Rude crude puts consumers in a bad mood?

Reuters News Article

Da-gum, Black Friday good and then it fades? If so get ready for some crazy bargains the week before Christmas to get people into the store.

US economy grows 3.9% in third quarter

Revised up from the 3.7% advance number. Despite all the naysayers the economy just keeps on rolling forward...

Bring it to the USA...

Wal-Mart's China inventory to hit US$18b this year. Low prices are a good thing but Wal-Mart runs the risk of a yuan/dollar adjustment resulting in a major shift to their cost structure.

Another element of risk here is a cultural backlash in the USA. If the mostly blue collar clientele of Wal-Mart decide as a group they don't want cheap stuff made by the Chicoms, Wal-Mart has a big problem.

We'll see how this one unfolds, the irony that our Christmas lights are made by the Chicoms and the Chinese provide our retail fireworks for the 4th of July is just to much.

At least my US Flags are still made here in the US of A. But if the manufacturers cannot keep their costs down Wal-Mart will farm that out to China as well.

Bill Gross, Pimco Commentary

Ah, alas Bill is correct. Only don't assume that he is just this week selling treasuries and buying German Bunds.

The cow is long out of the barn and following his trades with your own will benefit Pimco fundholders more than it will benefit you.

It's not just the spending that should drive down the value of the dollar, it is a supply/demand issue as well. MZM has grown 60% over the last five years while nominal GDP is up just 29%.

Due to the recession and 911 we have abnormally low interest rates relative to history. Dr. Greenspan is trying to wean us off the cheap money but short term rates alone will not be enough to prop up the dollar.

The evidence: Flat Tax in action in Eastern Europe

Love the idea of a flat tax? Hate it?

Here it is in action in Eastern Europe.

Black Friday Post mortem

Looks like retailers Christmas season started with a bang, save for Wal-Mart.

Speculation by some analysts is that since people feel better about were they are at financially they are moving more upscale this year, and high gas prices are hurting the lower end of the market that has to shop at Wal-Mart.

Southern Hospitality: Mobile, Alabama Joins Cruise Industry

Ya'll come and see us!

The Holiday is beautiful and it's just across the bay from us.

The dollar: When weakness is a strength

Yes, an adjustment in our currency is necessary but so is the lack of savings and the growth of Federal spending.

Living on the kindness of strangers

Without the outsized purchases of US Treasury Bonds by Japan and China, the US Dollar would be much weaker and US interest rates would be much higher.

Are we on the verge of a dollar crisis? Some of the signs are there, but in truth our currency floats versus most of our trading partners. To the extent that we do not manipulate our currency it should be fairly priced in the marketplace long term.

A dollar adjustment against the Chinese Yuan and the Japanese Yen may help our trade deficit in the short run, but a long term slide in the dollar would be detrimental if it was not met with a new initiative to cut Federal Government spending and hence the deficit.

A weaker dollar means higher oil prices and higher import prices which means inflation.

We have had our clients invested in markets rich in natural resources with a strong currency reserve position. It is likely too late to adopt this investment policy and benefit from the weakness in the dollar if it is short lived.

If the dollars decline is long and steep many people who abandoned international investing in the last five years due to its poor performance will have to re-think this position.

Weekly Market Returns

In a week of trading shortened by the Thanksgiving holiday the markets continued their weeks long advance.

For the week the tech heavy NASDAQ advanced 1.51%, the S&P advanced 1.1%, and the DJIA was up .6%

Looking ahead, the market is strong technically, has a favorable seasonal pattern supporting it, but soon may start bumping up against the valuation ceiling.

Why it is called "Black Friday"

Most of the time when you hear a financial reporter talking about "Black [insert weekday]" it is a story recalling a particularly bad day for the stock market.

Why then is the Friday following Thanksgiving, the biggest shopping day in the USA, called Black Friday?

Simple, it is the day of the year that many retailers move from being in the red (losses) to being in the black (profits).

The more specialty the retailer the more that this is true, Toys R Us (TOY) would not be a viable enterprise without its Christmas season profits in the 4th quarter.

Even for large retailers like Wal-Mart(WMT) and Target (TGT) the 4th quarter is very important for profits for the fiscal year.

Giving Thanks...

A discussion of the markets and Thanksgiving can seem, well, to some it just won't fit. But we are intrepid so here goes.

The US Stock Market has rallied strongly since October 25th. A number of factors are at work here, a strong positive seasonal effect, no domestic terrorism, an economy that sometimes seems wobbly from the indicators but keeps growing, a US presidential election that isn't locked up in the courts.

The positive seasonal effect is well known, but still "works". Stocks tend to rise between late October and May. Bullish.

In hindsight you cannot discount how bullish it is that UBL (bin laden) had to "hit" us with a video tape prior to the election. We made it through the Olympics, both parties Presidential conventions and the election with no major domestic terror. If Al Qaida was capable of hitting us they would have. Amazing in an open, free society. Bullish.

Our economic expansion in the USA is fairly balanced. Prices of some commodities are an issue but that is largely being driven by marginal demand from a growing middle class in China and India. We believe that commodity producers will listen to the price signal being sent by demand and invest in new capacity. The world is not running out of oil, copper or steel. Bullish.

The Presidential election being decided in the voting booth and not the courts is good for our democracy and it is wildly bullish in the short term. The effect will fade as our government grapples with some of the structural problems we face (debt and deficit, tax policy, social security.)

We aren't being polly anna here, if stocks were not up for the year we would still give thanks, but events of this year give even more reasons for us all to be thankful to be living in a market driven democracy.

Dollar continues to sink...

That German beer in the green bottle that you love is about to get a wee bit more expensive. Oh well, it is only money.

Holiday week woes...

Yesterday weakness in the dollar led to strength in gold and oil. In the short term oil and gold move opposite of the dollar, and higher oil will bias the US stock market down.

What is odd is the performance of US multinationals with strong overseas sales. Many will benefit from the weaker dollar as their foreign currency earnings translate back to more dollars.

A example of this would be Coca-Cola KO chart even in the last five days Coke has continued to underperform the broader market.

If you aren't internationally diversified, it is too late to do it now and protect yourself against the decline in the dollar.

Google Insiders lining up to sell, look out below!

Granted they need to diversify and they are up big, but this is an ominous sign.

Technogeeks I talk with said that Google has been too clever by a half and if they owned shares they would sell them. Most people are attracted to the clean interface which is sure to get junked up know that they are public and must do anything possible to generate profits.

If you are long Google, do you own homework. Consider the valuation of the comps, yhoo, ebay, etc. Insiders have lots of reasons to sell, but only one reason to buy.

Weekly Market Returns...

For the week the DJIA was down -.8%, the NASDAQ -.7%, and the S&P 500 was down -1.2%.

Greenspan cautions on the current deficit and the dollar, oil rises, and the markets fall.

For a number of weeks we have had a strong rise in the markets, and they paused this week. After such a swift and steady rise in the markets it is not surprising that we had a significant pullback.

BTW Kmart/Sears merger is bullish for the market

By the way, news today that Kmart and Sears are getting married is bullish for the overall stock market.

It is a sign of CEO confidence and liquidity in the system.

The Kmart/Sears merger is just another sign that the economic expansion has legs. Merger and acquisition activity gets Wall Streets animal spirits going.

With moderating oil prices we are setting up to rise right through the end of the year. Valuation may become an issue, but that is for a later date.

Kmart Buys Sears...Our analysis

This combination is a good deal to help insure the survival of both Sears and Kmart in the short run, but...it flies in the face of how retailing is unfolding. Retail is focus, focus, focus. Best Buy, Home Depot. Big Boxes Stores. Tons of items, Cheap. Multi line retail is DEAD.

Take Target. Not too long ago Target was Dayton Hudson Corp. which owned multiple retail concepts Marshall Fields, Mervyns in addition to Target. Target sold off each of these retail lines over the last couple of years to focus on the Target concept. Hence the name change from Dayton Hudson to Target. Focus. A niche, something a little snazzier than Wal-Mart.

Then there is Wal-Mart. Wal-Mart is the 900 pound gorilla. Everyone is going to have to carve out a niche around Wal-Mart. No single or combined retailer is strong enough to take them on head to head in the discount arena.

That is the knock on Kmart. They are neither large enough nor savvy enough to take back ground lost to Wal-Mart. Add to that the advantage Wal-Mart has in its information systems. It could take Kmart/Sears combination years and billions of dollars to improve its inventory management systems. They may not have enough time or money.

Are the real estate assets undervalued at Kmart and Sears? Yes, the same is likely true at JC Penny and other retailers as well. Assets on the books at historic cost with years and years of inflation raising the holdings real value. But in order to unlock that value you have to have control of the enterprise. That is something a minority shareholder simply does not have.

In terms of Buy/Sell/Hold on the Kmart/Sears combo do your own due diligence. But if it was me, I would watch the Christmas retail seasons results from Sears and Kmart closely. Their future depends on winning back customers of years past whom they have lost. Can they do it? Their survival depends on it!

Weekly wrap from briefing.com

Weekly Wrap
The rally continued. Big time. After the S&P was down 1 point each of the first three days this week, it rose 10 1/2 points each of Thursday and Friday. That left the S&P with an 18-point gain for the week. This followed a 36-point gain the previous week. The Dow managed enough of a gain to be up on the year, and the Nasdaq was up 2.3% this week.

The rally continued in large part because the fundamentals look increasingly bullish. There wasn't a whole lot of economic and earnings news this week, but previous expectations of a slowdown in each in 2005 are now being questioned. There is room for more bullish expectations to take hold. In addition, the inflation outlook has improved. Oil prices lost another $2 this past week, and there is now talk of a further sustainable decline to the $40 range. The interest rate outlook is of some concern, but there is little room for surprise. That is because higher rates are widely expected through 2005.

In fact, the big event this past week was that the Fed raised the target for the fed funds rate 1/4% to 2%. This is the fourth straight policy meeting that the Fed has raised rates 1/4%. Since the first increase on June 30, however, the 10-year note yield has actually declined from 4.59% to 4.19% as of today. And, the economy has picked up steam since the second quarter. The rate hikes are simply a removal of an extremely stimulative stance, and even a few more increases in short-term rates won't derail the economy. Not surprisingly, the market had little reaction to the rate hike on Tuesday.

The economic calendar this past week was light. On Friday, October retail sales were reported to have increased just 0.2%. But this was due to a drop in auto sales after a big increase in September. Looking at the 1.6% increase in September retail sales in conjunction with the 0.2% October gain, sales are rising at a 10% annual rate. This is also true of total sales excluding the volatile auto component. That figure was up 0.9% in October following a 0.8% gain in September. These data show the consumer is fully active ahead of the upcoming holiday season.

Earnings reports were limited this past week as well. On Tuesday, Cisco reported earnings in line with expectations. Revenue was a bit soft and they suggested demand for the upcoming quarter might be soft. The stock dropped a bit, but by Friday was only off $0.75 for the week. Dell fared better. The stock jumped 8.6% on Friday after its earnings report late Thursday. Dell also reported earnings in line with expectations, but they said that corporate demand was healthy heading into the fourth quarter. The positive reaction to a fairly tame report reflects the underlying bullishness seen this week.

Just about everything was bullish again this week. The economic data was good, earnings were mixed but certainly not bad, and oil prices fell further. The market typically does well in the November-January period, and perhaps traders are anticipating that again this year. In any case, right now the market tone is clearly bullish, as the risks to the market appear to have eased.


Index Change %
DJIA 1.5 %
Nasdaq 2.3 %
S&P 500 1.5 %
Russell 2000 2.9 %

Scammers Beware!

A good article on the most common financial scams, educate yourself!

Beware! Beware!

Stocks End Higher on Falling Oil Prices

S&P sets record high post 9/11 with tonights close.

Look for oil to fall even further in the short term.

Onward and upward!

Word on the Flat Tax from the father of the Flat Tax

Get the skinny on whether or not a flat tax would be "fair".

Fed moves, Fed Funds +.25% to 2.00%

Another 25 basis points to 2.00% for the Fed Funds Rate.

Read the release with your own eyes!

The Fed continues to push short term rates to more normal levels. For the last 24 months the Fed Funds rate has been below the rate of inflation. As of last month inflation was running at 2.50% versus a now 2.00% Fed Funds.

A more "normal" rate for Fed Funds is +1.81% above the rate of inflation (all urban CPI)that implies a "normal" Fed Funds rate of 4.30%!!

Not a prediction on our part, but something to think about!

Cisco Systems 1st-Quarter Earnings Rise

Look out below! CSCO comes in light on revenues.

Shares down in after market trading...

Low-cost coffins hit Costco

I saw this on CNBC some months ago and forgot about it.

Yikes! Scary stuff if you think about it, but then again could I get one for Halloween next year and return it?

Weekly Market Returns...

It was a very, very good week for the market. A number of factors that clouded forecasts for the direction of the economy were cleared out of the way.

First, the election outcome was clear by 10:00am EDT on the 3rd, something many market watchers did not think possible. You cannot discount the positive value of not having the election hung up in the courts.

Second, the employment report was very, very positive. Forget the effect of the hurricanes, the biggest thing you need to know about the employment report is that it is subject to large revisions at turning points. The revisions for the last two months were positive. The trend is higher.

For the week the Dow Jones powered ahead 3.6%, the NASDAQ and the S&P each advanced 3.2%.

After the soft patch this summer most market participants have been looking for data that indicates the trajectory of the economy is still upward, and it is!

Chart of the month...

One thing Wall Street strategists follow closely, argue over and hardly ever agree on is the valuation of the market.

In this months chart of the month we look at the Market Cap/GDP Ratio in the US adjusted for inflation.

At the peak of the bubble valuations were twice the average of this ratio over time. Today the market is right on top of the long run average.

So, based on this number alone we can infer that stocks are nether cheap nor are they expensive.

Take a look!

Wow! What an employment report!

The employment situation report was this morning.

The estimated pickup in jobs was 160,000 the actual number was 337,000. The talking heads are trying to spin this number as not quite as positive as it looks due to a jump in construction spending...


...but the last three months were all revised higher!


Onward and upward!

Site of the Month...

This month's site of the month is Wikipedia.

Wikipedia is a multilingual "copyleft" encyclopedia designed to be read and edited by anyone. It is collaboratively edited and maintained by thousands of users via wiki software, and is hosted and supported by the non-profit Wikimedia Foundation. In addition to typical encyclopedia entries, Wikipedia includes information more often associated with almanacs, gazetteers, and specialist magazines; and coverage of current events.

For fast fact finding on current events Wikipedia is industrial strength. If you have a list of reference bookmark on your browser you would be well advised to add this link!

Enjoy!

Monster Employment Index Shows Online Job Demand Holding Strong; October Results Essentially Unchanged From September Peak Level

- Most Industries, Occupations and Regions Up Sharply Compared to October 2003 -


- Wholesale Trade, Construction and Utilities Among Industries Showing Greatest Increase in Online Job Availability -


- Spike in Online Job Demand within Wholesale Trade Industry a Likely Precursor to Approaching Holiday Shopping Season -



NEW YORK, November 4, 2004 - Demand for workers and related online job recruitment activity across the United States remained strong in October, as the Monster Employment Index held steady, reporting relatively flat online job demand compared with September results, when the Index reached its highest level since its inception.


With a year of data collected, and in keeping with best practices, Monster Worldwide has officially re-scaled the Index using the first twelve months (from October 2003 to September 2004) as a new baseline. The newly re-scaled monthly historical numbers continue to accurately reflect the up and down movements over the past year, and moving forward, will serve as the Index's basis of measurement.


According to the newly re-scaled baseline, the Monster Employment Index measured 114 in October, maintaining the same record level established in September. The Index's October 2004 level stands in stark contrast to October 2003 when Index results stood at 93. Since that time, nearly every industry, occupation and region has shown steady year-over-year and stepwise growth that is indicative of sustained labor market expansion. Re-scaled results for the Monster Employment Index's first ten months of 2004 are as follows:


Oct. 04 Sept. 04 Aug. 04 Jul. 04 Jun. 04 May 04 Apr. 04 Mar. 04 Feb. 04 Jan. 04 Oct. 03
114 114 112 107 108 105 103 97 95 93 93


Previous Baseline
Oct. 04 Sept. 04 Aug. 04 Jul. 04 Jun. 04 May 04 Apr. 04 Mar. 04 Feb. 04 Jan. 04 Oct. 03
151 151 145 134 136 128 125 109 107 102 102


During the month of October, more than half of the 20 industries tracked by the Index saw increases of varying degrees in online job demand. Moreover, every industry except management of companies & enterprises was higher year-over-year. In October, wholesale trade, construction, utilities and accommodation & food services were among the industries that saw the greatest one-month increases.


The rise in demand within the wholesale trade industry could likely be a precursor to preparations for the holiday shopping season. Moreover, the rising demand in accommodation & food services is consistent with the broader recovery that the lodging industry has experienced in 2004 and projections that U.S. travel and tourism will continue to improve in 2005.


Manufacturing, retail trade and real estate also registered minor increases in October, while finance & insurance; information; professional services and administrative support remained essentially flat. The only industries that experienced slight declines during October were mining and public administration.


Online demand for workers increased slightly in 11 of 23 occupational categories in October. Business & financial operations registered its tenth month of sequential growth while the computer & mathematical occupations category, which captures the greatest number of IT-related positions, also continued a four-month upward trend. Management; architecture & engineering; and production all increased for the third consecutive month. Nearly every occupational category was up from a year ago.


The personal care & service, protective service and healthcare support categories (not healthcare practitioners) all saw sharp decreases during the month. Demand for sales occupations dipped slightly following a three-month growth trend.


"With twelve months of data collected and a new baseline of measurement established, the Monster Employment Index has reached a new level of maturity, enabling us for the first time to compare year-over-year growth and historical trends," said Jeff Taylor, Founder and Chief Monster. "As there was generally little significant up or down movement in most industries, occupations and regions, the Index was relatively flat in October but still remained at its peak. Overall, this demonstrates a continued strength in U.S. online job demand. You only have to look at where the Index is today versus a year ago to see clear evidence of a slow but steady expansion in the U.S. job market."


Online Job Demand Eases Back Slightly in Most U.S. Regions in October
Online job demand for workers eased back slightly in 8 out of the 9 U.S. Census Bureau regions in October. Nevertheless, every region remained close to its highest level based on a year-over-year comparison. The South Atlantic region, which includes Washington, D.C., Virginia, West Virginia, Delaware, Maryland, North Carolina, South Carolina, Georgia and Florida, was the only region that remained flat for the month, thanks to strong online job demand in Washington, D.C. and Florida.

Only 9 U.S. states registered increases during the month of October, with 7 of them notching two consecutive months of growth. These included Arizona, Florida, Kansas, Kentucky, Massachusetts, North Dakota and the District of Columbia. The remaining U.S. states either declined slightly or were flat. The District of Columbia and all 50 states, except Louisiana, are up year over year.


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


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


California continued to offer the most online job availability of any state during the month of October based on sheer quantity alone.


Top Five Industries Looking for Employees in October
Industries showing the greatest increase in job availability in October included:
Industries Oct. 04 Sept. 04 Aug. 04 Jul. 04 Jun. 04 Oct. 03
Wholesale Trade 118 111 113 109 107 89
Construction 113 107 111 109 106 100
Utilities 107 101 112 108 106 84
Accommodation & Food Services 112 108 109 107 111 93
Agriculture, Forestry, Fishing & Hunting 114 109 121 110 106 90



Most Wanted Occupational Experience
Occupational categories showing the largest increase in online job demand in October included:


Occupations Oct. 04 Sept. 04 Aug. 04 Jul. 04 Jun. 04 Oct. 03
Architecture & Engineering 120 115 112 103 110 87
Military Specific 113 110 110 108 107 85
Business & Financial Operations 118 116 110 108 106 90
Computer & Mathematical 120 118 112 99 98 83
Community & Social Services 116 114 111 103 104 93





Nationwide Online Job Demand Generally Flat
The following U.S. Census Bureau regions are listed in order of smallest month-to-month decrease:


U.S. Census Bureau Regions Oct. 04 Sept. 04 Aug. 04 Jul. 04 Jun. 04 Oct. 03
South Atlantic 114 114 112 109 108 88
New England 114 115 113 108 108 89
East South Central 112 113 111 108 109 91
East North Central 114 116 112 106 108 90
West North Central 115 117 114 107 106 92
Mountain 115 117 113 108 108 90
Pacific 114 116 111 108 109 92
Mid-Atlantic 113 117 112 107 107 92
West South Central 113 117 111 103 106 88



The Monster Employment Index is a broad and comprehensive monthly analysis of U.S. online job demand 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. The Monster Employment Index reports results on a monthly basis.


All of the data and findings in the Monster Employment Index have been validated for their 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. Data for the month of November will be released on December 2, 2004.

Watching Oil

Supplies are coming up. Oil prices are key for US economic performance in the coming months.

When prices moderate confidence, GDP growth and stocks will continue an upward trajectory.

The effect of uncertainty

Although the marketplace generally appreciates a Republican administration due to its typically pro-business stance, it is important to not under-estimate the "uncertainty" factor. Above all, the market does not like being unable to forecast and anticipate, and knowing who will be President for the next four years goes a long way to ameliorating that uncertainty. That is what we're seeing this morning, and the bounce could carry us to the end of the year. That said, over the coming months it will be just as important to monitor the price of oil, the number of jobs being created, and the President's willingness to tackle some issues that may have a significant effect on the long-term economic well-being of the country. So, although an increase in the markets was anticipated (regardless of who won), it remains to be seen what the lasting effects for the marketplace will be for the second Bush II Presidency.

I was wrong about Pennsylvania

I said I would admit it and even though it is dark thirty (early AM) I'll get it out of the way.

I thought PA would be indicative of the ground game in the election.

WRONG! Look at CNN's PA map, once again Philly trumps the entire state.

Sheesh!

News from Ohio The Columbus Dispatch - Election

Status of Ohio, by my numbers Kerry would have to carry the provisional ballots 9 to 1 in order to be declared the winner in Ohio.

Possible? Perhaps. Likely. No.

BBC Q&A: What if there is no clear winner?

Solid guide to potential problems and possible outcomes.

Check it out!

Election Day Resources

Forget the polls and get to the polls.

If local polling action is any indication turnout is going to be at new record levels. That indicates that all the polls within the margin of error are incorrect in their predictions.

Folks it is raining sheets here, you have to park 100+ yards from the polls because of the cars and people are LINED UP. Don't wait until the last minute, GET OUT THERE AND VOTE!

Here are some election eve resources:


Poll Closing Guide


Hour By Hour Election Viewing Guide

Final Post Before We Go To The Polls...

In case you have been on another planet, here in the good old USA we go to the polls tomorrow to vote.

The race looks tight, the polls show a virtual dead heat. Here is the inside skinny, the turnout models all these polls are based on are BOGUS.

If we are looking at close to 60% turnout, not seen since 1968 all of these polls could be wrong. All of the polls are based on turnout from the last couple of voting cycles.

Bottom line, it is going to be whoever's base shows up. Get out there and vote so that we decide and not some team of high priced lawyers.

So as they say in Chicago, vote early and vote often!

Crude Oil Futures Falling

What Might a Hung Election Mean for the Economy?

from dismal.com (subscription required)

With election polls still too close to call, a replay of 2000 is not altogether unlikely. How might such an outcome influence economic activity? Guidance from the aftermath of the 2000 election suggests that a contested result would be negative for economic activity. Key economic indicators weakened immediately after the election. For example, retail sales fell 0.4% in November following a 0.1% increase in October; payroll growth decelerated to 94,000 in November from 137,000 in October; and the Conference Board’s consumer confidence index edged down to 133.5 in November from 135.2 in October.

Of course, the economy was heading toward a cyclical downturn at that time. Hence, it would be misleading to attribute the subsequent weakness entirely to the outcome, or lack thereof, of the November 2000 election. Nevertheless, the abrupt turn in the data suggests that the chaos following the election did have some influence. We believe that the impact this year could be larger, if only because confidence is already faltering.

Uncertainty about the election result would impinge on economic activity mainly by way of consumer, business and investor confidence. But all three have been declining recently as concerns center on high energy prices and tepid payroll growth. The consumer, in particular, faces a long-list of headwinds: high energy prices, fading tax cuts, lower scope for home equity withdrawal and higher interest rate. Another hit to confidence would be most unwelcome and may have a discernible impact on consumer spending.

All that said, we view a hung election as a low probability event: a confluence of factors would have to come into play for a repeat of 2000.

Fact of the week...

In the event of a tie in the electoral college in the US Presidential election the US House of Representatives elects the president by a simple majority of the states and the Senate elects the President.

A nightmare scenario in a politically charged environment? Yes. But to us it is further proof that our founders really, really though things through when they formed the US of A.

Will we get a tie? I would hope not, but if we do we have solid rules in place that we have used in the past.