Tag Archives: US Economy

90 Day Treadmill Confession Time Begins-Expected Winners and Losers

Posted on April 14, 2011 by | Comments Off

90 Day Treadmill-Earnings Season

Alcoa’s, (AA) earnings release Monday April 11th, marks the unofficial start to the 90 day treadmill confession season, better known as earnings season.

Over the next several weeks thousands of public companies will report their results for the last 90 days, with each company’s management team focused on painting as positive of picture as legally possible.

A singe digit number of residents of our favorite domestic index, the S&P 500, report this week, with a much greater group reporting next week and peaking in member reporting the following week.

As we begin the season, here is what investors are expecting according to Thomson Reuters:

  • S&P 500 Growth this Quarter versus the same Quarter a year ago (Y/Y): 11.6% 

The two winning estimated earnings growth sectors:

  • Materials and Energy with a 35% and 32% expected Quarter Y/Y growth.

The two losing estimated sectors are :

  • Utilities and Telecommunication with losses expected of -4.8% and -3.6% Quarter Y/Y respectively.

We will keep you updated as the estimates become results, and market participants voice their opinions.

Have a Good Day!

JK

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Posted in General Financial Planning, Investing/Financial Planning, Market Comments

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This Week: Elections and Economic Data, A Full Plate of Information

Posted on November 1, 2010 by | Comments Off

Not only do we have a much watched mid-term election on Tuesday, an FOMC meeting/statement on Wednesday, scattered earnings results, but a full economic week as well.

Not withstanding the above mentioned items, key economic reports we will be watching will be Friday’s Payroll and Home sales, Thursdays Initial Claims, Tuesdays ADP and Today’s Personal Income and Spending (all of our interest is to help gauge the US Consumer’s temperature.)

This information is from Yahoo Finance and many of the items are hot-linked for greater information and definitions.

It is a lot, but thought you might find it interesting to see what a busy economic week looks like!

Have a Great Day!

JK

Date Time (ET) Statistic For Actual Briefing Forecast Market Expects Prior Revised From
Nov 1 8:30 AM Personal Income Sep - -0.3% 0.2% 0.5% -
Nov 1 8:30 AM Personal Spending Sep - 0.5% 0.4% 0.4% -
Nov 1 8:30 AM PCE Prices – Core Sep - 0.1% 0.0% 0.1% -
Nov 1 10:00 AM ISM Index Oct - 54.6 54.0 54.4 -
Nov 1 10:00 AM Construction Spending Sep - -0.8% -0.7% 0.4% -
Nov 3 7:00 AM MBA Mortgage Applications 10/29 - NA NA 3.2% -
Nov 3 7:30 AM Challenger Job Cuts (y/y) Oct - NA NA -44.1% -
Nov 3 8:15 AM ADP Employment Change Oct - 20K 23K -39K -
Nov 3 10:00 AM ISM Services Oct - 53.5 53.4 53.2 -
Nov 3 10:00 AM Factory Orders Sep - 2.0% 1.7% -0.5% -
Nov 3 10:30 AM Crude Inventories 10/30 - NA NA 5.01M -
Nov 3 2:00 PM Auto Sales Oct - NA NA 3.75M -
Nov 3 2:00 PM Truck Sales Oct - NA NA 5.07M -
Nov 3 2:15 PM FOMC Rate Decision Nov 3 - 0.25% 0.25% 0.25% -
Nov 4 8:30 AM Initial Claims 10/30 - 450K 445K 434K -
Nov 4 8:30 AM Continuing Claims 10/23 - 4400K 4383K 4356K -
Nov 4 8:30 AM Productivity-Prel Q3 - 1.0% 1.0% -1.8% -
Nov 4 8:30 AM Unit Labor Costs Q3 - 0.7% 1.0% 1.1% -
Nov 5 8:30 AM Nonfarm Payrolls Oct - 25K 55K -95K -
Nov 5 8:30 AM Nonfarm Payrolls – Private Oct - 50K 60K 64K -
Nov 5 8:30 AM Unemployment Rate Oct - 9.7% 9.6% 9.6% -
Nov 5 8:30 AM Hourly Earnings Oct - 0.1% 0.1% 0.0% -
Nov 5 8:30 AM Average Workweek Oct - 34.2 34.2 34.2 -
Nov 5 10:00 AM Pending Home Sales Sep - 2.0% 2.5% 4.3% -
Nov 5 3:00 PM Consumer Credit Sep - -$3.0B -$4.0B -$3.3B

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Posted in Economy, Investing/Financial Planning

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Economic Numbers of Greater Importance, Greeted Positively In Capital Markets

Posted on March 5, 2010 by | Comments Off

As we stated in an earlier post, with earnings season (90 day treadmill) mostly finished, the clues for our progress lie in the economic numbers, with extra focus on the employment situation.

This morning the Labor Department released the Unemployment report which held steady at 9.7%. In a unique win-win situation, many economists had varied expectations, leaning mostly negative, due to the terrible weather experienced across the country during the last reporting period. With such wide expectations, a negative report may have been written off as a one time event and a “right in line” (the report we received today) report might be greeted positively.

Our view, again formulated from company conference calls, and press releases, are that companies are tentatively hiring, which bodes well for the capital markets, our economy, and our country.  Again, our thoughts are that the eventual unemployment rate will not go down to the 4% zone where it hovered for many recent years, but decline from 9.7% to a 5-7% number, which might be greeted with positive feelings by the capital markets.

Remember this usually does not happen in a straight line!

Have a Good Weekend, Talk To You Next Week!

There will be events that shake confidence, again leading to our choppy market theme.

Have a Good Weekend !

JK

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Posted in Economy, Investing/Financial Planning, Market Comments

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Reminder of Expectations for 2010 (From Q1 2010 J.K. Financial, Inc. Newsletter)

Posted on January 30, 2010 by | Comments Off

We thought it timely to refer back to our thoughts from our Q1 2010 Newsletter, penned earlier this month.

“The year 2010 will be a teaser for many investors. We feel the markets will end up somewhere between 8 – 10% but the journey will be one we have not experienced recently.

The year 2010, in our opinion, will be a roller coaster market with frequent drops of 10% -15% or more, chasing the weaker hands out of the capital markets, just in time for the capital markets to take an about face and move to new highs, again frustrating shorter term investors.

Just a Reminder!

Our thesis relies on two premises. First, the economy will need to transition from assisted growth (government stimulus) to self reliance, leaving many to question the strength and timing of the transition period. Second, the “buy and hold is dead” thesis will lead to short-sighted investors selling at the small drops, only to be frustrated as the capital markets turn, leaving many in negative return territory as the markets have a nice total gain for the year. We are already seeing this second event occur in the commodity area, and expect the same in the capital markets eventually.”

Again, these are our toughts and no guarantees of course, but possibly timely!

Have a Good Day! Thanks

JK

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Posted in Market Comments, Newsletters

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Black Friday, Cyber Monday Update– The Winner “Suzie the Saver”!

Posted on December 2, 2009 by | Comments Off

As a quick update from last weeks humorous duo of fabricated personalities, we wanted to give you a quick status report.

It appears as if “Sammy the Spender” did make a few runs to the store, but was trumped by “Suzie the Saver” as we firmly established a new holiday lingo “Cyber Monday“. 

As a side note, I found myself on a few cell phone text updates for holiday specials, as an interesting way to monitor company sales, the technology they were using, and this rather new form of marketing.

Overall we estimate retail and related sales were not as robust as expected, as the consumer, rightly so, remains frugal in spending. This situation will form an interesting end of the year struggle as public companies via for a smaller sales pool, at reduced rates. We will keep you updated!

Have a Good Day!

JK

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Posted in Economy, General Financial Planning, Investing/Financial Planning, Market Comments

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Black Friday Conclusion,”Susie the Saver” and Happy Thanksgiving!

Posted on November 25, 2009 by | Comments Off

Yesterday (Black Friday Looms-”Sammy the Spender” and “Susie the Saver”) we introduced a few casual seasonal thoughts concerning our interest in “Black Friday” and also our hopeful busy appearance of a cheerful character, “Sammy the Spender” as an investor’s and analysts best friend. Today we share experiences with “Susie the Saver” a planner and saver.  

After winding down from Thanksgiving, Susie spends time thinking of the various gifts she has not already purchased for the season, along with a few important needed items for the remainder of the year.   Understanding that many items will truly be at a great discount on Black Friday morning, Susie’s time is spent organizing her possible final purchases. Contrary to her counterpart Sammy, Susie takes time to understand the items she “needs” and the other items she just “wants”.

As Friday morning makes its appearance, Suzie takes time scan the local paper for bargains, and before venturing out to the various retail establishments, happily discovers on-line, most of her needed items are also offering “free shipping”.  After a few point and clicks, most all of Suzie’s “needed” items and gifts are complete, leaving her time to visit with friends and family and take an occassional exhausted call from her good friend “Sammy the spender” (still fighting crowds late into the night).

Have a Happy Thanksgiving!

JK

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Posted in General Financial Planning

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Why We Need a Good Investment Plan-Conflicting Opinions… A Lunch with John Mauldin

Posted on November 18, 2009 by | Comments Off

Last Thursday, November 12, 2009, I had the opportunity to hear, Economist, Author of three books, and Dallas resident,  John Mauldin, http://www.johnmauldin.com/ john_mauldin.

John is well-known for a regular electronic communication he publishes to 1.5 million of his closest friends.

A summary for John’s thoughts are as follows:

  1. Unemployment is going higher and will not abate until late 2010
  2. Interest rates will stay low for the forseeable future
  3. We might have a double dip, or W,  recession
  4. Governmental structure will change due to the unemployment rate

As I left the conference in which John was speaking, thinking back to our September 3rd post, An Interesting Time with W. Michael Cox, Former Chief Economist of the Dallas Fed, in which Michael Cox had almost the exact opposite views, I understand why the investment industry is so confusing.

These are two very smart, well-known and followed, gurus of Economic’s, saying the exact opposite. How Does that happen? That’s what makes it so confusing at times. One key take away from our analysis, is that it re-confirms the need to have a good investment plan and stick with it. Certainly listening to the guru’s is important, but a good investment plan will work if either scenario materializes.

The great part of these two opinions are we have them both recorded, and can monitor their results. We look forward to updating you on these forecasts as time reveals the truth.

Our opinion is that John is slightly too pessimistic and Michael too optimistic. (Again, this is only our opinion.)

Have a good day!

JK

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Posted in Economy, Market Comments

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Searching for Ideas and the Economy

Posted on November 12, 2009 by | Comments Off

Yesterday (and today) I had the opportunity to visit with many publicly traded company managers. http://www.threepa.com/SWIdeas.html

Throughout the day yesterday, and most of today, I will be attending a conference for investors where publicly traded companies present explanations and updates about their firms. On Wednesday I visited with companies from the following Sectors of our economy, Biotech, Consumer, Energy, Financial, and Consumer Staples just to name a few. In most cases the CEO and CFO/IR representative was present.

As I left the conference yesterday, a few points became clearer to me:

  1. Most companies weathered the storm of the latest recession fairly well.
  2. This latest recession was a doozie!
  3. The Financial related company fully expected interest rates to begin moving upward (Further confirming our theme mentioned many times A Coiled Spring Being Held Down…Careful !)
  4. Energy prices are expected to rise in the future (Supporting our theme of inflation in the future.)
  5. Consumers are continuing to be careful with their spending.
  6. It’s too early to sound the all clear bell, but things are improving.
  7. Overseas is growing faster than domestically (Confirming our thinking the world is a much smaller place today An Interesting Weekend of Sports and How it Relates to World Capital Markets)

As you know we certainly embrace electronics and are big fans of distant virtual and distant connections, (several times during the conference Donald was looking at information live, as I was listening to managers) but it is very nice to shake hands, look managers in the eyes, and visit with them one on one, every so often.

Did the visits change our minds?

Not really, rather most visits help to confirm our current thoughts and beliefs, helping give us confidence in our delivery of thoughts to you.  Being humble, given the most recent events of the latest two years, was evident from both managers and investor’s. We have all learned a lot, which will certainly help us in the future.

Have a Good Day!

JK

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Posted in Economy, Investing/Financial Planning, Market Comments

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Earnings Update and Seasonal Trends in the Capital Markets

Posted on November 11, 2009 by | Comments Off

With over 90% of the S&P 500 companies reporting (90 day treadmill), we give the season a B+, and seasonally we are starting a good time of the year.

Capital Market Companies continue to struggle (although somewhat less) with sales, but due to strong cost cutting (increased productivity) most are providing reasonable bottom line (Net Income/EPS) growth.  As a side note, looking over the next few quarters most companies will have easier comparisons, as sales and EPS rates, fell off a cliff this time last year, especially consumer related companies.

Historically, please do not put too much weight on this factor because Capital Markets have made a dramatic move since a worst case Armageddon scenario was taken off the table in most investors minds earlier this year, Capital Markets tend to do well in the last two and first months of the year.

Why does this happen?

In our opinion, many investors may be looking to improve performance in their investment portfolios to gain greater returns for year-end materials (i.e. Pamphlets, brochures and flyers).  Also, as the end of the year makes it way to investor’s calendars, a happy time greets many with regards to time away and family time, offering many a more positive view towards economic trends.  The beginning of the year often marks heavy cash inflows as bonus, year-end shore ups of cash, and delayed investments, make their way into the Capital Markets.  While anything can happen, 2008 for example, all other factors being equal (which they never are) history and momentum favor an upward bias in the Capital Markets for the next 90 days or so.

This is of course our opinion and history can always be re-written at any time.

Have a Good Day!

JK

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Posted in Economy, Market Comments

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Running In Place and The Unemployment Rate

Posted on November 6, 2009 by | Comments Off

After such a huge move from the March low, the Capital Markets seem to be “Running In Place” lately.

Last week marked the end of the year for many Mutual Fund Companies, and the Capital Markets did not disappoint. Like a bouncing ball, we had big down, up, and down again days, as we ended the reporting year for Fund Companies. Running in place is much better than falling down, and we are certainly due for a pullback, just as a runner slows to catch a breather, the Capital Markets could use a little rest.

As we close the 90 day treadmill, called earnings season, most companies did pretty well, but managers still have concerns moving forward. Being that the U.S. GDP is over two-thirds consumer related, unemployment is still a negative.

Speaking of unemployment, we would eventually, if not today, expect to see a 10% rate, which will make headlines across the country. While this is certainly not a positive, bear in mind it will take some time for managers to get comfortable enough to begin hiring. Keep an eye on productivity (http://biz.yahoo.com/c/terms/prod.html) and capacity utilization(http://biz.yahoo.com/c/terms/indprd.html) numbers for signs of employment (http://biz.yahoo.com/c/terms/emp.html) gains. Eventually, as productivity peaks, and slack capacity is used up, hiring should begin again, of course, in our opinion.

Have a Great Weekend!

JK

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