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3 and 2 year yield curve inversion

Wednesday, August 31, 2005 | 07:30 PM

One of our commenters today noted the 2 and 3 year yield curve inverted

Here's what that looks like, intraday:
click for larger chart


Source: Bloomberg


I can't say I know what this means . . . any idea?

Wednesday, August 31, 2005 | 07:30 PM | Permalink | Comments (3) | TrackBack (0)
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Tracking Fuel Costs

Wednesday, August 31, 2005 | 02:49 PM

A few links that track gas prices and other related items (via the WSJ):

GasPriceWatch.com -- A database-driven site that allows users to search for the lowest prices across the country; depends on "spotters" to supply data.
GasBuddy.com -- A nationwide site that aggregates data from 170 local gasoline-price Web sites operated by GasBuddy, such as losangelesgasprices.com or californiagasprices.com.
FuelEconomy.com -- This site offers links for price information on a state-by-state basis, which drills down into lists of city links.
FuelMeUp.com -- A consumer-based site that depends on drivers to submit data on where to find the cheapest gasoline around the country.
Fuel Cost Calculator -- This site estimates the amount and cost of gasoline needed to complete vacation trips, based on current prices from AAA's daily online Fuel Gauge Report, as well as the latest highway fuel economy ratings from the U.S. Environmental Protection Agency.


Surge in Gasoline Prices Spark Dire Comparisons and Forecasts
WALL STREET JOURNAL ONLINE, August 31, 2005 2:17 p.m.

Wednesday, August 31, 2005 | 02:49 PM | Permalink | Comments (7) | TrackBack (0)
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PMI, GDP stink up the joint

Wednesday, August 31, 2005 | 11:23 AM

The first revision of GDP growth for the second quarter rose at a (seasonally adjusted) 3.3% annual rate. This was below expectations of 3.4%, and the revised Q1 GDP data of 3.8%. (recall that GDP data for Q1 was revised due to the specious theory that new home prices had dropped for that quarter).

Meanwhile, the Chicago PMI utterly collapsed below the magic 50 level to 49.2 in August, down from 63.5 in July. This was well short of consensus expectations of 61.0, and was the weakest level since April 2003.

Chicago PMI components showing the largest declines were:

new orders (46.5 from 69.6 in July)
production (56.2 from 70.5 in July).
Order backlogs (45.7 from 56.1 in July).

Three of seven PMI components are now below the 50.0 boom/bust line: order backlogs (45.7), new orders (46.5) and supplier deliveries (48.7).

Wednesday, August 31, 2005 | 11:23 AM | Permalink | Comments (10) | TrackBack (0)
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Katrina/New Orleans Disaster Relief Aid

Wednesday, August 31, 2005 | 07:43 AM

It appears the damage to New Orleans region is far worse than originally expected. As we did with the Tsunami, here are numerous resources that you may find helpful in keeping informed about the damage, and making donations to help survivors:

1) Relief Organizations

Known as the most efficient relief charity in the U.S. (and Non-denominational also)
88 Hamilton Avenue, Stamford, CT USA 06902
Toll Free: 1-800-486-HELP (4357) Phone: 01-203-658-9500

American Red Cross
(You can also donate via Amazon.com or the iTunes Music Store)

Salvation Army

see below for complete list of charities

2) News Coverage

Yahoo! FULL COVERAGE: Hurricanes & Tropical Storms

Google Groups katrina relief aid

The KatrinaHelp Wiki relief page

3) Weather Related Resources

National Hurricane Center

Actual Water Level Measurements, at New Orleans, LA
USGS 073802338 IWW @ I-510 Bridge (Paris Rd) http://waterdata.usgs.gov/nwis/uv/?site_no=073802338

See this Google Map for location:

National Weather Service
http://iwin.nws.noaa.gov/iwin/ graphicsversion/bigmain.html

Hydrologic Information Center (river flooding)
http://www.nws.noaa.gov/oh/hic /index.html

4) Government Resources

Federal Emergency Management Agency

City of New Orleans

Louisiana Governor's Office

Mississippi Emergency Management

Louisiana Homeland Security

5) State Government Resources

Louisiana Emergency Road Closures

Mississippi Emergency Road Closures

Alabama Emergency Road Closures

Florida Emergency Road Closures

New Orleans Convention and Visitors Bureau Update

Continue reading "Katrina/New Orleans Disaster Relief Aid"

Wednesday, August 31, 2005 | 07:43 AM | Permalink | Comments (69) | TrackBack (3)
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Dow Jones Chart (1900-2004)

Wednesday, August 31, 2005 | 05:22 AM

There is a terrific Dow Jones Chart (1900-2004) for sale at the Minyanville.com gallery.

Its along the same concept of a chart we did back in 2003 -- only this one includes P/E ratios, which is a very instructive addition to the graph:

click for an enormous chart:


"Officially licensed and designed by Minyanville's own Kevin Tuttle, follow the critters through the historical ups and downs and sideways trails of the Dow Jones Industrial Average from its humble beginnings of the last century up to the present day 'Ville."

I may have to get me one for my office wall!

Minyanville Dow Jones Chart (1900-2004)

Wednesday, August 31, 2005 | 05:22 AM | Permalink | Comments (13) | TrackBack (0)
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Ben Stein: Wrong About Earnings

Tuesday, August 30, 2005 | 05:21 PM

The (unfortunately under-rated) Dylan Ratigan is hosting Kudlow & Company tonite, and one of his guests was Ben Stein.

I've been on several shows with Stein, and he's a nice guy, but . . .

One of the other guests suggested that earnings were decellerating, which Stein vociferously disagreed with. That is, to be blunt, ignorant.

Since peaking in Q3 2003, year over year S&P500 earnings gains have been decelerating. From nearly 30% Y-over-Y, straight down for the next 6 quarters to just under 10%. The past two quarters have seen minor improvements -- thanks to energy -- to push Y-over-Y earnings back over 10%. But back out Energy and the decelerating trend remains intact.   

Further, there is an argument to be made that earnings are meaningless -- or at least not the most significant impact on stock price. Why? Most of the gains we have seen in prior Bull Markets are due to P/E expansion, and not earnings gains. Thats purely a function of psychology (more on this tomorrow).


UPDATE:  August 30, 2005 5:26pm
Actually, my title is excessive -- Stein did say something that makes a whole lot of sense:  Investors should buy a diversified basket of Indices or ETFs that cover stocks, bonds and commodities. Thats good, simple, low cost advice for most people.

BTW, here is my favorite of Ben Stein's work:

Economics Teacher: In 1930, the Republican-controlled House of Representatives, in an effort to alleviate the effects of the... Anyone? Anyone?... the Great Depression, passed the... Anyone? Anyone? The tariff bill? The Hawley-Smoot Tariff Act? Which, anyone? Raised or lowered?... raised tariffs, in an effort to collect more revenue for the federal government. Did it work? Anyone? Anyone know the effects? It did not work, and the United States sank deeper into the Great Depression. Today we have a similar debate over this. Anyone know what this is? Class? Anyone? Anyone? Anyone seen this before? The Laffer Curve. Anyone know what this says? It says that at this point on the revenue curve, you will get exactly the same amount of revenue as at this point. This is very controversial. Does anyone know what Vice President Bush called this in 1980? Anyone? Something-d-o-o economics. "Voodoo" economics.


Tuesday, August 30, 2005 | 05:21 PM | Permalink | Comments (10) | TrackBack (0)
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Music Industry Attempts Price Increases (or Hari Kari, Part II)

Tuesday, August 30, 2005 | 11:30 AM

for the About a year and a half ago, we noted the "Music Industry is Intent on Commiting Hari-Kari." Today, we revisit that subject.

In an apparent attempt to either a) prove they are as dumb as lawn furniture or 2) hasten their own imminent demise, the music industry is trying to raise prices for legal downloads.

A front page NYTimes article discusses how the music industry is (once again) trying to force prices up. This demonstrates a shocking lack of economic comprehension, as well as a distinct failure to understand their own customers. 

Its a basic rule of Economics: Goods that have Elastic demand  (i..e, non essential) are highly price sensitive. Further, any item easily available for free (albeit illegally) will have an even bigger response to price increases.

This is before we even get to the proposition that 99 cents songs at iTunes are not a particularly good value proposition either (you can buy the disc and rip it and have both MP3s and CD for about the same price).

Prediction: if the labels manage to crank up ITMS prices, expect those pricey legal downloads to plummet in volume. That's just basic economics -- if a free alternative exists, and consumers already think your product is overpriced, than you are in for a heap of trouble if you try to raise your selling price point.

Question: Where the hell are the artists and their representation in all this? Hasn't anyone in the industry besides Mick Jagger (London School of Economics) eceived any sort of business training?

As we have shown time and again, music buyers are extremely price sensitive, that CDs do not represent a good value for consumers, that consumers are rapidly adapting other forms of entertainment, and that DVDs  provide more bang for the buck.

Further, price decreases spur music sales, as does strong economic environments.

Here's the NYT Ubiq-cerpt:™

"Two and a half years after the music business lined up behind the chief executive of Apple, Steven P. Jobs, and hailed him and his iTunes music service for breathing life into music sales, the industry's allegiance to Mr. Jobs has eroded sharply.

Mr. Jobs is now girding for a showdown with at least two of the four major record companies over the price of songs on the iTunes service.

If he loses, the one-price model that iTunes has adopted - 99 cents to download any song - could be replaced with a more complex structure that prices songs by popularity. A hot new single, for example, could sell for $1.49, while a golden oldie could go for substantially less than 99 cents.

Music executives who support Mr. Jobs say the higher prices could backfire, sending iTunes' customers in search of songs on free, unauthorized file-swapping networks.

Signs of conflict over pricing issues are increasingly apparent. This month, Apple started its iTunes service in Japan without songs from the two major companies - Sony BMG Music Entertainment and Warner Music Group - leaving artists like Avril Lavigne, Beyoncé and Rob Thomas out of the catalog because the companies refused to license their music to iTunes, executives involved in the talks said . . .

Some analysts suggest that the willingness of the music companies to gamble on a new pricing structure reflects a short memory.

"As I recall, three years ago these guys were wandering around with their hands out looking for someone to save them," said Mike McGuire, an analyst at Gartner G2. "It'd be rather silly to try to destabilize him because iTunes is one of the few bright spots in the industry right now. He's got something that's working."

: From Stereophile, comes what may be the most astute statement on the subject -- "The real issue may be that iTunes has become the 500 lb gorilla on the digital music block, controlling 75% of all legal downloads and 80% of the portable digital player market. That level of market dominance may be the real sticking point for the recording industry, which has long been used to actually driving the market rather than being in the passenger seat. In other words, it may be an old-fashioned turf war."

Great . . . just what the recording industry needs now, a good old fashioned cockfight.   

Alex, I'll take Clueless Industry Executives for $100, please.


Apple, Digital Music's Angel, Earns Record Industry's Scorn
Jeff Leeds
NYTimes,  August 27, 2005

Is the iTunes price right?
Recording Industry Update
Wes Phillips
Stereophile, August 29, 2005

Tuesday, August 30, 2005 | 11:30 AM | Permalink | Comments (4) | TrackBack (1)
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New Music Business Model: Ancillary Revenues

Tuesday, August 30, 2005 | 08:30 AM

Yesterday's WSJ has an interesting discussion about a new music industry business model, using the The Pussycat Dolls as the prime example. The key takeaway is the potential revenue from ancillary lines of business.

Here's your ubiq-cerpt:™

"The Pussycat Dolls aren't due to release their first album until next month, but they've already got the No. 1 song on Billboard magazine's Pop 100 chart -- plus their own makeup line and a Las Vegas nightclub. A clothing line, a possible reality television show and more nightclubs are in the works.

The new, all-female pop group's far-flung endeavors are a departure from standard music-industry practice. The Pussycat Dolls' record company, A&M-Interscope, is an equal financial partner in any money-making enterprise the group participates in, from touring to TV.

Interscope last year created a company it jointly owns with the Dolls, which at the time wasn't a pop group at all, but rather a long-running Los Angeles dance troupe that performed a burlesque routine at nightclubs and events. Now the Dolls consist of six members who record and tour and another eight-member troupe that performs in Las Vegas.

Normally, music companies make money only by selling their acts' recordings, whether on compact disc or as digital downloads. Music labels typically don't see any direct benefit from concerts, movie appearances or ads in which a performer appears. Past manufactured pop groups, such as the Backstreet Boys, were usually created not by their record labels but by their managers, who primarily reaped the profits from promotional activities.

As recorded-music sales have plummeted in recent years -- due to excessive pricing, weak offerings, lack of consumer interest, and competition from other entertainment -- there has been a search for alternative sources of revenue.

And, its beyond the usual touring and t-shirts. Call it more than Merch:

"One of the most relevant words in the music business today is 'ancillary,' " says Jeff Haddad, the Pussycat Dolls' manager. "It's no longer strictly music."


Pussycat Dolls, Music Label Share All Profits in Novel Deal
THE WALL STREET JOURNAL, August 26, 2005; Page B1

Tuesday, August 30, 2005 | 08:30 AM | Permalink | Comments (4) | TrackBack (0)
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Mom versus RIAA (Elektra v. Santangelo)

Tuesday, August 30, 2005 | 07:30 AM

Patricia Santangelo, the single mother of 5 without any P2P on her PC, has decided to take on the RIAA and the rest of the music industry.

Even better, her lawyers set up a blog:  Recording Industry vs The People (pretty cool).

UPDATE: August 30, 2005 8:06 am

Godwin's Law points to a transcript of a pre-trial court proceeding. Its apparent the judge understands the game the RIAA is playing -- and she's having none of it.  (Good for him her)

Tuesday, August 30, 2005 | 07:30 AM | Permalink | Comments (2) | TrackBack (0)
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Apple to introduce new music-related (Video?) product

Monday, August 29, 2005 | 08:00 PM
in Music

AppleInsider:  Apple Computer plans to host a special event on September 7th to introduce new music-related products.

On Monday the iPod maker began distributing e-mail invites to the event, which will take place at 10:00am on Sept. 7th at San Francisco's Moscone Center.

"1000 songs in your pocket changed everything. Here we go again," the invite reads, in part. The slogan "1000 songs in your pocket" was originally used by the Apple when it introduced the the very first 5GB iPod digital music player in 2001.

Continue reading "Apple to introduce new music-related (Video?) product"

Monday, August 29, 2005 | 08:00 PM | Permalink | Comments (0) | TrackBack (0)
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