By Bob DeMarco
All American Investor
The U.S. Census Bureau announced today that obligations for federal domestic spending increased 16.0 percent in fiscal year 2009 to $3.2 trillion. The 2009 spending total is equivalent to $10,548 per person living in the United States.
Tuesday, August 31, 2010
Monday, August 30, 2010
Personal Income and Outlays, July 2010
By Bob DeMarco
All American Investor
Personal income increased $30.0 billion, or 0.2 percent, and disposable personal income (DPI) increased $17.6 billion, or 0.2 percent, in July, according to the Bureau of Economic Analysis.
Personal consumption expenditures (PCE) increased $44.1 billion, or 0.4 percent. In June, personal income decreased $2.7 billion, or less than 0.1 percent, DPI decreased $0.2 billion, or less than 0.1 percent, and PCE decreased $4.0 billion, or less than 0.1 percent, based on revised estimates.
Real disposable income decreased 0.1 percent in July, in contrast to an increase of 0.1 percent in June. Real PCE increased 0.2 percent, compared with an increase of 0.1 percent.
All American Investor
Personal income increased $30.0 billion, or 0.2 percent, and disposable personal income (DPI) increased $17.6 billion, or 0.2 percent, in July, according to the Bureau of Economic Analysis.
Personal consumption expenditures (PCE) increased $44.1 billion, or 0.4 percent. In June, personal income decreased $2.7 billion, or less than 0.1 percent, DPI decreased $0.2 billion, or less than 0.1 percent, and PCE decreased $4.0 billion, or less than 0.1 percent, based on revised estimates.
Real disposable income decreased 0.1 percent in July, in contrast to an increase of 0.1 percent in June. Real PCE increased 0.2 percent, compared with an increase of 0.1 percent.
Friday, August 27, 2010
30 Year Bond Tumbles on Bernanke Comment (Chart)
By Bob DeMarco
All American Investor
The 30 Year Bond tumbled 3 points on disappointing comments by Federal Reserve Chairman Ben Bernanke.
It appears that no new bond buying by the U.S. central bank is imminent and this triggering the biggest sell-off in three months.
All American Investor
The 30 Year Bond tumbled 3 points on disappointing comments by Federal Reserve Chairman Ben Bernanke.
It appears that no new bond buying by the U.S. central bank is imminent and this triggering the biggest sell-off in three months.
Thursday, August 26, 2010
New Gold Demand Trends, Supply, and Demand Statistics Q2 2010
By Bob DeMarco
All American Investor
Demand statistics for Q2 2010
All American Investor
Demand statistics for Q2 2010
- Total gold demand in Q2 2010 rose by 36% to 1,050 tonnes, largely reflecting strong gold investment demand compared to the second quarter of 2009. In US$ value terms, demand increased 77% to $40.4 billion.
- Investment demand was the strongest performing segment during the second quarter, posting a rise of 118% to 534.4 tonnes compared with 245.4 tonnes in Q2 2009.
Frontier Oil Corp (FTO) -- Company Highlight and Chart
By Steve Cook
All American Investor
Frontier Oil Corp (FTO) is an independent energy engaged in crude oil refining and wholesale marketing of refined petroleum products. The company has grown profits and dividends in excess of 30% annually over the past five years though its return on equity has declined dramatically from 40%+ to the 10-11% range. While profits fell significantly in 2008 and 2009, earnings are recovering in 2010 and should continue to grow as a result of:
(1) an aggressive capital expenditure program that has dramatically increased both the capacity and performance of its refining facilities,
(2) its ability to process heavier, less expensive types of crude oil while still producing higher value added refined products,
(3) wider margins resulting from stabilizing demand and lower raw material, freight and other costs,
FTO is rated B+ by Value Line, has a 28% debt to equity ratio and its stock yields 1.4%.
All American Investor
Frontier Oil Corp (FTO) is an independent energy engaged in crude oil refining and wholesale marketing of refined petroleum products. The company has grown profits and dividends in excess of 30% annually over the past five years though its return on equity has declined dramatically from 40%+ to the 10-11% range. While profits fell significantly in 2008 and 2009, earnings are recovering in 2010 and should continue to grow as a result of:
(1) an aggressive capital expenditure program that has dramatically increased both the capacity and performance of its refining facilities,
(2) its ability to process heavier, less expensive types of crude oil while still producing higher value added refined products,
(3) wider margins resulting from stabilizing demand and lower raw material, freight and other costs,
FTO is rated B+ by Value Line, has a 28% debt to equity ratio and its stock yields 1.4%.
Tuesday, August 24, 2010
Leggett & Platt (LEG) Company Highlight
By Steve Cook
All American Investor
Leggett & Platt (LEG) is a manufacturer of bedding components, residential and office furniture, store fixtures, displays, die castings, specialty wire products, auto seating control cable systems. LEG’s profits have shown little growth over the past 10 years though dividends have increased at an 11%+ rate. Return on equity has been a modest varied from 10-11% earlier in the decade to 6-7% recently. The company has suffered with others producing for the consumer durables industry; however, earnings appear to have stabilized and are expected to pick up in the next couple of years because:
All American Investor
Leggett & Platt (LEG) is a manufacturer of bedding components, residential and office furniture, store fixtures, displays, die castings, specialty wire products, auto seating control cable systems. LEG’s profits have shown little growth over the past 10 years though dividends have increased at an 11%+ rate. Return on equity has been a modest varied from 10-11% earlier in the decade to 6-7% recently. The company has suffered with others producing for the consumer durables industry; however, earnings appear to have stabilized and are expected to pick up in the next couple of years because:
Monday, August 23, 2010
10 Year Treasury Peaks at 15.68 Percent, Trends
The Ten Year Treasury note peaked at an all time high yield on September 25, 1981 at 15.68 percent. The yield has been falling since that peak. For more than 29 years.....By Bob DeMarco
All American Investor
Watch VIX for Next Break Out
The VIX is caught in a pennant formation. ....By Steve Cook
All American Investor
Historically when such a pattern occurs, when the stock/index breaks either the down trend resistance or the underlying support, it points to a continuation of price movement in the direction of the break.
S and P Chart 823
The S&P made a lower high last week giving us a point against which to plot a short term down trend (purple line). That marks 1097 as resistance and 1009/1042 as support.By Steve Cook
All American Investor
I still want prices in the lower quadrant of the current trading range (1009-1044) before committing funds.
Note that holding 1042 would meet that criterion.
Also note that historically stocks perform their worst in September which is clearly upon us. So I am in no hurry to rush to stocks.
Sunday, August 22, 2010
Small Investors Flee Stock Market
From -- In Striking Shift, Small Investors Flee Stock Market.
Renewed economic uncertainty is testing Americans’ generation-long love affair with the stock market.
Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group. Now many are choosing investments they deem safer, like bonds.
Renewed economic uncertainty is testing Americans’ generation-long love affair with the stock market.
Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group. Now many are choosing investments they deem safer, like bonds.
Thursday, August 19, 2010
Weekly Rail Container Volume Highest on Record
"The Association of American Railroads (AAR) today reported rail intermodal volume on U.S. railroads for the week ending Aug. 14, 2010 was the highest of 2010, with 233,767 total trailers and containers, up 20.8 percent from the same week in 2009, but down 1.4 percent compared with 2008 (see chart above). Weekly container volume, a subset of intermodal, was the highest on record up 22.4 percent compared with the same week in 2009, and up 6.4 percent with the same week in 2008. Trailer volume, the other subset of intermodal, rose 12.3 percent last week compared with the same week in 2009, but fell 31 percent compared with 2008.
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Economist on Jobless Claims and the Market
Economists and others weigh in on the jump in jobless claims.
– Initial claims climbed to its highest level in the past 9 months. Although new claims are often very volatile during the summer due to seasonal adjustment difficulties, these data still suggest a softer labor market. Although new claims are still much lower than they were a year ago, they are still relatively high and are no longer trending lower. –Steven A. Wood, Insight Economics
– Initial claims climbed to its highest level in the past 9 months. Although new claims are often very volatile during the summer due to seasonal adjustment difficulties, these data still suggest a softer labor market. Although new claims are still much lower than they were a year ago, they are still relatively high and are no longer trending lower. –Steven A. Wood, Insight Economics
Detailed Report on Weekly Unemployment Insurance Claims
In the week ending Aug. 14, the advance figure for seasonally adjusted initial claims was 500,000, an increase of 12,000 from the previous week's revised figure of 488,000. The 4-week moving average was 482,500, an increase of 8,000 from the previous week's revised average of 474,500.
Wednesday, August 18, 2010
PIMCO Boss Bill Gross Calls For Massive Taxpayer-Backed Mortgage Refinance Initiative
Gross said the refi scheme would spur some $50-60 billion a year in new consumer spending and raise home prices between 5-10 percent.
Seven Faces of “The Peril” -- Deflation
By James Bullard
President, St. Louis Fed
In this paper I discuss the possibility that the U.S. economy may become enmeshed in a Japanese-style, de‡ationary outcome within the next several years.
To frame the discussion, I rely on an analysis that emphasizes two possible long-run outcomes (steady states) for the economy, one which is consistent with monetary policy as it has typically been implemented in the U.S. in recent years, and one which is consistent with the low nominal interest rate, de‡ationary regime observed in Japan during the same period.
The data I consider seem to be quite consistent with the two steady state possibilities. I describe and critique seven stories that are told in monetary policy circles regarding this analysis. I emphasize two main conclusions: (1) TheFOMC’s extended period language may be increasing the probability of a Japanese-style outcome for the U.S., and (2) on balance, the U.S. quantitative easing program o¤ers the best tool to avoid such an outcome.
President, St. Louis Fed
In this paper I discuss the possibility that the U.S. economy may become enmeshed in a Japanese-style, de‡ationary outcome within the next several years.
To frame the discussion, I rely on an analysis that emphasizes two possible long-run outcomes (steady states) for the economy, one which is consistent with monetary policy as it has typically been implemented in the U.S. in recent years, and one which is consistent with the low nominal interest rate, de‡ationary regime observed in Japan during the same period.
The data I consider seem to be quite consistent with the two steady state possibilities. I describe and critique seven stories that are told in monetary policy circles regarding this analysis. I emphasize two main conclusions: (1) TheFOMC’s extended period language may be increasing the probability of a Japanese-style outcome for the U.S., and (2) on balance, the U.S. quantitative easing program o¤ers the best tool to avoid such an outcome.
Friday, August 13, 2010
M2 Minus, Money Supply, Chart
M2 less small time deposits. Calculated by the Federal Reserve Bank of St. Louis.
Tuesday, August 10, 2010
China Real Estate The Mother of All Bubbles (Chart)
The Mother of All Bubbles
Take a gander at home prices in China. Since the 2008 financial crisis, the Chinese housing market has skyrocketed 60%. There are now 65 million vacant housing units. The question is no longer whether there is a Chinese housing bubble, but when will it pop. There is one thing that bubbles ALWAYS do. An that is POP!!!
Nike (NKE) Update and Chart
By Steve Cook
All American Investor
Nike (NKE) designs, develops and markets an extensive line of footwear, apparel and accessory products for athletic and leisure activities through approximately 23,000 retail outlets in over 170 countries.
Over the past five years the company has generated a 20% return on equity, growing earnings and dividends in excess of 15% annually. While the current economic environment negatively impacts consumer spending, NKE performed well through the entire recession. Longer term this premier company should continue to generate above average profit growth as a result of:
NKE is rated A++ by Value Line, has a 4% debt to equity ratio and its stock yields 1.5%.
All American Investor
Nike (NKE) designs, develops and markets an extensive line of footwear, apparel and accessory products for athletic and leisure activities through approximately 23,000 retail outlets in over 170 countries.
Over the past five years the company has generated a 20% return on equity, growing earnings and dividends in excess of 15% annually. While the current economic environment negatively impacts consumer spending, NKE performed well through the entire recession. Longer term this premier company should continue to generate above average profit growth as a result of:
- its strong portfolio of globally recognized brands provides a competitive advantage,
- increased market share as a result of continued product line expansion in emerging markets and non Nike brands [Cole Haan, Converse, Chuck Taylor, Hurley and Umbro],
- its focus on technical innovation acts as a key differentiating factor.
NKE is rated A++ by Value Line, has a 4% debt to equity ratio and its stock yields 1.5%.
Jobs vs. Help Wanted Ads (Graph)
Does this chart signal that a jobs turn around is coming?"
The chart shows monthly payroll employment and monthly online help wanted ads from May 2005 to July 2010.
The chart shows monthly payroll employment and monthly online help wanted ads from May 2005 to July 2010.
Sunday, August 08, 2010
The Trillion Dollar Gap: Underfunded State Retirement Systems
$1 trillion. That’s the gap at the end of fiscal year 2008 between the $2.35 trillion states had set aside to pay for employees’ retirement benefits and the $3.35 trillion price tag of those promises.
Why does it matter? Because every dollar spent to reduce the unfunded retirement liability cannot be used for education, public safety and other needs. Ultimately, taxpayers could face higher
taxes or cuts in essential public services.
Why does it matter? Because every dollar spent to reduce the unfunded retirement liability cannot be used for education, public safety and other needs. Ultimately, taxpayers could face higher
taxes or cuts in essential public services.
Thursday, August 05, 2010
Headlines -- Morning Edition -- August 5
By Steve Cook
All American Investor
As reflected in yesterday’s Morning Call, ADP reported a positive employment number--but this is a secondary indicator and frequently deviates significantly from the Labor Department stat.
However, because there was no other economic data reported yesterday, the ADP report got more air time than it deserved. On the other hand, it set up the nonfarm payrolls figure which gets reported Friday morning and, as has been the case for the last two years, is widely anticipated.
All American Investor
As reflected in yesterday’s Morning Call, ADP reported a positive employment number--but this is a secondary indicator and frequently deviates significantly from the Labor Department stat.
However, because there was no other economic data reported yesterday, the ADP report got more air time than it deserved. On the other hand, it set up the nonfarm payrolls figure which gets reported Friday morning and, as has been the case for the last two years, is widely anticipated.
Universal Corporation (UVV) Chart
By Steve Cook
All American Investor
Universal Corporation (UVV)
UVV stock made good progress off the March 2009 low, easily surpassing the down trend off its March 2008 high (red line) and the November 2008 trading high (green line). The stock subsequently broke the up trend off the March 2009 low, quickly reset to a down trend, reversed itself again and presently appears to be attempting reset its primary trend to down--though it is in the time and distance discipline zone. The straight blue line in the lower section of the chart is the lower boundary of an up trend dating from 1975. The wiggly blue line is on balance volume. The High Yield Portfolio currently owns a full position in UVV. Its current Buy Price is $29; the Portfolio would Sell half of its position at $81.
All American Investor
Universal Corporation (UVV)
UVV stock made good progress off the March 2009 low, easily surpassing the down trend off its March 2008 high (red line) and the November 2008 trading high (green line). The stock subsequently broke the up trend off the March 2009 low, quickly reset to a down trend, reversed itself again and presently appears to be attempting reset its primary trend to down--though it is in the time and distance discipline zone. The straight blue line in the lower section of the chart is the lower boundary of an up trend dating from 1975. The wiggly blue line is on balance volume. The High Yield Portfolio currently owns a full position in UVV. Its current Buy Price is $29; the Portfolio would Sell half of its position at $81.
Wednesday, August 04, 2010
December Gold Chart
Good downside test of the 1160 area. The strong upside period does not kick in until the October - March period.
A real estate crash in China would most like cause a moonshot in Gold.
A real estate crash in China would most like cause a moonshot in Gold.
China Said to Test Banks for 60% Home-Price Drop
Banks were instructed to include worst-case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively, the person said, declining to be identified because the regulator’s requirement hasn’t been publicly announced. Previous stress tests carried out in the past year assumed home-price declines of as much as 30 percent.
China Said to Test Banks for 60% Home-Price Drop
China Said to Test Banks for 60% Home-Price Drop
August 2010 QUARTERLY REFUNDING STATEMENT
The U.S. Department of the Treasury is offering $74 billion of Treasury securities to refund approximately $33.0 billion of privately held securities maturing on August 15, 2010. This will raise approximately $41 billion.
For Dendreon, It’s 500 Prescriptions for Provenge and Counting
Last Thursday, the New England Journal of Medicine published the results of Impact, the pivotal clinical trial that persuaded the FDA to approve Dendreon (DNDN) Provenge in late April.
Monday, August 02, 2010
Is Commercial Real Estate on the Verge of Crashing? (Graphs)
The delinquent unpaid balances for Commercial Mortgage Backed Securities continues to rise.
The delinquency rate has now risen about 7 percent to 7.87 percent. Above 7 percent can be considered the level where a real crash can take place at any time.
Realization of this dire state of affairs could cause the stock market to take a major tumble. It would also be the point to get long term bullish on the stock market.
Having said this, I would expect a significant drop if this occurs. I would expect this drop to last more than a few days, more likely several weeks, as the market unwinds and fear takes over.
The delinquency rate has now risen about 7 percent to 7.87 percent. Above 7 percent can be considered the level where a real crash can take place at any time.
Realization of this dire state of affairs could cause the stock market to take a major tumble. It would also be the point to get long term bullish on the stock market.
Having said this, I would expect a significant drop if this occurs. I would expect this drop to last more than a few days, more likely several weeks, as the market unwinds and fear takes over.
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