Will The Economy Slump In 2008?
Small to medium sized businesses are always the first to show signs that the economy might not be as strong as we think. I found out the hard way a couple years ago. It looks like this coming year might not be as bright either.
More than half of U.S. mid-sized companies are not planning to hire over the next 12 months or may lay people off, and fewer than a third of the firms expect strong economic growth, a survey said on Monday.
The news adds to evidence the U.S. economy may not grow as robustly next year as it did last quarter, when gross domestic product grew at an annualized rate of 3.4 percent.
Not all companies are gloomy about employment — 47 percent expect to hire, according to the survey from CIT and the Economist Intelligence Unit. But 44 percent of mid-sized companies see their workforce size staying the same, and 9 percent forecast a decline.
Of course, you can look at this more positively. 47% say they expect to hire. 44% say they expect to stay the same. That’s 91% that are not forecasting a decline. Yes, as a matter of fact, I have always looked for the silver lining.
A New Feature On Kooks In Suits
Earlier today my wife discovered talkr.com.
Talkr.com is a free service which takes your text based blog and creates an audio podcast feed so visitors can listen to your posts rather than read them.
Each post on this site will have a link to listen to the post, and I will be adding a subscribe button in the sidebar as I get time.
For now, you can subscribe to the audio feed with this link (subscribe)
Pretty cool stuff if you ask me.
Way To Go Chrysler!
It appears Chrysler is attempting to put their money where their mouth is. Wow. A lifetime warranty.
Chrysler Group said on Thursday it would begin offering a “lifetime” powertrain warranty on almost all of its new vehicles to increase sales and address a longtime concern of dealers.
The warranty covers the engine, transmission and drive systems on Chrysler, Jeep and Dodge models for as long as a first-time owner drives the vehicle. It replaces the automaker’s current three-year, 36,000-mile warranty.
My new GMC Sierra came with a great warranty, but it’s not a lifetime warranty, that’s for sure. I sure could have used a lifetime warranty when the Envoy almost threw a tire last weekend.
The Dow Jones Tumbles
Just days after closing above 14,000 for the first time in history, the Dow Jones Industrials plunged more than 350 points because of worries over subprime mortgages.
Wall Street suffered its second-biggest plunge of the year Thursday, leading global markets lower as investors fled stocks amid increasing uneasiness about the mortgage and corporate lending markets. The Dow Jones industrials fell more than 350 points, while Treasury yields plunged as investors moved money into bonds.
Investors who had been able to shrug off discomfort about subprime mortgage problems and a more difficult environment for corporate borrowing appeared to finally succumb to those concerns. The Dow’s drop is the biggest since it plummeted 416 points on Feb. 27 after a nearly 10 percent decline in Chinese stock markets.
While the mainstream media will hype this til they are blue in the face, trying to convince us that the economy is about to tank, I predict a major corporation will turn around and announce some positively shocking news and the market will quickly recover from this dip.
Then again, the Fed could just open his mouth and tell people things look good and that would fix it before noon tomorrow.
Sphere: Related ContentFord Moving In The Right Direction
Back in November of 2006, Ford extended a buyout offer to all of their hourly production workers. It seems those buyouts, as well as other factors, are proving to have an impact on Ford’s bottom line.
Job cuts, slimmer losses in North America and good sales overseas helped Ford Motor Co. post surprise second-quarter earnings Thursday of $750 million, its first profitable quarter in two years.
The company also said the sale of its Jaguar and Land Rover subsidiaries was probable, and it said its U.S. market share rose during the quarter.
Still, President and Chief Executive Alan Mulally said investors should not think that Ford has turned the corner to consistent profitability.
“These accomplishments are something to be proud of, but we are not ready to declare victory,” he said, predicting substantial losses in the third and fourth quarters, when sales volume is traditionally lower. The company does not expect a return to full-year profitability until 2009.
Just imagine how much they would have made if they had offered buyouts to the salaried employees as well.
How Will The Bancrofts Vote?
The Bancroft family is now deciding whether or not to approve the bid from News Corp.
The family that controls Dow Jones & Co (DJ.N) expects to decide by early next week if it wants to sell the company to Rupert Murdoch’s News Corp (NWSa.N) for $5 billion, a source familiar with the matter said on Tuesday.
The Bancroft family holds 64 percent of Dow Jones’s voting shares and their adviser, Hemenway & Barnes lawyer Michael Elefante, is canvassing family members this week to see if they would approve the bid.
The process should be complete around the beginning of next week, the source said, who asked not to be named.
What do you think they’ll do? Me? I predict the sale will go through, with approximately 28% of the shareholders voting against the sale.
Starbucks Raising Prices Because Of Cows
I saw this coming. Really, I did.
I saw it when I went to the corner store for a gallon of milk. Today I am paying $1.00 more per gallon than I paid just 8 months ago.
Starbucks Corp will raise U.S. prices on coffee, lattes and other drinks by an average of 9 cents a cup next week to help offset soaring costs for milk and other commodities, a spokesman said on Monday.
The widely anticipated move marks Starbucks’ second price increase in less than a year and comes a month after the coffee shop chain’s chief financial officer warned it would be “very challenging” for Starbucks to meet the high end of its 2007 earnings forecast, in part because of rising dairy prices.
U.S. milk prices have soared recently amid strong global demand for dairy products and higher production costs.
Our local stores here have been telling us that the increase in dairy prices were caused by the drought in the area. Yeah, uh huh. I saw this coming.
Sphere: Related ContentMcDonald’s Posts 2nd Loss
While the headline, “McDonald’s Posts Its 2nd-Ever Loss“, might lead some people to speculate on the economy, others will read the article to find out that this was expected.
McDonald’s Corp. (MCD) said Tuesday that it posted its second-ever loss - its first in nearly five years - losing $711.7 million in the second quarter because of a hefty one-time charge.
For the quarter ending June 30, the world’s largest restaurant chain said its net income swung to a loss of 60 cents per share. That’s compared to a second-quarter profit of $834.1 million or 67 cents per share, a year earlier.
Tuesday’s report mirrored McDonald’s pre-announced earnings results.
McDonald’s only other quarterly loss, caused by a drawn-out sales slump, was during the fourth quarter of 2002.
There is no shocking information here. McDonald’s took a $1.31 charge for their “ceding control” of 1,600 restaurants in Latin America and the Caribbean. As the announcement says, the report mirrored their pre-announced earnings results.
I bet we hear a lot more about this 2nd loss a lot over the next few days.
Sphere: Related ContentInvestors Took Risks. Suing Because They Lost.
Investors in Bear Stearns Cos. hedge funds that were virtually wiped out from large bets on risky mortgages are planning to sue the company as early as Monday, television channel CNBC reported on Friday.
The lawsuit will be brought by the firm of Bernstein Litowitz Berger and Grossman LLP, which represented investors against WorldCom Inc. over a massive accounting fraud, CNBC said.
…
Legal experts have said the losses in the Bear funds are so large that litigation is almost inevitable.
But they say plaintiffs could have a tough time proving their case. Because the funds were aimed at sophisticated investors such as institutions and wealthy clients, it could be hard to argue that the risks were not properly understood.
I think it’s safe to say that anyone who knowingly invested in a hedge fund that funded high-risk mortgages knew thre was a substantial risk of losing all their money. Because these investors were mostly institutions and wealthy clients, it will be hard to prove that they didn’t know there was a huge risk in that market.
Heck, I am neither an institution nor wealthy and I know the risks of such an investment.
Home Loan Losses To Widen
And the lesson about over extending credit to people, no matter their financial viability continues…
JPMorgan Chase & Co. (NYSE:JPM - news) said on Wednesday it tripled the amount set aside for loan losses as even borrowers with good credit defaulted on home equity loans, hurting the bank’s quarterly profit.
The negative trend provides a new worry for investors. Until now, most of the angst has been focused on subprime lending, or loans to people with weak credit.
…
JPMorgan Chief Financial Officer Mike Cavanagh said losses on home equity loans to prime borrowers, or those with good credit, will steepen, partly because U.S. housing prices have flattened or fallen in some areas.
A few years ago most companies in the banking and mortgage industry began extending credit to people with adjustable rate mortgages and high rate credit cards, and it didn’t take a degree in accounting to see the disaster that would befall the financial markets if the market took a turn.
And to think, the market turned.
Now there is a glut in the industry and some people will never be able to pay back what they owe, which will in turn, raise the rates for the rest of us who were lucky enough to get our traditional mortgages and avoid the whole fiasco.