http://finance.yahoo.com/news/Economy-growing-but-recovery-apf-3242332094.html?x=0&sec=topStories&pos=main&asset=&ccode=
Today posted the first growth in GDP in over a year, of 3.5%. That is good news on one end, but not the end of all problems. Joblessness still continues to rise. The rise in GDP has been attributed to one time deals like cash for clunkers and the home buyer's credit. Economists worry that once these measures are over, the economy will need more to keep in the positive.
The jobless rate rose again last quarter. If we don't see improvement in those numbers, we may end up back in the same spot again. Consumer spending drives the economy for our country, and Americans having jobs is a big part of that.
Don't forget to look at the bright side though, the market it up. That means that investors see a brighter future. We also managed to keep the slide from breaking through and going down to 8800 on the Dow. We may just end up sustaining this rally.
Have a good weekend.
Thursday, October 29, 2009
Tuesday, October 27, 2009
Happy Halloween
Hello again. I hope you enjoyed the MBA picnic this weekend. It was a good time for those that came out. Big Red was even playing corn-hole, and rather good at it too.
On a business note, we had another good month for home prices. We had the third straight month of rising home prices in August, which is a good sign in our current economic state. In other news the government said the recession may be over, but not job losses.
Job losses may continue to mount, and not related to the economy at all. In another article I read in the Wall Street Journal this morning, employers are holding back and cutting back thanks to President Obama. He has managed to drag out the fear for small businesses which account for the majority of jobs in this country. The fear of being fined for not providing whatever care the government deems you should.
It makes no sense to hire someone if you will have to pay a fortune to keep them. That is what business owners all over the country are thinking. Why would I hire you if it may cost me an additional $10,000 or more before all the current legislation issues are over. I don't give the government credit for any of the job creation since the start of the recession, but certainly Congress and the White House should have credit for keeping employment down. Even if they are going to turn our country into a socialist nation, they need to do it and get it over with so companies will know what to do.
On a business note, we had another good month for home prices. We had the third straight month of rising home prices in August, which is a good sign in our current economic state. In other news the government said the recession may be over, but not job losses.
Job losses may continue to mount, and not related to the economy at all. In another article I read in the Wall Street Journal this morning, employers are holding back and cutting back thanks to President Obama. He has managed to drag out the fear for small businesses which account for the majority of jobs in this country. The fear of being fined for not providing whatever care the government deems you should.
It makes no sense to hire someone if you will have to pay a fortune to keep them. That is what business owners all over the country are thinking. Why would I hire you if it may cost me an additional $10,000 or more before all the current legislation issues are over. I don't give the government credit for any of the job creation since the start of the recession, but certainly Congress and the White House should have credit for keeping employment down. Even if they are going to turn our country into a socialist nation, they need to do it and get it over with so companies will know what to do.
Friday, October 23, 2009
How we ended up in Crisis Mode
http://finance.yahoo.com/news/Bernanke-urges-Congress-to-apf-3222386032.html?x=0&sec=topStories&pos=2&asset=&ccode=
If you listen to most of the media you're certain it was Wall Street's fault. Their greedy ways and big paychecks are what caused people to lose their houses right? It wouldn't have anything to do with buying something outsider your means would it?
Throughout the entire campaign process last year it seemed as if that was the best scapegoat. Wall Street did it! It makes plenty of sense, they are only a small voting demographic. Oh but they contributed big money to your campaign, Obama, Obama- what were you thinking?
Obama may have changed some of his opinions though. In a talk with Bernanke this week, he mentioned creating videos to make families more financially literate. But it gets better, he even went on to mention that some people bought houses outside their means. Thank you Obama for finally pointing your finger in more than one direction.
The crisis is now national, but still not the same throughout. Where did it start? We have California, Florida, New York, and lastly Michigan to blame. Too many houses, not enough buyers, and too many people thinking they needed a bigger house.
The real culprit for the housing boom and fall is actually Congress and one of their societal pushes known as the Community Reinvestment Act. Clinton furthered the Act in 1997 and basically pushed banks to make sub-prime loans to minorities and low-income individuals that might not normally get them. That's all I'm going to delve into that for now, but it was and is a big problem. Basically "Reverse-Discrimination" if there is such a thing, sort of an oxymoron in my book.
Hope you all did well on that accounting test. Have a good weekend and see you at the picnic.
If you listen to most of the media you're certain it was Wall Street's fault. Their greedy ways and big paychecks are what caused people to lose their houses right? It wouldn't have anything to do with buying something outsider your means would it?
Throughout the entire campaign process last year it seemed as if that was the best scapegoat. Wall Street did it! It makes plenty of sense, they are only a small voting demographic. Oh but they contributed big money to your campaign, Obama, Obama- what were you thinking?
Obama may have changed some of his opinions though. In a talk with Bernanke this week, he mentioned creating videos to make families more financially literate. But it gets better, he even went on to mention that some people bought houses outside their means. Thank you Obama for finally pointing your finger in more than one direction.
The crisis is now national, but still not the same throughout. Where did it start? We have California, Florida, New York, and lastly Michigan to blame. Too many houses, not enough buyers, and too many people thinking they needed a bigger house.
The real culprit for the housing boom and fall is actually Congress and one of their societal pushes known as the Community Reinvestment Act. Clinton furthered the Act in 1997 and basically pushed banks to make sub-prime loans to minorities and low-income individuals that might not normally get them. That's all I'm going to delve into that for now, but it was and is a big problem. Basically "Reverse-Discrimination" if there is such a thing, sort of an oxymoron in my book.
Hope you all did well on that accounting test. Have a good weekend and see you at the picnic.
Sunday, October 18, 2009
Still waiting on more good news
http://finance.yahoo.com/news/Investors-waiting-for-more-apf-3313352767.html?x=0&sec=topStories&pos=3&asset=&ccode=
Last week Goldman Sachs, the company that runs the world, blew earnings estimates away. Even the giant catastrophe known as Citigroup came out above expectations. But what happened? An irrational reaction to good news. What more can the market expect from these people? Goldman beat estimates by over 30%. That should have sent the stock over $200, instead it was down for the day.
The only reasonable news for why it was down was in regard to their promises to reward their employees. Yes, they pay their workers when they do good. Maybe that's why they've continued to be the best in the world for over 150 years. Success is no reason to frown, in a turbulent market they did better than all the rest and no longer owe our taxpayers the money they were forced to take.
So why should Goldman be looked down upon? I know that their average bonus is expected to be over $700,000 this year, but they've earned it. They aren't using taxpayer dollars and in fact they'll be paying a big chunk of the taxes that sustain the people that sit around and whine about how much money Goldman's employees are making. On top of all this, you know who Obama's biggest donor was? Goldman Sach's, somebody seems to have forgotten where the money tree is.
Last week Goldman Sachs, the company that runs the world, blew earnings estimates away. Even the giant catastrophe known as Citigroup came out above expectations. But what happened? An irrational reaction to good news. What more can the market expect from these people? Goldman beat estimates by over 30%. That should have sent the stock over $200, instead it was down for the day.
The only reasonable news for why it was down was in regard to their promises to reward their employees. Yes, they pay their workers when they do good. Maybe that's why they've continued to be the best in the world for over 150 years. Success is no reason to frown, in a turbulent market they did better than all the rest and no longer owe our taxpayers the money they were forced to take.
So why should Goldman be looked down upon? I know that their average bonus is expected to be over $700,000 this year, but they've earned it. They aren't using taxpayer dollars and in fact they'll be paying a big chunk of the taxes that sustain the people that sit around and whine about how much money Goldman's employees are making. On top of all this, you know who Obama's biggest donor was? Goldman Sach's, somebody seems to have forgotten where the money tree is.
Monday, October 12, 2009
Good News on the Way
http://finance.yahoo.com/news/Dow-moves-higher-nears-10000-apf-3921032132.html?x=0&sec=topStories&pos=main&asset=&ccode=
We're closing in on 10,000 today on the Dow. All ahead of a week that could prove to be a turning point. Earnings releases are coming out across the board this week. On Thursday Goldman Sachs will release earnings, in what is expected to be a blowout. The market has already seen surprises around the world from companies like Philips Electronics.
Above average earnings are a good reason for markets to rise. The other side to the ticket is where the earnings boosts come from. When they come from higher revenue it's usually seen as a win, but as of late most earnings growth has come from cost cutting. If companies project a bleak outlook after releasing good earnings we are still apt to see a dive.
The clock is ticking and the money is flowing. What will we see this week? Maybe earnings will be as big of a surprise as last week's Nobel Peace Prize winner.
We're closing in on 10,000 today on the Dow. All ahead of a week that could prove to be a turning point. Earnings releases are coming out across the board this week. On Thursday Goldman Sachs will release earnings, in what is expected to be a blowout. The market has already seen surprises around the world from companies like Philips Electronics.
Above average earnings are a good reason for markets to rise. The other side to the ticket is where the earnings boosts come from. When they come from higher revenue it's usually seen as a win, but as of late most earnings growth has come from cost cutting. If companies project a bleak outlook after releasing good earnings we are still apt to see a dive.
The clock is ticking and the money is flowing. What will we see this week? Maybe earnings will be as big of a surprise as last week's Nobel Peace Prize winner.
Friday, October 2, 2009
Unemployment Putting the Brakes on our Economic Recovery
http://finance.yahoo.com/news/US-Sept-nonfarm-payrolls-rb-589941939.html?x=0&sec=topStories&pos=main&asset=&ccode=
Job losses were worse than expected for September. So what's new? The analysts get it right or wrong every month. This time they were just conservative based on hopes that the recovery we'd seen in the stock market would equate to a recovery in the economy. Should they have? I think they're a few months ahead. The stock market is a leading indicator, not a laggard. So if it turns up, it usually means that the economy will be doing better in 6 to 12 months, not last month.
The stock market has a been a good indicator over history, but it can be wrong too. Irrational investors can drive prices up to places they shouldn't be and then we see crashes. Our economic professors and finance professors say that the stock market is efficient. That is what research says and theories. Personally I believe that it is efficient on an average basis. I believe there are times when psychological factors play a bigger role in stock prices than facts. Rumors about the stability of Lehman Brothers are what led its shares to fall to near zero in one day, so how does a company that size go from the second largest investment bank to worthless in one day if we have an efficient market? Maybe the market was just predicting its failure.
Job losses were worse than expected for September. So what's new? The analysts get it right or wrong every month. This time they were just conservative based on hopes that the recovery we'd seen in the stock market would equate to a recovery in the economy. Should they have? I think they're a few months ahead. The stock market is a leading indicator, not a laggard. So if it turns up, it usually means that the economy will be doing better in 6 to 12 months, not last month.
The stock market has a been a good indicator over history, but it can be wrong too. Irrational investors can drive prices up to places they shouldn't be and then we see crashes. Our economic professors and finance professors say that the stock market is efficient. That is what research says and theories. Personally I believe that it is efficient on an average basis. I believe there are times when psychological factors play a bigger role in stock prices than facts. Rumors about the stability of Lehman Brothers are what led its shares to fall to near zero in one day, so how does a company that size go from the second largest investment bank to worthless in one day if we have an efficient market? Maybe the market was just predicting its failure.
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