Archive for August 9th, 2008
Posted by: in Housing
Filed under: Forecasts, Oil, DJIA, Housing, Recession
Those investors/readers who are of the persuasion that the U.S. stock market is about turn the corner should heed the words of caution from legendary banker Bill Seidman.
“There’s always a chance of a massive bank failure,” Seidman told Newsweek. Seidman chaired the Resolution Trust Corporation, the federally-created liquidator for the last banking crisis in the 1980s.
Keep an eye on the big banks
A big bank failure would swiftly extinguish what little momentum the market has established from mid July to early August, during which the Dow Jones Industrial Average has risen from about 10,850 to 11,734. Economist David H. Wang stated he’ll not attach a more-positive descriptive to the 884-point move, because he “doesn’t want to create unreasonable, and unjustified, expectations.”
“First, our technical analyst friends would state the recent move up is still well within the range of a bear market correction,” Wang stated. “Second, from a fundamental standpoint, we still have major headwinds.”
- Headwind No. 1 – “public enemy No. 1″ — as far as the market is concerned is the housing sector — both write-offs and falling housing prices, Wang stated. The write-offs must subside to convince institutional investors that the housing-related damage has peaked, he stated. Similarly, housing prices must bottom, “to provide some impetus for home sales, and of the positive lateral economic activity that goes with it,” he added.
- Headwind No. 2 — oil. It must continue to decline, in Wang’s interpretation, into the $80-90 range to restore some semblance of disposable income and cost stability to the U.S. economy, and to a lesser extent, to the global economy. It’s too soon to tell how much damage the plus-$100 oil period has done to business activity, but Wang is certain “it has been a major deflator of GDP.” Moreover, $115 per barrel oil is better than $147, but the drop is still not enough for adequate growth to resume; it must drop considerably more for that to occur, Wang said. “The U.S. economy, no economy, really, can absorb the type of price increase in oil that has occurred in the past two years without entering a recession. It’s just too much of a cost shock to the system, which is why we call it an ‘oil shock’ ” Wang stated.
- Headwind No. 3 is actually the absence of a tailwind — a catalyst — and a catalyst must appear for sustainable growth — and a lasting market rally — to occur, Wang said. “Every recovery has a catalyst. At the end of World War I, it was U.S. soldiers returning from Europe at a time of innovation at the begin of the 1920s. They purchased everything in site, got married, and then purchased even more stuff,” Wang stated. “It produced the economic boom of the 1920s. In the 1990s, we had the birth of the World wide web and the technology boom that increased productivity and transformed business processes.” And the catalyst for 2008? “It hasn’t appeared yet,” Wang stated.
Market Analysis: So keep your eye on housing, oil, and a catalyst. If those three don’t line up constructively for the U.S. economy, don’t anticipate good things regarding the DJIA.
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Filed under: Products and services, Consumer experience, Marketing and advertising, Whole Foods Market (WFMI)
 This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about Whole Paycheck below in the comments.
Having long shopped at overpriced gourmet foods markets, I’ll admit to having rolled my eyes a bit — maybe even scoffed — when I first heard the beloved nickname for Whole Foods (NASDAQ: WFMI), “Whole Paycheck.” Of course, this was also when I was single and living on a dot-com boom-style income.
This day, I rarely shop at Whole Foods; there isn’t one in my neighborhood, and it’s true: it’s not difficult to spend upwards of $100 on ingredients for one meal. While there are choices on the lower end of the price spectrum, especially in the company’s 365 home brand line and seasonal produce, the grocery chain has long prided itself on providing a wide range of organic and gourmet ingredients; and if its customers demand star fruit from Brazil, stinky cheeses from around the globe, and sushi-quality tuna, by all means, Whole Foods will provide it, and won’t bat an eye about charging for its hard work.
Not surprisingly, the company is chagrined about its high-priced moniker, especially in an atmosphere of rising food costs and growing discontent amongst consumers. In a current New York Times article, co-president Walter Robb was quoted as saying, “I’m getting a tiny exhausted of that tag around our neck. We’re a lot more competitive than people give us credit for. We challenge anyone on like items.” Whole Foods the economic choice? But what about the “Whole Paycheck” nickname? We people love our affectionate diminutives, how can we let ‘em go?
Maybe you won’t have to. After all, with prices rising all over the grocery spectrum, it could take a whole paycheck to shop just about anywhere. Walter, et al.: embrace your nickname! You’d rather have your customers signing over their paychecks to you than WalMart, wouldn’t you?
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Filed under: Products and services, Marketing and advertising, McDonald’s (MCD), Burger King Hldgs (BKC)
 This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about BK below in the comments.
Is there any advertising icon more creepy than the Burger King (NYSE: BKC) King? I get nightmares myself each time the mascot appears on the small screen. My view, though, may be in a minority since the character seems to be wildly popular.
Unlike McDonald’s (NYSE: MCD), Burger King isn’t afraid to be edgy and even annoying. I always have to turn the volume down on my TV whenever a BK spot is on the air or my ears will begin to bleed otherwise. Burger King tried being like McDonald’s and got its butt kicked. I am old enough to remember when the king was a cuddly cartoon. That strategy has now shifted and all of the in-your-face marketing appears to be paying off.
Shares of the number two burger chain are up 17% over the past year as cash-strapped consumers forgo casual dining chains for fast food. Wall Street analysts consider the stock a purchase. The company is expected to post earnings of 34 cents per share on revenue of $633.26 million when it reports results Aug. 21, according to Thomson Reuters. Those are respectable numbers especially given the current economic environment.
All is not absolutely calm in Whopper land. Franchisees are balking at new late-night hours, and the Miami company, like every food business, is being slammed by high commodities prices. But at the end of the day, Mel Brooks had it right in History of the World Part I: “It’s good to be the king.”
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Posted by: admin in Today News
Market Chatter — Corporate finance press digest - Reuters
Thanh Nien Daily |
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A team of researchers has simulated the gravitational interaction of dark matter particles over the course of a hypothetical 13.7 billion years. They found that the particles tended to form clumps huge enough to assist in the formation of galaxies. The results contradicted observations from previous, smaller studies, but they lent support to an unrelated simulation of how the Milky Way formed. UCSC’s press release is also available. Quoting ScienceNews: “The clumps of dark matter in the simulation have densities that are remarkably similar to densities that a University of California, Irvine research group found when simulating the formation of the Milky Way and its satellite dwarf galaxies, says James Bullock, the astrophysicist who leads the UC-Irvine group and wasn’t involved in the new study. ‘This is a remarkable success of the particular model simulated and adds strong support to the idea that the dark matter is made up of particles that are “cold.” There are a number of planned experiments aimed at detecting the dark matter that are betting on it being cold, so this is generally good news for the community,’ Bullock states. And, [study co-author Piero Madau] notes, more massive simulations that might help constrain the nature of dark matter even more are already in the works.”
Read more of this story at Slashdot.
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Lucas123 writes “The latest and most ambitious attempt to detect ‘near-Earth objects’ (NEOs) is the Panoramic Survey Telescope and Rapid Response System, or Pan-STARRS. When it’s fully operational several years from now, it will have four telescopes, each with a 1.4-gigapixel camera. The system is expected to be able to track virtually all NEOs larger than 300 meters in diameter as well as many smaller ones. Rather than turning to an high-priced supercomputer equipped with hundreds or thousands of processors, Pan-STARRS will use a cluster of 50 Computer servers connected to 1.1 petabytes of disk storage via fast Infiniband networking gear.”
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Roland Piquepaille writes “There are more than 33 million people living with HIV worldwide. No cure or vaccine has been unveiled this week in Mexico during the International AIDS Conference. Still, European researchers have developed ‘a predictive software system for HIV that could help extend the lives of victims of the killer disease.’ The scientists working on the EuResist project have combined HIV databases in Italy, Sweden and Germany, creating what is probably the largest database on AIDS and HIV in the world. Armed with information about more than 18,000 patients, 64,000 therapies, and 240,000 viral mode measurements, the researchers have created new mathematical prediction models, which should soon be available to medical researchers and physicians all over the world.”
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Anonymous Cow writes “Researchers have inflated gas-filled balloons of graphene, the atom-thick carbon material being used to make super-small transistors. Apart from giving them a valid claim to be in the Guinness Book of Records, it could apparently be handy for weighing microscopic objects. ‘The sheets were used to seal microscopic wells made in a layer of silica glass, forming a kind of drum head. The membranes were held in place only by the van der Waals forces that make things sticky at microscopic scales. The wells varied from 1 to 100 square micrometers in area and 250 nanometers to 3 micrometers deep.’”
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