Looking for signs of growth...and getting them...

Chicago PMI (purchasing managers index) advanced more than expected for the last month, raising expectations of a solid ISM PMI number tomorrow.

After a weak spot in the economy, we are starting to get some leading numbers that indicate continued growth.

Personal Income up, spending flat...

While the consumer looks tired, incomes continue to rise.

Spending is no doubt affected by prices at the gas pump, the income number is one we really focus on.

Higher income = higher spending in future periods.

Initial Jobless Claims Rise...

Two ways to look at the number:

Panic, another sign that the economy is getting weaker.

Skeptical, no doubt that the hurricanes have disrupted things in the populous state of Florida.

The 4 week average with smoothes out some of the noise is still below the critical 350,000 with the current reading at 344,000.

Continued weakness in this series over the coming month will spell trouble for the economy and for President Bush. We will be watching closely.

Final second quarter 2002 GDP

We just know you have been on the edge of your seat waiting for the final GDP numbers from the Commerce Department's Bureau of Economic Analysis.

Fair enough, here it is.

Hopefully in plain english and not econospeak.

Final second quarter GDP (gross domestic product) came in at +3.3% versus the +2.8% preliminary number. Most economists surveyed expected only +3.0% for the final number. These numbers have been adjusted for inflation.

The nominal, or unadjusted numbers came in at a smoking +6.6% annualized number. This is impressive from a couple of fronts.

1. Consumer demand has been weak
2. Inflation chopped off 3.3% off the rate when converting from nominal to real. The inflation rate utilized for this calculation had been averaging under 2% until this year.
3. Imports reduce GDP and high oil prices boost the import number.

So for all the talk about the rough patch the economy hit, this is still a solid number. The 3.3% annual rate for the real number is identical to the 10 year average for this series.

So yes, the number is weaker than the last 4 quarters, but growth is not below trendline.

This will help put all these percentages into perspective. National output was $11,657,500,000,000.00 annualized in the second quarter. A large number!


You can find the GDP report here at the BEA website. Requires Acrobat.

Yahoo News Story Link

Oil prices ease back from highs

It's always "worries" over supply that bump the price up. Just image if supply did get disrupted somewhere in the world, then the price would really move.

But like all markets do time and again, the price is well ahead of the fundamentals.

Treasury Yields Hit 5-Month Lows

Meanwhile the crude oil market is banging on new highs. Something very fishy going on here!

Looking ahead to 3rd Quarter Company Earnings...

The vanguards of company earnings are slated to report within the next month, Alcoa (EST Oct 7th) and Yahoo (EST Oct 12th).

Alcoa has already warned that earnings will come in light due to a strike, a fire, and restructuring charges from closing a plant. A quick search for YHOO guidance did not reveal any educated enlightenment.

Market perception of third quarter earnings is huge in terms of where the indices are headed over the coming month and there are no easy answers. In the first and second quarters earnings were up sharply and the market did nothing with them. Overall the market fell and the P/E on the market contracted.

Now in the third quarter, based on the economic indicators we follow earnings growth for the quarter should be weaker given the abated strength in the economy over the Summer. If we didn't rally on strength in the first and second quarter will the markets falter on weakness? No clear answer.

I think it is safe to say that sectors losing earnings momentum in the next quarter will be punished. It is a good bet that energy will do well and sectors driven by consumer demand will be hurt.

We don't believe that the business cycle has peaked, only growth rates. If we get slower growth combined with moderating inflation the market should still have room to move higher.

Weekly Market Returns...

For the first time in a long streak of weeks we have negative returns to talk about. For the week the DJIA was down -2.3%, the S&P -1.6% and the Nasdaq -1.6%.

A number of factors drove the market down, flatter yield curve, higher oil prices, several earnings warnings.

We have been through a tough correction in the equity market since March. The last couple of weeks gave us a respite from that.

We think that slower growth in the 4th quarter is a foregone conclusion. But growth is growth. The comps may get negative but if the absolute level of earnings move higher we should be ok.

HURRICANE IVAN PHOTO INDEX COVERAGE AREAS

Off topic, NOAA photos of coastal damage from Ivan...

Wake up people! Portfolio changes needed!

Zombie investors haunt America By Paul B. Farrell, CBS.MarketWatch.com
Last Update: 8:36 PM ET Sep 21, 2004

ARROYO GRANDE, Calif. (CBS.MW) --?"I don't want to be scared anymore. I want to tell you my secret now," says the little boy, "I see dead people." The psychiatrist says, "Dead people, like in graves and coffins?"

"No, walking around, like regular people."

Only they don't know they're dead. And that's the scariest of all secrets, the one even the psychiatrist doesn't know, until the very end. The boy is one in a million with this terrible gift. He really can see the dead, people are walking around the real world, in denial. They are dead. They just think they're real people.

The scene is fictional, from "The Sixth Sense," one of the most haunting psychological thrillers of all time. But unfortunately, reality is far more frightening.

Recently I had a sick feeling that I was that little boy. And what I saw was tens of millions of dead investors in America. And they don't even know how dead they are.

This chilling sixth sense overwhelmed me as I read two new reports from Boston-based Dalbar Inc., a respected independent research firm that periodically surveys the behavior of mutual fund investors. I call them the "zombie investors" studies.

Zombies study one: Fund scandals
Fund scandals? What fund scandals? Want hard proof that mutual fund investors are dead. Read Dalbar's "Investor Confidence in the Mutual Fund Industry, an In-Depth Examination of How the Mutual Fund Scandals Affected Investor Confidence."

The study's conclusions are more frightening than some of the grossest horror films ever made, a condensation of every Halloween, every Friday the 13th, every Night of the Living Dead. And yet, the victims just sit there, oblivious of their fate.

Get this: In Dalbar's scandals study 75 percent of mutual fund investors could not even name one of the dozens of firms involved in the scandals. Not one! Despite the overwhelming press coverage of the scandals for months on end, three out of four investors were dead to the world of fund scandals. And over half still do not know what market timing and late trading mean.

Worse yet, a whopping 86 percent of the fund investors said that the scandals had not changed their investments in any way. Nada. Zippo. That's real scary. Eighty-one million of America's 95 million fund investors are victims of financial rape, losing billions in excessive charges every year, yet most look the other way, oblivious, in denial, passively accepting their perpetrators' violations.

Zombies study two: Timers are losers

Want more hard proof that mutual fund investors are zombies, walking around believing that they're regular folks? Read Dalbar's "Quantitative Analysis of Investor Behavior." This one will really gross you out. And the most frightening aspect of this horror story is that it is not news! This horror story is Dalbar's latest update "measuring the effects of investor decisions to buy, sell and switch into and out of mutual funds since 1984."

What they found is the same bad news: Most mutual fund investors are not only zombies, they are stupid, dumb and really bad investors. For the period of this research study from 1984 to 2003, Dalbar concluded that:

"Whether the mutual fund industry is enjoying rapid expansion in times of economic boom, or is being battered by the bears, the key findings uncovered by Dalbar's first study remain true: Investment return is far more dependent on investor behavior than on fund performance. Mutual fund investors [who] simply remained invested earned higher real investor returns than those who attempted to time the market."

According to Dalbar's annual updates, all those fancy "fund performance" statistics you get from Morningstar and Lipper, all the numbers you read in Barron's, The Journal, USAToday, your local newspaper, in Kiplingers and Money magazine, and every online source are misleading.

Published stats are misleading you

Why are the published numbers misleading? Because the real story is told by your buying and selling, timing and trading, not by the published stats from Morningstar and Lipper.

Did you know that published stats are purely hypothetical? They "assume a lump sum investment made once and held for the period being reported [and] while mathematically useful, there are virtually no investors that exhibit this behavior, making the published returns nonrepresentative" and thus misleading.

So how bad is it? This relentless horror story has been proven over and over for 20 years -- through both the '90s raging bull market and the recent disastrous bear market -- that fund investors who time the market are "motivated by greed and fear, not by sound investment practices," and as a result, they are not only zombies, they're losers.

I'm not kidding. Here, take a close look at Dalbar research results from two decades of tracking fund investors between 1984 and 2003:

The S&P 500 Index has averaged 12.98 percent annually. However, Dalbar emphasizes this data is hypothetical and misleading since it assumes a single lump sum investment in 1984 compounding for 20 years. Investor returns can never equal such posted performance numbers because an individual's investment is made gradually over time, not as a lump sum up front.
The "Systematic Investor" averaged 6.8 percent annually. This is "the investor who invests a fixed dollar amount each month for the entire period and makes no withdrawals," and will never come close to the posted 12.98 percent.
The "Market Timer Investor" actually lost an average of 3.29 percent annually as a result of futile attempts to out-guess the market. "Market timers consistently lose money proving that it is extremely difficult over time to consistently predict and react appropriately to changes in the market."
This three-part scenario would be funny if it weren't so tragic. Imagine, year after year for 20 years mutual fund market timers are losing an average of 3.29 percent annually, and yet they deny the real numbers (their own returns) and continually make the same dumb mistakes over and over again. They really are zombies, dead to the real world around them, yet foolishly believing they are just regular living people.

Stupid? Bad? In denial? Sad? Call this behavior whatever you want folks, but the truth is that most of America's investors are zombies and losers.

Now you know why I wish I didn't have this sixth sense. It's a curse. I wish I didn't see all these zombies, these dead investors walking around, acting like real people, like live investors.

But most of all, I wish they'd wake up, I wish they knew how dead they are. Imagine, 95 million investors in America, and 81 million don't even know that when it comes to investing, they are among the walking dead, they are zombies.

As anticipated Fed moves short term rates higher...

Federal Reserve moves Fed Funds up another 1/4 point to 1.75%

Op/Ed the Danger of the internet, powerpoint and CBS...

News this week that CBS must retract a story on President Bush's service in the Texas Air National Guard brings forward a chilling point.

With the capability of the internet to spread information quickly news desks face pressure to get a story to press much faster than in the past. No longer do they have a day or two to run a story down. Try 15 minutes to a couple of hours.

Combine this with the "power point" effect of needing to distill presentations down to bullet points and we have a dangerous combination. Rushed analysis and simplified facts.

This is not the stuff that got us to the moon and back. I am not trying to be reactionary. I won't bore you with references to Orwell. But someone outside of long haired Phd's has to do some critical thinking for our society to continue to advance. Who will it be?

Poor weather hits Unilever sales

Be skeptical when companies blame the weather for poor sales.

Summary Market Returns

Summary Market returns through last month are up on the website. It is amazing, the five year return on the S&P 500 are still negative!

Riding the storm out...

This post is a little off topic for marketweek but is covers a some things that need to be addressed. Numerous people have contacted us over the last couple of days because we were in the path of hurricane Ivan.

Most people want to know:

Why we stayed
What is was like
What they can do to help

Why we stayed. First, it took from Tuesday morning at 7:00am to Wednesday Morning at 10:30am to board up the house, secure the business, board up the business, and then finally secure everything at the house. We were hearing that people were having to travel as far as Chattanooga or Houston to find a hotel room. We were looking at 7 hours to north Atlanta on a good day, perhaps 10 hours or more in the traffic we would face. Not ideal when you have worked yourself to the point of exhaustion.

Storm surge and flooding is what destroys most structures and we are far enough inland that neither was going to be a issue. Most maps we have reviewed don't have us getting either even in a Cat 5 hurricane.

Our home was boarded up and because it was built since Andrew hit Florida the building code and design has gotten a lot better to handle high winds. Most of our house is engineered for 120-130 mph winds. The roof is tied to the walls which are bolted to the foundation so each can share the load. Hurricane force winds winds were not going to be a problem unless it was a strong Cat 4 or Cat 5. We were forecast to have winds of 90-100 mph.

Our bet was that Ivan would weaken in the cooler water just off the coast (which it did) and perhaps move to our east (which it did as well)

What is was like. Here is a picture of the eye of Ivan just before land fall. We all made preparations to spend the night on our first floor in the living room. We called it a night about 10:00pm. We had done all we could do, we knew the storm was bearing down on us, all we could do is sit and wait. Our children slept. About 1:00am it started to get bad. Not oh my gosh we are going to die bad, but enough going on outside to make you glad you are on the inside. We never heard the pop, pop, pop that sounds like gun shots that indicate pine trees snapping. A good sign.

Sometime between 2:00am and 3:00am the eye of the storm passed over the house. By that time the eye had been distorted due to landfall and the calm did not last long. Then the winds reversed.

Here is a before picture.

Here is an after picture.

Here is some damage from hurricane Ivan

More Ivan damage

We had been through Opal in and old Victorian home in Columbus, GA and that was much worse. Wind was howling through that house. It was much quieter in our home during Ivan. About 6:30am we were able to venture outside and check things out. Still windy but not hurricane force. Not many trees down and no visible damage to our home. The neighbors homes looked ok as well.

What you can do.
Most people have asked us if there is anything that they can do to help. We don't personally need any help. Within 25 minutes of our home we have seen very little structural damage to buildings. Mostly trees down. We are cleaning up and getting back to normal. We were on the west side of the storm which is the weakest part. To our south and east in Orange Beach, Al and Pensacola, FL they got hammered. The Red Cross needs donations to continue the great relief work that they are doing. Alternatively you could support the Salvation Army. Most of all the people in the path of the three storms all need your prayers as recovery and rebuilding begin.

I have to say something about how everyone in the community acted as the storm approached. Everyone was serious, but friendly. Folks helped each other, continued to say please, thank you and excuse me. No grabbing, yelling or fussing. Supplies were short. It was a stressful time. I am proud of how I saw people act.

Final word for all who expressed their care and concern we appreciate hearing from you and your prayers. If you are ever in the path of a strong hurricane, board up and bug out!

Ivan Photo gallery

Weekly Market Returns...

For the week the S&P 500 notched it's sixth weekly gain, up .4%.
The DJIA fell for the week -.3% and the NASDAQ rose .8%.
Inflation readings released during the week showed that price increases are moderating and jobless claims released on Thursday continue to indicate moderate growth in the labor markets.

We have been through a lot over the summer that had the markets on edge:
Oil Prices
Threat of terror at G8, Olympics, and both the National political conventions

We have made it through all of that and the economy keeps marching higher. Let's keep it going!

Technology Part II

Just a quick add on to what my compatriot had to say in the last post about technology.

We often talk about our dependence on oil. In the last 36 hours it has become clear that the common thread with all this technology is electricity. Even with batteries, without some juice coming from the wall outlet, all our high tech goodies eventually fail.

We are a society where wires and wireless has become our nervous system. It is something we all take for granted and we shouldn't.

A note about technology...

For those unaware, our firm is located on the Eastern shore of Mobile Bay Alabama, and we are presently in the epicenter of a nasty category 4 hurricane that will cause major damage to the area and require weeks of clean-up time. However, I am continually amazed at the way technology changes our lives. For example, my wife and I are riding out the storm in Jackson, MS, and are presently at a coffee shop offering wireless internet. My, how times have changed. I am able to continue to monitor the markets, client accounts and local (Mobile) weather. I can also check my personal and business e-mail, receive phone calls over the business cell phone that is with me and review any faxes sent to our efax number. I have even spoken to a client today who had no idea that the home office was boarded up and we were gone. And, they would not have had to know had I not told them. I am managing the office from 200 miles away while a hurricanee rips through our city. Just a thought about how things have changed over the last decade. To all the residents of the Gulf coast, be safe and be prudent; this too shall pass...

Back up a step... spin from within on Disney

In case you think we missed something major this week with the "planned retirement" resignation of Michael Eisner of Disney, well you would be wrong.

This is so old news it smells like fish that has turned. The Disney board was doing all they could to protect him and they had been seeking a way for everyone to save face.

The big news isn't that he will be gone, it is who will really lead when he is gone. With the brain drain Disney has had there isn't much left in the bull pen.

The company has great assets, the stock is cheap, but the ding dang internal return on invested capital is 1/2 of what it was just 5 years ago. Yikes! If internal returns continue to deteriorate the stock will continue to underperform.

I personally believe the biggest problem at Disney is that they don't know whether they are a media company or an entertainment company. Maybe breaking it up isn't such a bad idea. Dunno.

Experimental strike probabilities for Hurricane Ivan..

Neat stuff, PhD's and computer geeks trying to button down where the big guy will make landfall. Think non-linear man, non-linear!

Weekly market returns...

Here we go kids! You have been waiting all week for them, Market returns!

For the week the NASDAQ launched a smoking 2.7% return for the week on the back of a rebound in technology shares, the S&P 500 followed with a .9% gain, and the Dow Jones Industrial Average lagged with a .5% gain.

Not bad week. The Dow lagged in part due to a warning from Alcoa. The strength in the NASDAQ was broad based in the week AFTER Intel dropped the bad news on the market. The buzz is that what is bad for Intel may not be bad for the entire population of tech-land.

Decomposing ECRI weekly leading index

Weekly Leading Index Rises
09/10/2004
NEW YORK, Sept 10 (Reuters) - A weekly measure of U.S. economic activity rose last week, but a measure of the overall trend suggested growth has slowed considerably in recent months. The Economic Cycle Research Institute, an independent forecasting group, said on Friday its weekly leading index (WLI) climbed to 132.6 in the week ended Sept. 3 compared with 131.1 in the previous week. Higher mortgage applications, a rally in stocks and fewer jobless benefit claims helped bump the index higher, ECRI said. The index's annualized growth rate, which smooths out weekly fluctuations, improved to 0.0 percent from -0.3 percent. But its longer-term decline still points to weaker economic growth. 'With the growth rate of the WLI in a sustained downtrend, prospects for U.S. economic growth remain lackluster,' said Lakshman Achuthan, managing director at ECRI. "


Spin from within Marketweek
Our view is that the ECRI weekly leading index (WLI) did what it was supposed to do, predicted slowing growth before just about anyone else. Now here is the trick, most economists surveyed are just in the last few weekly lowering their growth forecasts, so in effect they are following the trend in place.

Great!

What we want is a gutsy prediction based on some facts. So here it is from us, yes growth slowed over the summer as oil prices bubbled higher. But (there is always a but) the ECRI WLI is still up 3.35% year over year versus an average over the history of the series of +2.90%. So, anticipated growth rates are still above average, just much slower than the white hot growth in the first of the year.

This is important to point out because a balanced recovery does not require the Fed to act to control inflation, and tight money and inflation is were you get your big bad bear markets.

Just our two cents worth, worth only what you paid for it. Have a great weekend and enjoy that college football!

HoustonChronicle.com - Word of oversupply from OPEC punctures oil prices

Another news story about balance between supply and demand. Prices above $30 a barrel for oil may be here to stay, but prices near $50 are not...

Japan's economy still rising...

After ten years of recession that sometimes flirted with an outright depression Japan's economic recovery remains on track. With the world's second largest economy in terms of GDP this is an important sign that global growth remains on track even with doubts about the strength of the US economy.

Decomposing the Bush bounce...

Bush Up Five Points in Three Weeks

September 5, 2004--President Bush gained more than five percentage points over John Kerry during the past three weeks. About half the gains were made before the Republican National Convention and half during Convention week.

While challengers typically earn a bigger Convention Bounce than incumbents, Kerry managed only a two-point bounce from both the announcement of his running mate and the Democratic Convention.

Three weeks ago, at his post-Convention peak, Kerry was ahead by nearly three percentage points in our weekly tracking update. This week, Bush is ahead by nearly three points. The race for the White House, while still very close, is now the President's to lose.

During the Republican Convention week, the President's numbers improved across the board. He took the lead in the 16-Battleground States, his Job Approval ratings went up to their highest levels in six months, and the number saying the country is moving in the right direction increased to its highest level of the year. Ratings for the President's handling of the situation in Iraq and the economy also reached new peaks during the past week.

Additionally, initial reaction to the most recent job creation report shows a slight increase in the economic confidence of Investors and Consumers.

Obviously, there is still plenty of time left in Election 2004 and the race is still close. Both candidates still have a realistic chance of winning. The situation in Iraq and around the globe remains volatile, there are more economic reports to be issued at home, and the Bush-Kerry debates are yet to be held. Any or all of those things could work to the benefit of one candidate or the other.

However, the dynamics of the race have changed. A few weeks ago, the status quo would have led to a Kerry victory. Now, the status quo will benefit the President. Senator Kerry must either hope for a serious Bush mistake or do something on his own to shake up the race.

Dig the chart of the month....

Oil prices have been roiling the markets over the Summer. In the short run the correlation is obvious.

Weekly Market Returns...

This past week offered a mixed bag in terms of returns. For the week the DJIA was up .6%, the S&P 500 was up .5% and the NASDAQ fell -.9%.

Most of the decline in the NASDAQ was due to a disappointing mid quarter update from Intel. Intel reduced both their revenue and margin estimates for the coming quarters.

Wall St. believes that when Intel's gross margins peak, the cycle has peaked. While in the past that may be true, investors sold technology shares across the board in the past week, and they may be throwing the baby out with the bath water.

Have a great holiday weekend, stay safe!

August Employment report...

U.S. Nonfarm Payrolls (August): 144,000 (Actual), 160,000 (Economy.com), 150,000 (Consensus)

The August payroll numbers came in below the consensus forecast but given the wild swings in the headline number in the previous two months the report was respectable.

The unemployment rate fell from 5.5% in July to 5.4% in August. The average workweek and hourly earnings numbers growth rates have been flat over the last three months.

Both the June and July numbers where revised higher, as we expected.

Fed Funds futures have sold off as traders price in expectations of continued hikes in the Fed Funds rate as the underlying strength in employment continues, albeit not at the red hot pace of the spring. After bouncing off a low of 4.1% this week the 10 year US Treasury has sold off to yield a 4.27%

This is yet another report that indicates that slower but steady growth continues in the US economy.

Look out below...Watch for weakness tomorrow after a poor mid-quarter update from Intel

Intel mid-quarter update snapshot:

Inventories up, margins down. Reducing revenue forecast.

Shares weak in after hours market. Negative news that could weigh on stocks in the morning.

Experimental strike probabilities for hurricane Frances

Batten down the hatches folks, she headed this way!

Monster Employment Index Shows Jump in Online Job Demand in August

- Index Resumes Upward Trend, Reaching Highest Level Since its Inception, Indicating Strong, Sustained Growth in Online Job Demand -


- Manufacturing Among Industries Showing Greatest Increase in Online Job Availability -

- Nearly Every Occupational Category Up Over Last Month -


NEW YORK, September 2, 2004 - Overall demand for workers and related online job recruitment activity across the United States grew in August, as the Monster Employment Index reached its highest level since its inception. Rebounding off a slight decline in July, the Index resumed its upward trend in August, reflecting continued strength in U.S. online job availability. Overall, the Index rose to 145 in August from 134 in July. Results for the first eight months of 2004 are as follows:


August July June May April March February January
145 134 136 128 125 109 107 102


Online job demand remained strong across most industries during the month of August, with all but three industries experiencing varying degrees of growth. In fact, 14 industries reached their highest levels for 2004 during the month. Industries that saw online job availability increase significantly in August included manufacturing; mining; professional, scientific & technical services; transportation & warehousing; and agriculture, forestry, fishing & hunting.

Manufacturing was up sharply during August, as was professional, scientific & technical services. Finance & insurance registered a seventh consecutive month of growth, while healthcare & social assistance and utilities both continued five months of modest sequential growth. In contrast, management of companies & enterprises ended a five-month positive trend, as did real estate, rental & leasing, and administrative/waste management services which all dipped a few points.


Online demand for workers increased across nearly every occupational category in August, with 18 of 23 categories registering their highest levels in 2004. Occupations showing the biggest increases in August included computer & mathematical; architecture & engineering; production; management; and community & social services.


Computer & mathematical, which captures the greatest number of IT-related positions, saw its biggest jump this year and reached its highest level. Business & financial operations recorded its eighth month of sequential growth, as did training & education. Demand for sales occupations also increased, continuing an upward trend over the past eight months. Conversely, online demand for legal occupations remained essentially flat.


"With the Monster Employment Index showing a mostly upward trend over the past eight months, we are seeing strong evidence of continued growth in online job demand for the year," said Jeff Taylor, Founder and Chief Monster. "Overall, August's upward trend in online job availability may be a potential precursor to increased hiring activity in the last quarter of the year. It may also be indicative of companies beginning to recruit recent college graduates."


"The Index's seven-month growth trend in finance & insurance is likely reflective of increased business expansion and merger and acquisition activity. Likewise, the renewed upward trend in online demand for sales positions following a flat July is further evidence that companies continue to position their enterprises for growth - a positive indicator of further economic recovery," continued Taylor.

Strong Regional Online Job Demand in August
According to the Monster Employment Index, regional online job demand for workers increased in all nine regions of the U.S. in August, with every region achieving its highest level since October 2003. The Mountain region, which includes Arizona, Colorado, Idaho, Nevada, New Mexico, Utah and Wyoming, saw the greatest increase in job availability, driven by Wyoming and Arizona. Other regions registering sharp increases during August included the West South Central region (Oklahoma, Texas, Arkansas, and Louisiana) and the West North Central region (Minnesota, Iowa, Kansas, Nebraska, Missouri, and the Dakotas), which marked its eighth consecutive month of growth.


Every state showed an increase in online job demand in August, except Florida (as it recovers from Hurricane Charley) and West Virginia, which remained flat. Individual states that saw significant increases in online job availability during August included Arizona, which saw its highest index rating since October 2003, and Louisiana, which increased sharply after three consecutive months of little to no growth. Oregon, Alaska and North Carolina also registered sharp increases.


Based on online job demand in relation to total working population, the Monster Employment Index found the following to be among the top ten in terms of online job availability growth during the month of August:


1. Arizona
2. District of Columbia
3. Delaware
4. Maryland
5. Virginia
6. California
7. Connecticut
8. Massachusetts
9. New Jersey
10. Alaska


Based on sheer quantity alone, California offered the most online job availability of any state during the month of August.

Top Five Industries Looking for Employees in August
During August, the Monster Employment Index showed an increase in online job demand across most U.S. industries, with healthcare continuing to offer the greatest volume of online job availability compared to all other sectors. Industries showing the greatest increase in job availability in August included:

Industries

August July June May April
Agriculture, Forestry, Fishing & Hunting 148 128 120 101 87
Manufacturing 146 129 123 124 118
Mining 118 102 104 101 100
Professional, Scientific & Technical Services 171 157 135 118 126
Transportation & Warehousing 131 120 122 116 110

Most Wanted Occupational Experience


Occupational categories showing the largest increase in online job demand in August included:


Occupations August July June May April
Community & Social Services 157 133 136 138 168
Production 154 136 139 137 129
Architecture & Engineering 136 119 131 127 117
Computer & Mathematical 117 104 103 105 105
Installation, Maintenance & Repair 134 121 121 125 112



Online Job Demand Increases Across the Country
Every U.S. Census region saw online job demand increase in August. Following are the regions listed in order of greatest month-to-month increase:


U.S. Census Regions August July June May April
Mountain 179 161 161 154 145
West South Central 141 125 132 134 136
West North Central 151 137 133 130 128
New England 169 155 154 145 141
East North Central 143 131 133 128 126
Mid-Atlantic 147 136 135 131 125
Pacific 154 145 147 140 129
East South Central 143 135 139 133 127
South Atlantic 138 132 131 124 121



The Monster Employment Index is a broad and comprehensive monthly analysis of U.S. online job demand based on data from more than 1,500 Web sites conducted by Monster Worldwide, Inc. (NASDAQ: MNST), the parent company of the leading global online careers property, Monster®. Based on a real-time review of millions of employer job opportunities culled from more than 1,500 Web sites, including a variety of corporate career sites, job boards and Monster, the Monster Employment Index presents a snapshot of employer online recruitment activity nationwide. The Index counts job postings as an indicator of employer demand for employees or, in other words, job availability. Job postings are online advertisements placed by an employer looking to fill one or more vacant job positions.


All of the data and findings in the Monster Employment Index have been validated for accuracy through independent, third party auditing conducted on a monthly basis by ARC Research, a Cranford, New Jersey-based provider of innovative click and brick market research solutions. The audit validates the accuracy of the online job recruitment activity measured for the last six months within a margin of error of +/- 1.05%.


Additional information on the Monster Employment Index, including all charts and tables, is available online at http://eIndex.monsterworldwide.com. The Monster Employment Index will report results monthly. Data for the month of September will be released on October 7, 2004.


About Monster Worldwide
Founded in 1967, Monster Worldwide, Inc. is the parent company of Monster®, the leading global online careers property. The company also owns TMP Worldwide, the world's largest Yellow Pages advertising agency and one of the world's largest Recruitment Advertising agency networks. TMP Worldwide is also a provider of direct marketing services. Headquartered in New York with approximately 5,000 employees in 26 countries, Monster Worldwide (NASDAQ: MNST) is a member of the S&P 500 Index. More information about Monster Worldwide is available at www.monsterworldwide.com.


Celebrating its 10-year anniversary, Monster is the leading global online careers property. A division of Monster Worldwide, Monster works for everyone by connecting quality job seekers at all levels with leading employers across all industries. Founded in 1994 and headquartered in Maynard, Mass., Monster has 22 local language and content sites in 20 countries worldwide. Monster is the official online career management services sponsor of the 2004 U.S. Olympic Team. More information is available at www.monster.com or by calling 1-800-MONSTER. To learn more about Monster's industry-leading employer products and services, please visit http://recruiter.monster.com.


Special Note: Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Except for historical information contained herein, the statements made in this release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve certain risks and uncertainties, including statements regarding Monster Worldwide, Inc.'s strategic direction, prospects and future results. Certain factors, including factors outside of Monster Worldwide's control, may cause actual results to differ materially from those contained in the forward- looking statements, including economic and other conditions in the markets in which Monster Worldwide operates, risks associated with acquisitions, competition, seasonality and the other risks discussed in Monster Worldwide's Form 10-K and other filings made with the Securities and Exchange Commission, which discussions are incorporated in this release by reference.


Contacts:

David Rosa
(212) 351-7067
david.rosa@monsterworldwide.com


Christian Harper
Weber Shandwick
(212) 445-8135
charper@webershandwick.com

Op/Ed Deadwood, pruning, outsourcing and election year politics.

We live in hurricane country on the Gulf of Mexico. I spent some time the other weekend trimming back some trees. Of course late winter is the right time to do this, but in this part of the country dead wood can become a dangerous missile if a hurricane hits. Pruning “dangerous” deadwood got me thinking about how much has been made politically of the “jobless recovery” and the loss of manufacturing jobs.

Each political party is trying to jockey for advantage on this issue. The Democrats seem to want to play on people’s emotions, their fears of this issue. The Republicans run the risk of appearing indifferent, almost like ivory tower economists.

No one is to blame, no Presidential Candidate, no Political Party, no policy. If we move to protect our jobs at the cost of free trade we risk damaging our economy and our standard of living.

This is a difficult subject emotionally and an easy subject rationally. Imagine the gut wrenching experience of living in a company town were the mill or plant that provides most of the jobs shuts down and is never coming back. Everyone is affected; realtors, bankers, the car dealer, you name it. At the same time, rationally, without the tremendous growth in productivity over the last two centuries we would all still be working the fields just to get what we need to eat. Who wants to sign up for that?

US Manufacturing output has grown 26% over the last ten years while employment has dropped from 17 million to just 14.4 million, a 15% decline. This is an amazing feat and a testament to the productivity of the US manufacturing sector. (Source: Bureau of Labor Statistics)

So productivity growth is both a benefit and a curse. But is the logical outcome no “good jobs” here in the USA? No. The much vaunted service economy isn’t about McJobs; much of the employment in the service economy is in Finance, Technology and Healthcare. And these areas are the bulk of the “good” paying jobs will be generated over the coming years. The median wage in Finance is $55k, Healthcare is $55k and Technology is $63k. (Source: Bureau of Labor Statistics)

Why pruning is good.

A great example of an American company that regularly “prunes” is General Electric. Of the 30 members of the Dow Jones Industrial Average in 1934, only 5 remain today. General electric is a survivor and it is a great example of a company that has thrived by pruning low return businesses from its portfolio. Each and every year GE reviews all of its businesses and if they are achieving the return objectives for the company. If not they get pruned. Sold, outsourced, or shut down.

Once upon a time GE manufactured televisions and radio’s right here in the USA. Today they do not. After the Second World War, consumer electronics like TV’s and radios were a high return business with a decent profit margin. Today it is a low margin business. Somewhere in Asia some company contract manufactures them with the GE brand name on them.

That is the nature of the loss of manufacturing jobs that have gone off shore.

In America we “prune” low return businesses and invest in high return businesses. The textile industry in the USA is another case in point. Over time textile manufacturing moved from Great Britain to the Northeast of the USA, then to the Southeast of the USA in order to keep labor costs down. Now the textile industry is moving overseas to low cost producers. Textiles are a business with a very low return on invested capital and cost advantages quickly turn into price advantages. Price advantages turn into sales as consumers seek to get the most for their dollar.

As painful as this process can be for individuals and communities the likely outcome is not that all of our jobs move overseas. Who aspires for their children to work in a broom factory, or to make clothespins? The USA will continue to retain high value added jobs and prune low value added jobs.

We all benefit from pruning from lower cost of goods, a broad array of products in our stores. The Chinese make lamps, toys, consumer appliances and sell them to us, and they buy Boeing Jets, Cisco Routers, Intel Microprocessors, Disney Movies, and Coca-Cola.

Off shoring or outsourcing of low valued added jobs is how we prune the dangerous dead wood here in the USA. It is why we enjoy one of the highest standards of living in the world. It is necessary. Without it our productivity will falter and our standard of living will fall.

We cannot control what is going on with outsourcing in a free market economy but we can understand it.