Filed under: Good news, India, China, Economic data

The U.S.’s current account deficit decreased to $178.5 billion in Q3 2007, down from a revised $188.9 billion in Q2 2007, the U.S. Commerce Department announced Monday, as exports of capital goods and motor vehicles increased.

Economists had expected [subscription required] a Q3 2007 account deficit of about $184 billion. The Q3 2007 current account stat represents the smallest account deficit as a percent of the U.S. economy since Q1 2004.

The Q3 2007 account deficit was roughly 5.1% of U.S. GDP using a closing Sept. 2007 GDP of $13.967 trillion. That’s down from 5.5% of GDP using a closing June 2007 GDP of $13.769 trillion.

Small victory

In Q3 2007, imports of goods rose to $497.6 billion from $483.6 billion in Q2 2007, but exports of goods rose even more, to $297.9 billion from $279.3 million. Meanwhile, the trade of services rose to a surplus of $26.5 billion from $25.8 billion.

Continue reading U.S. Q3 current account deficit declines — better, but still not good

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Filed under: Forecasts, Bad news, Economic data, Housing

The New York Times asked six economists whether the U.S. is in a recession. Their conclusion seems to be that they don’t know whether we’re in a recession but that the housing market slowdown and the related debt bomb could lead us there.

I’m not an economist but I played one in 2004. That’s when I worked with the John Kerry campaign and had a chance to meet one of the economists — Jason Furman — whose op-ed appeared Sunday. I also appeared opposite another of the contributing economists, Kevin Hassett, in an interview on Wall $treet Week with Fortune the day after the Democratic National Convention.

I don’t know what 2008 will bring. But I think it depends on two factors: whether the Bush administration decides to take any radical policy moves or just twiddles its thumbs until its term expires, and how deep and wide the global impact of the housing market slump and the related credit market freeze will be. To address the analysis behind this forecast, here are my thoughts on five key questions:

Continue reading Tighten your belt for a rocky 2008

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Filed under: Products and services, Apple Inc (AAPL), Marketing and advertising, Research in Motion (RIMM)

When Research In Motion (NASDAQ: RIMM) hit the scene a few years ago, not that many people were interested in accessing work and personal email on the go from a handheld device. But, the company changed the paradigm of wireless email by allowing customers to be instantly notified of incoming email messages regardless of where they were: on the subway, on vacation (ehh), or even in a meeting.

Since then, companies have realized that when it comes to wireless communications, one of the killer apps (if not the killer app) may not be voice calls, but email wireless access without the need to lug a laptop everywhere. RIM has thus captured the hearts and minds of millions of customers with its BlackBerry products (often called “CrackBerry” since they cause portable email addiction). It has released a multitude of cellphone/email handsets for every major U.S. wireless carrier recently, and has even shifted away from just business customers to consumer-targeted devices with cameras and MP3 playing capability onboard. What can RIM do for a second act? Try to sell products directly to consumers instead of relying entirely on wireless company sales?

RIM has recently partnered with U.S. cellphone retail outlet Wireless Giant to open a small store in a Detroit suburb in what could be the start to what Apple Inc. (NASDAQ: AAPL) has done, and done well: sell products directly from retail stores. However, signaling to wireless companies that you’re willing to bypass them and sell directly to consumers can sometimes inflame executive egos. Wireless carriers depend on those long-term contracts to actually make money, you see. But, in this case, RIM will be selling its phones — many models, to be exact — to work with networks such as AT&T, Sprint, T-Mobile and Verizon Wireless. That ought to cause any apprehension to disperse from the wireless telecom companies. At least, for now.

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Filed under: Indices, Market matters, Economic data, S and P 500, Federal Reserve

On October 9, the S&P 500 index rose 12.57 points to close at a record high of 1565.15. The move was attributed to the release of minutes from the Federal Reserve’s September 18 meeting that indicated the central bank wasn’t seeing any broad-based weakness in the U.S. economy.

But based on the performance of the overall market and various sectors since then, it seems that investors didn’t necessarily buy into what policymakers said.

Over the course of 10 weeks, the benchmark measure has fallen by 6.9%, hurt by growing turbulence in credit markets and heightened fears over the health of the consumer and the state of the economy.

At the same time, some of the best performing groups have been those that often hold their own when investors are worried about the future. From the early October market peak, both the consumer staples and the utility sectors have gained 3.9%.

The big losers over the span: financials and consumer discretionary shares, which have lost 18.6% and 12.6%, respectively.

While it is still possible that the Fed’s relatively sanguine views about the economy could prove correct, recent developments serve as a useful reminder when it comes to gauging which way share prices are headed, don’t believe everything you hear!

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle.

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Filed under: Canada, Housing

This was me yesterday, shoveling away the front of our house. Yes, I know this was not unique to Toronto and that the cold weather didn’t just hit Canada but the U.S. as well. Still, if any of you — Canadian or American — had the choice, would you keep on living in this kind of weather? If people had the choice, wouldn’t there be a natural migration during this time to a warmer climate? Doesn’t the word snowbird ring a bell?

Well, the dire housing situation in the U.S. seems to have given many Canadians an opportunity they may have never thought possible before. As this Associated Press article tells it, Canadians are now looking at cheap homes in the U.S.

With the Canadian dollar rising vis-a-vis the U.S. dollar and the housing market in the U.S. hitting new lows daily, Canadians are looking for deals. Specifically, they are looking to buy condos in the sunbelt states for investment and convenience. Enjoying better economic conditions than currently in the U.S., Canadians (especially those in the chilly province of Alberta where the oil business has been booming) are looking for opportunities from Las Vegas and Arizona all the way to Florida.

However, if you were hoping this would help alleviate some of the excess supply in the U.S. housing market, the demand from Canadians is still far too small compared to the sheer size of the U.S. housing glut.

While hubby and I have in the past entertained the thought of renting a winter condo in Florida, but could never afford it, the possibilities presenting themselves now may prove to favor other options. Seriously, given the choice, who wouldn’t choose this? If I could, I would!

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Filed under: Management, Google (GOOG), Microsoft (MSFT), Apple Inc (AAPL), Employees

When Google (NASDAQ: GOOG) announced in August that CFO George Reyes would be retiring from the company, one would have thought potential CFO candidates would have been sending in resumes to Google’s headhunters within minutes. After all, Google enjoys about as much brand cachet as Apple (NASDAQ: AAPL) in the tech world, which is no small feat. Also, the company is leading the internet search market by a long shot and is making Microsoft (NASDAQ: MSFT) quake in its boots for the first time in a long time. Add that with one of the most enviable corporate cultures in the world and you’d think anyone in tech would want to work there.

So, why doesn’t the search leader have any replacement for the CFO? No CFO successors have been identified and Reyes is tilling on until one is found. With its stock hovering around the $700 recently, do potential CFO candidates not see the stock option form of compensation as very valuable or something? Is is because Google’s CFO most decidedly plays second fiddle to the triumvirate of founders Larry Page and Sergey Brin along with CEO Eric Schmidt? Both of the above are probably true along with some other reasons. Reyes sure does not come off as a right-hand man to Schmidt, which is typically the very visible role of any Fortune 500 CFO. Not at Google, though.

Is Google just taking a little longer than normal to interview CFO candidates and make the best decision? Possibly. A major CFO decision like the one Google faces doesn’t take a month or two. With the company’s burgeoning markets in several internet areas (as well as TV, radio and other markets), the incoming CFO has quite a task to perform, as Reyes knows. Add in Google’s very non-traditional culture where risk-taking is almost preferred over a scripted financial decision-making process, and most bean counter lifers probably see the opportunity as turn-off. Anyone know a CPA who isn’t anal about number tracking and decisions based on spreadsheets? There you have it. It may work for computer programmers, but not for accountants.

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Filed under: International markets, Forecasts, Press releases, Middle East, Economic data, Commodities, Oil, Federal Reserve

Earlier today oil prices had traded higher, as traders were betting that this past weekend’s wintry weather would put a crimp in heating oil supplies. Since then, though, oil prices since turned to the downside, dipping under the psychological $90 barrier.

The main reason why oil prices have been falling today? You guessed it … concerns over the health of the overall economy. Today’s concerns are a runoff of last Friday’s CPI report, which showed that inflation during the month of November was the highest that the economy had seen in the past two years. This sent the market tumbling to close out last week, and the bears have only continued to push down the market again today.

There has been a growing fear over the past year that the U.S. economy was moving full steam ahead towards a recession. The one thing that has provided some hope was the anticipation that the Federal Reserve would be willing to continue to slash interest rates in order to fuel economic activity and fight off any looming recession.

Continue reading Market worries push oil prices under $90

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Filed under: Bad news, Brazil, Russia, Archer-Daniels-Midland (ADM), Kellogg Co (K), General Mills (GIS), Canada, Commodities

Wheat prices pushed above $10 per bushel Monday, as dry weather threatened crops in Argentina, adding to concerns regarding a potential wheat shortage, Bloomberg News reported Monday.

The bullish move in wheat sent other grains and oilseeds higher. Argentina, now experiencing summer, is a key supply of wheat for bread, pasta and livestock feed.

The price of wheat has more than doubled in the past year, with wheat climbing another 30 cents to $10.03 per bushel Monday morning. Soybeans gained 17 cents to $11.93 per bushel. Corn rose 5 cents to $4.43 per bushel.

Global growth

Economist Steve Affinito told BloggingStocks Monday that wheat’s climb is part of a global trend of higher commodity prices, driven by emerging market economic growth.

Continue reading Wheat tops $10 per bushel — could cereal become too expensive?

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Filed under: Bad news, Amgen Inc (AMGN), Options, Technical Analysis

Amgen Inc. (NASDAQ: AMGN) reported Friday after market close positive initial results from its tests of denosumab, a drug designed to increase bone density in breast cancer patients. AMGN stock is down this morning, however, as analysts await larger trials of the drug as the company has come under fire due to safety, reimbursement and label concerns about its anemia drug franchise. There are some indications of a higher rate of infections with AMGN’s drug, but due to the relatively small sample size it would be tough to draw conclusions. If you think this stock won’t be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on AMGN.

After hitting a one-year high of $76.95 in January, the stock hit a one-year low of $48.25 last week, which it has broken this morning. This morning, AMGN opened at $48.02. So far today the stock has hit a low of $47.67 and a high of $48.13. As of 11:30, AMGN is trading at $47.92, down $0.48 (-1.0%). The chart for AMGN looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider an April bear-call credit spread above the $60 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in four months as long as AMGN is below $60 at April expiration. Amgen would have to rise by more than 25% before we would start to lose money.

Continue reading Amgen (AMGN) drug trials cause worry

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Filed under: Forecasts, General Motors (GM), Toyota Motor Corp. (TM)

Toyota Motor Corp. (NYSE: TM) plans to increase global vehicle production to nearly 10 million vehicles in 2008, a total that would surpass rival General Motors (NYSE: GM), Agence France-Presse reported Monday, citing Nikkei, the Japanese news service.

Toyota continues to expand production, while GM continues to `right-size,’ closing factories and laying-off workers, in an effort to stem the tide of losses. GM’s losses reached the $2 billion mark in 2006. However, earlier this year, GM announced it will increase 2008 production by 1% to 9.26 million vehicles.

Toyota’s shares rose four cents to $106.35, while General Motors gained 20 cents to $26.72 in mid-day Monday trading.

Stock Analysis: If Toyota surpasses General Motors in 2008 global output, it’s a metric that GM will have to concede and overlook as it concentrates on mission-critical metrics. GM must keep its eye on lowering legacy costs, increasing productivity and efficiency, maintaining quality controls, and introducing innovative vehicles, all amid a less-favorable auto product cycle — a large task, without question.

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