Today was not a good day for the unemployment picture.
Caterpillar, Home Depot, ING, Sprint Nextel, Pfizer, and others announced cuts
of 72,500, a number that just may be a record for one day. With an economy
eroding faster than a Southern California
wildfire, the future of many Americans looks bleak today.
Corporate America
is having a bad day. John Thain, the CEO of Merrill Lynch was ousted last week
after a shoving match with Bank of America's chief Ken Lewis. Lewis contends he
was surprised by the gravity of losses while Thain insists that he was upfront
every step of the way. So now we have two bosses accusing each other of lying.
Well, they are both right!
Furthermore, I believe that all of us need to start
boycotting poorly run businesses and those that don't have values that align
with the rest of us common folk. I suggest that all of us begin to vote with
our wallets and let companies know how unhappy we are. Everyone should take a
hard look at the big banks. Do you really want to do business with Citigroup
and Bank of America? Do you really want them to have more money so they can
continue their obscene profligate ways? Why not find a smaller regional bank?
What about the brokerage houses? Do you really want to have money with Merrill
Lynch, Smith Barney or Morgan Stanley? They don't care about you as long as you
pad their pockets. I say abandon these people and find a local regional firm to
deal with. Also, these firms are sales organizations. They are simply selling
products for commissions much like selling a stereo, cosmetics or tractors. You
buy it; you keep it. This is why so many people are losing fortunes in the
stock market. It is because of salespeople who earned a commission who have no
interest in whether you bleed to death or not. Once paid, always aloof!
Last week was devoted to trying to install a new Secretary
of the Treasury, Timothy Geithner. The problem is just a trifle considering the
mess our country is in. It seems that he has a hard time paying income taxes.
As soon as he got nominated he suddenly decided to pay some taxes that he was
ignoring since it was past the statute of limitations! Yikes, and then to make
things worse, he took money out of his retirement fund and paid early
withdrawal penalties. Clearly this man is the wrong choice. He cannot manage his
own money, he has no money which is why he paid huge taxes, and he apparently
doesn't believe in paying taxes. In testimony before committee, he admitted to
being "careless." Unfortunately, Congress is enamored with this man and is
counting on him to be the savior of our financial system. Never mind the fact
that his policies at the NY Fed are part of the problem.
Then if that is not enough, he had the unmitigated gall to
accuse the Chinese of manipulating their currency. You don't do this to the
Chinese. They are proud people and they own us! They own $1.2 trillion of our
Treasury securities. All they have to do is request a check and we are in deep,
deep horse pucky. So far, not so good but good enough that Mr. Geithner will
most assuredly be confirmed. Good luck America is all I can say.
Gold was up sharply last week. Getting into a squabble with
the Chinese as well as trying to pass an ever growing stimulus package is
making investors nervous. Debasing the currency is not a good thing. Buy gold!
Chrysler is in trouble again. They want the dealers to buy
and sell more cars! Hello Chrysler! Have you not heard that people are saving
and not buying your cars? They got money from the taxpayers but that is not
good enough so they want the dealerships to pitch in and help. Hmmh, how does a
dealership sell more cars when Chrysler doesn't deeply discount the prices?
Want to know why they are so insistent on the dealers buying more cars from
them? Simple. When the car leaves the factory and goes to the dealership then
Chrysler shows it as revenue. There you have it. They want to look good and
show strong sales when they go back to Congress for another handout!
This week is a bit quiet with economic news but should prove
to be significant. In addition there will be lots of earnings (or loss) reports
this week.
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Consumer Confidence (Tues):
Consumer confidence has been awful for some time. The most recent months
have seen some improvement but most likely because the banking crisis has
passed over for now. As more layoffs are announced, we suspect that confidence
will wane and people will be reigning in their spending more in the coming
months.
Federal Reserve Board Meeting (Wed): This is a two day meeting. No one expects any
interest rate cuts since we are at zero. What we are all looking for is what
they have to say. Can you imagine having to craft every word so carefully so
the little stock market doesn't get upset.
Durable Goods Orders (Thurs): These are orders for goods that last three
years or longer. They are goods like appliances, carpet, autos, machinery, etc.
This has been falling sharply. I think this will be a very ugly number. The
orders are drying up which is why so many layoffs are taking place. Look at the
chart, things are dropping quickly which will delay recovery.
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GDP or Gross Domestic Product (Fri): This is the big one for the week. All eyes
are on the health of our economy and this measures the total of all goods and
services in the United
States. The previous number was a minus
0.5%. The consensus now is -5.4% with some analysts predicting as high as 7%.
We think that is closer. Whatever the number, it will be staggering as we see
things continue to erode. Hang on!
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