start producing [...]

A ‘rolling maul’ budget is better than an ‘up the jumper’ miracle

Bernard Hickey — Sun, 08 Feb 2009 19:53:16 +0000

It appears everyone and their dogs are Keynesians now. They believe the only hope for turning around the global economy is lots of government spending and quick. Spend, spend, and borrow even more, they say. There’s a frenzy of calls for governments to give handouts to taxpayers and to spend up large to support consumption in [...]

Silver Christmas Rounds – A Gorgeous Way To Buy Silver Rounds

Christina Goldman — Sun, 01 Feb 2009 09:14:19 +0000

Silver Christmas rounds are a simply beautiful variety of a type of silver coin called bullion rounds. The term round itself came about because the silver was shaped into coins and thus was able to be stacked into rolls. This made it easy for the coins to be handled and shipped. Many times, you'll see them called silver art rounds because they can be bought inscribed with a variety of designs ranging from Santa Claus, christmas trees, snowman, animals, angels, and many other seasonal figures.

Five reasons why Alan Bollard should not have cut the OCR

Bernard Hickey — Wed, 28 Jan 2009 20:06:16 +0000

Here’s five reasons why Reserve Bank governor Alan Bollard should have held the Official Cash Rate at 5% this morning, rather than the 150-basis-point cut to 3.5% he delivered. 1. We have a savings problem. The best way to encourage savings is to keep interest rates above 5% at least. A lot of people forget there’s about [...]

Stockerblog.com Exclusive: Interview with Natalie Pace – Part 1

Fred Fuld — Sun, 25 Jan 2009 04:33:00 +0000

Stockerblog.com had the pleasure of recently interviewing Natalie Pace, head of her own financial publishing and media company, and author of the book a href="http://www.amazon.com/gp/product/1593154917?ie=UTF8tag=antiquestocka-20linkCode=as2camp=1789creative=9325creativeASIN=1593154917"Put Your Money Where Your Heart Is: Investment Strategies for Lifetime Wealth from a #1 Wall Street Stock Picker/aimg src="http://www.assoc-amazon.com/e/ir?t=antiquestocka-20l=as2o=1a=1593154917" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important;" /. She has been a repeat guest on Fox News, Forbes on Fox, Good Morning America, Time Magazine, USA Today, Kiplinger's Personal Finance, and other financial news media.br /br /span style="font-weight:bold;"Stockerblog.com/span: What made you decide to get into stock investing, after losing money on real estate? In other words, why not just put your money in the bank?br /br /span style="font-weight:bold;"Pace:/span I didn't lose money on real estate, I was underwater and when I did sell my real estate, I sold for a profit. And in the mean time, I was able to live there and not pay rent and got the tax benefits, but it was underwater. I'm glad you asked the question because that's an important message for people today, to realize about their real estate. If they're in trouble and they can find a way to modify their loan and stick it out, their investments return over time, but in the mean time, especially if it is your home, chances are you have a tax benefit staying there, and you get to live in it. Sometimes there are other win-wins out of an investment rather than just the ROI. br /br /span style="font-weight:bold;"Stockerblog.com:/span What made you get into stock investing, in other words why did you really look into how to invest in stocks, choosing stocks, that type of thing. br /br /span style="font-weight:bold;"Pace:/span Well actually I always thought that you should make money while you sleep. So I had been invested in stocks ever since I began my first real job, when I started making money. But what got me into it even more seriously, which was kind of funny, was when I did make money on that real estate that I sold, I had a chunk of money sitting in a certificate of deposit at 4%. br /br /I wanted it to earn a little more so in August of 2000, I went to a broker that had been referred by my bank and he recommended that I diversify all of my money, every cent plus an additional $500 per month, into four mutual funds, and I can tell you that one was a telecommunications fund anchored by Global Crossing, another was an energy fund anchored by Enron, third was an Internet fund anchored by AOL, and the fourth was an international fund anchored by Japan. I looked at him and I said the telecommunications companies are cooking the books, you can't have 25 cents a minute long distance drop to 4 cents a minute and have profits.br /br /Then there was Enron, and I lived in California when Enron was gouging our energy rates to the point that people were dying; there were old people and poor people during our heat wave that were not able to afford their air conditioning, so I refused to invest in Enron, just on principal. br /br /I had told all my friends that at a 1999 Christmas party, and I lived in Santa Monica so a lot of my friends were very wealthy and very powerful, and they thought I was crazy, and told me that I didn't understand the new economy. I told them that I understand the old economy and if you make 9,000% gains on AOL, you should take your profits, because it cannot last until they start earning money. At any rate, I told everybody to sell and diversity in Christmas of 1999. In 2000 I just said 'No' to mutual fund investments, and in 2001 when stocks that I did like had lost 90% of their value and were trading for a song, I went in and tripled my money in less than four months, another year that people lost a lot of money. So at that point, all the girlfriends who had been listening to me in 1999 started coming back to me and have me teach them what I know. br /br /span style="font-weight:bold;"Stockerblog.com:/span Did you ever think that you would become a stock picker, columnist, and head of your own financial web site?br /br /span style="font-weight:bold;"Pace:/span Never in my wildest dreams, but it was totally meant to be. I was just a single mom trying to make my own ends meet, and when my girlfriends came to me, it was hilarious, because they said "Will you teach us what you know?" and I said "OK as a philanthropic thing I will teach you as a test group", and within a year, I had submitted a business plan. Then out of the blue, the daughter of the president of Oracle walked in to my life, so I gave him the business plan, and he said "I think you're a genius" and I said "Would you put that in writing?" and he say "Yes" and from there, within a year I was on Forbes.com, interviewing Steve Forbes. They were very supportive, and it just kept growing that fast. br /br /span style="font-weight:bold;"Stockerblog.com:/span Can you tell me what your biggest investment success was, and why it was so successful?br /br /span style="font-weight:bold;"Pace:/span I am a Forbes, not a Schwab, so my strategies are to provide the news and information for investors to make a lot of money. I can tell you the biggest successes we've had and it's been unbelievable. I have companies of the year and then I have company features of the month. My company of the year in 2003 was Taser International (TASR) and from the time I listed it to its peak, it earned 9,000% gains. So anyone who had invested $12,000 when I first listed it in January of 2003 would have become a millionaire. We took it off the list at a 5,000% gain. br /br /Other big winners I had, I actually picked Google (GOOG) on the IPO and that was on Fox News, and I got to tell you, I was the lone ranger on that one. Everybody did not like Google. At that point they thought it was going to be over-valued, over rated, they didn’t like the way they were conducting their auction for the IPO and letting just anybody invest in it. There have been many, many more. br /br /One other thing that I think is really important for people to know, in 2007, clean energy was the top performer. It earned 60 cents on the dollar and over half of the companies I was featuring each month were green and in that clean energy space. People made a lot of money. Suntech (STP) more than doubled that year, and we did tell people to take their profits early. MEMC Electronic (WFR) tripled that year, and anybody, even if they just had a clean ETF, and were rebalancing once a year, they probably would still be up this year, instead of down.br /br /br /bEnd of Part 1 of the Interview – Stay tuned for future segments of the interview over the next couple weeks, where Pace discusses her thoughts on her holistic view of investing and new bits of advice since the book was written./bbr /br /Her latest book, a href="http://www.amazon.com/gp/product/1593154917?ie=UTF8tag=antiquestocka-20linkCode=as2camp=1789creative=9325creativeASIN=1593154917"Put Your Money Where Your Heart Is: Investment Strategies for Lifetime Wealth from a #1 Wall Street Stock Picker/aimg src="http://www.assoc-amazon.com/e/ir?t=antiquestocka-20l=as2o=1a=1593154917" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important;" / is available at Amazon. You can also check out Stockerblog's a href="http://stockerblog.blogspot.com/2009/01/book-review-put-your-money-where-your.html"review of the book /a.br /br /iInterviewer does not own any of the above mentioned stocks./ibr /br /Interview by Fred Fuld at a href="http://Stockerblog.com"Stockerblog.com/adiv class="blogger-post-footer"div class='adsense' style='text-align:center; padding: 0px 3px 0.5em 3px;' script type="text/javascript"!-- google_ad_client="ca-pub-2427831169011625"; google_ad_width=300; google_ad_height=250; google_ad_format="300x250_as"; google_ad_type="text"; google_ad_channel ="8681602088"; google_color_border="FFF3DB"; google_color_bg="FFF3DB"; google_color_link="1B0431"; google_color_url="1B0431"; google_color_text="29303B"; //--/script script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js" /script /div

How to Protect Yourself from the End of America

Daily Wealth — Sat, 24 Jan 2009 13:00:00 +0000

BBy Porter Stansberry/BBRBR The current economic problems have their roots in one major thing: the vast expansion of debt in the United States over the last three decades.BRBR Americans have borrowed far more money than they can ever hope to repay. Much of this debt is tied to residential real estate, but there are also record amounts of credit-card, commercial real estate, and public (state and federal) debt.BRBR Starting in 2006, when mortgage debts began to sour, asset prices began to fall – even though employment and wages remained strong. The only time that's ever happened before was in the early stages of the Great Depression. This marked the beginning of the great "unwinding" as the excess debt began to unravel. The result has been a sustained decline in the underlying asset prices upon which layer after layer of debt had been securitized.BRBR Declining asset prices and the large amount of mortgage debt already outstanding make it virtually impossible for the private sector to create any additional credit.BRBR And because Americans (in aggregate) have not saved a penny in almost a generation, there's no way to keep the economy going. Americans have become credit junkies. Without more credit, America's economy falls apart. But according to the Federal Reserve, outstanding U.S. consumer credit fell in November by $7.9 billion – the largest monthly decline ever. That's a 3.7% annualized decline in consumer credit. That's never happened before – not since 1943, when the records begin. Credit-card balances declined by $2.8 billion, and auto loans declined by $5.2 billion.BRBR The declines in credit made a huge impact on consumer demand. Car sales fell by record amounts in December (32%), and retail sales fell across the board at Christmas. It was the worst holiday retail results in more than four decades. These declines to credit set the stage for what would normally be a long-lasting recession and a massive decline in asset prices. Imagine how far car prices would fall if it became impossible to get a car loan. Imagine how far home prices would fall if it became impossible to get a mortgage.BRBR But the U.S. government has one weapon no other country has – the world's reserve currency. The government clearly plans to make up for the shortfall in consumer demand by increased spending. The U.S. budget deficit for 2009 is now projected to be $1.1 trillion – more than 8% of GDP. Only during World War I and World War II did the government ever have bigger annual deficits. None of these figures include any of the new stimulus packages Barack Obama has promised, which means the actual deficit next year might grow to $2 trillion – around 15% of GDP.BRBR Given our total debt already exceeds $10 trillion, it seems improbable this level of deficit spending can continue without sparking a run on the dollar via foreign governments selling U.S. Treasury bonds. No one believes our creditors will ever sell the dollar. But they're wrong. Our creditors will not allow us to print money forever.BRBR South Korea is one of the largest holders of U.S. Treasury bonds. On January 19, the head of investments for South Korea's government pension service, Kim Heeseok, told Bloomberg, "It's time to sell U.S. Treasuries" because the ongoing stimulus is going to cause inflation. We are squandering and destroying the greatest advantage of our country – control over the world's reserve currency.BRBR In 2009, we will see government spending approach 30% of GDP. Our government is now bigger, as a percentage of our economy, than the socialist states of Europe, excluding their health care expenditures. And these figures don't reflect the Federal Reserve's actions. The Fed has tripled the size of its balance sheet, creating enormous amounts of new money by lending to hundreds of ailing banks and buying up more than $1 trillion worth of questionable asset-backed securities. This month, the Fed pledged to buy yet another $500 billion of Fannie- and Freddie-guaranteed mortgage securities, helping to force mortgage interest rates down.BRBR This is how America ends – with the lie that we all can live at the expense of our neighbor and borrow endlessly. Rather than simply face a downturn in the economy, we plan to borrow trillions of dollars our children and grandchildren will be forced to repay. Rather than let all those people and institutions that took on too much debt (like GM) be liquidated and restructured, we plan to risk a hyperinflation. Rather than insist homeowners who can't afford their mortgages lose their homes, we would jeopardize the credit rating of the country.BRBR It is all madness. None of the government's bailout plans will solve any of the problems. The government can only shift the burden of the failures. Instead of bondholders and shareholders being wiped out, taxpayers are put on the hook. These actions will temporarily resuscitate the economy – but cause a permanent decline in the value of the dollar.BRBR Fortunately for us, we have several ways to protect ourselves from what will happen. First, make sure to own physical gold and silver. A dollar run will send precious metals much higher. Second, own the highest-quality stocks in the world. And third, sell any long-dated U.S. government bonds you own. As the dollar loses its value and inflation returns to the economy, much of the value of these government IOUs will be wiped out.BRBR I'm not happy to be the one to tell you all this. I hope I'm dead wrong. But it's paramount you take at least some measure of the precautionary steps I've just described. Bigger government is coming... and in the long run, it's going to make things worse.BRBR Good investing,BRBR Porter StansberryBRBR TomBRBRdiv class="feedflare" a href="http://feeds2.feedburner.com/~f/dailywealth/rss?a=RbgIKAAc"img src="http://feeds2.feedburner.com/~f/dailywealth/rss?d=41" border="0"/img/a a href="http://feeds2.feedburner.com/~f/dailywealth/rss?a=VKy9YzqU"img src="http://feeds2.feedburner.com/~f/dailywealth/rss?d=50" border="0"/img/a a href="http://feeds2.feedburner.com/~f/dailywealth/rss?a=pzBV0FCr"img src="http://feeds2.feedburner.com/~f/dailywealth/rss?i=pzBV0FCr" border="0"/img/a a href="http://feeds2.feedburner.com/~f/dailywealth/rss?a=d2QVxXTW"img src="http://feeds2.feedburner.com/~f/dailywealth/rss?d=54" border="0"/img/a a href="http://feeds2.feedburner.com/~f/dailywealth/rss?a=IqwaKBbQ"img src="http://feeds2.feedburner.com/~f/dailywealth/rss?i=IqwaKBbQ" border="0"/img/a a href="http://feeds2.feedburner.com/~f/dailywealth/rss?a=QJp2J52p"img src="http://feeds2.feedburner.com/~f/dailywealth/rss?d=129" border="0"/img/a /divimg src="http://feeds2.feedburner.com/~r/dailywealth/rss/~4/AdtjMaTuJ_8" height="1" width="1"/

Make money on Ebay.

Vlada Kynsky — Sat, 24 Jan 2009 08:02:00 +0000

a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_28p7XDn4Qb0/SXrLmdmDVhI/AAAAAAAABYE/-vZLvA4pKBg/s1600-h/make+money+on+Ebay.jpg"img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 400px; height: 219px;" src="http://1.bp.blogspot.com/_28p7XDn4Qb0/SXrLmdmDVhI/AAAAAAAABYE/-vZLvA4pKBg/s400/make+money+on+Ebay.jpg" alt="" id="BLOGGER_PHOTO_ID_5294768173567137298" border="0" //abr /br /Last week online seller Ebay (EBAY) has released earnings for Q4 08 and the company posted first revenue decline ever. Even double digit decline by 16% to $ 1,3 bln. Next week we have another scheduled online seller's earnings call. Amazon (AMZN) releases results on Thursday 29th of January. And there could be upside surprise as company called the best Christmas ever with ordered 6,3 mln items. Also in terms of internet searches Amazon has beaten Ebay. December visitors increase by 9,8% y-o-y for Amazon vs. drop by 2,5% for Ebay.br /br /The picture above is from Adam Hewison video analysis. You can see full a style="font-weight: bold;" href="http://www.ino.com/info/277/CD3103/amp;dp=0amp;l=0amp;campaignid=3" target="_blank"analysis for Ebay share price here/a. There is still not buy signal (shorts covering) with stocks plunging after disappointing quarter results.div class="blogger-post-footer"http://stockweb.blogspot.com/atom.xml/div pa href="http://feedads.googleadservices.com/~a/CbHqDL3KlgqoGJjhOL_xY_XPpGo/a"img src="http://feedads.googleadservices.com/~a/CbHqDL3KlgqoGJjhOL_xY_XPpGo/i" border="0" ismap="true"/img/a/pdiv class="feedflare" a href="http://feeds2.feedburner.com/~f/Stockweb?a=voMkSDX1"img src="http://feeds2.feedburner.com/~f/Stockweb?d=41" border="0"/img/a /div

Advertising Cutbacks Reveal Firms Ripe For Shorting

Contrarian Profits — Fri, 23 Jan 2009 12:06:56 +0000

pWhen firms stop advertising, it is a sure sign of distress says strongAdam Lass/strong. He says strongGeneral Motors /strong(NYSE:a href="http://finance.google.com/finance?q=GM" target="_blank"GM/a) and strongFedEx /strong(NYSE:a href="http://finance.google.com/finance?q=NYSE%3AFDX" target="_blank"FDX/a) will be conspicuous by their absence at this year#8217;s Super Bowl. As they struggle to survive the crisis, Adam says both companies a ripe for shorting right now./p pThis from a href="http://www.taipanpublishing.com" class="alinks_links"Taipan/a Daily:/p blockquotepLet me check my list:/p pThe Olympics? Nubile Chinese child-athletes took the lion#8217;s share of the medals, but Baltimore hometown hero Mike #8220;The Fish#8221; Phelps stood on the top tier more often than any other human ever./p pThe Presidential election? A done deal back in November. Heck, in my neck of the woods, sulky Republicans were already sporting #8220;Impeach Obama#8221; bumper stickers as early as October./p pThe Inauguration? In-the-tank reporters gushed on#8230;/p/blockquote

The Lint Age

Bill Bonner — Mon, 19 Jan 2009 13:02:49 +0000

pChristmas may be over, but Obama is keeping the #8217;season of giving#8217; going on the Hill…the next bubble will be in public debt… Stock prices are more #8216;normal#8217; than they were a year ago…how many chickens can get in a plane engine? What is bad for GM is bad for America…just when you think you have things figured out, the facts change…and more!/p pAfter five straight days of losses, Wall Street managed to steady itself yesterday. The Dow rose only 12 measly points; but that was a relief for most investors./p pOil held steady too - at $35. And gold lost a dollar, to drop to $807./p pThe big question is a question of faith. How much faith do you have in the#8230;/p

Retail Sales Disappoint

Contrarian Profits — Thu, 15 Jan 2009 17:57:41 +0000

pRetail sales disappoint#8230;. Chuck#8217;s views on the Lone Prop#8230; Waiting on the ECB#8230; Emerging market currencies sell off#8230; And Now#8230; Today#8217;s Pfennig!br / Good day#8230; The big news yesterday was the retail sales numbers, which fell twice as much as expected. Chuck predicted a tough Christmas season, and the BHI was right again. Sales dropped 2.7 percent according to yesterday#8217;s report from the Commerce Department. The falling home prices, rising job losses, and tighter credit have all combined to finally force US consumers to adjust their spending habits. No matter how low retailers slashed prices during the recent Christmas season, US consumers just weren#8217;t buying. The economy is forcing consumers to wean themselves off of the dangerous drug of easy credit. In#8230;/p

Outgoing Wal-Mart CEO’s Words – Analyst Blog

Zacks Market Commentaries — Thu, 15 Jan 2009 16:15:33 +0000

Earlier this week, Wal-Mart's (WMT) outgoing CEO Lee Scott spoke at the National Retail Federation's Annual Convention. His speech can be seen here. This was the last time Scott will speak in public as the leader of the company.

After his prepared remarks, Scott sat down for a Question & Answer session with NRF President and CEO Tracy Mullin. Mr. Scott was asked about various topics ranging from government spending, retail trends, and the economy. What Scott had to say about the economy and consumer spending is worth reading.

On the economy:

Hopes that by next Christmas it isn't any worse
If things get better, they will only be modestly better
Doesn't see anything that points to things turning around quickly
Stimulus should have some impact

It appears that Scott agrees with us that this recession will last longer than most expect, and a rebound is not likely to occur in the second half of 2009.

On spending habits:

Scott believes that there is a fundamental change in consumer buying habits
Young people have given up something like eating out, going to the movies, or shopping, and they felt good about it
The consumer won't go back to a lifestyle of consumption and debt
Many young people learned what it is like to live on the edge when the bad times come
Their appetite is now towards more about living things differently
This change in consumer attitudes is not all that bad

This is a topic that I've writing about for some time. Consumer attitudes toward spending and debt began to change in 2008, and those shifts in attitude are gaining traction with more people. Consumers are becoming more frugal and increasing savings.

Many consumers are still reeling from staggering declines in wealth due to losses in home values and the stock market. Anyone looking for a return to the days of consumers spending beyond their means or taking on more debt to keep up with the Joneses will be sorely disappointed.As a result, we would continue to limit exposure to the retail sector and avoid department stores such as JC Penney (JCP) and Nordstrom (JWN); specialty retailers such as Cost Plus (CPWM) and Hibbett Sports (HIBB); and e-tailers Overstock.com (OSTK) and Priceline.com (PCLN).

Read the full analyst report on JCP

Read the full analyst report on JWN

Read the full analyst report on CPWM

Read the full analyst report on HIBB

Read the full analyst report on OSTK

Read the full analyst report on PCLN

"WMT" Free Stock Analysis: Buy? Sell? Hold?
"JCP" Free Stock Analysis: Buy? Sell? Hold?
"JWN" Free Stock Analysis: Buy? Sell? Hold?
"CPWM" Free Stock Analysis: Buy? Sell? Hold?
"HIBB. OSTK" Free Stock Analysis: Buy? Sell? Hold?
"PCLN" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Consumers Cut Spending – Feel Good About It

Investment U — Thu, 15 Jan 2009 01:30:30 +0000

Consumers Cut Spending – Feel Good About It by Jeannette Di Louie, Assistant Editor, Mt. Vernon Research Editor’s Note: Our colleagues over at Mt. Vernon research were looking at the retail figures this morning. Some of the things that will be coming out in the next few months will highlight just how bad December and the fourth [...]

The Dollar Swings A Mighty Hammer!

Contrarian Profits — Wed, 14 Jan 2009 16:12:35 +0000

pAnother dollar rally#8230;. Rumors in Ireland#8230; Trade Deficit narrows#8230; Retail Sales to disappoint? And Now#8230; Today#8217;s Pfennig!br / The dollar ripped through the 1.32 handle of the euro yesterday, like a hot knife goes through butter! There was little to no resistance in that 1.32 handle, and before you could tell one of the many people on the desk here that sneeze all day, God Bless you, we were trading with a 1.31 handle in euros. The talk about a European Central Bank (ECB) rate cut has really ramped up this week, and taken its toll on the single unit. No one is mentioning that even if the ECB cuts 75 BPS this week, they#8217;ll still have a an interest rate /#8230;/p

Consumer Electronics Show: Yawn – Analyst Blog

Zacks Market Commentaries — Tue, 13 Jan 2009 15:26:02 +0000

This post cites Palm, Inc. (PALM) and Panasonic Corp. (PC).

The Consumer Electronics Show (CES) in Las Vegas is the premier consumer electronics show in North America. This year was essentially a non-event, in my opinion.

Attendance was way down. The press lunch had extra meals whereas last year I was too late to grab anything. (This may have been in response to the quality of the boxed lunch, as compared to the catered meals of prior years, however.)

Many exhibitors failed to turn up. This means they lose the preparation fee (about $75 a square foot) and will probably lose their priority place in line for 2010. A lot of empty spaces is not a good sign.

No Major New Product Announcements

Palm, Inc. (PALM) announced its new mobile operating system, WebOS, and a touch screen smart phone. It was difficult to discern how this was any better than the many other smart phones at the show.

Panasonic Corp. (PC) displayed its new 3D HDTV. This looked good, but it was probaly due to the 3D glasses more than anything else. In our opinion, 3D with glasses has never been a major market.

There were very few people in the International Pavilion. This is where I usually get an insight to what the next commodity product is. And it is not pink handbags accessorized for a pink (or purple) cell phone case.

The 2009 CES reminded me of the waning days of COMDEX. However, the decline of COMDEX was, in no small part, due to the ability to buy and sell across the Internet. CES is impacted by Internet trading, but it is a consumer show and not a trade show.

Retail sales over the Christmas season were poor. The consumer electronics business is in a quiet period until March 2009 when we get into the negotiations for new technology to be incorporated in products for the 2009 November/December selling season. In 2008, the Super Bowl weekend was a bust, and this year will probably be even worse.

In Consumer Electronics, "I want" has been replaced by "I need," and this may well last into 2010.

Read the full analyst report on PALM

Read the full analyst report on PC

"PALM" Free Stock Analysis: Buy? Sell? Hold?
"PC" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Mortgage Rates, Scary Jobs Details, Investing in 2009, Russian Gas Dispute, and More!

Contrarian Profits — Tue, 13 Jan 2009 13:00:34 +0000

pMortgage rates plunge to record lows… but are they at the bottom?#8230; Overlooked details from Friday’s jobs news… troubling signs from retail and energy sectors#8230; Rob Parenteau charts a different way to view the S#38;P… could the worst be over?#8230; Russia/Ukraine gas conflict ends… who “won” the latest resource skirmish#8230; Bill Gross’ sad-but-true guide to 2009… how to invest amid rife market manipulation./p p class="BodyCopy" align="left" If you’ve got money, credit and patience, strongtoday is your cheapest opportunity buy or refinance a house in at least 38 years. /strong /p p class="BodyCopy" align="left"The 30-year fixed-rate mortgage carries a rate of 5.01% this morning, the lowest rate of its kind since at least 1971, when Freddie Mac started keeping track. Since the peak of the credit crisis in late#8230;/p

How Water Will Become A ‘Blue Gold’ For Investors

Contrarian Profits — Mon, 12 Jan 2009 15:25:12 +0000

p style="text-align: left;"America#8217;s dilapidated water infrastructure is in desperate need of upgrading, says stronga href="http://www.contrarianprofits.com/articles/author/chris-mayer/" class="alinks_links"Chris Mayer/a/strong. And the situation is similar in many countries throughout the world. And worse still, supplies of clean, fresh water are dwindling across the globe. Chris says these two trends can make water a #8216;blue gold#8217; for investors./p p style="text-align: left;"This from Penny Sleuth:/p blockquote p style="text-align: left;"Two days before Christmas, a 66-inch water main burst on River Road, not far from where I live, during morning rush hour. Water spewed out at a rate of 150,000 gallons per minute, turning River Road into an actual river for a time. People at the scene described the burst as a bomb going off. The road itself took significant damage./p p style="text-align: left;"The force of the water - going at#8230;/p/blockquote

Dollar Sinks Against Euro

Doug Casey — Thu, 08 Jan 2009 18:20:44 +0000

pIn the currency market, the dollar slipped against the euro. Late Wednesday, the euro was trading at $1.3618 vs. $1.3529 on Tuesday. /p pThe buck was undermined by the day’s horrendous job number. The ADP Employment Services report, generally seen as a leading indicator for the official Labor Department data due on Friday, said yesterday that private companies cut 693,000 jobs in December, far more than the 500,000 economists were projecting./p pThe report paints “a shockingly weak picture of the labor market,” said economists at RDQ Economics. The labor market is on track for the largest quarterly decline since 1945, they added./p pIn addition, for all of 2008, companies announced a total of 1.2 million job reductions, the most since 2003 and 59%#8230;/p

Bed Bath Beyond (BBBY) – Shoppers “Didn’t Have the Time.”

Investment U — Thu, 08 Jan 2009 17:55:09 +0000

Bed Bath & Beyond (BBBY) - Shoppers “Didn’t Have the Time.” This morning, Wal-Mart (NYSE: WMT) reported that December holiday sales were much less than expected. It comes on the heel of reports that Americans actually cut back holiday spending this year. Bed Bath & Beyond (Nasdaq: BBBY) reported lower sales as consumers clearly “did not have [...]

As Hungary’s Recession Deepens The Central Bank Cuts Rates In “Snails Pace” Mode

Manuel Alvarez-Rivera — Thu, 08 Jan 2009 17:37:00 +0000

The fact that Hungary's National Bank did not decide to make an unexpected interest rate cut at its meeting earlier this week seems to have a href="http://www.bloomberg.com/apps/news?pid=newsarchiveamp;sid=a84zp9hh0af0"surprised some/a, but it really should not have done. According to James Morsink, head of the IMF delegation to Budapest, Hungary only has room to cut its benchmark interest rate a href="http://www.bloomberg.com/apps/news?pid=newsarchiveamp;sid=aW.6Yo1wzmp4"at a “gradual and cautious” pace/a. The reasoning behind this view is simple, any more rapid reduction in the bank's benchmark rate risks being accompanied by a devaluation of the forint, and and any such devaluation would inevitably lead to a rise in mortgage defaults and problems for the banking system as holders of Swiss Franc forex loans find themselves unable to maintain their payments as unemployment rises and wages and salaries fall.br /br /Thus it is that even though the Hungarian economy is now in its worst recession in over a decade the IMF representative finds the decision to cut the key policy rate for the second time in two weeks just before Christmas (by 50 basis points to 10.00%) “appropriate”. Such "snails pace reductions mean that over the last two months the central bank has now clawed-back only half of the 3% hike made back in October, a hike which was rapidly put in place in an attempt to mount a firewall defence around a Hungarian banking system faced with the imminent threat of financial meltdown at the end of October. The problem is, having put the firewall in place it is proving very hard to remove it, and Hungarian monetary is now well and truly trapped between the proverbial rock and a hard place.br /br /The diificulty of this situation is implicitly recognised by András Simor, Governor of Hungary's central bank, who told Reuters this week that the 10.00% base rate needed to be lowered as fast as possible. Yes, but how?br /br /blockquote“The Monetary Council has declared that we would like to lower the base rate as fast as possible because both real economy prospects and inflation prospects would justify a significantly lower interest rate level than the current level," Simor said. /blockquoteThe problem is that since the original sharp interest rate hike decision was taken largely in order to defend the forint, the question now naturally arises what will happen to the currency as the guard is now gradually lowered - and given the severity of Hungary's recession there is no doubt that the guard will have to be lowered. Personally I would simply express the hope that in the intervening period as many Hungarians as possible have had the good sense to make the currency switch from CHF to Forint for their mortgages - a href="http://hungaryeconomywatch.blogspot.com/2008/10/and-so-it-ends-hungarys-government.html"the opportunity for which was offered to them in law by the government/a. Basically the steadily deteriorating trade data - see below - which is accompanying the collapse in internal demand will leave the authorities with no effective alternative but to let the currency slide, if they don't even provoke the slide themselves, that is.br /br /So monetary policy has now been "relaxed" by 15 base points - but there is still a long road - a hell of a long road - left to travel.br /br /br /pa href="http://4.bp.blogspot.com/_ngczZkrw340/SU-TGBqGMJI/AAAAAAAAL2U/dFYteghqVJI/s1600-h/hungary+cb.png"img id="BLOGGER_PHOTO_ID_5282602619662381202" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 195px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SU-TGBqGMJI/AAAAAAAAL2U/dFYteghqVJI/s320/hungary+cb.png" border="0" //abr /br /The Hungarian government remember secured 20 billion euros in IMF-led loans back in October, and apart from the monetary tightening which has accompanied the "easy as she goes" IMF internal deflation strategy, there will be no fiscal support for the beleagured economy, since the other leg of the strategy is for Hungary to cut its fiscal deficit faster than previously planned in order to achieve a short sharp reduction in its financing needs. In fact Hungary seems to have complied with it's 2008 goal of cuuting the deficit to 3.4 percent of gross domestic product in 2008 and is now set to reduce it to 2.6 percent in 2009. Whether these two pro-cyclical squeezes count as a package of anti-crisis measures or not (certainly they bear little resemblance to what Barack Obama has in mind of the United States, or José Luis Zapatero is doing in Spain - to mention two other countries which are suffering the after effects of a "twin deficit problem"). But then here what is sauce for the goose obviously is considered to be something akin to caviar for the gander, and the Hungarian's must be patient, and simply grin and bear it like the long suffering people they undoubtedly are./ppstrongSharp Economic Contraction Ahead In 2009/strong/ppIf we look at what has been happening to Hungarian GDP in recent quarters we will see that the weak performance of the economy is not of recent origin, and that headline GDP has been struggling to keep its head above water since the end of 2006, and this despite a surprisingly good harvest in 2008, and a reasonable export performance in the first half of the year to offer the only real bright spot support to what was otherwise a pretty dismal general horizon. So basically, when the global shock hit in October 2008, we were talking about a patient that was already severely weakened by both the underlying illness from which it is undoubtedly suffering (but what is the illness'') and some of the standard-recipe medicine which was being applied.br /br //ppa href="http://4.bp.blogspot.com/_ngczZkrw340/ST5xOIDvDbI/AAAAAAAALr0/p6-CDg5cYwY/s1600-h/hungary+q-o-q.png"img id="BLOGGER_PHOTO_ID_5277780300820057522" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 159px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/ST5xOIDvDbI/AAAAAAAALr0/p6-CDg5cYwY/s320/hungary+q-o-q.png" border="0" //abr /Even the briefest of glances at the recent evolution in household consumption should make the root of the problem abundantly clear, since Hungarian household consumption peaked all the way back in 2002 (a href="http://economicresources.blogspot.com/2008/07/sustaining-portugal.html"just as it did in Portugal in 1998/99/a), and it has not rebounded - just as we have seen in the Portuguese case. Nor will it, in my humble opinion, ever rebound in the way that most analysts expect, since Hungary is now showing all the signs of being destined to add its name to that venerable list of export driven economies, a list currently so nobly and venerably headed by countries with such illustrious histories as Japan and Germany. And what exactly do these countries have in common: oh yes, they are in the throes of an economic trasition brought about by negative population momentum and rapid ageing.br /br /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/ST6Y-cNxHOI/AAAAAAAALsU/_k0t7QpJSO0/s1600-h/hungary+private+consumption.png"img id="BLOGGER_PHOTO_ID_5277824011818048738" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 187px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/ST6Y-cNxHOI/AAAAAAAALsU/_k0t7QpJSO0/s320/hungary+private+consumption.png" border="0" //aBasically, weak as the momentum in household demand before October 2008 was - we have to be grateful for small mercies here - it was still positive, and it stayed positive all the way through to Q2 2008 - probably as a result of all those forex mortgages and "refis" which were being so avidly contracted.br /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/SWYvjkgAkoI/AAAAAAAAMEU/Y5Rd8em7mt8/s1600-h/hungary+loans+2.png"img id="BLOGGER_PHOTO_ID_5288967100533084802" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 206px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SWYvjkgAkoI/AAAAAAAAMEU/Y5Rd8em7mt8/s320/hungary+loans+2.png" border="0" //abr /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/SWYve0TLG1I/AAAAAAAAMEM/VpYKZRCcOlw/s1600-h/hungary+loans.png"img id="BLOGGER_PHOTO_ID_5288967018874870610" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 212px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SWYve0TLG1I/AAAAAAAAMEM/VpYKZRCcOlw/s320/hungary+loans.png" border="0" //abr /Since October, however, we can now expect the "bird" to have been well and truly knocked of its perch, with the outlook for 2009 being undoubtedly negative, and possibly strongly so. Since there are a number of reasons why it is interesting to think of Hungary as being some sort of second Portugal (the similarities even extend to negative population shocks - since Portugal's population actually fell beck in the mid 1990s, partly because of out migration headed for other EU member countries), and since domestic demand in Portugal did not (and has not) recovered from the 2000/01 momentum shock (or adjustment process) people might like to take a look at the chart below. /ppThe strongest argument for assuming that we will get a bounce back in domestic demand in Hungary is the convergence argument, and the idea that it "has to be like that". The simple case of Portugal shows that convergence is not inevitable (you only need one negative case to falsify an inductive chain), and that it does not "have to be like that". This evidence alone, of course, does not mean that there will not be a recovery in the houshold consumption path, but it does mean that those who want to suggest there will be need to dig a bit deeper, and find some more arguments, arguments which can be subjected to empirical testing, and which can, should they not be the case, be falsified. Remember, Hungary was the native country of a href="http://en.wikipedia.org/wiki/Imre_Lakatos"Imre Lakatos/a, not that I imagine too many contemporary Hungarian economic analysts are aware of the relevance of his work for how they do their job.br /br //pa href="http://bp2.blogger.com/_ngczZkrw340/SG1CRv2xrXI/AAAAAAAAGeA/Kqk3JqnXJNE/s1600-h/portugal+private+consumption+2.jpg"img id="BLOGGER_PHOTO_ID_5218900415863696754" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="http://bp2.blogger.com/_ngczZkrw340/SG1CRv2xrXI/AAAAAAAAGeA/Kqk3JqnXJNE/s320/portugal+private+consumption+2.jpg" border="0" //abr /So, as I said, there is still some road to travel for the National Bank of Hungary in its rate cutting cycle, and one of the principal reasons that they have a long road to travel here is the competitive readiness of Hungarian industry to serve as an export machine to drive growth, a competitiveness which is currently being tried and found wanting. Some evidence to back my assertion in this regard can be found in the current level of Hungary's Real Effective Exchange Rate (see chart below).br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SV_H8hesHGI/AAAAAAAAL98/hXsrIKNUcXM/s1600-h/hungary+reer.png"img id="BLOGGER_PHOTO_ID_5287164330149420130" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 181px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SV_H8hesHGI/AAAAAAAAL98/hXsrIKNUcXM/s320/hungary+reer.png" border="0" //abr /br /br /The REER (or Relative price and cost indicators) is a tool economists use to assess a country's price or cost competitiveness relative to its principal competitors in international markets. The indicator is a useful one, since changes in cost and price competitiveness depend not only on exchange rate movements but also on cost and price trends. The specific REER used by the EU for its Sustainable Development Indicator (which is the one used in the above chart) is deflated by nominal unit labour costs (total economy) against a panel of 36 countries (= EU27 + 9 other industrial countries: Australia, Canada, United States, Japan, Norway, New Zealand, Mexico, Switzerland, and Turkey). Double export weights are used to calculate REERs, reflecting not only competition in the home markets of the various competitors, but also competition in export markets elsewhere. A rise in the index means a loss of competitiveness.br /br /Another indicator - the Nominal Effective Exchange Rate (NEER or, if you prefer, the “Trade-weighted currency index”) of a country aims to track changes in the value of that country’s currency relative to the currencies of its principal trading partners. It is calculated as a weighted geometric average of the bilateral exchange rates against the currencies of competing countries. Changes in cost and price competitiveness depend not only on exchange rate movements but also on cost and price trends. The REER (or, if you prefer, the “Relative price and cost indicator”) aims to assess a country’s price or cost competitiveness relative to its principal competitors in international markets, which basically means it is the NEER deflated by nominal unit labour costs (total economy) and consumer prices (CPI/HICP). Which means, cutting through all the mumbo jumbo, that it is an extremely useful and powerful tool for assessing the state of competitiveness of any given country.br /br /So if we come to look at the state of Hungarian competitiveness, and we do it through a comparison with what could be the benchmark value for aspirant export driven economies - and that is of course the German index - then we can see just how much the Hungarian position has been allowed to deteriorate, and all that loss with now have to be clawed back - if you want to have anything that half way resembles a modern pensions and health system that is. True the index measures relative price and productivity movements across strongall sectors/strong (tradeables and non tradeables alike), and true Hungary's export oriented sector has performed much worse than the rest, but that is just the point, since the position of the non tradeable sector is even worse than the chart suggests, and a very large scale mis-allocation of resources into non tradeables has been going on, and one way or another this mis-allocation will now need correcting. And there are only two ways to do this correction, through a substantial internal deflation (not adviseable) or through an outright devaluation (my prefered path).br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SWMfufB5R9I/AAAAAAAAMBk/5xLNtvS5W_Q/s1600-h/hungary+pmi.png"img id="BLOGGER_PHOTO_ID_5288105270926985170" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 171px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SWMfufB5R9I/AAAAAAAAMBk/5xLNtvS5W_Q/s320/hungary+pmi.png" border="0" //abr /br /That the loss of competitiveness in the non tradeable sectors has been particularly strong is shown by the difference between domestic and export producer prices you can see in the above chart, since domestic producer prices have hardly budged since the early summer in y-o-y terms, a very bad sign indeed, I think. Domestic producer prices were donw by 1.3% in November compared with October but they were still 10.8% above those of November 2007. Export prices (measured in HUF) were up by 1.1% on October and by 4.4% on November 2007 - again the uptick is worrying. Combined producer prices for both domestic and export sales were thus up 0.1% on October and 7.1% on November 2007.br /br /The sharp uptick in HUF export prices was undoubtedly the result of currency movements (and the fact that the euro value of the exports seems to have been held constant (which is not the best way of getting the benefits from devaluation), since the HUF was down by 2.8% against the EUR (and by 7.8% against the USD) in November (compared to October) following a 7.2% drop against the EUR (and a 15.4% one against the USD) in October (compared to September). What this seems to indicate is that exporters held their euro prices constant, rather than taking advantage of the cheaper forint to reduce them, although the move may have been seen as temporary, and we will have to wait to see how export prices evolve in the coming months.br /br /blockquoteBelgium's luxury lingerie maker Van de Velde is to close down its Hungarian factory in Szekszárd, business daily Világgazdaság reported on Thursday. The company's CEO said it is impossible to make textile goods in Hungary cost efficiently. The shutdown would put 345 employees on the street. Production is still on at the plant, but it will need to be stopped as in Hungary there is no way to produce textile goods cost efficiently, the CEO said. He noted that the same job can be done at one third of the costs in Tunisia therefore the entire Hungarian production will be moved there./blockquotebr /pstrongConstruction Activity Stays Down At A Very Low Level/strong/ppbr /Although Hungarian construction activity expanded very slighly in October, output remains at a very low level. According to Central Statistic Office data, production was up 0.2% month-on-month, while the year-on-year reading fell back 2.2%. More to the point output has now been stuck since 2007 at a level first reached in 2003, and it is also worth bearing in mind that we have not yet seen the real impact of the October credit crunch. /ppa href="http://3.bp.blogspot.com/_ngczZkrw340/SUtdH7SeAgI/AAAAAAAALzs/2x3mVZqT9zU/s1600-h/hungary+1.png"img id="BLOGGER_PHOTO_ID_5281417378777661954" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 170px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SUtdH7SeAgI/AAAAAAAALzs/2x3mVZqT9zU/s320/hungary+1.png" border="0" //a /ppAs can be seen from the chart below, the current data is more a reflection of the long-term stagnation in economic activity that followed the introduction of the austerity programme in late 2006 and is thus not a result of the recent financial crisis. Put another way, the impact of this crisis is about to be seen, but it will be operating on an economy which was already severely weakened, as such the end result may well not be any too pretty.br //ppa href="http://2.bp.blogspot.com/_ngczZkrw340/SUtdDqwimvI/AAAAAAAALzk/hi1RT-vHIY0/s1600-h/hungary+2.png"img id="BLOGGER_PHOTO_ID_5281417305620912882" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 170px; TEXT-ALIGN: center" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SUtdDqwimvI/AAAAAAAALzk/hi1RT-vHIY0/s320/hungary+2.png" border="0" //abr /New orders placed in October give some idea of what we may expect, since new contracts for residential and commercial real estate were down by 41.1% year-on-year (and remember October 2007 was not that high a base reference).br /strong/strong/ppstrongUnemployment Rising Steadily/strongbr /br /br /Hungary’s unemployment rate rose in the three months to November - to 7.8 percent, up from 7.5 percent in the three months to August and from 7.5 % in the three months to November 2007. Of the 329,000 currently unemployed, 49.6 percent have been out of work for at least a year.br /br //pa href="http://1.bp.blogspot.com/_ngczZkrw340/SWYyFvxi7lI/AAAAAAAAMEs/lAMIauKYCQ8/s1600-h/hungary+unemplyed+one.png"img id="BLOGGER_PHOTO_ID_5288969886698237522" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 165px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SWYyFvxi7lI/AAAAAAAAMEs/lAMIauKYCQ8/s320/hungary+unemplyed+one.png" border="0" //abr /The rise is not dramatic, but that is only because of the earlier weak position of Hungarian employment, and because the full impact of the slowdown in industry is only now about to bite. But if we look at the employment, rather than the unemployment, chart it is plain that the jobs trend is down, and has been for some time. Not only has the Hungarian economy not creating jobs, it has been losing them.br /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/SWYyBIBCCiI/AAAAAAAAMEk/S2xvsiEQfuQ/s1600-h/hungary+unemployed+two.png"img id="BLOGGER_PHOTO_ID_5288969807306295842" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 194px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SWYyBIBCCiI/AAAAAAAAMEk/S2xvsiEQfuQ/s320/hungary+unemployed+two.png" border="0" //a One of the reasons this poor job creation performance has not lead to more unemployment is, of course, because the Hungarian working age population has itself been steadily declining.br /br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SWYx642cOwI/AAAAAAAAMEc/qEq-saRvedA/s1600-h/hungary+unemployed+three.png"img id="BLOGGER_PHOTO_ID_5288969700156128002" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 165px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SWYx642cOwI/AAAAAAAAMEc/qEq-saRvedA/s320/hungary+unemployed+three.png" border="0" //abr /br /strongConsumer Confidence Continues To Slide/strongbr /br /Hungary’s economic sentiment index plunged to a record in December as the onset of recession darkened the outlook for both businesses and consumers, according to the latest report from the GKI institute. The overall index fell to minus 36.7, the lowest since measuring began in 1996, from minus 33.3 in November, the Budapest- based institute said. The indexes for business and consumer confidence also fell to new lows. The outlook for industrial production and orders, specifically exports, led the decline in the business confidence index to minus 28.2 from minus 25.1 in November. Fear of job losses dragged down the consumer confidence index, which fell to a record low of minus 60.8 in December from minus 56.7 the previous month, GKI said.br /br /a href="http://2.bp.blogspot.com/_ngczZkrw340/SWS_sZ3a9kI/AAAAAAAAMC0/FoSHzC2zmvA/s1600-h/gki+sentiment+index.png"img id="BLOGGER_PHOTO_ID_5288562632018294338" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 187px; TEXT-ALIGN: center" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SWS_sZ3a9kI/AAAAAAAAMC0/FoSHzC2zmvA/s320/gki+sentiment+index.png" border="0" //abr /pstrongRetail Sales Continue To Fall/strongbr /br /Calendar and seasonally adjusted constant price retail sales dropped by 0.1% month on month in October, following a 0.3% drop in September, and fell 1.4% year on year. Combined sales of cars, car parts and fuel were down 5.6% year on year following a decrease of 2.1% in September.br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SU-BFFEv0HI/AAAAAAAAL10/0huH3Apalb4/s1600-h/hungary+retail+sales+1.png"img id="BLOGGER_PHOTO_ID_5282582812190298226" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 186px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SU-BFFEv0HI/AAAAAAAAL10/0huH3Apalb4/s320/hungary+retail+sales+1.png" border="0" //abr /br /Thus retail sales have been contracting steadily for some time now, basically since the middle of 2006 - as can be seen in the chart below - although as I keep stressing all of this predates the October shock, and we should be ready now for another sharp deterioration in consumer demand in the coming months. Also I now think a href="http://hungaryeconomywatch.blogspot.com/2008/08/hungary-retail-sales-continue-their.html"there are good theoretical reasons for thinking/a that Hungarian retail sales may strongnever/strong attain the mid 2006 peak again (oh, I know, never is a long time, but I simply don't see how this declining and ageing population process is going to reverse itself, but then all of this strongis/strong perfectly testable/falsifiable).br /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/SU-BKjWzx_I/AAAAAAAAL18/52wwgprfbds/s1600-h/hungary+retail+sales+2.png"img id="BLOGGER_PHOTO_ID_5282582906218465266" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 184px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SU-BKjWzx_I/AAAAAAAAL18/52wwgprfbds/s320/hungary+retail+sales+2.png" border="0" //abr /strongWhile Industrial Output Slumpsbr //strongbr /Hungarian industrial production declined the most in 16 years in Novemberber as western European demand plunged and Hungary's economy headed into what now looks sure to be its worst recession in at least 15 years. Industrial output dropped a working day adjusted 10.1 percent from November 2007, following a 7.2 percent year on year decline in October, according to data from the statistics office. Output fell 2.1 percent month on month.br /br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SWXOAI-Z8aI/AAAAAAAAMDc/7YPZLdTAc38/s1600-h/hungary+industrial+output.png"img id="BLOGGER_PHOTO_ID_5288859839221068194" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 190px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SWXOAI-Z8aI/AAAAAAAAMDc/7YPZLdTAc38/s320/hungary+industrial+output.png" border="0" //abr /br /As we can see from the seasonally adjusted monthly volume chart, Hungary's industrial output has now been dropping steadily since it peaked in February.br /br /br /a href="http://2.bp.blogspot.com/_ngczZkrw340/SUJdYx8icuI/AAAAAAAALvc/LcCZmIF1rt8/s1600-h/hungary+IP+index.png"img id="BLOGGER_PHOTO_ID_5278884393537139426" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 192px; TEXT-ALIGN: center" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SUJdYx8icuI/AAAAAAAALvc/LcCZmIF1rt8/s320/hungary+IP+index.png" border="0" //abr /br /And the future looks set to get worse, since the stock of total orders grew by only 2.0% year on year in October, as compared with a near 10% increase in September. Domestic orders were down 2.4%, which compares with an increase of the roughly the same size in September.br /br /This outlook is confirmed by the December Purchasing Managers' Index (PMI) which, while it recovered slightly from the lowest point ever achieved since records began in November (39.9 down from 42.8 in October) to hit 41, still showed a quite strong contraction taking place, since 50 is the dividing line between expansion and contraction on this type of index. The rebound was to some extent the result of an improvement in the new orders index, which rose 2.8 points from November to 39.9, although both the purchasing and production volume indexes also climbed in the month. But still we come back to the same problem, industrial output will not be pushed back up by domestic demand, only exports can now do that, but to push up exports we need to attract investment, build factories, and sell, and to do all that we need to get competitiveness back. Is all this so hard to understand?br /br /a href="http://2.bp.blogspot.com/_ngczZkrw340/SWH0XTKVCTI/AAAAAAAAL_U/2yK7qR6b9so/s1600-h/hungary+pmi.png"img id="BLOGGER_PHOTO_ID_5287776118627436850" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 181px; TEXT-ALIGN: center" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SWH0XTKVCTI/AAAAAAAAL_U/2yK7qR6b9so/s320/hungary+pmi.png" border="0" //abr /br /br /strongCurrent Account Deficit The Key/strongbr /br /Now, as I am saying, one of the key factors we all need to think about here is just where future growth in Hungary is going to come from - and I think it very important to bear in mind that without growth the living standards gap simply isn't going to close. The main argument I have been advancing is that as far as all the evidence we have seen for the last 18 months goes you can forget about domestic demand as a driver of growth - and that was before the credit crunch shock wave hit. Basically Hungary now has to live (and pay the rising old age related health and pension costs) from exports, which is why it comes as no good news at all that the current-account deficit widened more than expected in the third quarter when compared wih the same period a year ago - as imports increased faster than exports and the income stream to external investors continued to rise.br /br /The deficit was 2.49 billion euros, which compared with 1.68 billion euros in the third quarter of 2007, according to the latest data from the central bank. The goods trade deficit was 206 million euros, compared with a surplus of 47 million euros in the same quarter last year and a 169 million euro surplus in the second quarter. Due to a very health services surplus (582 million euros) the combined trade balance stayed in surplus (376 million euros), but all this hard work (and sweat) was undone by the continuing deterioration in the income balance - which is one of the core problems for Hungary (see chart below) - where there was a deficit of 2.51 billion euros (or nearly 6 times the combined trade surplus), up from the 1.73 billion euro shortfall registered a year earlier and the 2.12 billion euro one registered in the second quarter of 2008.br /br /a href="http://2.bp.blogspot.com/_ngczZkrw340/SV-_fMigvCI/AAAAAAAAL90/GPcVlgAx7BM/s1600-h/hungary+income+account.png"img id="BLOGGER_PHOTO_ID_5287155030219078690" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 186px; TEXT-ALIGN: center" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SV-_fMigvCI/AAAAAAAAL90/GPcVlgAx7BM/s320/hungary+income+account.png" border="0" //a So payments to owners of Hungarian equities, and holders of Hungarian debt constitute a substantial, and growing, dead weight for the entire Hungarian economy now. Essentially this situation is a result of funding all those years of current account deficit (see chart below) with inward fund flows - these funds all attract interest, and they will eventually have to be paid back, even the recent IMF and EU loans fall into this category. So basically this is just one more reason why exports have become important, since Hungary now needs to move from being a CA deficit nation to a CA surplus one, and the only way to get to this position is to start borrowing (and consuming) less, and saving more. And this transformation has to come one day or another, and the later it comes the worse the correction will be. So maybe here one day is not as good as another, maybe tomorrow is, in fact, a good day to start.br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SV-_FzMLydI/AAAAAAAAL9s/h7y4hRk5FR8/s1600-h/hungary+CA+deficit.png"img id="BLOGGER_PHOTO_ID_5287154593917815250" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 180px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SV-_FzMLydI/AAAAAAAAL9s/h7y4hRk5FR8/s320/hungary+CA+deficit.png" border="0" //a/p

Stocks Fall, ADP Report Says U.S. Shed 693,000 Jobs in December

Contrarian Profits — Thu, 08 Jan 2009 13:30:58 +0000

pThe U.S. economy shed 693,000 jobs in December, a showing that was far worse than economists had expected and that may even have been the biggest monthly loss of jobs in more than 30 years, analysts said of a closely watched survey of business employment released yesterday (Tuesday)./p pThe monthly ADP Employer Services (ADP) survey - which tracks private non-farm payroll employment - stunned economists, showing a surprising increase from the 476,000 jobs lost in November./p pThe decline was the worst in the history of the survey, which began reporting in 2001. And if the findings are matched by the official government jobs report, due out Friday, it would be the biggest employment drop since the U.S. recession of 1975./p p“a href="http://www.bloomberg.com/apps/news?pid=20601087#38;sid=apHhkpPTI5kY#38;refer=home" target="_blank"This is an#8230;/a/p

And Then There’s This…Wednesday, January 07th, 2009

Contrarian Profits — Wed, 07 Jan 2009 20:07:14 +0000

pWhen I finally fired off yesterday#8217;s commentary (to my editor) in the wee hours of Tuesday morning, I must admit that I wasn#8217;t overly optimistic about what I would find when I turned my computer on after a few hours of shut-eye. I was expecting the worst#8230;but got something entirely different./p pGold bounced off its lows of Tuesday a couple of times during London trading, but starting at lunchtime in London, and continuing right until the London close at 3:00 p.m. (10:00 a.m. in N.Y.)#8230;gold managed to inch its way higher. Once London was done for the day, it wasn#8217;t too long before the gold price made a spirited rally on the Comex in New York, and turned what could have#8230;/p

Investing In Oil Now Could Be The Trade Of The Year

Contrarian Profits — Wed, 07 Jan 2009 16:49:52 +0000

pGeo-political tensions are mounting in the global energy game. And that could make investing in oil right now the trade of the year, says Manraaj Singh. Buying shares of oil majors is a good move now. But Manraaj says quality mid-sized oil companies are best placed to return big profits in the next oil bull run./p pThis from Fleet Street Invest:/p blockquote pIsraeli tanks have just rolled into Gaza…Almost three thousand miles away, Nigerian separatist blew-up an oil pipeline over the weekend…Meanwhile, Russia is locked in a dispute over the price of gas with Ukraine. Today they stopped deliveries of natural gas to Ukraine, Turkey and Europe to force the Ukrainians to pay up#8230;/p pWhile fears about political instability drive the price of oil#8230;/p/blockquote

James Kunstler: Serious Inflation And Dollar Slump In 2009

Contrarian Profits — Tue, 06 Jan 2009 13:26:58 +0000

pAt the moment, money is being sucked out of the financial system, bringing the threat of deflation. But for strongJames Howard Kunstler/strong, the only question is when the new money being pumped in by the Fed will exceed the amount that has disappeared. James says we could see serious inflation - and a slump in the US dollar - before the end of 2009./p pThis from Whiskey #38; Gunpowder:/p blockquotepThis is the “other shoe” that a lot of people are waiting to drop. Right now we are caught up in a compressive debt deflation as mortgages stop “performing” and loans of all kinds are welshed on. Since money is loaned into existence, and a great many loans are not being repaid, then#8230;/p/blockquote

The Obama Bounce Begins

John Mauldin — Mon, 05 Jan 2009 14:30:54 +0000

pThe dollar bounces! ISM was simply awful! Oil rallies#8230; Jobs Jamboree this Friday#8230; And Now#8230; Today#8217;s Pfennig!br / Although, technically, it#8217;s still the Christmas season (it doesn#8217;t end until Jan. 11), the Santa rally that pushed the euro to 1.45, has gone away, and we#8217;re on to the next phase, which I drew out for you over a week ago#8230; And that is#8230; The Obama bounce#8230; This is something we#8217;ll have to deal with for the next few months. It all began with a huge stock rally on Friday, and that won#8217;t be the last one during the Obama bounce./p pThe dollar is kicking up its heels once again, and this is to be expected during this Obama bounce#8230; You see, the markets#8230;/p

Top Citi Executives to Forgo 2008 Bonuses, Reports State

Contrarian Profits — Mon, 05 Jan 2009 14:00:23 +0000

pCitigroup Inc. (a href="http://finance.google.com/finance?q=c" target="_blank"C/a) Chief Executive Officer a href="http://www.reuters.com/finance/stocks/officerProfile?symbol=C.N#38;officerId=951615" target="_blank"Vikram Pandit/a and Chairman a href="http://www.reuters.com/finance/stocks/officerProfile?symbol=C.N#38;officerId=185556" target="_blank"Winfried Bischoff/a will forgo 2008 bonuses after the bank lost three-quarters of its market value and got a $45 billion U.S. bailout, Pandit said in a memo to employees./p pa href="http://www.reuters.com/finance/stocks/officerProfile?symbol=C.N#38;officerId=98839" target="_blank"Robert E. Rubin/a, the former U.S. Treasury secretary who serves as an adviser to the New York-based company, declined a bonus for a second straight year, a href="http://www.bloomberg.com/apps/news?pid=20601087#38;sid=akSqMkNtIPAg#38;refer=home" target="_blank"said the memo/a sent to strongemBloomberg News/em/strong by Citigroup spokesman Michael Hanretta. According to strongemBloomberg/em/strong, senior leadership committee members will get smaller awards than last year./p p“The harsh realities of 2008, primarily our earnings results, mean that our bonus pool is dramatically lower,” Pandit said in the memo./p pYear-end bonuses, which typically account for about two-thirds of Wall Street compensation, are being#8230;/p

Gold Safe Haven Sought as International Tensions Increase

Doug Casey — Tue, 30 Dec 2008 21:09:54 +0000

pGold rose in the far East, peaking at $890 in early Hong Kong trading, fell back to $875 by the close of the Comex, but rallied through the Globex to finish at $880.60/oz., up $11.90. Overnight, gold has dropped off./p pPlatinum pushed above $900 in Hong Kong and held above the mark all day, ending at $911/0z., up $20. Overnight, platinum has slipped lower./p pSilver was in positive territory from overseas trading to the New York open, at which point it went vertical in the first half-hour, pushing past $11 to just above $11.20, but then fell sharply through the rest of the Comex before adding back a little on the Globex to close at $10.86/oz., up 20 cents. Overnight, silver is#8230;/p

Base Metals Modestly Higher

Doug Casey — Tue, 30 Dec 2008 20:00:18 +0000

p class="maintextDRP"The base metals were all in the green in light post-Christmas trading on Monday. Copper noodled around within a tight 4-cent range the whole day, finishing at $1.3115/lb., up more than 2 cents from Friday. Nickel had a good day, advancing to $4.409/lb., up 17 cents. Zinc moved slightly higher, closing at $0.5164/lb., up three-quarters of a cent. Aluminum posted a modest gain to $0.6868/lb., up more than a penny, while lead had a very strong day, adding nearly 4 cents, to $0.4177/lb. /p pCopper benefited from the strength in crude and the shakiness of the dollar, most of which had to do with the amped-up strife in the Middle East. Analysts generally believe any rally will be short-lived as demand#8230;/p

Risk Aversion Remains but is Waning

Contrarian Profits — Tue, 30 Dec 2008 17:54:44 +0000

pEuro gains, then loses, then gains#8230; Inflation and Commodities#8230; The euro turns 10! Risk Aversion remains but is waning#8230; And Now#8230; Today#8217;s Pfennig!br / Remember those Wild Swings I talked about yesterday? The Wild Swings that could be a result of thin volumes in this the second week of Christmas. Well#8230; We witnessed them in earnest yesterday! As I signed off yesterday, I told you that the euro had rallied 2 whole figures to 1.43 and change. Well, that rally dissipated throughout the morning, and by late in the day the single unit was 1.39 and change#8230; WOW! Now that#8217;s a Wild Swing!/p pYou can point to profit taking as the reason for the move, and with the volumes thinned out by Holiday#8230;/p

Six Predictions for 2009

Andrew Gordon — Tue, 30 Dec 2008 17:19:44 +0000

pHello 2009. What do you have in store for us? Will you finally put the immense problems of the economy behind you? What surprises are you going to spring on us? /p pNobody gave me a crystal ball for Christmas. Then again it doesn#8217;t take one to predict a lousy 2009. #8220;More of the same#8221; isn#8217;t much of a prediction, is it? It#8217;s more like a status report projected into the future./p p style="text-align: left;"I don#8217;t believe in #8220;more of the same.#8221; Either things will get better or worse. The one thing they won#8217;t do is stay the same. Here are six things I think will happen in ‘09.strong/strong/p p style="text-align: center;"strong1./strong The stronga href="http://www.investorsdailyedge.com/Article.aspx?Id=1099"BRICs/a/strong (Brazil, Russia, India and China) will have a terrible year. China will compete with the#8230;/p

Parent Company: First Major Bankruptcy After Christmas

Fred Fuld — Tue, 30 Dec 2008 15:29:00 +0000

The Parent Company (KIDS), which has a great stock ticker symbol by the way, is an online retailer of family and children's products. It is also the a href="http://www.heraldtribune.com/article/20081230/znyt01/812303015tc=yahoo" target="_blank"first major Chapter 11 bankruptcy after Christmas/a. The stock, which traded as high as $6.43 per share this year, is now down to seven cents a share.div class="blogger-post-footer"div class='adsense' style='text-align:center; padding: 0px 3px 0.5em 3px;' script type="text/javascript"!-- google_ad_client="ca-pub-2427831169011625"; google_ad_width=300; google_ad_height=250; google_ad_format="300x250_as"; google_ad_type="text"; google_ad_channel ="8681602088"; google_color_border="FFF3DB"; google_color_bg="FFF3DB"; google_color_link="1B0431"; google_color_url="1B0431"; google_color_text="29303B"; //--/script script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js" /script /div

A HUGE Currency Rally!

Contrarian Profits — Mon, 29 Dec 2008 15:45:39 +0000

pGaza bombing has dollar on the run#8230; More proof we#8217;re turning Japanese#8230; Adding to the debt burden#8230; What will deflation do for the dollar? And Now#8230; Today#8217;s Pfennig!/p pThe currencies had a split personality while I was gone too#8230; At first, they rallied like there was no tomorrow, but then sold off, and then range traded. So, we#8217;ll finish the year on a down note for most of the currencies, but knowing all too well that the markets are beginning to realize that the debts the U.S. is chalking up are not going to go away, and in fact they#8217;re just going to get worse, and that spells bad times for the dollar#8230; Eventually#8230;/p pI did a lot of reading on my#8230;/p

Bernard Madoff Hedge Fund Manager Notes

Richard C. Wilson — Mon, 29 Dec 2008 03:07:02 +0000

h1 style="text-align: center;"bBernard Madoff/b/h1h2 style="text-align: center;"bspan class="Apple-style-span" style="color: rgb(102, 0, 0);"Bernard Madoff Hedge Fund Manager Notes/span/b/h2br /a alt="Bernard Madoff Hedge Fund Manager Notes" title="Bernard Madoff Hedge Fund Manager Notes" onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://richard-wilson.blogspot.com/"img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer; width: 200px; height: 150px;" src="http://3.bp.blogspot.com/_wM_OZdOMR_Y/SVcNYHaZvVI/AAAAAAAACuo/J88d9xIiiPk/s200/Bernard-Madoff-Hedge-Fund-Fraud.jpg" alt="Bernard Madoff Hedge Fund Manager Notes" title="Bernard Madoff Hedge Fund Manager Notes" id="BLOGGER_PHOTO_ID_5284707395700374866" border="0" //aJust came across another post on the Madoff fraud case. This article is by Veryan Allen, here is an excerpt:br /blockquoteBernie Madoff was a stock broker "managing" client accounts. He was never part of the hedge fund industry. His firm was "regulated" and fraud is already illegal. He did not charge 2 and 20 and had no prime broker, proper auditor or independent administrator. Few professional investors invested directly with so many red flags in abundance. Due diligence is an alpha source itself. And portfolio diversification with NUMEROUS strategies and managers is mandatory. a rel="nofollow" target="_blank" href="http://hedgefund.blogspot.com/"read more.../abr //blockquoteh4Additional Information on Bernard Madoffbr //h4ullia alt="Hedge Fund Blogger.com: Hedge Fund Ethics | A New Code" href="http://richard-wilson.blogspot.com/2008/12/hedge-fund-ethics-new-code.html" title="Hedge Fund Ethics | A New Code"Hedge Fund Ethics | A New Code/a/lilia alt="Hedge Fund Blogger.com: Bernard Madoff Fraud | Auditings amp; Due Diligence" href="http://richard-wilson.blogspot.com/2008/12/bernard-madoff-fraud-auditings-due.html" title="Bernard Madoff Fraud | Auditings amp; Due Diligence"Bernard Madoff Fraud | Auditings amp; Due Diligence/a/lilia alt="Hedge Fund Blogger.com: Bernard Madoff Hedge Fund Risks | Fund of Fund Letter" href="http://richard-wilson.blogspot.com/2008/12/bernard-madoff-hedge-fund-risks-fund-of.html" title="Bernard Madoff Hedge Fund Risks | Fund of Fund Letter"Bernard Madoff Hedge Fund Risks | Fund of Fund Letter/a/lilia alt="Hedge Fund Blogger.com: Bernard Madoff Case amp; Hedge Fund Fraud" href="http://richard-wilson.blogspot.com/2008/12/bernard-madoff-case-hedge-fund-fraud.html" title="Bernard Madoff Case amp; Hedge Fund Fraud"Bernard Madoff Case amp; Hedge Fund Fraud/a/li/ulTags: Bernard Madoff, Bernard Madoff Feeder Funds, Madoff Fraud Case, Madoff News, Bernard Madoff News, Bernard Maddoff, Bernard Madof, Bernard Madoff hedge fundsdiv class="feedflare" a href="http://feedproxy.google.com/~f/richard-wilson-blog?a=WYu00EZd"img src="http://feedproxy.google.com/~f/richard-wilson-blog?i=WYu00EZd" border="0"/img/a a href="http://feedproxy.google.com/~f/richard-wilson-blog?a=slItEtQC"img src="http://feedproxy.google.com/~f/richard-wilson-blog?d=50" border="0"/img/a a href="http://feedproxy.google.com/~f/richard-wilson-blog?a=1onff1cB"img src="http://feedproxy.google.com/~f/richard-wilson-blog?i=1onff1cB" border="0"/img/a /divimg src="http://feedproxy.google.com/~r/richard-wilson-blog/~4/W4GgV5Nn2L8" height="1" width="1"/

The Grinch was right: Christmas should be banned

Bernard Hickey — Sat, 27 Dec 2008 20:45:01 +0000

Well not really… But I do think this orgy of consumption around Christmas is a pointless and painful waste of time. It simply stores up even more foreign debt that will have to be serviced and eventually repaid. We simply can’t afford to keep spending the way we have. The charts below show why. We need to [...]

Holiday Shopping Disappointing – Analyst Blog

Zacks Market Commentaries — Fri, 26 Dec 2008 15:05:00 +0000

Preliminary retail sales reports for the holidays are in.

According to SpendingPulse, a unit of MasterCard, total retail sales (excluding autos) declined 8% year-over-year for the period Dec 1 through 24.

More troubling was the report issued by ShopperTrak. It reported that customer visits to retailers declined 24% (the largest drop ever) last weekend versus last year. Keep in mind that the weekend before Christmas is usually the busiest shopping time of the year, as shoppers look for last-minute gifts. ShopperTrak also estimated that retails sales for Dec 19-21 fell 5.3%.

Our take is that sales trends have deteriorated from November into December. Falling gasoline prices are not enticing consumers to consume more. In light of a weak economy, higher unemployment, and tighter credit markets, consumers are choosing to spend less and save more. Those who are spending money in retail stores are buying heavily discounted items at name brand stores, trading down to discounters/liquidators, and only buying what is needed.

The biggest surprise during the holidays is that the huge decline in gasoline did not spur even a slight up tick in spending. Instead, the savings at the pump has been saved or used to pay down existing debt. A higher savings rate is a long-term positive for the economy. Unfortunately, the transition from borrowing and spending to saving is going to a great deal pressure on retailers in the near term. As a result, retailers including J.C. Penney (JCP), Sears (SHLD), Best Buy (BBY), AnnTaylor (ANN), Saks (SKS), and Macy's (M) are offering huge post-holiday discounts beginning today to clear out inventories.

Read the full analyst report on JCP

Read the full analyst report on SKS

"SKS" Free Stock Analysis: Buy? Sell? Hold?
"JCP" Free Stock Analysis: Buy? Sell? Hold?
"BBY" Free Stock Analysis: Buy? Sell? Hold?
"ANN" Free Stock Analysis: Buy? Sell? Hold?
"M" Free Stock Analysis: Buy? Sell? Hold?
"SHLD" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Company Layoffs: More Companies Trim the Fat without Trimming the Workforce

Contrarian Profits — Fri, 26 Dec 2008 14:12:02 +0000

pThe U.S. unemployment rate, currently at a level of 6.5%, a href="http://www.moneymorning.com/2008/12/12/jobless-claims/"could rise to 8% next year/a. But it could also find a ceiling sooner than expected, as more companies implement unpaid vacations and four-day workweeks to preserve jobs./p pThe U.S. recession may just now be entering full swing, but storm clouds have been gathering for more than a year and many companies have already trimmed payrolls. Now, the goal for many companies is to prepare for an economic rebound by finding ways to keep the their skilled productive labor intact./p p#8220;a href="http://www.businessweek.com/magazine/content/08_52/b4114085629738.htm?campaign_id=rss_daily"More companies are exploring alternatives to layoffs/a,#8221; John A. Challenger, chief executive of consulting firm Challenger, Gray #38; Christmas, told strongemBusinessWeek/em/strong. #8220;If they can keep people on until the business turns around,#8230;/p

Happy Boxing Day!

Sean Brodrick — Fri, 26 Dec 2008 13:25:14 +0000

It looks like a stupor-inducingly dull day in the market. I survived Christmas, though my Aunt's dog, Sidney, did not. In fact, it died at my house yesterday afternoon. Sidney was a very old dog, a good dog, and very loved, and will be missed very much.brbrEarlier in the day, we had fun. Along with presents, tons of food, and good friends, we played games. It's something of a tradition at my house.brbrMy team won this one: A href=http://www.amazon.com/Cranium-101010000-100E/dp/B00000DMBQ/ref=sr_1_1?ie=UTF8s=toys-and-gamesamp;qid=1230299863amp;sr=1-1strongCranium/strong/A. I highly recommend it, especially for competitive families who like screaming at each other in a mix of outrage and glee.brbrLater, I lost this one: A href=http://www.amazon.com/Rio-Grande-Games-4098395-Carcassonne/dp/B00005UNAX/ref=sr_1_1?ie=UTF8amp;s=toys-and-gamesamp;qid=1230299958amp;sr=1-1strongCarcassone./strong/A Doesn't matter -- it's a great game, and I'll win it another time. I bought A href=http://www.amazon.com/Vintage-Sports-Cards-Carcassone-Expansion/dp/B0009K6T2E/ref=sr_1_2?ie=UTF8amp;s=toys-and-gamesamp;qid=1230300041amp;sr=1-2strongCarcassone: Princessamp;Dragon Expansion /strong/Aas a gift for Cindy. She squealed with delight to find that under the tree.brbrHere's what I'm reading today (and so very little of it has to do with the markets) ...brbrMost people (who aren't mainlining Fox News) know that Christmas incorporated previously existing pagan winter solstice rituals. Rktect takes a look at some of those early celebrations, and the traditions that have carried over. I find Rktect's title A href=http://www.dailykos.com/storyonly/2008/12/25/10628/885/214/677110strongThe Real Story of Christmas/strong/A misleading -- the real story of Christmas is where you find it, and for many people that's A href=http://christianity.about.com/od/holidaytips/a/christmasbible.htmstronghere /strong/Aor A href=http://www.nyctourist.com/xmas_rockcenter1.htmstronghere /strong/Aor A href=http://www.cardsdirect.com/holiday/christmas/currier-ives-christmas-cards.aspxstronghere /strong/Aor even A href=http://ccinsider.comedycentral.com/cc_insider/2008/11/a-colbert-christmas-premieres-sunday.htmlstronghere /strong/A-- but the historical research is fascinating, and happy yule to ya.brbrMost of my immediate family likes Tom Friedman. Most of my family is wrong. A href=http://www.balloon-juice.com/?p=14907strongMy thoughts in nutshell/strong/A.brbrA href=http://biz.yahoo.com/ap/081224/gold_hunt.htmlstrongWoes on Wall Street Coincide With Gold Coin Rush/strong/AbrI've never seen a case where demand was so high and supply was so short, said Chicago coin dealer Harlan Berk, who has been in the business 44 years.brbrA href=http://online.wsj.com/article/SB123025036865134309.htmlstrongRetail Sales Plummet/strong/AbrTotal retail sales, excluding automobiles, fell over the year-earlier period by 5.5% in November and 8% in December through Christmas Eve, according to MasterCard Inc.'s SpendingPulse unit.When gasoline sales are excluded, the fall in overall retail sales is more modest: a 2.5% drop in November and a 4% decline in December.This will go down as the one of the worst holiday sales seasons on record, said Mary Delk, a director in the retail practice at consulting firm Deloitte LLP.brbrPaul Krugman scares the bejeezus out of us with the title A href=http://krugman.blogs.nytimes.com/2008/12/25/the-second-great-depression-has-arrived/strongThe Second Great Depression Has Arrived,/strong/A but then reveals it's in Ukraine.brbrGet ready for the A href=http://www.mydd.com/story/2008/12/25/04331/338strongForum of Gas Exporting Countries/strong/A.brRussia, the world's largest producer, accounts for 21.6% of global natural gas production. Other top ten global producers attending the meeting include Iran, Norway (as an observer) and Algeria.bremThe time of cheap energy resources, and cheap gas is surely coming to an end. Vladimir V. Putinbr/emMaybe you'd like a video with that ... The Economist asks: A href=http://www.economist.com/finance/displaystory.cfm?story_id=12818300STRONGAfter Zero Interest Rates, Where Next?/STRONG/AbrbrWould you like a little conspiracy to spice up your post-Christmas reading? Then read A href=http://www.huffingtonpost.com/2008/12/25/the-intriguing-death-of-t_n_153518.htmlSTRONGThe Intriguing Death of Top GOP Consultant Michael Connell/STRONG/AbrbrI'm sure there is more I could write; maybe I'll add more later. Have a good day and a good weekend.brbrbestbrbrSean

Cheaper Gas Not Enticing Consumers – Analyst Blog

Zacks Market Commentaries — Fri, 26 Dec 2008 11:57:19 +0000

More troubling was the report issued by ShopperTrak. It reported that customer visits to retailers declined 24% (the largest drop ever) last weekend versus last year. Keep in mind that the weekend before Christmas is usually the busiest shopping time of the year, as shoppers look for last-minute gifts. ShopperTrak also estimated that retails sales for Dec 19- Dec 21 fell 5.3%.

Our take is that sales trends have deteriorated from November into December. Falling gasoline prices are not enticing consumers to consume more. In light of a weak economy, higher unemployment, and tighter credit markets, consumers are choosing to spend less and save more. Those who are spending money in retail stores are buying heavily discounted items at name brand stores, trading down to discounters/liquidators, and only buying what is needed.

The biggest surprise during the holidays is that the huge decline in gasoline did not spur even a slight uptick in spending. Instead, the savings at the pump has been saved or used to pay down existing debt. A higher savings rate is a long-term positive for the economy.

Unfortunately, the transition from borrowing and spending to saving is going to put a great deal of pressure on retailers in the near term. As a result, retailers including JC Penney (JCP), Sears (SHLD), Best Buy (BBY), AnnTaylor (ANN), Saks (SKS), and Macy's (M) are offering huge post-holiday discounts beginning today to clear out inventories.

Read the full analyst report on JCP

Read the full analyst report on SHLD

Read the full analyst report on BBY

Read the full analyst report on ANN

Read the full analyst report on SKS

Read the full analyst report on M

"JCP" Free Stock Analysis: Buy? Sell? Hold?
"SHLD" Free Stock Analysis: Buy? Sell? Hold?
"BBY" Free Stock Analysis: Buy? Sell? Hold?
"ANN" Free Stock Analysis: Buy? Sell? Hold?
"SKS" Free Stock Analysis: Buy? Sell? Hold?
"M" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Merry Christmas!

Market Speculator — Thu, 25 Dec 2008 18:58:33 +0000

Enjoy the day with friends and family! Merry Christmas.

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