Economy Blog

This week, Barron’s criticized the inventory levels at Jos. A. Bank (JOSB):

Chief Executive Robert N. Wildrick did a great job of shaking up the century-old retailer after he took charge in 1999. Annual sales have since tripled, to $604 million, while per-share earnings have risen eightfold. The company expects to report about $2.67 a share when it finishes accounting for the fiscal year ended January 2008 (called the 2007 fiscal year, by retailing convention). While adding 50 new stores a year, the chain grew revenues at existing stores. In all but 11 of the past 77 months, the retailer reported higher comparable-store sales — a measure that compares each store’s sales with its sales in the prior-year period. Frequent promotions drive the sales. These discounting binges make monthly comps erratic, varying by an average of seven percentage points around the median increase of 6%.

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From the FT:

Investors worldwide pulled close to $100bn (€63.3bn) out of equity funds in the first three months of this year – a record shift that accelerates a longer-term trend away from US and western European stock markets.

Equity funds suffered outflows of $98bn in the quarter ending March 28, according to Emerging Portfolio Fund Research, which tracks retail and institutional flows. The funds had inflows of $19bn during the same period last year and inflows of $49bn in the same period for 2006.
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A key question in the liability of brokerages in the failure of the auctions for auction rate securities is what customers were told about the risks of the products they bought. The brokerages now claim they properly warned customers about the products, and that they never considered them cash or cash equivalent. Most individual brokers we’ve spoken to off the record say that this is very inaccurate, and every retail customer we’ve spoken to (including some who are friends and family of DealBreaker editors) say they bought these securities with the understanding that they were “highly liquid” or “cash equivalents.”
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It’s often been said that we’re in the worst financial crisis since the 1930s. So perhaps its no surprise that we seem on the verge of the biggest financial regulatory overhaul since the Great Depression. But we certainly didn’t expect anything this sweeping to come out of the Bush administration. We clearly underestimated these guys. Talk about shock and awe.

But we’re getting ahead of ourselves. Over the weekend Treasury Secretary Hank Paulson released the outline of his controversial and sweeping a plan to overhaul financial regulation. He would eliminate thed SEC, FDIC, CFTC, OTS and OCC. And after dumping out this bowl of alphabet soup, he would fill it right back up again with the Prudential Financial Regulatory Agency , the Conduct of Business Regulatory Agency, the Federal Insurance Guarantee Corporation and the Corporate Finance Regulator. It’s going to take some time to digest these changes.
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MondayEconomic Chicago PMI (46.7)Earnings Pacific Ethanol (PEIX), Shaw Group (SGR), HB Fuller (FUL), Rismetrics (RMG)TuesdayEconomic Auto / Truck (5.1M, 6.6M), Construction (-.9%), ISM Index (48.2)Earnings Qiao Xing (QXM)WednesdayEconomic Weekly Crude, ADP (-23K), Factory O’s (.7%)Earnings Best Buy (BBY), CarMax (KMX), Lulumon (LULU), Monsanto (MON), Micron (MU), Research In Motion (RIMM), Ruby Tuesday (RT)…
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Lehman Sues Japan Firm, Claiming $350 Million Fraud (WSJ)
There’s a million ways to lose money. Here’s one of the more interesting ones we’ve been paying attention to. Lehman claims that employees of a Japanese firm fraudulently bilked Lehman out of $350 million. Their method of action: using official company documentation to suggest that it was behind a hospital refurbishment funding project. Turns out the Japanese company Marubeni Corp had no idea about it. So now Lehman is suing for its cash back. Whether they get it back or not, you have to figure that Lehman’s counterparty (so to speak) in this fraud, must’ve had a damn good idea about how this whole process works to pull something like this off.

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Dad and I went down to the Nationals season opener last night at their brand-new ballpark. The park gets an A+ from me. They did a really good job, and the food is light years better than RFK.

Most importantly, the Nats won a thriller with a two-out bottom-of-the-ninth walk-off home run from Ryan Zimmerman. The place went absolutely bonkers. Hey, we’re in first!

Here’s a brief photo montage starting with Pop:

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Production of capital goods is supporting the recovery.…
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Consumer prices in New Europe continue to grow up. Like Baltic states where for all three countries inflation is above 10 %. The highest rate is in Latvia with 16,5% followed by Estonia (11,5%) and Lithuania (10,9%). EU newcomers Bulgaria and Romania don’t skew with 12,2% respectively 8%.Also other economies of Central Europe (Czech Republic, Hungary, Poland) are well above targets. Central banks will be forced again to tighten monetary policy in coming month….
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U.S. business confidence slipped to a new record low during the last week of March, consistent with a contracting economy. Business assessments of present conditions are notably dour. Expectations regarding the six-month outlook continue to suggest the economy is going to struggle through at least the summer. The sentiment of those working in the financial services industry remains at an all-time low, reflecting the ongoing turmoil in the financial system. Confidence remains soft in Europe and Canada, and strongest in Asia. Pricing pressures remain subdued despite $100-plus oil.…
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The Hungarian Central Bank surprisingly raised its key policy rate by 50 basis points to 8.0% at the conclusion of today?s monetary policy meeting. The Bloomberg News consensus forecast was for a 25-basis point hike. Consumer price inflation is far above the target and the Hungarian forint is weakening. Both factors are demanding higher rates. But economic growth is very weak and higher interest rates will delay the economic recovery.…
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This week, Barron’s criticized the inventory levels at Jos. A. Bank (JOSB):

Chief Executive Robert N. Wildrick did a great job of shaking up the century-old retailer after he took charge in 1999. Annual sales have since tripled, to $604 million, while per-share earnings have risen eightfold. The company expects to report about $2.67 a share when it finishes accounting for the fiscal year ended January 2008 (called the 2007 fiscal year, by retailing convention). While adding 50 new stores a year, the chain grew revenues at existing stores. In all but 11 of the past 77 months, the retailer reported higher comparable-store sales — a measure that compares each store’s sales with its sales in the prior-year period. Frequent promotions drive the sales. These discounting binges make monthly comps erratic, varying by an average of seven percentage points around the median increase of 6%.

B…
Fuente Original

From the FT:

Investors worldwide pulled close to $100bn (€63.3bn) out of equity funds in the first three months of this year – a record shift that accelerates a longer-term trend away from US and western European stock markets.

Equity funds suffered outflows of $98bn in the quarter ending March 28, according to Emerging Portfolio Fund Research, which tracks retail and institutional flows. The funds had inflows of $19bn during the same period last year and inflows of $49bn in the same period for 2006.
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Charles Biderman’s reliance on TrimTabs liquidity theory for U.S. stock market forecasting results in an accuracy rate a little below average. His forecast sample size is modest, as is our confidence in this conclusion….
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When Republicans regulate, it’s a solemn occasion. (Manuel Balce Ceneta/AP)
Today the White House announces what is being called a comprehensive overhaul of financial regulation in the United States. It is a pre-emptive strike by Hank Paulson, the Treasury secretary, against the many voices clamoring for new rules that would prevent crises like the subprime [...]…
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Consumer confidence in the U.K. continued to deteriorate in March. The GfK NOP consumer confidence barometer fell to -19 in March, from -17 in February. This was in line with our forecast and marked the seventh month of straight decline. The U.K.’s slowing economy has made consumers nervous about their own personal finances.…
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Business and consumer sentiment declined in the euro zone in March. The European Commission’s economic sentiment indicator fell to 99.6 in March, down from 100.2 in February. Meanwhile, the business climate indicator rebounded, rising to 0.80 in March, from 0.71 in February, and so ended its four-month declining streak. Higher interest rates and the appreciated euro are key drags on the economy.…
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(March 30, 2008 09:57 PM, by Bryan Caplan) A while back on blogged on the fascinating fact that the religious gender gap is bigger in more advanced societies…….
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MondayEconomic Chicago PMI (46.7)Earnings Pacific Ethanol (PEIX), Shaw Group (SGR), HB Fuller (FUL), Rismetrics (RMG)TuesdayEconomic Auto / Truck (5.1M, 6.6M), Construction (-.9%), ISM Index (48.2)Earnings Qiao Xing (QXM)WednesdayEconomic Weekly Crude, ADP (-23K), Factory O’s (.7%)Earnings Best Buy (BBY), CarMax (KMX), Lulumon (LULU), Monsanto (MON), Micron (MU), Research In Motion (RIMM), Ruby Tuesday (RT)…
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(March 30, 2008 09:26 PM, by Bryan Caplan) Remember Joel Waldfogel’s The Tyranny of the Market? Waldfogel’s thesis, as he explains in Slate: "For small groups with preferences……
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