Franks Finances Blog

Newsstands Join The List Of Recession Hit

2009-09-21T22:57:00.000-07:00

Newsstands Join The List Of Recession Hit

http://news.yahoo.com/s/ap/20090831/ap_on_bi_ge/us_magazines_circulation

Two factors are said to be responsible for the decline in sales of magazines at newsstands. The first of course is the ubiquitous recession, which has affected demand of everything, and the second is the availability of free online reading material.

Newsstand sales are the primary generator of revenue for magazines, and subscriptions which are hugely discounted often just shore up the circulation numbers. Hence, the 12% drop in sales in the first quarter of the current year over the same period last year does not augur well for this industry. Circulation numbers however remained steady, but as mentioned earlier; these are usually propped up with large numbers from subscriptions which do not do much for the bottom line.

Many Good Signs Overwhelmed By One Bad Sign

2009-09-07T00:00:00.000-07:00

Many Good Signs Overwhelmed By One Bad Sign

http://news.yahoo.com/s/ap/20090901/ap_on_bi_ge/us_economy;_ylt=AmDJX7Plp7fzVsdUBAtWus6yBhIF;_ylu=X3oDMTJmY2VhbTBhBGFzc2V0A2FwLzIwMDkwOTAxL3VzX2Vjb25vbXkEY3BvcwM0BHBvcwMxBHNlYwN5bl9oZWFkbGluZV9saXN0BHNsawNob3BlZnVsZWNvbm8-

Recent reports on economic activity are positive on many fronts. The manufacturing sector reported a growth in August, the first time it has done so in nineteen months. The measure of future home sales showed an increase in July; it was at the highest point it has been in two years. Auto sales were boosted by the highly successful “cash for clunkers” program.

But, and the but here is a big one, consumer confidence continues to remain low. As a result, shoppers are unwilling to spend outside of their bare necessitities, giving rise to the question, “who will buy these goods that the manufacturing sector is producing?” Consumer confidence is impacted to a great extent by the state of the labor market, and the man and woman on the street has not quite recovered from the battering he or she has taken in terms of wage cuts and job losses.

Existing Home Sales Record Increase

2009-08-24T00:42:00.000-07:00

Existing Home Sales Record Increase

http://www.bloomberg.com/apps/news?pid=20601087&sid=aA0IiC38A7Ig

It appears that the housing crisis that has held the world’s largest economy hostage may be easing up. July saw existing home sales climb to their highest level in 10 months. This could be a combination of price declines driven by foreclosures, government schemes and attractive borrowing costs. In fact this is probably the best time to buy a house provide you qualify under any of the credit schemes.

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Before we get too optimistic, it is best to also consider sales of new homes which also increased despite not seeing the same buoyancy as existing homes. New home sales are considered by many to be a more accurate indicator of economic health.

Decline In US Manufacturing Continues to Ease

2009-08-13T00:28:00.000-07:00

Decline In US Manufacturing Continues to Ease

http://online.wsj.com/article/SB124930793954601517.html

The decline in US manufacturing activity continued to ease in July, with factories boosting their output. The Institute of Supply Management’s Manufacturing Index increased to 48.9 in July, up from 44.8 in June, indicating an increase in new orders and production. Despite the seventh consecutive increase in the index, the level remains lower than 50, an indicator of growth in the segment. The increase, however, indicates that we are nearing the end of the recession and that manufacturing activity is expected to recover in the near future. However, the continued difficulties in the housing and the automobile segments are likely to weigh on overall demand and restrict growth in the manufacturing segment. Although the employment component of the ISM index increased from 40.7 in July to 45.6 in July, layoffs are likely to continue in the coming months.

PCs Not Selling

2009-07-28T23:09:00.000-07:00

PCs Not Selling

http://tech.yahoo.com/news/ap/20090723/ap_on_hi_te/us_earns_microsoft

I am really not that keen to burst the bubble of hope and expectation of good times returning which is surrounding us, but maybe we do need a reality check. Microsoft Corp., for the first time since it went public in 1996, declared a decline in revenue for the current fiscal year. Profits for the company dropped 29% in the last quarter.

It looks like consumers are holding on to their machines much longer than they did before. And if they buy, they are picking up the lower priced machines. As a result, profitability margins of PC manufacturers are getting squeezed. Intel earlier this month declared better than expected results. They however tempered their announcement with the statement that improved performance by Intel does not mean that more PCs are selling. Microsoft’s results seem to corroborate that view.

A Push From One Side And A Squeeze From The Other

2009-07-12T23:27:00.000-07:00

A Push From One Side And A Squeeze From The Other

http://news.yahoo.com/s/nm/20090709/us_nm/us_usa_states_budgets_unemployment

State budgets are expected to shrivel and their expenses scheduled to mount as the recession continues to hold sway. With income tax being a primary source of revenue for state budgets, it is expected that collections from this source will drop in the current year. Incomes have dropped and the number of unemployed has increased.

Many of these unemployed queue up for the State funded medical aid programs with a lag. Having lost a job, they look for alternate employment for a while, and opt for state aid only when they fail to land a job.

State governments are expected to begin to feel the pinch of the recession now, much later than most others, as their incomes slow down and expenses increase.

Aircraft Industry Struggles To Stay Airborne

2009-06-28T23:17:00.000-07:00

Aircraft Industry Struggles To Stay Airborne

http://www.msnbc.msn.com/id/31565942/ns/business-aviation/

Qantas Airways Ltd. has announced that it has cancelled orders for fifteen Boeing 787s and delayed the delivery of fifteen other aircrafts. The reason is not hard to see; difficult times for the airline industry.

What a roller coaster ride it has been for the aircraft industry. From a time, manufacturers such as Airbus and Boeing had order books full for a couple of years, the past year have only seen cancellations.

The Qantas story has been repeated across all airlines operating out of practically every country. With sharp drops in passenger traffic, airlines have been cutting costs wherever they can. Combining flights, reducing services and of course job cuts. This industry will still take a while before it recovers.

Recession Affecting Choice Of Universities

2009-06-15T00:27:00.000-07:00

Recession Affecting Choice Of Universities

http://www.msnbc.msn.com/id/31176257/

In the first of its kind survey conducted by the National Association for College Admission Counseling it has been shown that students are compromising on their university choices due to economic factors. It is based on responses from finance aid bodies as well as admission personnel in high school and colleges.

In times of recession, parents are being forced to re evaluate the worth of a prestigious school in view of the financial aid being made available.
With cost of education being so high, most students had expected a sizeable contribution from their `dream schools’. The schools in turn have had to scale down the level of contribution they could make, leading to a great disappointment amongst students who have had to settle for cheaper education options.

GM’s Future In The Hands Of Its Bondholders

2009-06-01T06:28:00.000-07:00

GM’s Future In The Hands Of Its Bondholders

http://www.freep.com/article/20090528/BUSINESS01/905290328

Obama’s administration and GM have offered a 25% stake to bondholders if they agree to not halt the bankruptcy of the automaker. Now it is up to the GM bondholders to accept or refuse ‘the sweetened deal’. If they accept, GM will be able to tackle their bankruptcy much better, that is for sure!

The proceedings will begin on Monday but the bondholders are yet to communicate their decision.

The automaker’s sales dropped by nearly half in 2009 itself. GM has been surviving the ‘storm of recession’ with the help of $19.4 billion in federal loans. If the bondholders agree to the offer being made to them, GM will breathe a sigh of relief!

Is U.S. Going To Really Issue Yen Bonds

2009-05-17T23:54:00.001-07:00

Is U.S. Going To Really Issue Yen Bonds

http://www.bloomberg.com/apps/news?pid=20601101&sid=aj0JstLwkxnE&refer=japan

Hiroshi Watanabe, a former top currency official at the Japanese Ministry of Finance, said that asking the U.S. to issue yen-denominated bonds is impractical. Hiroshi Wantanabe, an ex-official at Japan’s Minsitry of Finance has commented his doubts at the US raising Yen Bonds, saying that the country (read the US) will surely not raise money in other countries’ currencies!

Watanabe said this in response to comments made by Masaharu Nakagawa, finance spokesman of the Democratic Party of Japan, who had said that as dollar’s future is uncertain, the samurai bonds should be sold by the US. For those who don’t know, the samurai bonds are debt denominated in yen.
We see here a repetition of what China was screaming itself hoarse with a few months back. Let’s not forget that Japan is the world’s second-largest holder of Treasury notes, after China!

Is U.S. Going To Really Issue Yen Bonds

2009-05-17T23:54:00.000-07:00

It May Just Hurt To Be Overqualified!

2009-04-28T02:31:00.000-07:00

It May Just Hurt To Be Overqualified!

http://www.washingtonpost.com/wp-dyn/content/article/2009/04/18/AR2009041800125.html?wpisrc=newsletter

We were always told that the better our education, the better would be our job prospects. Nothing appears to be further from the truth. In this downturn as more and more people seek jobs to pay their grocery bills, the dynamics seem to have changed. Employers are wary of hiring people who appear to be too good for the position simply because they don’t believe they will stick on. It is natural for them to move on as soon as something more suitable comes along. There is also some truth in the fact that these people may not have a willing attitude given that they may consider the job they are applying for, a ‘come-down’ from their earlier position.

Anyhow the end result is that more and more people are spending time in writing resumes and preparing for interviews to appear less qualified instead of more. Wonder what interviewers should be checking for now?

Global Economy To Shrink In 2009, Says WB

2009-04-13T00:07:00.000-07:00

Global Economy To Shrink In 2009, Says WB

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/31/AR2009033100621.html

The global financial crisis has taken its toll on the developing world with the economic growth in the region expected to slow down in 2009. The World Bank has halved its growth forecast for the region from the earlier expected 4.4% to 2.1%. Meanwhile the global economy is expected to decline by 1.7% during 2009 with a marginal revival expected in the year after that. The major problems facing the developing world are the sharp decline in their exports due to the economic slowdown, shrinking foreign investment and a decline in commodity prices. World Bank, IMF and other international organizations have said that the developing world too needs stimulus spending to boost their economies and that there is need to boost global trade.

Obama’s Genuine Concern Over US Economic Crisis

2009-03-30T00:45:00.001-07:00

Obama’s Genuine Concern Over US Economic Crisis

http://www.cnn.com/2009/POLITICS/03/12/obama.business.leaders/?iref=mpstoryview

President Obama has expressed his heartfelt concern over the existing economic crisis. In an interview on 12th Mar ’09 with CNN, he said “The recent problems in the markets are only part of a larger crisis”. Though the masses are looking at these issues from a micro level, his insight is at a macro level. The current economic problems may look acute and urgent, but they represent larger economic crisis. He foresees the need for long-term structural changes in education, energy and health care systems.

Obama’s genuineness, towards the common man, reflects in his comments about the tax structure. He has mentioned that nobody’s taxes will be raised before 2010. He strongly said that there will be an economic upswing by 2012; else we will be listening to someone else in 2013. Such is the commitment and fervor of the US President.

Safeway Warns Brands

2009-03-16T00:27:00.000-07:00

Safeway Warns Brands

http://online.wsj.com/article/SB123567551701785755.html?mod=googlenews_wsj

Safeway Inc. has warned branded-food makers that his grocery chain will privately label their brands if the food makers did not lower the prices of their products.

Safeway Inc. has brought to notice of all that the gap between the sales of national and private brands is widening. The current consumer does not have the money to buy high priced products. The private brands need to realize this and reduce prices considering that their manufacturing costs have considerably lowered in the last few months. However, food makers are reluctant and saying that the inflation is the reason for their high prices. The debate continues, till then the consumer is the loser, no one else!

G7 Is Soft On China

2009-03-01T21:01:00.000-08:00

G7 Is Soft On China

http://www.ft.com/cms/s/0/0b6d7d02-fb91-11dd-bcad-000077b07658.html

The US, along with the other industrialized countries has softened their criticism of China in a push for greater collaboration with Beijing. Timothy Geithner, US Treasury secretary, had a pacifying tone towards Beijing as compared to last month, when he blamed China of controlling its currency to benefit exporters.

Hillary Clinton, the US Secretary of State will be the first senior member of the new administration to make a visit to China hoping for a mutually beneficial relationship with China. The G7 has realized that China needs to be taken into the fold of the world financial system instead of treating it as an outsider as the growth of China is crucial for tackling the economic meltdown.

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A New ‘-Ism’ - Protectionism

2009-02-15T21:51:00.000-08:00

A New ‘-Ism’ - Protectionism

http://www.nytimes.com/2009/02/08/business/economy/08view.html?ref=business

Some critics have given us food for thought. They say that Obama and his administration’s take on international economic policy could be worrying!
For example, Treasury secretary, Timothy F. Geithner spewed venom over the dollar-yuan exchange rates, saying that China was manipulating its currency - by keeping its currency undervalued it was making its goods cheaper in the global market and American goods, more expensive. To teach them a lesson, the ‘buy American’ promotion is on. The consumers are, however, not complaining. If they can get cheaper products even if from China, why would they bother about what this ‘what-do-you-call-it’ protectionism?

What Was On Obama’s Mind Till Date Is Now On Paper!

2009-01-28T22:48:00.000-08:00

What Was On Obama’s Mind Till Date Is Now On Paper!

http://www.moneymorning.com/2009/01/21/the-obama-blueprint-for-solving-the-us-financial-crisis/

You may think that President Obama will start work now after taking over office. You are wrong, my friend. He began the work many months ago, just after he was elected to the highest office in the US. Helped by his advisors, he has been doing all the groundwork to work out a feasible economic stimulus plan for the country. He has done his calculations for sure to come up with the $825 billion economic stimulus plan to help our country tide over the recession. But will this money be enough? After all, this plan is going to cater to job creation, help the struggling banking and auto industries, provide aid to the states that have deficit budgets etc, etc, etc. Now that a lot of work to do in $825 billion. But like I said, it seems President Obama has done his calculations.