It’s a snowstorm in Cleveland this morning.  The amount of precipitation we’ve seen in the last 9-10 months is just absolutely ridiculous.  It’s almost as if Mother Nature is punishing Cleveland for Jimmy Dimora.

I finished reading “The Hunger Games”.  Outstanding book.  I’m moving right on to the second book in the series.

And I’m totally confused (and was unaware until mentioning it in the Dish last week) why this book and series is being pigeon-holed into the teen/Twilight/Harry Potter genre.  The concept of the book (which is brilliant) is a battle to the death between 24 people in a giant outdoor battleground arena.  Where was this kind of entertainment when I was 13?  I was collecting baseball cards and playing Super Mario Brothers and The Legend of Zelda.

The movie comes out on March 13 and the trailers look awesome.

The Indians released their 2012 schedule yesterday.  They open AT HOME this year on Thursday April 5 against the Toronto Blue Jays at 3:05 PM.  Their first six games are at home vs. the Jays and White Sox.

The early season schedule looks easy.  Hopefully the Tribe can get off to another good start.  Their first 18 games are against teams that had losing records last year and 32 of their first 52 games are at home, which includes three interleague home games against old friend Ozzie Guillen and the revamped Miami Marlins from May 18-20.  In other interleague series, the Pirates (includes home game on Fathers Day) and Reds come to town in June, and the Tribe plays at St. Louis, Cincinnati and Houston.

The schedule also features home weekend sets against the Red Sox and Bankees in August.  24 of our final 30 games will be against AL Central foes, including six straight home games to end the season against the Royals and the White Sox.

I was talking about the Indians schedule with my six-year old son last night.  Asked him what games he wanted to go see. Immediately he says “I want to see the Indians beat the Yankees.”  “Goooooood boy”, I said.  Then he asks me “Is Justin Masterson’s name really Justin Masterson?”

Quote of the Day …

“Sometimes the road less traveled is less traveled for a reason.” ~ Jerry Seinfeld

Market …

Following up Wednesday’s Fed announcement, we had a mixed bag of economic releases yesterday.  Durable goods orders came in stronger than expected.  First time unemployment claims came in right at expectations.  And new home sales in December came in below projections, putting a lid on the slowest year for new home construction since the government started tracking that data.

With some investors taking profits after a run up in the stock market, and with the new home sale data putting a drag on things, the Dow ended the day slightly negative.  Mortgage bonds had another positive day.  After falling to historically low levels last week, we had seen a little run up in rates late last week and this week.

We could see another down day for stocks today after the release of advanced 4Q GDP this morning, which showed that the economy grew 2.8% in the 4Q of 2011 as compared to the 3.1% growth total economists were expecting.

We also get a consumer confidence reading at 10 AM.

News …

~ US GDP Grows 2.8% in the Fourth Quarter

http://www.marketwatch.com/story/us-gdp-grows-28-in-fourth-quarter-2012-01-27

~ Apple Overtakes Samsung as World Smartphone King

http://www.marketwatch.com/story/apple-overtakes-samsung-as-world-smartphone-king-2012-01-26-2357190?dist=beforebell

~ Starbucks Sales Strong, Stock at Record Highs

http://www.marketwatch.com/story/starbucks-rides-strength-of-us-consumers-2012-01-26

~ Ford Earns Huge Profit in 4Q

http://finance.yahoo.com/news/ford-earns-13-62b-profit-123237884.html

~ Romney Assails Gingrich in Florida Debate

http://www.bloomberg.com/news/2012-01-27/romney-demands-gingrich-apology-on-immigration-remarks-in-florida-debate.html

~ Geithner Urges Bigger Financial Firewall in Europe

http://www.marketwatch.com/story/geithner-urges-bigger-financial-firewall-in-europe-2012-01-27?dist=beforebell

The Plain Dealer has removed Tony Grossi from the Browns beat.  The move comes after Grossi tweeted that Browns owner Randy Lerner was a “pathetic figure, the most irrelevant billionaire in the world.”  Grossi immediately realized what he had done and deleted the tweet, but not before many people had copied and pasted it or re-tweeted it to others.

Grossi, of course, was spot-on in his analysis of Lerner.  He’s a silver spoon in his mouth buffoon that has never had to achieve anything on his own in his life.  That has been hoodwinked by one regime after the next.  The Browns have been a league laughing stock since returning to the league in 1999, and it all starts at the top.

Like most of the Plain Dealer’s sports writers, Grossi has been outpaced over the years by smarter, wittier, harder working writers on the web – most of whom have other jobs.  He’s far from popular in Cleveland, especially since he has taken to Twitter, where he comes off as surly and angry.  Me personally?  I still read Grossi.  He knows football, even if he has gotten lazy as a columnist. 

Grossi came out and publicly apologized for what he called “an accidental tweet”.  However, we’re still waiting on an apology from the Plain Dealer for employing Bud Shaw and Mary Schmitt Boyer.

The new aquarium opened up downtown last weekend.  I’m anxious to see it.

But the prices totally caught me off guard.  $22 for an adult and $16 for a kid?  Is Sinatra performing in there?  For comparisons sake, adult admission to the Great Lakes Science Center is $14.  And the Rock ‘n Roll Hall of Fame is the same price, $22.

Apple is proof that American consumers are still willing to pay up for a great product.  But if your product is not GREAT, people are much more particular in how they’re spending their disposable income.

I hope the Aquarium is cool.  Cleveland needs more attractions like it.

And finally, Bruce Springsteen is coming back to Cleveland.  When he came back in ’09, he played for three hours, no intermission.  As someone that has seen Bruce 4-5 times, dating back to the mid 90’s – it was the best Springsteen show I’ve seen. 

Tickets for the concert go on sale at 10 AM this Saturday.  Prices are listed at $42.50, $62.50 and $98.

Quote of the Day …

“Lead me, follow me, or get out of my way.” ~ General George Patton

Market …

It was another positive day for stocks yesterday after Apple’s earnings release Tuesday night and then the release of the Fed statement yesterday afternoon.  The Dow ended the day up 81 points and finished the session at 12,756 … its highest close in 8 months.  Investors in US stocks are less concerned with Europe, encouraged by the improving domestic economic data, have been impressed with corporate earnings reports … and it’s leading to a run up in stocks.

Regarding the Fed, as expected, they pushed back the date for any likely increase in its benchmark interest rate by at least a year and a half, until late 2014 at the earliest.  And held off on any additional bond buying for now.  As the Fed gauges the mortgage rate climate and the possibility of a more expanded refinance program, we could see another round of bond buying announced at their next meeting in March.

The Fed also reduced its outlook for growth this year but is slightly more optimistic about the unemployment rate. It expects the economy to grow between 2.2% and 2.7% in 2012.  That’s down from its November’s forecast of between 2.5-2.9%.  But it sees unemployment falling as low as 8.2% this year, better than its earlier forecast of 8.5%.  The unemployment rate in Dec was 8.5%.

The forecast they released also revealed that some Fed members wanted to extend the period of record-low interest rates beyond late 2014.  Additionally, for the first time, the Fed publicly stated their target for inflation in the US, which they said they’d like to see stay at 2%.

This morning, we’ve already seen a couple big economic releases come out as well.  Weekly first time jobless claims came out at 377,000, which was slightly above projections and 25,000 higher than last week’s much lower than expected #.   The average of four-week claims fell slightly, down 2,500 to 377,500.  The monthly average smoothes out seasonal quirks and is viewed as a more accurate gauge of labor-market trends.

We also received news from the Commerce Dept that orders for US-made durable goods rose 3.0% in December on stronger demand for civilian aircraft, machinery, and primary metals.  Durable goods are items considered to be useful for at least three years (such as vehicles, large appliances and computers.)  The increase was stronger than expected.  This is the third straight monthly gain and the fourth in the past five months.  Excluding transportation, orders rose 2.1%, the fourth straight gain.  The increase was stronger than expected.

News …

~ Federal Reserve Unlikely to Raise Rates Until 2014

http://www.cleveland.com/business/index.ssf/2012/01/federal_reserve_unlikely_to_ra.html

~ In Historic Shift, Fed Sets Inflation Target

http://www.reuters.com/article/2012/01/25/us-usa-fed-inflation-target-idUSTRE80O25C20120125

~ Bernanke Opening the Door to the Federal Reserve a Little Wider

http://www.cleveland.com/business/index.ssf/2012/01/bernanke_opening_the_door_to_t.html

~ Fed’s Low Interest Rate Pledge Boosts Markets

http://finance.yahoo.com/news/feds-low-interest-rate-pledge-111727765.html

~ New Housing Task Force Will Zero in on Wall Street

http://www.nytimes.com/2012/01/26/business/new-housing-task-force-takes-aim-at-wall-st.html

~ Jobless Claims Rise, but Trend Points to Improvement

http://www.marketwatch.com/story/us-jobless-claims-increase-21000-to-377000-2012-01-26?dist=beforebell

~ CEO’s: Fed Rate Discussion Welcome, But Economy is Still Shaky

http://www.cnbc.com/id/46145336

~ FHFA: Home Prices Rose 1% in November

http://www.mortgagenewsdaily.com/01252012_home_prices.asp

Apple.  My lord. 

I feel like just mailing them all my money, getting it over with now, and moving forward.  Their products are too good.  You win Apple.  Uncle.

For those that missed it, in an earnings release last night, Apple reported that their quarterly results for the fourth quarter of 2011 OBLITERATED Wall Street’s projections.  Blew them out of the water.  They’re making money faster than a quarterback prospect being recruited by SEC schools.

In the fourth quarter alone, Apple sold 37 million iPhones.  Aggressive expectations were that they sold 30 mill.  15.4 million iPads sold, again, demolishing expectations.  46.3 BILLION in revenues in the quarter.  And they are sitting on 100 BILLION in cash!!!!!  All during the heart of the greatest American recession since The Great Depression.  Amazing!

Reminds me of one of my favorite Steve Jobs quotes:

“A lot of companies have chosen to downsize, and maybe that was the right thing for them. We chose a different path. Our belief was that if we kept putting great products in front of customers, they would continue to open their wallets.”

And man are they opening them Steve.  Apple has now sold 183 million iPhones.  A survey recently showed that 45% of the people that bought a smartphone in December bought an iPhone.  Others showed that the iPad is making people increasingly comfortable with replacing home desktop and laptop computers with tablets.  And startlingly, 72% of Apple’s revenues now come from the iPhone and iPad, neither of which existed five years ago.

There’s no stopping this freight train either.  Whispers are that the iPhone 5 will be SERIOUSLY enhanced.  iPad 3 is set to come out in the spring.  And the very-secretive Apple is said to be VERY close to entering the TV market, looking to continue to imbed their products into the lives of Americans, tying together their phones, their computers, and their television – by far the three most used electronic devices in this country.

The Tigers signed Prince Fielder.  You got to be freaking kidding me.  The signing incited predictable fan outrage on Cleveland sports sites like www.theclevelandfan.com and on Twitter.

And it’s hard to blame fans.  The deck is so stacked against this Indians team.  It’s bad enough the Angels and Rangers are spending hundreds of millions of dollars on free agents this off-season to improve already excellent teams and the Yankees and the Red Sox will have payrolls more than three times higher that the Indians.  But now you have the Tigers, in our division, who have added one of the most feared sluggers in baseball for the next nine seasons – all while the Tribe tries to find ways to free up an additional million bucks so they can make a run at some Mickey Mouse chump like Casey Kotchmann on a one-year deal.

It’s hard for fans to understand.  They see Detroit as being a geographically close, same sized, crappier version of Cleveland.  “How can they do this and we can’t?!?!?!?”  Here’s how.  Their metro market is twice as big as ours.  They’ve outdrawn us in attendance by 2 MILLION fans the last two years, which equates to about 50 mill a year.  And they have an owner that is willing to lose money on the team each season.

It’s that simple.  And it is what it is.

And it’s not like we did nothing this off-season.  We traded for Derek Lowe “expectations”.  Re-signed Grady (I think I hurt my knee just typing that).  And traded for Kevin Slowey and signed Ryan Spilbroghs to a minor-league deal.  Take that Detroit.

Quote of the Day …

“The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” ~ Ronald Reagan

Market …

Apple, The Fed, and the State of the Union.  That’s what the markets are focused on.

Apple – we touched on them above.  They destroyed earnings estimates and should set a positive tone for the stock market as a whole this morning ahead of the Fed statement.

The Fed – they release their policy statement at 12:30 PM EST, their economic forecast at 2:00 PM EST, and then Big Ben Bernanke will speak with the media after that.  And in addition to its economic forecast, the Fed will now report the forecasts of its individual members for their Fed funds rate targets.  Many economists expect the forecasts to mainly show the Fed will be on hold until mid-2014, as opposed to its current stated time frame of mid-2013.  The markets will be looking for hints of a potential third round of quantitative easing in the statement, and then from Big Ben in the press conference this afternoon.  But because of a gradually improving economy, most Fed watchers believe the central bank will hold policy steady and not engineer a third round of bond purchases at this meeting.  The most likely scenario is that the next round of asset purchases would come at the next meeting on March 13 and would be almost certainly aimed at Fannie and Freddie mortgage-backed securities in an attempt to keep mortgage rates low to help spur home purchases and refinances.

The State of the Union – Man is Obama a good speaker.  Smoothest since Clinton.  He is very good at giving speeches, resonating themes with “Joe Voter”, and making it seem like doing anything other than what he proposes is lunacy.

The speech was pretty much dead on what we predicted out of it yesterday.  An extremely populist tone to it.  Very political in nature and the clear start to the Obama re-election campaign.  Almost conceding in tone that nothing bi-partisan will get done this year.

After he successfully used “Hope and Change” as the slogan for his election campaign, we heard last night what I believe will be the slogan for the Obama re-election campaign: “An America Built to Last”.  We heard him talk about all the issues that will be the bedrock themes of his campaign: manufacturing, job training, job “insourcing”, clean energy initiatives, and tax reform that sees the tax rates of corporations and wealthy Americans increase.

On the mortgage side of things, Obama finally responded to Big Ben Bernanke’s white paper on the housing problems in America by saying this:

“Responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief. That’s why I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates. No more red tape. No more runaround from the banks. A small fee on the largest financial institutions will ensure that it won’t add to the deficit, and will give banks that were rescued by taxpayers a chance to repay a deficit of trust.”

According to senior Obama administration official, that “small fee on the largest financial institutions” that is proposed to cover the entire cost of this plan would be charged to financial institutions with more than 50 billion in assets.  Obama has proposed a similar fee on financial institutions twice in the last two years.  Both times the proposal wasn’t taken up by Congress.  Administration officials also said the refinance initiative will also apply to all borrowers, not just the ones with Fannie or Freddie owned loans, with details still to be worked out.

The details are meaningless though.  This has zero chance of getting through Congress.  I’m talking Roberto Hernandez Heredia chances of pitching the home opener for the Indians chances.  Don’t even waste any time thinking or reading about this.

And of course, Obama knows all this.  He could have jammed another expansion to the national refinance program though without going through Congress, as he did with the failed HARP I and the just-underway and improved HARP II.  But he couldn’t get it financed by the “evil banks” without putting it through Congress, and he also couldn’t expand it to non-Fannie/Freddie loans without Congress.  By just doing it himself, Obama also would have shouldered the brunt of the political risk of increasing the credit risk of the federal government, who own and are responsible for any losses from Fannie and Freddie.

So he throws the plan to Congress, knowing it won’t get passed, but also knowing he can campaign saying that he’s been trying to get homeowners help.  Politically smart, but not smart for America.  In Obama’s defense, he believes doing the politically smart thing will help get him four more years in office, where he believes he can help Americans on a number of different levels.

News …

~ Defiant Obama Challenges Congress on Sticky Issues

http://www.cnn.com/2012/01/24/politics/state-of-the-union/index.html

~ Obama Answers Bernanke’s Plea with Refinancing Plan

http://www.businessweek.com/news/2012-01-25/obama-answers-bernanke-plea-with-refinancing-plan-mortgages.html

~ Apple Obliterates Earnings Expectations, Has Record Quarter

http://www.reuters.com/article/2012/01/24/us-apple-idUSTRE80N2BQ20120124

~ KeyCorp, First Merit Both Report Profitable Quarters, Years as Lending Continues to Grow

http://www.cleveland.com/business/index.ssf/2012/01/keycorp_firstmerit_both_report.html

~ Apple, FOMC, and More Results in Focus for Markets

http://www.marketwatch.com/story/us-futures-in-narrow-range-apple-fomc-in-focus-2012-01-25?dist=beforebell

~ Apple Shines as Markets Wait for Fed

http://www.cnbc.com/id/46123777

~ Fed Plans Makeover to Soothe Hawks and Doves

http://www.marketwatch.com/story/fed-plans-makeover-meant-to-soothe-hawks-and-doves-2012-01-24?dist=beforebell

~ MBA: US Mortgage Applications Retreated Last Week

http://www.cnbc.com/id/46128300

I’ve got that sick teasing gene as a parent.  It was cultivated by years of my uncles teasing me when I was a kid.  I can’t help it.

This is how sick I am.  Bath and bed time last night.  I announce it, then run upstairs and implore the kids to follow me.  I race and hide under my son’s bed and throw on a gorilla Halloween mask.  Kids come up a couple minutes later.  Get confused when they can’t find me and eventually realize I’m hiding.  They check all my usual spots.  I let it play out for 15 minutes, to the point where they start to get concerned.  Then I wait till my son is standing by his bed and grab his leg and pop my gorilla mask-covered head out from under the bed.  He was terrified!

Once the terror subsided, we read the latest book from my new favorite children’s author, San Alini.  We’ve already read three books by him, all of which are child appropriate, and have the kids wheezing with laughter in the bed.  “Super Burger” is about a boy who saves up for the latest and greatest burger, then goes through great lengths to hide it and plan the consumption of it from his family.  We also read both books in the “Aaack the Duck” series.  The books are about a funny and feisty little duckling named Aaack who is tired of being pushed around by humans and decides to become a lawyer so he can set things right.  Laugh.  Out.  Loud.  Funny.

All three books are HYSTERICAL.  Highly recommended for anyone with kids between the ages of 3-10 that likes to read to them. 

I was impressed enough where I tracked down the author on Twitter to ask him when the third Aaack the Duck book is coming out.  He sent me a real nice e-mail back and told me later this year.

The Indianapolis Colts have interviewed Jim Tressel for their head coaching job.  Would The Sweater Vest make a good NFL head coach?

To me, a NFL head coach is an organizer.  A manager of all the moving parts during the week of prep, and then on Sundays during the game.  And a motivator. I thought Eric Mangini was outstanding at that part of it.  Getting guys to play hard and smart all the time.  Squeezing as much production out of the talent each player has by motivating them and putting them in the best positions to succeed.

I believe the best coaches don’t call plays or micromanage any other major parts of the process.  They bring in elite assistant coaches and work with those assistants to establish a smart game plan and ways to attack and expose opponents.  And the best coaches are great at adjusting on the fly real time when the bullets start flying.

I think Tressel is a good manager and a good motivator.  I feel like he’s actually the type of coach that could succeed at the NFL level … if you don’t let him surround himself with no talent gravy trainers like former Buckeye offensive coordinator Jim Bollman.  Tressel would need a strong offensive coordinator.  But I feel like he’d be a perfect head coach for a young quarterback like Andrew Luck.

I’d take Tressel right now, in a heartbeat, over Paddy Shurmur.  Of course, that’s not saying much.

Quote of the Day …

“More details are coming out about the Italian cruise ship disaster. It seems the chef on board the ship says the captain ordered dinner after the crash. And here’s the worst part — he ordered it to go.  That guy has brought more shame to the Italian people than Olive Garden.” ~ Jay Leno, on the captain of the capsized Italian cruise ship

Market …

A very quiet trading session yesterday (stocks and bonds both lightly traded with little movement), and another is expected today.  We have no economic releases, and everyone is just kind of waiting on tomorrow’s Fed announcement.  As has been the case for years now, there is no drama in what the Fed will do with rates.  They’ll leave them unchanged.  The Fed Funds rate has been at between 0.00% and 0.25% since December 16 2008, over three years. 

The Fed’s two day policy meeting begins today, and then concludes with their official statement, which will be released at 12:30 PM EST tomorrow, followed by a press conference at 2:15 PM EST.  The presser is part of the Fed’s new set of “full disclosure” policies to try and better help Joe Public understand the Fed’s actions.  Starting tomorrow, the Fed will also start publishing predictions about the outcomes of future meetings to guide investor expectations.  The predictions themselves could have a mild effect on markets.  The Fed said this summer that it would maintain short-term rates near zero through middle of 2013 and analysts expect tomorrow’s forecast will show that most members of the committee intend to hold rates near zero into 2014.

What does have the potential to stir up the markets today is earnings releases.  We get a bunch of them.  McDonalds, Johnson & Johnson, and DuPont this morning … and then Apple after the markets close tonight. 

The other big news of the day is President Obama’s State of the Union speech, which will kick off around 9 PM EST tonight.  After being publicly pounded by the Republican Presidential candidates for the last couple months, expect the smooth-talking Obama to fire some shots back across the bow tonight and officially kick off his re-election campaign. 

Other things you can expect Obama to talk about …

Jobs – The centerpiece of his last State of the Union was a huge jobs plan that was just totally ignored by Congress.  Expect Obama to harp on the better that expected jobs #’s s of late, citing progress, and elements of that ignored jobs plan he wants to try and get through before November.

Energy – The decision to not allow drilling for a new pipeline last week was not a popular one with the American people.  Obama will surely justify his reasoning behind the decision and call for an increase in US energy production and set a goal for domestic natural gas production.

Housing – Will be VERY interesting to see what is said here.  The Fed is on the right track with the white paper they released a few weeks back, and most of it could be enacted without going through Congress.  If Obama is truly intent on moving forward with ways to make refinancing for current borrowers and modifications for delinquent borrowers easier, we’ll probably hear about it tonight.  Obama may also announce the framework for a settlement ending negotiations between his Administration, state attorneys general and several major financial institutions on “robo-signing” and questionable foreclosure practices.

Taxes – He will assuredly call for an extension to the payroll tax cut and unemployment benefits.  What we don’t know is how he will propose to pay for it.  Separately, he will also go into his “everyone paying their fair share” routine and call for tax hikes on those who make more than X annually.

It’s all moot.  Nothing is getting done between now and November.  I have never seen the political climate so divisive.

In related news though, big ups to Michelle Obama for her recent appearance on iCarly!

News …

~ Obama to Pitch for Second Term in Tonight’s State of the Union

http://www.cnbc.com/id/46112229

~ Bank of America Halts Cash Out Refinancing

http://www.mortgagenewsdaily.com/channels/pipelinepress/01232012-mortgage-jobs-cash-out-refi.aspx

~ Federal Reserve Likely to Hint at No Rate Increases Until 2014

http://www.cleveland.com/business/index.ssf/2012/01/federal_reserve_likely_to_hint.html

~ Big Day for Earnings & the Presidential Race

http://www.cnbc.com/id/46109230

~ Euro Zone May Yet Escape Recession as Services Jump

http://www.cnbc.com/id/46112150

~ Pepper Pike Entrepreneur Will Be Among State of the Union Guests

http://www.cleveland.com/business/index.ssf/2012/01/a_local_job_creator_will_enjoy.html

~ White House Delays Release of 2013 Budget

http://www.cleveland.com/business/index.ssf/2012/01/white_house_delays_release_of.html

~ US Stock Futures Down Ahead of Busy Earnings Day

http://www.marketwatch.com/story/us-stock-futures-fall-jj-mcdonalds-await-2012-01-24?dist=beforebell

These NFL playoff games have been amazing.  Both games yesterday were outstanding.  Absolutely riveting television.  And we’ve got an outstanding Super Bowl matchup in 13 days between the New England Patriots and the New York Giants – a rematch of the Super Bowl four years ago, won by the Giants by a 17-14 final score.  The rematch is widely expected to be the most watched Super Bowl in history.  The Patriots opened last night as 3.5 point favorites, but early wagering on the Giants has pushed the # down to 3 in some places.  The over/under for points scored is 55, the second highest over/under total in Super Bowl history.

In the hopes that Mike “don’t come groveling to me for playoff tickets” Holmgren and Tom Heckert are reading this, take note – this will be the NINTH straight Super Bowl won by a quarterback who will end up in the Hall of Fame.  And in the last five Super Bowls, all ten quarterbacks involved will be Hall of Famers.  The days of run the ball and stop the run are over.  If you can’t throw the ball and rush the passer, you have no chance of winning a title in this league.  The Browns must do everything in their power to get Andrew Luck or Robert Griffin III in this April’s draft.  It’s that simple.

Quote of the Day …

“It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.” ~ Henry Ford

Market …

Last week was a good week for stocks and a bad week for mortgage bonds.  The Dow Jones rose about 300 points last week, and mortgage bond prices fell by 20/32, causing mortgage rates to rise right around .25%.  The economic news has been mixed, the situation in Europe is still touch and go, and everyone is on edge because we have a Fed meeting and Fed rate announcement this week, which we get on Wedns afternoon.  Investors will be looking for hints in the Fed’s statement as to whether or not they will provide additional monetary stimulus.  

The most significant economic report this week will be Friday’s GDP data for the fourth quarter.  GDP stands for Gross Domestic Product, and it is the best measure of the US economy as a whole.  Before that, Pending Home Sales will be released on Wednesday.  Jobless Claims, Durable Goods Orders, and New Home Sales will come out on Thursday.  Leading Indicators and Consumer Sentiment will round out the schedule.  In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.

News …

~ New York Giants to Face New England Patriots in the Super Bowl

http://www.cnbc.com/id/46093732

~ Housing Market Ends 2011 on a High Note, with Home Sales Up in NE OH and Nationwide

http://www.cleveland.com/business/index.ssf/2012/01/housing_market_ends_2011_on_a.html

~ Forecasters See Small Pickup in Growth in 2012

http://www.cnbc.com/id/46097490

~ Momentum Seen for Home Improvement Spending

http://www.mortgagenewsdaily.com/01192012_construction.asp

~ RIM Has a New CEO, But Does it Have a New Game Plan?

http://www.cnbc.com/id/46094976

~ Euro Zone Finance Ministers to Rule on Greek Debt Talks

http://finance.yahoo.com/news/euro-zone-finmins-rule-glacial-083938657.html

~ Romney, Gingrich Spar as Race Heads to Florida

http://finance.yahoo.com/news/romney-gingrich-spar-race-shifts-050001759.html

~ Top 100 US Zip Codes Hit Hardest by Foreclosures

http://finance.yahoo.com/news/top-100-u-zip-codes-102300188.html

Nothing can shock me anymore in professional sports.  Not even the breaking news that Fausto Carmona’s real name is Roberto Hernandez Heredia and that he’s 31 years old and not 28.  This was all brought to light yesterday when Carmona/Heredia/Keyser Soze was arrested in the Dominican Republic after applying for a visa (under the fake Carmona name) to come back to the US for spring training.

First Don Draper is really Dick Whitman and now this?  What’s next?  Pat Shurmur’s real name is Norv Turner Kotite?

It all remains to be seen whether or not this will inhibit The Artist Formerly Known as Fausto’s ability to re-enter the US.  Or whether or not jail time looms or if this event may make his contract voidable by the Indians.  The Tribe owes Heredia 7 million bucks this year and has a 13 million dollar team option on him for next season.

Even if the contract is voidable, and even if Fatso Fausto reports to Goodyear, AZ as voluptuous as he did last year … it’s not a given the Tribe would get rid of him.  The trades of their two top young arms to Colorado for Ubaldo Jimenez coupled with the Tommy John surgery for Carlos Carrasco has stripped the team of the rotation depth they had a year ago.  We got Masterson, Ubaldo, Josh Tomlin, the newly acquired (and older than dirt) Derek Lowe … and uh … nothing else we can count on, if you can even count on those guys.  7-8 starting pitchers are needed for the grind of a MLB season.

Staying with the Indians theme, it was another boring off-season for our Erie Warriors.  Cutting through all the fluff, at the end of the day, the Tribe had 15 million dollars to spend this off-season.  Here’s how they spent it: 

• 5 million dollars to SP Derek Lowe, acquired via trade
• 5-9 million dollars to OF Grady Sizemore, who they resigned (5 mill guaranteed)
• 1-5 million dollars left to spend on a bat

For a team that needed to fill a lot of holes, it wasn’t a lot of money to spend in today’s day and age.  And it was a very risky allocation of those dollars. 

Lowe looked absolutely shot down the stretch last season, lost EVERY single one of his September and October starts, and was one of the main culprits behind the Braves historic late-season collapse last year.  And things won’t get easier for him coming to the American League, where there is no pitcher slot and teams hit more and score more.  Also, Lowe makes the Indians rotation loaded with ground ball pitchers.  And your infield defense outside of Asdrubal is sketchy.  Rookies at 2B and 3B.  A catcher that can’t throw.  And Lord knows who at 1B.

Giving Sizemore 5 mill guaranteed was also a big risk.  Grady has missed 56, 133, and 91 games the last three seasons due to injury, while batting .248, .211, and .224 … all while striking out as frequently as anyone in the league and being completely robbed of the speed that saw him swipe 33 and 38 bases in ’07 and ’08.

Now the Indians are looking to add another bat, ideally at 1B, but there’s nothing but junk like Carlos Pena and Casey Kotchmann out there in the free agent market.  And both want more $ than we gave Grady.  At this point a trade for a bat is looking like the most likely scenario.

The Indians payroll is expected to be between 65 and 70 mill this year.  It was 50mm last year (roughly), and 61mm and 81mm the two years before that.  13 million of this year’s payroll goes to Travis Hafner, which is hard to type without getting physically ill.

Quote of the Day …

“According to a Washington Post poll, 84 percent of Americans do not approve of the way Congress is doing its job. Sixteen percent weren’t even aware Congress is doing a job.” ~ Jay Leno

Market …

Had a trio of pretty significant economic releases yesterday morning.  Let’s run through ‘em real quick:

First time jobless claims – Way higher than expected LAST week at 399k.  Expected to come in at 385k this week.  Comes in WAY lower than expected at 352k.  Very positive news, but like last week’s bad #, it doesn’t mean much until we see some kind of consistent trend.  First time weekly claims more in the 325-350k level would almost assuredly yield stronger future job growth.  This strong # makes next week’s # even more vital.

Consumer Price Index – The main gauge of inflation in America and the measure of the change in prices that consumers like you and I pay for goods and services.  The # came in exactly as economists were expecting.  CPI had no change from last month, and “core CPI” (which extracts out volatile food and energy prices) rose 0.1%.  CPI rose 3.0% in 2011 (core CPI up 2.2% last year), up from a mild 1.5% increase in 2010.  This is the most accurate measure of the “cost of living” in America.  So in a nutshell, it got 3% more expensive to live our lives last year.  Inflation is still not a concern to most economists despite the fact it’s on the uptick.

Housing starts – Housing starts represents the number of residential homes construction has begun on during each month and is used as an indicator of future national new home sales and mortgage origination volume.  It also is a lesser indicator of retail sales, as people that are building new homes must buy stuff to put in them.  Last month’s # was 685k.  Expectations for Dec were 675k.  The # came in lower than expected at 657k and puts a capper on the worst year ever recorded for starts of single-family residential home construction.  2012 is expected to be a better year for this sector, which has been crushed by the glut of home inventory already out there in the market.  Confidence among US homebuilders rose in January to the highest level in more than four years as sales and buyer traffic improved, according to the National Association of Home Builders.

Today signals a quiet end to a busy week of economic data.  The sole economic release today is Existing Home Sales for Dec at 10 AM EST, which is projected to come in at 4.65 million after Nov’s 4.42 million #.  The market is already looking ahead to next Tuesday’s FOMC meeting which will conclude with a release of economic projections and a press conference with Chairman Big Ben Bernanke on Wedns. 

News …

~ Greece, Creditors Move Closer to Deal in Race Against Time

http://www.cnbc.com/id/46064939

~ Republican Rivals Clash at Raucous Debate

http://www.cnbc.com/id/46066336

~ Markets Cautious as Greece Meets Creditors Again

http://finance.yahoo.com/news/markets-cautious-greece-meets-creditors-104501810.html

~ Market Weakness Threatens All-Time Low Mortgage Rates

http://www.mortgagenewsdaily.com/consumer_rates/243919.aspx

~ Google’s Earnings Miss and GE’s Report Keep Focus on Earnings Friday

http://www.cnbc.com/id/46064362

~ Apple Starts Selling Interactive iPad Textbooks

http://www.cleveland.com/business/index.ssf/2012/01/apple_starts_selling_interacti.html

~ Huntington’s Profits Up 74% as Customer Accounts Climb

http://www.cleveland.com/business/index.ssf/2012/01/huntington_profits_up_3_percen.html

~ Ohio Liquor Sales Set Record in 2011

http://www.cleveland.com/open/index.ssf/2012/01/ohio_liquor_sales_set_another.html

Coming off the heels of their entry into the K-Cup market, Starbucks has now introduced a new milder blend of coffee that they are calling their “Blonde Roast”.  Clearly, this is a play to appeal to more coffee drinkers who don’t care for Starbucks stronger blends.  Put another way, they’re going after the Dunkin Donuts coffee drinkers.

I’ve been drinking the new blend for the last three days to try and form an opinion.  And got a funny look on Monday when I asked the barista for a “Tall Blonde with a little extra sugar”.  The verdict after drinking it all week?  It tastes just like a milder, more watered down version of Starbucks other mainstream blends.  But that’s not a bad thing.  Actually, for someone that likes the extra shot of espresso dumped in to give my day a kick start, the venti Blonde with an extra shot (and a couple creams and sugars) is actually the perfect strength and taste that I’m looking for our of my (initial) morning cup of joe.

I recently started reading “The Hunger Games”.  Just like with “Mad Men” and “Breaking Bad” on TV, and the “Girl with the Dragon Tattoo” series of books … so many people had implored me to jump on board, I finally succumbed.  And also like all the aforementioned others, “The Hunger Games” has been a worthwhile investment of time.  I am already absolutely enthralled with this book and would highly encourage everyone to read it.

The premise?  In the not-too-distant future, the United States of America has collapsed, weakened by drought, fire, famine, and war … and has been replaced by Panem, a country divided into the Capitol and 12 districts.  Long ago the districts waged war on the Capitol and were defeated.  As part of the surrender terms, each year, a lottery must be held in each district, selecting a boy and girl representative between the ages of 12 and 18 from each of them.  The 24 chosen children are then forced to fight in a televised gladiator style fight to the death until just one remains, with the winner’s district being lavished with gifts, riches, and food … which is at a premium in this new version of America.  The story focuses on a 16 year old girl named Katniss Everdeen, who volunteers to go in the place of her 12-year old younger sister after she is the chosen one from their district.

The book is absolutely compelling.  And per my new Amazon Kindle Fire, I am only 13% done with it.  After investing a couple hours into it last night, I’ve been thinking about this book all morning. 

They’re also making a movie based on the book.  It comes out March 23, and stars Jennifer Lawrence, who was the PHENOMENAL (and Oscar nominated) child actress in “The Winter’s Bone” a couple years ago.  The film will also star Swerb-heartthrob Elizabeth Banks, Woody Harrellson, Liam Hemsworth, Stanley Tucci, Donald Sutherland, and Lenny Kravitz.

Staying on the reading front, I stumbled upon a very cool website fellow readers may enjoy.  Its www.goodreads.com and it’s a social media website of sorts for book lovers.  You can rate books you’ve read, which then inspires the site to recommend other books you may like based on your tastes.  You can create “to-read” lists, which is good for someone like me that can never remember all the different books I want to read.  And you can add friends, “like” writers, create a profile, and view a timeline of all that in the same way you would on Facebook.

In playing around on there this past weekend, I spent some time really trying to remember and rate every book I’ve read.  My all-time favorites: “The Stand” and “It” (Stephen King), “Watchers”, “Strangers”, and “Phantoms” (Dean Koontz), “Red Storm Rising” and “Rainbow Six” (Tom Clancy), “The DaVinci Code” (Dan Brown), U.S.S. Seawolf (Patrick Robinson), and “Alive: The Story of the Andes Survivors” (Piers Paul).

Quote of the Day …

Maverick: What’s your problem, Kazanski?
Iceman: You’re everyone’s problem. That’s because every time you go up in the air, you’re unsafe.  I don’t like you because you’re dangerous.
Maverick: That’s right! Ice… man.  I am dangerous.

~ Tom Cruise and Val Kilmer as “Maverick” and “Iceman” in the 1986 classic film ‘Top Gun’

Market …

PPI (Producer Price Index) was released this morning.  PPI, in a nutshell, is the measure of what it costs producers of goods to make those goods … and it’s viewed as a measure of inflation and a predictor of what we as consumers will end up paying for those goods down the line.  It’s sister indicator, CPI (Consumer Price Index) is released tomorrow … and measures exactly what I just mentioned: the cost of goods to people like us.  CPI is the main gauge of inflation in America, and today’s release, PPI … is more of a lagging indicator that helps predict CPI totals down the road.

PPI declined by 0.1% last month.  Expectations were for it to increase by 0.1%.  However, the decline in wholesale prices stemmed entirely from lower energy and food costs.  They both fell 0.8%.  But “core” wholesale prices (which strip out the volatile food and energy categories) jumped an unexpectedly high 0.3%.  Economists were expecting a 0.1% increase.  The core index is viewed by the Fed as a more accurate gauge of inflationary pressure.  The rise in core prices might cause some angst at the Fed, as core prices have climbed 3.0% over the past 12 months, the largest one-year increase since the summer of 2009.  Higher inflation could limit the Fed’s ability to try to further stoke the US economy.  Overall wholesale prices have risen an even faster 4.8% in the past 12 months.  Not all of that increase, however, has been passed onto consumers.  Many companies have absorbed higher wholesale costs and kept price increases in check to maintain market share.  Others have accepted lower profits.

End of the day, I am not expecting a violent market reaction either way, as inflation is pretty much a non-worry right now.  However, it will put investors on higher alert for tomorrow’s CPI #.

In other economic release news, we get figures on industrial production at 9:15 AM EST this morning.  And CPI, jobless claims, and housing starts … ALL released tomorrow morning ay 8:30 AM EST.  All three releases have serious market moving potential.

Yesterday we saw the Dow Jones jump 150 points early in trading off of better than expected manufacturing sentiment from the NY Empire State Index, then saw some of those gains trimmed after mixed earning releases from banking giants CitiGroup and Wells Fargo … and also a report from China that indicated that the Chinese economy grew a little less than expected in the 4Q of last year.  The Dow ended the day up 60 points and mortgage bonds traded sideways.  The 10-year treasury yield is now a ridiculously low 1.85%.

Early in trading this morning, stock futures are mixed and mortgages bonds are trading flat.

News …

~ Bank Earnings Could Set Tone as Markets Watch Europe

http://www.cnbc.com/id/46033616

~ Ohio Savings Receives Unsatisfactory Rating in FDIC CRA Report

http://www.cleveland.com/business/index.ssf/2012/01/ohio_savings_receives_unsatisf.html

~ Mortgage Rates Begin Week Holding Steady at Record Lows

http://www.mortgagenewsdaily.com/consumer_rates/243513.aspx

~MBA: Mortgage Applications Surge on Refinance Demand

http://finance.yahoo.com/news/mortgage-applications-surge-refinancing-demand-120142863.html

~ US Wholesale Prices Decline in December

http://www.marketwatch.com/story/us-wholesale-prices-decline-in-december-2012-01-18

~ Fed Officials Open to Additional Easing as They Monitor Risks to the Economy

http://finance.yahoo.com/news/fed-officials-open-additional-easing-050001397.html

~ US Natural Gas Prices Fall to 10-Year Low

http://www.cnbc.com/id/46032083

~ Four Banks Set to Bid for Ex-AIG Mortgage Securities

http://www.cnbc.com/id/46035114

~ Romney Estimates His Tax Rate at 15%

http://finance.yahoo.com/news/romney-estimates-tax-rate-15-050104836.html

~ Yahoo Co-Founder Jerry Yang Leaving Company

http://www.cleveland.com/business/index.ssf/2012/01/yahoo_co-founder_jerry_yang_le.html

~ Samsung Says No Interest in Buying Troubled RIM

http://www.cnbc.com/id/46031929

I took my little guy sled riding yesterday, which I am constantly reminded of every time I move any part of my aching body.  Weather was perfect for it yesterday.  40 degree day coming off a few days of snow.  Hill was PACKED with kids.  There’s nothing better than the mostly harmless collisions at the bottom of the sled riding hill on a busy day.  You get to the bottom and then turn around and assess what’s coming down the hill at you.  Nick and I went from gingerly and cautiously avoiding these collisions to giving some punk 10 year old the “Down goes Frazier!” taunt after taking him out with a leg sweep.

I am very sore though.  I feel like someone spent 6 hours beating me with an aluminum bat yesterday.  All worth it though.

For all the bagging we do on the winter weather here, days like yesterday are why I am NEVER moving away from northeast Ohio.  Yes – Jan and Feb stink.  I’ll put up with it because northeast Ohio is a great place with real people to raise a family.  The cost of living is low, our parks and medical facilities are as good as anywhere in America, we get a beautiful change of seasons, no natural disasters, have Cedar Point/Put In Bay/Rock & Roll & Football Hall of Fames, no traffic in and out of the city, great restaurants and schools, three pro sports teams and a veritable slew of college and high school sports options, and are within driving distance of every great American Midwestern city.  I love visiting other cities.  But I love coming back home as well.

How about that Saints/Niners game Saturday night?  Wow – what a finish!  That game, along with last week’s Tebowing of the Stoolers, two of the greatest NFL playoff games I’ve ever watched.  The NFL is loving life right now.  Marketable, identifiable star players.  Parity.  An immensely watchable product, with scoring and offensive stats (which Americans love) at all-time highs.  And all of America disgusted with their main competitor (college football) right now.

Had the Patriots not blown the Broncos out so quickly Sat night, the game was anticipated to be the highest rated non-Super Bowl NFL game of ALL-TIME.  And a Patriots/Giants Super Bowl in early Feb would likely be the highest rated Super Bowl ever.  And I think that’s what we’re headed towards.

And how about those Cleveland Cavaliers?!?!  We’ll get more into them this week … but it’s almost unfathomable how ahead of schedule this team already is in their rebuilding of the franchise.  Kyrie Irving is all that and a bag of chips, and is well on his way to becoming one of the great young players in this league.  Tristan Thompson, an unpopular selection at #4, has been outstanding as well.

The Cavs are now 6-6, despite playing nine of their first 12 games on the road.  The team is much better than anyone could have dreamed, and may actually have a shot to contend for a low seed in a top heavy Eastern Conference that will likely see a team or two make the playoffs at a below .500 record.  That’s good, and its bad, as there’s no way this team has one of the 2-3 worst records in the league this year, which would likely yield another very high draft pick.

Bottom line though, it is IMPOSSIBLE to not cheer for this team to keep winning right now.  They’re very likable.

Quote of the Day …

“The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.” ~ Martin Luther King Jr.

Market …

It’s just an incredible climate for low mortgage rates right now.  Inflation (which eats away at the fixed return of mortgage bonds) is non-existent.  The situation in Europe as well as the crippled economy in the US makes fixed income assets like mortgage bonds very attractive, even with yields of 30 year MBS now in the 3’s.  The mortgages filling those bonds are being underwritten very tightly, and have the backing of Fannie and Freddie, owned by the US government … giving investors the piece of mind that Big Brother is behind the assets they’re buying.  And the Fed continues to be a big time buyer of MBS, and that additional demand is helping drive bond prices up, and is pushing bond yields (translates to mortgage rates) lower.

I also truly believe the Fed’s master plan (they won’t come out and say it) is to try and push mortgage rates a little lower.  And couple that with major expansions to Fannie and Freddie’s refinance programs, which they strongly suggested in a white paper to Congress a couple weeks ago.  The Fed has held up their half of the bargain with low rates.  Now they need someone in Congress to actually read that white paper and do something about it.  The expansions from Fannie and Freddie on Dec 1 to their refinance programs for underwater borrowers is helping, a little.  But end game, in addition to figuring out ways to stop foreclosures (so home values can stop going down and start going up again), getting more borrowers refinanced into today’s low rates would do WONDERS for consumer spending and mortgage delinquency in general.  And more consumer spending = more hiring.  The Fed knows that we’re about at the point where we’ve squeezed as much juice out of the economic recovery lemon as we can without massive improvements to the labor and housing markets.

A lot of economic data this week.  We got the first of it this morning, as the NY Empire State Index was released.  It is a survey is from a group of manufacturers across New York in a variety of industries.  The participants respond to a questionnaire and report the change of indicators from the previous month.  Respondents also state the likely direction of the same indicators for the next six months ahead.  It is viewed as a leading indicator of the manufacturing industry primarily.  The Index came in higher than expected, rising to 13.5 in Jan from a revised 8.2 in Dec.  The index has been on a strong upward trend after remaining stuck below zero from June through October.  The size of the increase was unexpected.  Economists were expecting the index to rise to 11.3 from the initial Dec reading of 9.5.  The underlying details of the report were strong … as a reading of expected conditions in the next six months climbed sharply in January to 54.9, its highest reading in a year.

The most significant economic data of the week will be the monthly inflation reports.  The Producer Price Index (PPI) focuses on the increase in prices of “intermediate” goods used by companies to produce finished products and will come out on Wednesday.  The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Thursday.  CPI looks at the price change for those finished goods which are sold to consumers.  In addition, Industrial Production, an important indicator of economic growth, will come out on Wednesday.  Housing Starts will be released on Thursday, and Existing Home Sales will come out on Friday.  

News …

~ Mortgage Rates Break Previous All-Time Record Lows

http://www.mortgagenewsdaily.com/consumer_rates/243253.aspx

~ Republicans Leap to Attack Romney at Debate

http://www.cnbc.com/id/46018941

~ Credit Card Debt Slips 11% in 2011

http://www.wmur.com/r/30228437/detail.html

~ Google Appears Poised to Deliver Impressive Fourth Quarter

http://finance.yahoo.com/news/google-appears-poised-deliver-impressive-122517326.html

~ Citi Earnings Miss on Profits & Revenue; Shares Down

http://www.cnbc.com/id/45989851

~ Wikipedia to Black Out Wednesday in Protest

http://www.cleveland.com/business/index.ssf/2012/01/wikipedia_to_black_out_wednesd.html

~ China Data Lifts US Stock Futures; Banks in Focus

http://www.marketwatch.com/story/china-data-lift-us-stock-futures-banks-in-focus-2012-01-17?dist=beforebell

It’s Friday the 13^th.  The weather is NASTY here on the north coast.  No better night to pop in a scary movie.  Here’s my 13 favorite …

1. The Shining – Classic Jack Nicholson here as he plays the caretaker of a hotel abandoned for the winter. An evil and spiritual presence consumes Nicholson, and his son begins to see terrifying visions of the hotel’s brutal past. All hell breaks loose about an hour or so in, and the film takes you on a terrifying ride towards a great ending.  An all-time classic.
2. Alien – The standard for sci-fi horror movies, and one of the greatest films ever made. A mining ship investigates a SOS call on a distant planet. An alien life form makes its way back on to the ship before they depart, and insanity ensues. An amazing performance by Sigourney Weaver in her coming out party as an actress. The film was light years ahead of its time. The alien and set design were fantastic … the ship’s design is so believable that you feel you’re inside the actual spacecraft with the terrified crew. The film has you on the edge of your seat throughout – as you never know where the danger will strike next. Great tag line too. “In space, no one can hear you scream.”
3. The 2008 Cleveland Browns season – The year Phil Savage imploded, Romeo Crennel missed on his first 14 coaches’ challenges of the year and was mercifully fired, and Derek Anderson was exposed as one of the most awful excuses for a NFL quarterback in the league’s history.  The Browns finished 4-12 and failed to score an offensive touchdown in their last SIX games, all losses.  And this was coming off the heels of a 10-6 season.  Browns fans were taken on a terrifying journey that still inspires nightmares that cause me to wake up some nights in a cold sweat.
4. Silence of the Lambs – Anthony Hopkins’ role as “Hannibal Lechter” is one of the greatest performances ever. This is the terrifying tale of a young FBI agent (played brilliantly by Jodie Foster) tracking a psychopathic killer, and needing the help of an even more psychopathic Lechter to do it.  Some of the dialogue scenes between Hopkins and Foster are the scariest parts of this film.
5. Saw – Two men wake up in the secure lair of a serial killer who’s been nicknamed “Jigsaw”.  The men must follow various rules and objectives if they wish to survive and win the deadly game set for them.  I don’t think the original “Saw” gets the credit it deserves because they continued making sequels that got progressively worse.
6. Poltergeist – I will never forget watching this movie as a kid.  It was spine-chilling then and it has withstood the test of time.  The little girl.  The voice of the poltergeist expert lady (They’re heeeeeere).   The scenes where all the stuff starts moving around the little girls’ room.  And when they lose her inside the TV.  Good stuff.  Trivia – Steven Spielberg directed both this film and “E.T.” in 1982, just a couple weeks apart.  Both became all-time classics.
7. Audition – A little off the radar here.  A Japanese psychological horror film with subtitles.  A lonely Japanese widower whose son is planning to move out of the house soon expresses his sadness to a friend and fellow film producer, who becomes inspired to hold an audition for a non-existent film so that the widower can select a new potential bride from the resulting audition pool. The widower ultimately becomes enamored with and fascinated by one particular young woman.  The wrong woman.
8. Se7en – A film about two homicide detectives’ desperate hunt for a serial killer who justifies his crimes as absolution for the world’s ignorance of the Seven Deadly Sins.  Outstanding performances from Brad Pitt and Morgan Freeman as the detectives, and Kevin Spacey as the deranged serial killer.  And the ending!
9. The Exorcist – Another all-time classic that has withstood the test of time, and a movie that still tops many “scariest movie of all-time” lists.  When a child is possessed by a mysterious entity, her mother seeks the help of two priests to save her daughter.  The pea soup, the spinning head, the demon’s voice … all legendary scenes.
10. High Tension – A French horror film in subtitles, if not for the seriously controversial (and detested by many) ending, it would get a lot more acclaim.  In terms of just sheer terror, the first hour of this movie is unparalleled in my mind.  It’s about two college friends who encounter loads of trouble while on vacation at the one gal’s parents’ country home when a mysterious killer invades their quiet getaway.  Caution – not for the weak of heart. 
11. Cujo – Another film I saw when I was younger that seriously scarred me as a youth, and one of the more underrated scary movies of all time in my mind.  Unlike most Stephen King adaptations of books, this one was well casted, acted, directed, and produced … telling the tale of  a once-friendly St. Bernard named “Cujo” who contracts rabies and conducts a reign of terror on a small American town.  The ending, with the mom and the boy trapped in the car – epic.
12. Funny Games – Long time Dish readers know I am a huge Naomi Watts fan.  She’s the wife in this one, and as her middle-class family settles in for a respite in their vacation home, a pair of young, articulate, white-gloved serial killers (played by Tim Roth and Michael Pitt who I also like) invade the home and submit the family to a series of physical and mental torture.
13. The Hills Have Eyes – A Wes Craven remake of the 1977 classic by the same name.  About an American family travelling through the southwest.  But their trip takes a detour into an area closed off from the public, but more importantly from society.  An area originally used by the U.S. Government for nuclear testing that was intended to be empty.  And then their car breaks down.  You can guess what happens next.

Quote of the Day …

“Keep your friends close, but your enemies closer.” ~ Al Pacino as Michael Corleone in ‘The Godfather, Part II’

Market …

As we discussed yesterday, weaker than expected retail sales and first time jobless claims #’s fueled the markets yesterday.  After dropping 70 points right off that news, the Dow actually fought back to finish the session slightly positive, as investors held out hopes that Europe would muddle through its debt troubles.  A lot of Europe fear is priced into the markets, so any potential positive developments over there help US stocks.  That said, stocks are getting to the point where they can only go so much higher until we see sustained and legitimate improvement to the US economy, which can not occur until someone figures out a way to fix the US housing market.

Mortgage bonds rallied off the poor economic news.  Mortgage rates are insanely low.  30 year fixed rates are in the 3.70% to 3.85% range for the most creditworthy borrowers.  I’ve been saying for several months that I feel they are going lower yet, and I’m holding to that prediction.  I see 3.50% 30 year fixed rates and 15 year fixed rates with a handle in the 2’s sometime before the last snowfall of the year.  The Fed continues to be a huge buyer of MBS, which is helping keep mortgage rates low and drive them even lower.

This morning we got two pieces of economic data at 8:30 AM EST.  After declining for four straight months, the US trade deficit widened in November, bringing the trade gap up to its highest level since June.  The international trade balance measures the difference between imports and exports of both tangible goods and services. Imports may slow domestic growth. Exports boost domestic production.  Thus, a low deficit between imports (always higher) and exports is good.  If we’re importing a lot more than we’re exporting, that is bad for the US economy.  Just ask Art Vandelay.

In the other piece of data, which is somewhat related, import prices fell 0.1% in December, the fourth fall in five months.  Economists had anticipated a 0.2% gain.  November prices were revised to show a 0.8% gain from an initially reported 0.7% advance.  Excluding fuel and food, prices rose 0.1% in December.  For all of 2011, import prices rose 5.3%, the third year in a row they have increased.

News …

~ Fed to Weight Further Easing Amid Doubts of Recovery

http://www.cnbc.com/id/45977098

~ Snow Returns to Northeast Ohio

http://blog.cleveland.com/metro/2012/01/winter_storm_warning_for_most.html

~ November Trade Gap Widens, Biggest Since June

http://finance.yahoo.com/news/november-trade-gap-widens-biggest-133301447.html

~ Key Buys HSBC Branches in NY in First Major Deal Since Crisis

http://www.cleveland.com/business/index.ssf/2012/01/key_buys_hsbc_branches_in_ny_i.html

~ JP Morgan Chase Misses on Revenues; Shares Fall

http://www.cnbc.com/id/45976701

~ Report: B of A Mulls Retreat if Financial Problems Worsen

http://www.cnbc.com/id/45983477

~ Import Prices Slip 0.1% in December

http://www.marketwatch.com/story/import-prices-slip-01-in-december-2012-01-13-836550

~ Facebook Weighs Risks of Unconventional IPO

http://www.cnbc.com/id/45978438

~ iPhone Sales Halted as Irate Chinese Shoppers Pelt Apple Store With Eggs

http://finance.yahoo.com/news/apple-halt-sales-latest-iphone-044627077.html

LeQuitter got engaged over the holidays.  At least someone in his family has a ring now.  Hopefully for her he doesn’t leave the wedding ceremony 12 minutes early like it’s a crucial playoff game.

Kelly Clarkson was selected to sing the national anthem at the Super Bowl.  Few things were funnier than last year when Christina Aguilera screwed up the lyrics.  I got several months worth of jokes out of that last winter.  The last five people selected for this honor: Aguilera, Carrie Underwood, Jennifer Hudson, Jordin Sparks, and Billy Joel.  The over/under on how long it will take Clarkson to sing it has been set at 1 minute and 54 seconds by several of the more notable online sportsbooks.  I love how you can bet on that!  I make that wager every year.  After reviewing some tapes of Clarkson, I am leaning towards the under this year.

Madonna will perform the halftime show.  The bar has been set insanely low for her performance by The Who and The Black Eyed Peas, both of whom were god-awful the past two years.  Man do I miss the days of going to huge parties at bars for the Super Bowl where I didn’t hear nor care about the halftime performer.  I didn’t even know about the Janet Jackson “wardrobe malfunction” until the following day back in 2004.

Worst part about the whole Janet Jackson thing is that it has terrified the NFL into hiring these over the hill, acceptable to all Americans performers like the Stones, Who, Madonna, et al. 

Bottom line – my girl Katy Perry should have got the nod.

List of the Super Bowl halftime performers, post-wardrobe malfunction (which featured P. Diddy, Nelly, Kid Rock, and Justin Timberlake in ADDITION to Janet J): Paul McCartney, The Rolling Stones, Prince, Ton Petty, Bruce Springsteen (good pick there), The Who, The Black Eyed Peas, Madonna.

‘Nuff said.

Quote of the Day …

“The critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.” ~ Nolan Bushnell

Market …

Got two big pieces of data released this morning at 8:30 AM EST.  Weekly first-time jobless claims and retail sales figures for Dec.  Both #’s came in much worse than expected.

Let’s start with jobless claims, the gauge of how many people each week are filing for unemployment benefits for the first time.  It’s a top indicator of the national employment picture.  The # had been trending down in recent weeks, bottoming out at 372,000 last week.  Expectations for this week’s # were 375,000.  It came in at 399,000.  That’s a pretty big miss.

Retail sales for Dec – expectations are that they would rise 0.4% from November’s totals, and rise 0.3% from Nov when you strip out volatile automobile sales #’s.  The overall retail sales # only rose 0.1%, and the total less auto sales actually fell 0.2% from Nov.

Yesterday, stocks traded sideways.  Dow ended up down 13 points.  Treasury and mortgage bonds ended the session slightly higher on continued Eurozone worries, as Germany (the region’s largest and strongest economy) reported that its GDP contracted in the 4th quarter of last year.    

The markets didn’t react violently one way or another to the release of the Fed Beige Book yesterday.  In it, Fed Presidents from around the country said that economic activity increased “at a modest to moderate pace”, but acknowledged the continued weakness in the housing market.  While the report showed a moderate pace of expansion across various other sectors, including consumer spending and nonfinancial services, residential housing continues to be a HUGE area of concern.

We’ve been saying it for years now.  Only so much of an economic recovery can occur without a MAJOR improvement in the still crippled housing market.  I think the Fed and Congress now finally get it, now that Bernanke has beaten Congress over the head with a white paper saying as much.  I am anticipating major federal housing policy initiatives in 2012 as we head into the Presidential election.  I’d be shocked if we don’t see all of the following initiatives pushed through by Obama as he looks to bolster his re-election hopes and to help fix US housing:

REO to rental program – Encourage lenders and investors who own REO properties to rent them out instead of try and sell ‘em at bottom dollar prices, which is dragging down home values.

Expanded loan modification program for borrowers in default – Provide more/better options for borrowers who are in default to modify the terms of their loan to make them able to pay, which will prevent homes from going into foreclosure, which also drags down home prices.

Expanded refinance program for underwater borrowers – We’re likely to see something in between the newly expanded refinance program rolled out by Fannie/Freddie on Dec 1, and the trillion-dollar “Refinances For Everyone!”  program that it is rumored that Obama wants to unleash … allowing more underwater home owners to refinance into more favorable terms.

Kind of a tug of war right now in the markets.  This morning’s news aside, the US economy seems to be improving.  But the European economy continues to teeter on the brink of a major recession.

News …

~ Retail Sales Up Slim 0.1% in December

http://www.marketwatch.com/story/retail-sales-up-slim-01-in-dec-2012-01-12

~ US Jobless Claims Rise 24,000 to 399,000

http://www.marketwatch.com/story/us-jobless-claims-rise-24000-to-399000-2012-01-12

~ US Foreclosure Filings Hit Four-Year Low in 2011

http://www.cnbc.com/id/45968837

~ Jimmy Dimora Trial Set to Begin Today

http://www.cleveland.com/countyincrisis/index.ssf/2012/01/jimmy_dimora_trial_a_guide_to.html

~ How Met Life’s Exit Will Impact the Mortgage Industry – Will Others Follow?

http://www.mortgagenewsdaily.com/channels/pipelinepress/01112012-metlife-residential-lending.aspx

~ Fed Survey Showed Economy Ended 2011 with Strength

http://www.cleveland.com/business/index.ssf/2012/01/federal_reserve_survey_shows_e.html

~ US Bank Profits Could Be Lifted By Business Loans

http://www.cnbc.com/id/45966811

~ Bank of England Holds Rate; No More Money Printing

http://www.cnbc.com/id/45853610

~ RBS to Cut 3,500 Jobs in Investment Banking

http://finance.yahoo.com/news/rbs-cut-3-500-jobs-111004329.html

~ Stock Futures Rise after Europe Debt Auctions

http://finance.yahoo.com/news/stock-futures-signal-early-dip-094218508.html