What’s Keeping Obama up at Night?

by Don Miller Contributing Writer, Money Morning

Editors Note: Inevitably the fanfare and excitement about our new administration will die down, and they will have to get down to work. President-elect Obama may have a laundry list of urgent jobs, but fixing the economy is priority one. The market’s problems are about to become his problems. Money Morning gives us a taste of the economic data that’s been keeping the president-elect and Wall Street up at night – and what we should be paying attention to as well.

Stock Market Gyrates as Reports Show Economy Deep in Recession

The stock market struggled to recover from a tumultuous 2008 yesterday (Tuesday) while digesting a trio of downbeat economic reports from the manufacturing, housing and service sectors.

The reports included separate data on factory orders and pending home sales for November, as well as the Institute of

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he economic news continues to bring bad tidings…consumer bankruptcies were up 33% in 2008…The financial crash is causing an economic crash, which will cause a worse financial crash…and around and around we go…Who will spend their savings in ‘09?…the CBO puts the budget deficit at $1.2 trillion for this year - and that’s not counting stimulus programs…and more!

“Psst…we’re breaking out of this joint…Saturday night…pass it on….”

Yes, dear reader…we’re breaking out… We’re not going to let these prison bars stop us. A whole generation of American investors is being fattened for slaughter…we’re not going to be among them.

Let’s look at yesterday’s headlines just to see what is going on.

The Dow rose 62 points yesterday. Oil held steady at $48. Gold went up $8. Yields are rising…but you still get paid nothing when you lend money to the U.S. government.

The economic news tells us that things are getting worse. Alcoa said

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According to the new book Outliers by Malcolm Gladwell, countries that have high PDI’s (power-distance index) respect authority more and are less likely to speak up to or challenge superiors. The evidence cited is the case of a Korean Air flight where the first officer (the co-pilot) knew the plane was in serious trouble, but out of  perceived ‘respect’ for the pilot, was slow to suggest otherwise. The result of the first officer’s lack of speaking up was the plane crashing into the side of Nimitz Hill.

So how does this relate to the markets? According to the same study, Americans are supposed to have one of the lowest PDI’s, meaning that in order to avoid catastrophe, we aren’t afraid to speak up to authority in order to ring the alarms. Gladwell refers to this as “The Ethnic Theory of Plane Crashes”.

Apparently, when it comes to speaking up about potential fraud

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U.S. stocks fell on Thursday after most retailers posted weak retail sales and reduced their earnings outlook, even after denting margins with heavy discounts to lure consumers. Bellwether Wal-Mart (WMT) missed Wall Street expectations on December same-store sales and guided to a dismal fourth quarter.

Wal-Mart blamed snowstorms during the crucial holiday season for forecasting quarterly earnings between 91 cents to 94 cents a share, down from a prior view of $1.03 to $1.07. Although Wal-Mart was one of the few retailers that posted comparable-store sales growth for the month of December, the 1.7% increase still fell short of analysts' estimates. The retailer fell more than 8% to $50.31 after the announcement.

Rivals Target (TGT) saw December same-store sales falling 4.1%, while comps were down 4% at Macy's (M). Both the companies warned of lower profits in the fourth quarter. Gap (

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Thursday January 8, 2009 Navivest

Shares of Walmart (WMT) are indicated to open down a whopping $4.53 after the company cut its forecast for Q4 2008 earnings from continuing operations, to $0.91 to $0.94 per share. The company had previously issued guidance for the period of $1.03 to $1.07 a share, with consensus estimates coming in at $1.06.

Walmart was supposed to be a standout as the economic downturn cut consumers’ spending power, and more of them turned to discount stores to save money of which Walmart is the clear leader. But apparently, even Walmart is not immune.

The company also reported that same store sales for December rose just 1.7%. Wall Street analysts had been looking for a rise of 2.8%.

Tags: Walmart 

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span style="font-weight:bold;"New Year. New You. New Nest Egg./spanbr /br /By Natalie Pace,br /Author of 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;" /br /br /Build a better nest egg with 6 easy, sound strategies for 2009.br /br /The stock market lost 38% in 2008, but if you lost more than 20%, your problem wasn't really the stock market, it was the design of your nest egg. Storms occur in markets, as they do in the real world, but your home shouldn't be flooding every time it happens.br /br /You know intuitively that your retirement plan doesn't work. Your nest egg has drowned twice now in the last eight years. You were elated with your returns in 1999 and then devastated when your assets imploded ...

Procter & Gamble Co. (PG), which offers an outstanding record of positive surprises on earnings, outperformed the Dow ($DJI), S&P 500 (SPX) and NASDAQ (COMP) in 2008.

< ?DART(15);?> Company Description

Procter & Gamble Company is a major household products and cosmetics company, which manufactures and markets over 300 brand name products in more than 160 countries. The company is well known for impressive product development capabilities, marketing prowess, and a strong global distribution network. Procter & Gamble s products enjoy strong brand name recognition.

In fiscal 2008, the company derived 44% of total revenue from North America, 30% from developing markets, 22% from Western Europe, and 4% from Northeast Asia.

Strong Results Reflect Quarterly Growth

On October 29, 2008, Procter & Gamble reported results for the first quarter of fiscal 2009 ending September 30, 2008. Quarterly earnings (excluding one-time items) were $1.03 per share, increasing 14.4% year-over-year from

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Small-Cap Investing: How to Play The Emerging Small-Cap Rally

by Louis Basenese, Advisory Panelist Associate Investment Director, The Oxford Club Wednesday, January 7, 2009: Issue #911

Forget the grim news that Alcoa (NYSE: AA) is slashing costs and cutting 13% of its workforce. We all know times are tough. But the market’s a forward-looking beast. And right now, it’s doing exactly what I predicted on November 19. It’s favoring small caps over large caps.

In December the little guys put up big numbers - a 5.8% gain versus a mere 1.1% uptick for the large guys, based on the Russell 2000 and S&P 500 indexes.

Before I get to my favorite ways to screen and play this emerging small-cap rally, let me first address my critics.

My last column failed to convince some of you. Others thought I simply skimped on the proof. Or more specifically, that I failed to tell you why

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In this week’s article, I wanted to follow up my piece from the week prior – Predictions for 2009 - and this time offer some offbeat predictions for 2009. First, however, I wanted to make a few observations about making prognostications. Many times prognosticators look to the past for patterns which will repeat themselves in the future.

I myself look to history quite often, searching for parallels to what is happening today. However, I always keep in mind that famous Mark Twain quote - “History doesn’t repeat itself, at best it sometimes rhymes”. The consensus Wall Street deflationists are ignoring this bit of wisdom.

The deflationists are assuming that hard economic times, like the 1930s, will lead to massive deflation. I predict that our current hard economic times will “rhyme”. The actions of the Bernanke Federal Reserve are completely different than …

There is a saying in the world of Austrian economics about the business cycle. The puzzle is not to explain business failures. Those are part of the normal course of life, and the sign of a healthy economy. The puzzle is to explain the “cluster of errors” that appears at the beginning of a recession. How could so many have been so wrong about so much at the same time? The business cycle is a system-wide failure, not merely the mistaken judgment of a few.

So it is with Madoff’s scheme. The mystery isn’t how one person was able to fool a few. The scheme in which yesterday’s “investors” are paid off with the money of today’s victims is known in all places and probably all times - and it always goes belly up to the originator’s complete disgrace. It is a classic example of how moral laws are self-enforcing in

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