Blogs

Our View on the S&P500 Trend

The S&P500 is down 7.5% from the September 18, 2014 high. The price trend online, in the newspapers, etc., looks awesome in a macabre way. What to think about the decline and how much further it might last are worthwhile questions. The former being a lot easier in our opinion than the latter.

Good News for Retail Sales

Retail Sales for September made headlines for coming in below August and disappointing some economists.  We aren’t among those disappointed soothsayers.

Retail Sales for September were down from August by 6.8%.  The month-to-month decline is milder than each of the last two years and milder than the 7.3% average decline posted over the last 10 years.  The overall seasonal rise in Retail Sales since the first-quarter seasonal low is the strongest since 2005.  Nothing to quibble about with that stat either!

A Look at the June Numbers

Our forecast calls for slower growth in the US economy in the second half of 2014, particularly in the fourth quarter.  Given that outlook, there should be empiric evidence of the shift in economic activity from acceleration to deceleration.  Those changes never occur in a vacuum and are always signaled in advance.  I thought a quick look at some June numbers might help you stay the course in terms of planning for a softer second-half 2014.

Corporate Profit Blues

Corporate profits in the US took a nose dive in the first quarter of 2014 according to the Bureau of Economic Analysis (www.bea.gov).  Profits in the first quarter of 2014 came in 3.0% below the first-quarter of 2013 and a steep 9.8% below the fourth-quarter-2013 figure.  The 9.8% drop is the second steepest in the last 65 years (only 1982 provided for a worse first quarter result).  Other than that you have to go to 1959 to see a similar onset of profit decline.  Those dates do not bode well for the 2014 economy, but they are consistent with our forecast of slower growt

ECB and Negative Interest Rates

The European Central Bank (ECB) introduced negative interest rates for the first time in its history.  This historic action caught the attention of the press, so I thought you might like a quick look at what it means without having to listen to a long lecture that will make the details on the back of your library card look interesting.

Trouble Between EU and Russia Fails to Create Market for US Natural Gas

There have been hopes that troubles between the EU and Russia over Ukraine would produce a market for US natural gas, most likely in the form of LNG.  We have been skeptical of that from the beginning of the crisis, stating that the Russian oil and gas will flow through the Ukraine pipelines because Russia needs the hard currency generated from energy exports.  That is indeed what is happening.  In fact, shipments are up year-over-year.  Investors in hopes of a quick return based on massive exports to Europe have been severely disappointed. 

Retail Sales: A Closer Look at the Numbers

Retail Sales were in the news on Wednesday, and the headlines/lead broadcast comments were not encouraging.  The news anchor said retail sales were disappointing and probably related to weather (again with the weather!).  Retail Sales (excluding auto sales and not adjusted for inflation) were off 0.58% from March to April.  As I write this the pundits are saying that the winter weather hurt retail sales in March and April.  Really?  Let’s look at the numbers. 

Good News out of Europe

The European Central Bank (ECB) announced that business and non-business loan activity increased in the first quarter of 2014, and concurrently, an easing of lending standards in European Banks. The increase in loan demand was small at 2.0%, but a whole lot better than the -11.0% of the last quarter of 2013.

Where is the Cheap Manufacturing?

A study by the Boston Consulting Group shows that traditional views on low-cost manufacturing are not true anymore. The last 10 years has seen a shift in the lost-cost advantage away from China. China is still ranked the lowest cost by some measures, but the all-in cost, including quality, has resulted in a new look at other manufacturing centers, including the US. China’s cost advantage in manufacturing is now less than five percent. Mexico is now lower-cost than China, and the US is on par with Eastern European costs.

Margin Squeeze on Businesses

Rising costs are creating a margin squeeze on businesses.  We have been encouraging readers and listeners alike to take preemptive action against these rising costs, and hopefully, you have.  Act quickly if you have not because material and labor costs are going up.  According to the National Association of Business Economics (NABE), twice as many businesses reported higher material costs in the first quarter of 2014 as compared to the last quarter of 2013 and 35% reported higher labor costs.  This is a tough environment in which to raise prices, but do so if you can as

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