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Wall Street Breakfast: Must-Know News
You have repeated the same mistake again. To wit:
"The ISM report indicated that the non-manufacturing sector improved slightly from the previous month. However, a sub-50% reading indicates sector contraction. So, a slower rate of contraction in December brought activity to 40.6%."
The sector did not "improve slightly" as you insist. It got worse. It simply got worse at a slower rate than the month before.
In my portfolio I lost 20% in one month and then lost 18% the next. My losses are not as great, but my portfolio is still shrinking. It will "improve slightly" when it has actual growth. For example +.05%!
Improvement indeed!
I am still a fan! Thanks for your reply.
Wall Street Breakfast: Must-Know News
Whoo Hoo! A counter trend move! The sector is GROWING... right? But the very next sentence in your "news" is:
"This marked the third month in a row of sector contraction, though the rate slowed slightly."
So it is growing and contracting at the same time? Are you just making this stuff up? Do you even read what you write?
Please do better, Mrs. Granby.
Chart of the Week: ISM Plummets
2009 Predictions I Hope Are Dead Wrong
I wonder how local governments will fare this year. Brother, can you spare a dime?
Nine Ways to Profit in 2009
On Jan 02 08:18 AM y3115y wrote:
> Please tell if the printed money will cause inflation?
> We barrow from China to pay Russia now, but if China wants to cash
> in, then where can we barrow? May be Madoff could help.
Current Economic Outlook: Reasons to Be Positive
"Furthermore, we haven’t seen wars, revolutions, or other disturbances anywhere as a result of this financial "turmoil." Add to that the scores of companies outside the financial sector with clean, strong balance sheets ready to invest. And a new US administration ready to spend on infrastructure at a rate not seen for decades..."
Furthermore, we haven’t seen wars, revolutions, or other disturbances anywhere as a result of this financial "turmoil."
Yes, and we haven't been attacked by aliens either- another good sign!
Add to that the scores of companies outside the financial sector with clean, strong balance sheets ready to invest.
Please sir, could you name three? Please?
And a new US administration ready to spend on infrastructure at a rate not seen for decades...
Oh goody! Now deficit spending is good! Japan tried to do the infrastructure thing to end their recession too. What makes you think we can do a better job of it?
All in all it is a mighty thin reed to be leaning on. Perhaps you can take another run at it in February after the follow-on of cascading events that are already upon us have happened:
Retailers closing their doors causing mall real estate defaults, unemployment spikes, small business failures, further bank balance sheet erosion, commercial loan defaults, property and sales tax reductions leading to municipal bankruptcies... all of this and more is already in motion. It is bigger than Obama and the feds. It will end when all unsustainable debt is gone and price of goods reflect real value.
Your optimism is charming, but you naiveté is a little scary.
Coach: Luxury on the Cheap
How to Inspire More Panic in the Economic Crisis
Sadly, we have a cascade type banking crisis on our hands. One need not be genius to see it.
First, the "mortgage crisis" resulted in the American consumer halting the mortgage equity withdrawals from their homes. This resulted in a sudden consumer spending drop.
A sudden backup in inventories caused an unemployment spike, spooking whatever consumers were left. Thus holidays sales, car sales and travel ceased.
Now we are going to see retailers closing, (empty malls, commercial real estate malls [CRE malls] going bankrupt) hotels closing and CRE hotels going bankrupt, light industrial/warehouse properties empty and CRE manufacturing bankruptcies, office space vacancies rising and CRE office bankruptcies.
Local banks, struggling with home mortgage problems are going to have distressed business loan on their books too- and the fed is already at a zero interest rate policy. (zirp) They have no more bullets in their gun! (zirp is designed to stampede money market investors into bank certificates of deposits [CD] to help capitalize small banks.)
With every loan category on the bank's balance sheet in distress, they need every dime available as a capital reserve just to remain solvent and avoid seizure. They will be unable to write new loans of any kind! This will be true for every lending facility in the country.
This is why all the infusion into the banking system has not and will not result in more liquidity.
Directing scarce resources into failing business ventures like auto manufacturing will only prolong and delay our recovery. Businesses need to turn to the bankruptcy court (The appropriate body to deal with it- not the legislative or executive branch. After all, politicians don't make economic decisions, they make political decisions with economic consequences!) and get all the losses distributed out of the system. From the bottom we will grow again from a sounder foundation.
On top of this will be local governments in distress. All tax revenues will be down sharply. They will have difficulty selling bonds and may be faced with defaulting on existing debt- yet another hazard for our suffering bank balance sheet!
Retailers: The Good, The Bad, The Indifferent - Barron's
All will be reducing operations in 2009, precipitating a crisis at malls and commercial REITs.
Equity Buyers, Beware of Companies' Big, Bad Balance Sheets
Hedge Fund Redemptions May Crash Q1 Markets
"Thirdly, there are a lot of stocks that have extremely low pe ratios and pay good dividends. What is your alternative? 0% T-Bills? I think that selective stocks look pretty good in this environment."
The answer is bank CDs. The whole reason for zirp is to recapitalize the banking system by driving the money market holders into CDs.
The Forces of Deflation Are Stronger Than People Realize
UBS Lists Ten Possible Surprises for 2009
Liquidity Crisis, Ponzi...What Happens Next?
As regulated banks attempt to maintain a sound balance sheet in the face of major write-downs of assets, they simply have no more money to lend. Any infusion of money is needed to prevent seizure by regulators.
Next up will be a commercial real estate bomb. As retailers close this winter, malls will shut down when they can't re-finance when loan covenants are violated. Fewer retailers will cause a cascade of small business bankruptcies and industrial REIT to collapse. The same hazard is hanging over the hotel and hotel property industries.
Bank balance sheets will get worse before they get better. They have to hoard every penny.
Tiffany Sparkles for Patient Investors - Barron's
I think management is way optimistic about the depth and breadth of this still looming recession, and as such they will be caught out with high inventory, high debt and high costs.
"In terms of share repurchases, we were active early in the third quarter and spent $90 million to repurchase 2.3 million shares at what we thought was the very attractive average cost of $39.61 per share." (From the conference call as transcribed at SeekingAlpha.com) Aren't they pleased about that!
$100 million of long term debt is due soon, but management isn't worried- "...we were evaluating opportunities to issue new debt, up to $300 million in order to repay $100 million of senior notes coming due within the next 12 months as well as to fund potential share repurchases."
No luck there so: "you should note that on our $450 million revolving credit facility we had $339 million outstanding at October 31 so there was still $111 million available." Provided of coarse that all covenants can be maintained!
Luxury retail is the most vulnerable sector in the hard times ahead. Management's attitude seems to be "we are special, we are immune from market forces". From the conference call:
"In closing, the 2008 holiday season is upon us and many customers will undoubtedly be seeking Tiffany's extraordinary products. Tiffany is a trusted American institution. We offer timeless design and craftsmanship that lasts. The Tiffany & Co. brand is worthy for celebrating important personal milestones, incorporating the established values of romance, love and honor."
Come spring, Tiffany's will be a better buy than now.