Monthly Archives: April 2012
Ford and Chrysler Report Strong Sales; How This May Forecast Employment
“Ford Motor had the best March for new-vehicle sales in the U.S. in five years, and AutoNation raised its forecast for sales for the whole year, in what may be a strong sign of recovery for the auto industry.
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Philippe Desmazes | AFP | Getty Images
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Ford [F 12.62 
0.145 (+1.16%) 
] Americas President Mark Fileds told CNBC on Tuesday that the sales performance was due to pent-up demand, the mild weather and demand for fuel-efficient cars.
AutoNation [AN 34.78 0.47 (+1.37%) ]announced that March retail new vehicle unit sales increased 15 percent compared with the same month of last year and that sales in the first quarter increased 13 percent from the first quarter of 2011.
The results were so good, CEO Mike Jackson told CNBC, that the dealer raised its sales forecast for the whole year.
Its shares rose 2 percent in pre-market trading.
Chrysler’s sales increased 34 percent, best monthly sales in four years.”
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Is this a sign of a good jobs report ?
Comments »Damn: REINHART AND ROGOFF: The US May Never Experience A Strong Recovery Again
“Economists Carmen M. Reinhart and Kenneth S. Rogoff are back with a new Bloomberg View op-ed, in which they double down on their claim that recessions caused by financial crises do not see normal recoveries, and that the comeback will be slow and uneven, much like we’ve seen for the last few years.
You might think that this is consensus now, but the point of their column is to blast a series of studies which have been arguing the opposite, that there’s no reason for post-crisis comebacks to be so mediocre.
The point that all recoveries are the same — whether preceded by a financial crisis or not — is argued in a recent Federal Reserve working paper by Greg Howard, Robert Martin and Beth Anne Wilson. It was also discussed in a recent article in the Wall Street Journal.
It is mystifying that they can make this claim almost five years after the subprime mortgage crisis erupted in the summer of 2007 and against a backdrop of an 8.3 percent unemployment rate (compared with 4.4 percent at the outset of the financial crisis). Our research makes the point that the aftermaths of severe financial crises are characterized by long, deep recessions in which crucial indicators such as unemployment and housing prices take far longer to hit bottom than they would after a normal recession. And the bottom is much deeper. Studies by the International Monetary Fund concluded much the same.
The gist of the Reinhart and Rogoff complaint here is that these new studies, which suggest post-crisis recoveries can show a return to trend growth rates is that they have as their starting points actual “recoveries”, rather than the moment the bust happened.
Hence they say:
We admit that this time is different in one important respect: The goal posts many analysts use to assess economic outcomes seem to shift from data point to data point.
They conclude grimly:
Looking ahead, does history suggest that the current U.S. recovery will be strong and robust, even if it has been so long coming? We hope this will be the case, but the jury is out. Precisely because there is often no bright line that marks a “recovery” stage after a deep financial crisis — the kind of halting uneven recovery the U.S. has experienced is the norm — considerable judgment is required in choosing turning-point dates (especially in real time).”
Comments »Look How Much The Average Person Would Get Screwed By The GOP Health Care Plan
“[This post by Michael Halasy was published at Angry Bear Blog.]
Much has been said about “repeal and replace” it has become almost as much a part of GOP lexicon as “drill baby, drill”. The GOP despite having been supportive of the framework for the ACA previously, wants badly to discredit the administration and claim a victory in the name of “freedom”. Too bad history shows that the Heritage Foundation and VP Stuart Butler supported a plan almost virtually identical to the ACA.
Now, along comes Congressman Ryan, despite being rebuffed last year for the “Roadmap”, he has come along with a v 2.0. Unfortunately, he is making headway. I won’t comment on the other aspects of the new and improved Roadmap, but it seems to be just as much of a disaster as the previous one. The House has already passed it of course, and Romney, aka etch a sketch, has enthusiastically received the Congressman’s endorsement and has endorsed Ryan’s plan as well.
So we know that the GOP, primarily the Tea Partier, despise the individual mandate as a violation of their freedom. Ezra Klein had a great article last week about the hidden mandate in the Ryan bill , but does not discuss the fact that it will essentially eliminate employer based insurance.
Now, Ryan’s plan assumes that the state based exchanges (sound familiar?) will produce a lot of savings, and he assumes that market forces will do even more. To that end, he offers a couple of tax credits. But, oh by the way, you LOSE employer based coverage under Ryan. It severs it completely. So an individual gets a 2,300 dollar tax credit (family is 5,700) to buy insurance. I can tell you now, that the average per the Kaiser Family Foundation for a single individual is much higher than 2,300.
Family plan premiums are $15,073 on average, while coverage for single employees is about $5,429.
Workers contributed an average of $921 toward the premium of single coverage and $4,129 for family plans.
What this means, is, that under the Ryan plan, your single insurance premium will cost you 2,208 MORE per year out of your own pocket at current cost. Family plans will cost you 5,244 MORE per year out of your own pocket.
That’s the repeal and replace plan folks…..That’s what the House voted on and passed…..That’s what Romney endorsed….THAT’s the GOP plan…
It’ll save businesses money, and it’s great for corporate America. However, it is not so great for the average small family living on 40-45k per year combined income.”
Comments »Doug Short Offers an Update on Why the Market is Overvalued by 34-50%
“Here is a summary of the four market valuation indicators I updated at the beginning of the month.
- The Crestmont Research P/E Ratio (more)
- The cyclical P/E ratio using the trailing 10-year earnings as the divisor (more)
- The Q Ratio, which is the total price of the market divided by its replacement cost (more)
- The relationship of the S&P Composite to a regression trendline (more)
To facilitate comparisons, I’ve adjusted the two P/E ratios and Q Ratio to their arithmetic means and the inflation-adjusted S&P Composite to its exponential regression. Thus the percentages on the vertical axis show the over/undervaluation as a percent above mean value, which I’m using as a surrogate for fair value. Based on the latest S&P 500 monthly data, the market is overvalued somewhere in the range of 34% to 50%, depending on the indicator. This is an increase from the previous month’s 33% to 46% range.
I’ve plotted the S&P regression data as an area chart type rather than a line to make the comparisons a bit easier to read. It also reinforces the difference between the line charts — which are simple ratios — and the regression series, which measures the distance from an exponential regression on a log chart.
The chart below differs from the one above in that the two valuation ratios (P/E and Q) are adjusted to their geometric mean rather than their arithmetic mean (which is what most people think of as the “average”). The geometric mean weights the central tendency of a series of numbers, thus calling attention to outliers. In my view, the first chart does a satisfactory job of illustrating these four approaches to market valuation, but I’ve included the geometric variant as an interesting alternative view for the two P/Es and Q. In this chart the range of overvaluation would be in the range of 45-59%, an increase from last month’s 44% to 55%.
As I’ve frequently pointed out, these indicators aren’t useful as short-term signals of market direction. Periods of over- and under-valuation can last for many years. But they can play a role in framing longer-term expectations of investment returns. At present they continue to suggest a cautious long-term outlook and guarded expectations.”
Comments »Spain’s Market is Tanking Hard
Spain’s IBEX is now off 1.4%.
This is the world’s “sick man” as they say.
Read more: http://www.businessinsider.com/spain-is-melting-down-more-2012-4#ixzz1qyiXM3TN
Comments »EU Probes Motorola and Google for Potentially Preventing Competition From Accessing Patents
“BRUSSELS (AP) — The European Union’s competition watchdog on Tuesday opened two investigations into whether Motorola Mobility, which is being bought by Google, is unfairly restricting competitors from accessing essential patents.
The formal investigations were announced after Apple Inc. and Microsoft Corp. complained to the European Commission that Motorola Mobility was using injunctions against its rivals’ key products — such as the iPhone, iPad or Xbox — as a way of gaining an edge in the market. Apple and Microsoftclaimed that the price Motorola Mobility was demanding for licensing its patents was excessive and its court cases against them illegal.
Motorola Mobility holds patents that are essential for standards linked to 2G and 3G wireless technology — the focus of Apple’s complaint — as well as compressing video for online use and wireless LAN technologies, which are at the heart of Microsoft’s complaint.
The Commission said it “will assess whether Motorola has abusively, and in contravention of commitments it gave to standard setting organizations, used certain of its standard essential patents to distort competition.”
Under EU competition law, companies that hold patents that are essential for industry standards have to make these available to rivals at a fair price. Standards ensure that devices from different producers can interact seamlessly with widely used networks, technologies and each other….”
Comments »The Aussie and Greenback Fall Before Key U.S. Data
“The dollar approached a one-month low against the euro before a U.S. report that economists said will show factory orders rebounded in February, reducing demand for the relative safety of the world’s reserve currency.
The Dollar Index dropped for a fourth day before the Federal Open Market Committee releases minutes of its March meeting, where policy makers raised their assessment of the economy. The euro rose against most of its major peers after a German parliamentary leader said there’s no need to discuss a bailout for Spain. Australia’s dollar fell after the central bank signaled it may resume cutting interest rates.
“The U.S. economic news, because it has been better, is promoting some risk appetite,” and undermining the dollar, said Michael Derks, chief strategist at FXPro Financial Services Ltd. in London. “For now the market is minded to focus on the more positive developments. The euro is less vulnerable against the dollar than it was a month ago and there’s also a suspicion that the FOMC minutes might show a bias toward further easing.”
The dollar fell 0.2 percent to $1.3342 per euro at 6:33 a.m. New York time after declining to $1.3386 on March 27, the weakest since Feb. 29. The U.S. currency was little changed at 82.04 yen. It earlier dropped to 81.56, the lowest since March 9. The euro gained 0.1 percent to 109.47 yen.
The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. major trading partners, fell 0.1 percent to 78.794….”
Comments »China Expects 8.4% Growth for Q1
“China’s economy may have expanded about 8.4 percent in the first quarter, the least since the first half of 2009, according to an estimate given by an official 10 days before the data are due.
Zhang Xiaoqiang, vice chairman of the National Development and Reform Commission (NDRZ), cited “relevant China research institutes’ initial figures” for the estimate and predicted a gain of about 3.5 percent in consumer prices. He spoke today during a panel discussion at the Boao Forum for Asia, a gathering of government and business leaders on China’s tropical island ofHainan.
The growth figure compares with the 8.3 percent medianestimate of 28 economists surveyed by Bloomberg News. The fifth straight slowdown in quarterly growth will underscore concerns that weakness in the Chinese economy is set to limit a global expansion already capped by Europe’s austerity measures.
“The final number will be very close to 8.4 percent,” Lu Ting, chief Greater China economist at Bank of America Corp. inHong Kong, said in an interview in Boao. “They can get a relatively accurate forecast or estimate of first-quarter GDP.”
Premier Wen Jiabao pared this year’s expansion target to 7.5 percent from an 8 percent goal in place since 2005 on March 5, part of government plans to tilt growth toward consumption and away from exports. In the fourth quarter of last year, growth was 8.9 percent….”
Comments »Oil Drops Overnight on Stockpile Worries
Australia Holds Interest Rates Steady at 4.25%
“Australia’s central bank signaled today it may resume cutting interest rates as soon as next month if weaker-than-forecast growth slows inflation, sending the local currency and bond yields lower.
“The board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy,” Governor Glenn Stevens said in a statement after leaving the overnight cash-rate target at 4.25 percent…”
Comments »Molson Coors Bids for StarBev
Global Markets and U.S. Futures Flip Flop
Oceans Started Warming 135 Years Ago, Study Suggests
Joseph Castro, LiveScience Staff Writer
Date: 02 April 2012 Time: 09:20 AM ET
The world’s oceans have been warming for more than 100 years, twice as long as previously believed, new research suggests.
The findings could help scientists better understand the Earth’s record of sea-level rise, which is partly due to the expansion of water that happens as it heats up, researchers added.
“Temperature is one of the most fundamental descriptors of the physical state of the ocean,” said the study’s lead author,Dean Roemmich, an oceanographer at the University of California, San Diego. “Beyond simply knowing that the oceans are warming, [the results] will help us answer a few climate questions.”
Read the rest here.
Should You Sell in April?
By Mark Hulbert, MarketWatch
CHAPEL HILL, N.C. (MarketWatch) — Those interested in doing some spring cleaning in their portfolios this month might be tempted to do the most radical spring cleaning of all: Sell everything and go to cash.
That’s because April represents the end of the seasonally favorable six-month period that began last Halloween, and the fast approach of the time when many will “Sell in May and Go Away.” Should you try to get a head start on those who mechanically wait until May Day to do their selling?
Read the rest here.
Comments »10 Wall Street Reporters You Should Follow on Twitter
April 2, 2012 By Loquiveri
If Fox Business were serious about going after CNBC/Bloomberg, they would hire Bess Levin to co-anchor a show with Charlie Gasparino and call it “STFU or GTFO”. Talk about a ratings bump….
Until then, Twitter can serve as an alternative for the dream team of co-anchors. As our readership expands to those outside the echo-chamber, we thought it would be a good idea to give everyone a guide on who to follow in the financial journalism world. The following people can turn Fed Decisions into Super Bowl Sunday.
Get the list of 10 reporters here.
Comments »Supreme Court Ruling Allows Strip-Searches for Any Arrest
By ADAM LIPTAK
Published: April 2, 2012
WASHINGTON — The Supreme Court on Monday ruled by a 5-to-4 vote that officials may strip-search people arrested for any offense, however minor, before admitting them to jails even if the officials have no reason to suspect the presence of contraband.
Read the rest here.
The Associated Press Gets Caught Having an ‘Obasm’
Source: washingtonpost.com
Better Safe Than Sorry
The American Truckers Association have a saying: “When trucks stop America stops”
“A report prepared for legislators and business leaders by the American Trucking Associations highlights just how critical our just-in-time inventory and delivery systems are, and assesses the impact on the general population in the event of an emergency or incident of national significance that disrupts the truck transportation systems which are responsible for carrying some ten billion tons of commodities and supplies across the United States each year.
A shut down of truck operations as a result of elevated threat levels, terrorist attacks, or pandemics would, according to the report, have “a swift and devastating impact on the food, healthcare, transportation, waste removal, retail, manufacturing, and financial sectors.”
So too would events such as an EMP attack or a coordinated cyber-attack that could shut down global positioning systems and the computers responsible for inventory control. Another potential scenario that is more likely now than ever before is liquidity problems within the financial system stemming from currency crisis or hyperinflation. All of our just-in-time delivery systems are built upon the unhindered transfer of money and credit, but when credit flow becomes restricted or money becomes worthless, no one will be able to pay for their goods. Likewise, no one will trust the credit worthiness of anyone else. This is exactly the scenario playing out in Greece right now and the consequences on the health care industry in that country have left many without life saving drugs. When there’s no money, no one will be transporting anything.
The effects of a transportation shutdown for any reason would be immediate (in some cases, within hours) and absolutely catastrophic.
Excerpted from the American Truckers Associations report
Food
- Significant shortages will occur in as little as three days, especially for perishable items following a national emergency and a ban on truck traffic.
- Consumer fear and panic will exacerbate shortages. News of a truck stoppage—whether on the local level, state or regional level, or nationwide—will spur hoarding and drastic increases in consumer purchases of essential goods. Shortages will materialize quickly and could lead to civil unrest. (We’re seeing this in the UK right now)
Water
- Supplies of clean drinking water will run dry in two to four weeks. For safety and security reasons, most water supply plants maintain a larger inventory of supplies than the typical business. However, the amount of chemical storage varies significantly and is site specific. According to the Chlorine Institute, most water treatment facilities receive chlorine in cylinders that are delivered by motor carriers. On average, trucks deliver purification chemicals to water supply plants every seven to 14 days. Without these chemicals, water cannot be purified and made safe for drinking.
Health Care
- Without truck transportation, patient care within the truck stoppage zone will be immediately jeopardized. According to Cook, many hospitals have moved to a just-in-time inventory system. In fact, some work from a low-unit-of-measure system. This means that essential basic supplies, such as syringes and catheters, are not ordered until the supplies are depleted. These systems depend on trucks to deliver needed supplies within hours of order placement. Internal redistribution of supplies in hospitals could forestall a crisis for a short time; however, in a matter of hours, hospitals would be unable to supply critical patient care.
- If an incident of national significance produces mass injuries, truck transportation is the key to delivering urgently needed medical supplies necessary to save lives.
- Hospitals and nursing homes will exhaust food supplies in as little as 24 hours
- Pharmacy stocks of prescription drugs will be depleted quickly. According to the National Association of Chain Drug Stores, most of the nation’s 55,000 drug stores receive daily merchandise deliveries by truck.
Transportation
- Service station fuel supplies will start to run out in just one to two days. An average service station requires a delivery every 2.4 days. Based on these statistics, the busiest service stations could run out of fuel within hours of a truck stoppage, with the remaining stations following within one to two days
- Air, rail and maritime transportation will be disrupted.
- A fuel shortage will create secondary effects. Without access to automobile travel, people will be unable to get to work causing labor shortages and increased economic damage. Without cars, many people cannot access grocery stores, banks, doctors, and other daily needs. Public bus systems will cease to operate as well, preventing many disabled and elderly people from accessing these necessities. Without fuel, police, fire, rescue and other public service vehicles will be paralyzed, further jeopardizing public safety.
Waste Removal
- Within days of a truck stoppage, Americans will be literally buried in garbage with serious health and environmental consequences. Further, without fuel deliveries, many waste processing facilities will be unable to operate equipment such as backhoes and incinerators.
- Uncollected and deteriorating waste products create rich breeding grounds for microorganisms, insects, and other vermin.Hazardous materials and medical waste will introduce toxins as well as infectious diseases into living environments. Urban areas will, of course, be significantly impacted within just a couple of days.
Retail / Manufacturing / Economy
- Replenishment of goods will be disrupted. Many of the nation’s leading retailers rely on just-in-time delivery to keep inventory levels as low as possible. Similar to the low-unit-of-measure hospital inventory system, these stores rely on frequent deliveries to replenish basic goods. Often, delivery of a shipment is not triggered until the current inventory is nearly depleted. Without truck deliveries, retailers will be unable to restock goods, including consumer basics such as bottled water, canned goods, and paper products.
- Consumer behavior during emergencies triples the rate of inventory turn-over.Since many large retail outlets typically keep inventories as lean as possible, problems often arise quickly during truck transportation slowdowns that occur from crises such as hurricanes.
- Just-in-time manufacturers will shut down assembly lines within hours. Major American manufacturers, ranging from computer manufacturers such as Dell and Compaq to major automakers such as GM and Ford, rely on just-in-time manufacturing. Without truck deliveries, component shortages and manufacturing delays will develop within hours
Financial Sector
- ATM and branch bank cash resources will be exhausted quicky.In today’s fastpaced, high-technology economy, consumers access cash 24/7 from 370,000 ATMs nationwide. JP Morgan Chase, the nation’s second largest consumer bank, replenishes its 6,600 ATMs via armored truck delivery every two to three days. Given the increase in ATM activity that occurs before and after any type of crisis, ATMs would run out of cash much sooner.
- Small and medium-size businesses will lose access to cash.
- Regular bank functions will cease.”
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