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How ‘bout them Buckeyes? Talk about an impressive performance.
The tone was set right away last night when reserve linebacker Dorian Bell delivered a bone crushing hit on the opening kickoff, resulting in a fumble that the Buckeyes recovered, and then immediately capitalized on. The offense looked excellent. Terrelle Pryor looked much more technically sound than last year, Brandon Saine looked faster and stronger, and the trio of Posey, Sanzenbacher, and Stoneburner looks like it has the makings of being the best Buckeye receiving corps since Teddy Ginn and Santonio Holmes.
And the defense. The freaking defense. Fast and violent are the operative terms that came to mind when watching them fly around last night. They gave up nothing. And how nice was it to see Tyler Moeller back in the mix? He was the defensive MVP last night from the hybrid “star” position in Coach Heacock’s defense.
My only concerns? The special teams play was again shaky, as it was in the Rose Bowl. And we do need someone to step up as the third WR.
But make no mistake; this is one heckuva football team. And this should be a real fun season.
Bring on the Hurricanes.
Quote of the Day …
“Over? Did you say over? Nothing is over until we decide it is! Was it over when the German’s bombed Pearl Harbor? He#* no! And it ain’t over now! Cause when the going gets tough … the tough get goin’. Who’s with me?” ~ Bluto Blutarski, from the 1978 classic ‘Animal House’
Market …
A better than expected jobs report. Not a good jobs report … but a better than expected one.
And the markets don’t trade off the actual numbers. The expectations for all big numbers and economic news are baked into the markets in the days and weeks leading into their release. Then, after they’re released, the markets generally trade off of where those numbers came in versus expectations.
That’s why the stock market is set to rally hard off of a jobs report showing that the economy shed another 54,000 jobs in August. Fixed income assets like treasuries and mortgage bonds are tanking. Mortgage rates are going to get bumped up almost everywhere today.
So let’s take a quick look inside the employment # …
- Overall, the economy lost 54,000 jobs as 114,000 temporary census positions came to an end.
- The jobless rate rose to 9.6 percent from 9.5 percent in July. More than a half-million Americans resumed their job searches in August, which drove up the jobless rate. When the unemployed stop looking for work, they are no longer counted in the jobless rate. It’s the first time the labor force has grown since April.
- Because of the large amount of census workers we knew would be laid off, the private payroll component to this # was what everyone had their eyes peeled for. Private companies added a net total of 67,000 new jobs last month and both July and June’s private-sector job figures were upwardly revised.
- Temporary employment rose by nearly 17,000, after ticking down in July.
Again … not good news. But better than expected. As we move into fall and then winter, these employment reports will continue to drive stock prices and mortgage rates … and also have a big impact on potential policy shifts for both the Federal Reserve and federal government.
News …
~ Fewer Jobs Lost in August; Private Hiring Also Beats Expectations
http://www.cnbc.com/id/38988946
~ Stock Futures Jump After Jobs Report
http://www.marketwatch.com/story/us-stock-futures-jump-after-jobs-report-djia-up-88-2010-09-03?dist=beforebell
~ Hurricane Earl Rakes US East Coast with Wind, Rain
http://www.cnbc.com/id/38986679
~ BP Oil Spill Cost Hits $8 Billion as Rig Probe Ends
http://www.cnbc.com/id/38988169
~ Fears Growing over Global Food Supply
http://www.cnbc.com/id/38979837
~ Apple, Google to Clash in Music Space by Christmas
http://www.cnbc.com/id/38986561
~ Continental CEO to Clarify Statement about Cleveland Flights
http://www.cleveland.com/business/index.ssf/2010/09/continental_airlines_ceo_jeff.html
Buckeye season is here. Finally!
While I would love to be going to tonight’s game (is there any better feeling than walking into a packed Ohio Stadium) … and be at Matt and Joe Cotter’s excellent tailgate party (which is like 200 yards from The Shoe) … I’ll have to settle for the alternative: racing out of the office to pick up some fried food and refreshments, and taking the game in at home with my best buddy and my five-year old.
I was going to try to lay out my thoughts on the game tonight … but I am unable to do it any better than the excellent Dan Wismar does in his fantastic preview of this evenings game:
The Ohio State Buckeyes will host Marshall University Thursday night at Ohio Stadium to kick off the 2010 season, the first step in a journey they hope will land them in Glendale, Arizona in January. College football teams all around the country have the same dream, but this year the Buckeyes are one of a handful of teams that arguably have the dream and the team. And these Buckeyes are not shy about going on record that their goal is the national championship.
Jim Tressel has 15 starters returning from the 11-2 Big Ten and Rose Bowl champions of last year, a team that finished the season on a six-game winning streak, and ranked No. 5 in the final poll. When the Buckeyes look back at the two close losses (Purdue and USC) that kept them from an appearance in the BCS final a year ago, they see games that the evolving OSU team that beat Oregon in January would have won. A certain determination and seriousness of purpose is the overriding mindset on display these days around Ohio State football. The entire program exudes it.
And Dan on tonight’s opponent, the Marshall Thundering Herd …
OSU coaches have seen all the film of Marshall’s 2009 season of course, and they’re familiar with the Herd’s personnel, but the schemes Marshall will be running are a little less clear due to the changeover in the coaching staff. Most of the preseason punditry has them as a middle-of-the-pack team in Conference USA West behind UCF and Southern Miss.
Doc Holliday takes over the reins of the Herd after former OSU assistant Mark Snyder was fired following the 2009 season. Snyder went 7-6 last year, including a Little Caesar’s Bowl win over Ohio U., but his mark over five seasons was just 22-37, prompting the school to pull the plug.
Holliday hails from West Virginia, and he spent 20 years on the staff at WVU before moving on to assistant jobs at N.C. State and Florida. It is presumed that he’ll be bringing some version of the spread offense into the Shoe against the Buckeyes. He’ll operate mostly out of a one-back spread set, and do his best to get the ball to his playmakers at running back and receiver.
Well, the Big Ten split up Ohio State and Michigan into different divisions (starting next year) in the new revamped 12-team Big Ten. But they kept The Game in its usual spot, the final week of the regular season in late November. Illinois, Indiana, Penn State, Purdue, Wisconsin and Ohio State make up one division, with Iowa, Michigan, Michigan State, Minnesota, Northwestern and new 2011 member Nebraska, in the other.
While I would have still preferred to see the conference put Ohio State and Michigan in the same division (ensuring that The Game would be the only time they played each season) … this is a much better alternative than the one being bandied about last week that would have moved the annual game between the legendary rivals into the middle of the season. After looking like that was the direction the Big Ten was going to go in … a groundswell of fury from angry fans prompted the powers that be to come to their senses … and not jerk around with the greatest rivalry in all of sports.
But with the two teams now in opposite divisions, and The Game remaining the final contest of the regular season, it is conceivable that the two teams could meet in back to back weeks if they each win their respective sides of the newly reconstructed conference. The Big Ten Championship Game will be held at a neutral site each season. The Conference selected Lucas Oil Stadium (home of the Indianapolis Colts) as the site for its first title game in late 2011.
Quote of the Day …
“You will win on Saturday. You will have to do what we have planned to do all week, but essentially you will win because you are Ohio State and they will respect you for that. They know what we do and they will respect you, and I’ll tell you something else! That respect soon turns to fear, and by the time we’ve hit them three or four times in that first quarter they know they can’t win.” ~ Woody Hayes
Market …
Got the jobless claims # this morning. Came in at 472,000, right about at expectations and down 2,000 from last week’s total of 474,000.
The markets have been jittery all week ahead of tomorrow morning’s August employment report. Stocks, treasuries, mortgage bonds … they’ve been all over the place. Seems like the market doesn’t even know how to react this morning to a # that came in at about where people were expecting it to.
Bottom line, the tone for every financial market here in America (and most around the world) will be set by tomorrow’s jobs #. It will fuel the direction for stock prices, mortgage rates, 401K accounts … you name it. The entire economy is hinging on the employment picture. People worried about jobs have cut back on their spending, which has also been a drag on the economy this year. However, yesterday, retailers reported stronger than expected monthly sales for August … though big discounts and the back-to-school shopping season might have provided just a temporary lift. Also yesterday, the manufacturing data that was released was also stronger than expected. As a result … the Dow jumped over 250 points yesterday … getting the month of September off to a good start for equity investors.
We have some more data coming out at 10 AM this morning as well. We get the National Association of Realtors’ index of pending sales, which likely fell for the third straight month in July after the home buyer tax credit expired. Pending sales are considered a barometer for future completed sales because typically there is a lag between the signing of a sales contract and a completed deal. We also get data on factory orders, which likely rose in July after a sharp drop in June. Economists expect orders rose 0.3% after falling 1.2% a month earlier. The growth in factory orders would fit with the upbeat manufacturing data released yesterday.
News …
~ Preview: Marshall at Ohio State
http://theclevelandfan.com/ohio-state-buckeyes/3-buckeye-archive/6806-preview-marshall-at-ohio-state
~ Jobless Claims Decline by 6,000 to 472,000
http://www.marketwatch.com/story/jobless-claims-decline-by-6000-to-472000-2010-09-02
~ New Mortgage Rate Lows Lost as Stocks Rally and Bonds Correct
http://www.mortgagenewsdaily.com/consumer_rates/170001.aspx
~ Hurricane Earl Strengthens, Bears Down on North Carolina Coast
http://www.bloomberg.com/news/2010-09-02/hurricane-earl-gains-strength-as-it-moves-closer-to-u-s-eastern-seaboard.html
~ Cleveland Officials Satisfied With Continental’s Explanation of Document That Suggests Big Cuts to Flights
http://blog.cleveland.com/metro/2010/09/cleveland_officials_are_satisf.html
~Retailers Post Surprisingly Strong August Sales
http://www.cnbc.com/id/38957880
~ Bernanke Testifying to Crisis Inquiry Panel
http://finance.yahoo.com/news/Bernanke-testifying-to-crisis-apf-572552694.html?x=0&sec=topStories&pos=5&asset=&ccode=
~ European Central Bank Keeps Rates on Hold at 1%
http://www.cnbc.com/id/38969092
~ Lehman Says Two Units Need Help to Avoid Failing
http://www.cnbc.com/id/38968487
Tick, tock, tick, tock. Football season really gets rollin’ tomorrow night … when THE Ohio State Buckeyes host the Marshall Thundering Herd at 7:30 PM at historic Ohio Stadium.
The Buckeyes enter the season loaded for bear. They basically return their entire offense, including Heisman Trophy candidate Terrelle Pryor. The defense is expected to be better as well, with seven senior starters … including all-world defensive lineman Cam Heyward, and the dynamic Brian Rolle/Ross Homan duo at linebacker.
I’ll touch more on the game in tomorrow’s Dish. Below I’ve linked an excellent column from superb Buckeye columnist Dan Wismar, who talks about his “Ten Breakout Buckeyes” for the 2010 season:
http://theclevelandfan.com/ohio-state-buckeyes/3-buckeye-archive/6787-ten-breakout-buckeyes
Man is it great to be a Buckeye. The tradition of loving and living and dying with this team will officially begin to get passed on to another generation when I bring my 5-year old to his first game on September 18th when the Bucks host the Ohio Bobcats.
If anyone is interested in reading a good book or seeing a good movie, “The Girl With The Dragon Tattoo” is an excellent option. I read the book in the airports/airplane on a recent work trip … not knowing it was actually the second book of a trilogy by the late Swedish author and journalist Stieg Larsson. Larsson actually passed away in 2004 before the three books were published, and all three have become posthumous best-sellers. The trilogy’s central character is a woman by the name of Lisbeth Salander, an asocial and extremely intelligent computer hacker and researcher, who specializes in investigating people.
I also had no idea that this book was made into a film. It’s been a smash hit in Sweden, Denmark, & Norway … and was released in the US (with subtitles) at limited theaters in March, and is now on DVD … with Noomi Rapace getting Oscar buzz for her role as Lisbeth. David Fincher (Se7en, The Fight Club, Panic Room, The Curious Case of Benjamin Button) has signed on to direct an American version of the film, which will hit theaters in late 2011, with Daniel Craig (new James Bond), Rooney Mara, and Robin Wright all signed on for major roles.
Quote of the Day …
“I don’t apologize for anything. When I make a mistake, I take the blame and go on from there. I just despise to lose, and that has taken a man of mediocre ability and made a pretty good coach out of him.” ` Woody Hayes
Market …
The first of this week’s three employment related releases came out this morning as the ADP private employment index showed that private employers in the US cut 10,000 jobs in August. The figure was around what analysts were expecting. The two biggest jobs numbers are still coming, with first time weekly unemployment claims set to be released at 8:30 AM tomorrow, and the highly anticipated August jobs report due out ay 8:30 AM on Friday morning.
Stock futures are up this morning. Encouraging manufacturing data from China and better-than expected growth in Australia also had investors preparing to welcome September with gains after a dismal August. The Dow Jones shed 700 points during the final three weeks of the month.
Still due out this morning at 10 AM are figures on construction spending and the ISM Index, which is a national survey of purchasing managers which covers such indicators as orders, production, employment, inventories, delivery times, prices, export orders, and import orders. Economists are forecasting that the index slipped to 53.0 in August from 55.5 a month earlier. Any reading above 50 indicates expansion in the sector. Regional surveys of manufacturing activity in recent weeks also pointed to slowing growth in the sector, which had been among the strongest during the first half of the year.
News …
~ Obama Declares End to Iraq Mission, Turns Focus to Economy
http://www.cnbc.com/id/38942540
~ Continental Airlines Document Suggests Huge Cuts to Flights Out of Cleveland
http://blog.cleveland.com/metro/2010/08/continental_document_suggest_h.html
~ Home Prices Rise, But Gains May End Soon
http://www.washingtonpost.com/wp-dyn/content/article/2010/08/31/AR2010083106020.html
~ Lehman, Wachovia CEO’s Coming Before Panel
http://www.cnbc.com/id/38947813
~ US Retailers Get Back to School Boost in August
http://www.cnbc.com/id/38919322
~ Planned Layoffs Hit 10-Year Low, First Drop Since April
http://www.cnbc.com/id/38949732
You know it’s going to be a good day when you get in the car, turn on the satellite radio, and the first thing you hear is the sax solo from “Jungleland” by Bruce Springsteen. Then you pull into Dunkin Donuts, and find out today is the day you get a free extra large coffee thanks to a completed punch card. Then you go across the street from the office to The Place To Be Diner in Lakewood and order eggs, and don’t drop dead on site due to salmonella.
I’m ready for anything today.
Quote of the Day …
“On the whole, the happiest people seem to be those who have no particular cause for being happy except that they are so.” ~ William R. Inge
Market …
Investors are terrified about this jobs # we got coming up on Friday.
And it’s warranted. Most economists are expecting that the US economy shed just over another 100,000 jobs in August, after losing 131,000 jobs in July. They’re also expecting the national unemployment rate to rise from 9.5% to 9.6% … a number that would look far worse if it included the people who are too discouraged to look for work. The employment situation is now regressing here in America, and doing so in the wake of an $814 billion dollar economic stimulus package that was executed specifically to create jobs.
Stocks got crushed yesterday. The Dow shed 140 points and closed just above the psychological 10,000 mark. And it was off of no news really.
Adding to all the uneasiness in the markets is the fact that there’s all kinds of other economic data set to be released leading up to Friday’s jobs # … including a whole host of crucial data today. At 9 AM we get the Case-Shiller Home Price Index, which is an index of home prices in 20 major US cities. At 10 AM we get Chicago Purchasing Managers Index and a Consumer Confidence reading. And at 2 PM, the Fed will release the minutes from their last FOMC meeting.
Expectations on Case-Shiller are that home prices increases just 0.3% nationally in June (index runs a couple months behind). Increases to home prices should be taken with a grain of salt right now though … as sales of previously occupied homes plunged in July to the lowest level in 15 years, despite the lowest mortgage rates in decades and bargain prices in many areas.
The Chicago PMI likely fell in August to 57 from 62.3 last month … and a drop in the index would follow other regional manufacturing indices that showed activity in the sector slowing in other parts of the country throughout the month. Manufacturing had shown consistent growth during the first half of the year, so the slowdown in the industry has been particularly troubling and added to worries about the pace of growth for the remainder of 2010.
Consumers also remain uncertain about the economy, which has kept consumer confidence readings low. This morning’s reading on confidence is expected to show little change in August, according to most economists. Confidence has remained low as people worry about their jobs. That has cut into spending, which is the primary driver of the nation’s economy. Until unemployment drops, consumers are likely to keep spending in check, which will be a drag on the recovery. Chicken and the egg.
And then early this afternoon, the Federal Reserve will release minutes from the Aug 10 meeting of the Federal Open Market Committee, during which it resolved to use the proceeds of maturing MBS to buy Treasury securities.
News …
~ Extended Discounts to Weigh on August Retail Sales
http://www.cnbc.com/id/38929945
~ HUD Secretary Tiptoes Around Another Tax Credit, Pushes Balanced Housing Policy
http://www.mortgagenewsdaily.com/08302010_shaun_donovan_hud.asp
~ Refunds on Way for Property Owners Overcharged on Cuyahoga County Taxes
http://blog.cleveland.com/metro/2010/08/refunds_on_way_for_property_ow.html
~ Summer Movie Box Office Attendance Falls to Lowest Level Since 1997
http://www.bloomberg.com/news/2010-08-31/summer-movies-fill-fewest-seats-since-1997-as-price-increases-buoy-sales.html
~ Stock Futures Fall Ahead of Economic Data & Fed Minutes
http://www.marketwatch.com/story/stock-futures-fall-ahead-of-data-fed-minutes-2010-08-31?dist=beforebell
It has been a perfect summer here on the north coast from a weather perspective. We’ve got the best summers here. January through March tests the patience and loyalty of Clevelanders each year, but it just doesn’t get any better than the weather we get to enjoy from June through October. Temps in the high 70’s to low 80’s with no humidity, a nice little breeze off the lake, and no chances of any natural disasters sweeping though here. As much as you hear people complain about our winter weather, it seems like the area takes our summers for granted.
What are the best patios in Northeast Ohio? I was lucky enough recently to spend evenings on what have to be two of the best. Jekkyl’s (formerly Blake’s) in downtown Chagrin Falls, and an Irish restaurant/pub called The Harp on the corner of Detroit and West 45th.
The patio at Jekkyl’s overlooks the falls in Chagrin, has a great big outdoor fireplace, and is a cool mixture of regular dining tables, stand up bar tables, couches, and coffee tables. The Harp’s patio offers a fantastic view of Lake Erie, Steelyard Commons, and the Cleveland skyline. The food at both places is excellent as well.
Long time Dish readers know one of my biggest pet peeves is how poorly the city of Cleveland has utilized their greatest natural asset – the waterfront on Lake Erie. The latest edition of Scene Magazine has a fantastic article in there that goes behind the scenes to try and lay out the series of decisions that have contributed towards the city being unable to develop the waterfront.
The column is titled “Port in a Storm: How years of bungling and self-interest robbed Cleveland of its future”. It can also be accessed on line at the link below:
http://www.clevescene.com/cleveland/port-in-a-storm/Content?oid=2013336
Quote of the Day …
“Watch, listen, and learn. You can’t know it all yourself … anyone who thinks they do is destined for mediocrity.” ~ Donald Trump
Market …
This is a huge week for the markets.
It’s absolutely jam packed with economic news and releases, and is all capped off with the August jobs report on Friday morning at 8:30 AM EST. Employment data is driving all the financial markets here in America right now … as an economic recovery domestically will be impossible until more people get back to work.
The unemployment rate right now is 9.6% (was 4.8% in April ’08), but that does not factor in the people that have stopped looking for work, or those that are working part time or are under-employed. Most economists will tell you that the true unemployment rate in America right now is 16-17%. Additionally, waning confidence from consumers about the employment situation has also put a hurting on consumer spending from those that are employed. The savings rate in this country is more than triple what it was three years ago! People who do have money are sitting on it.
It’s a real pickle that we’re in right now economically, and no one seems to have any definite answers on how to fix it, including the Fed. They met last week at their annual policy symposium in Jackson Hole, Wyoming … and Big Ben Bernanke’s theme of his keynote speech was along the lines of “we’re ready to act if need be, but we can’t do this alone”. Bernanke has told Congress that some additional fiscal stimulus could be helpful in supporting the recovery, as long as it was accompanied by a credible plan to gradually bring deficits under control and stabilize the ratio of debt to GDP. Unlike his predecessor Alan Greenspan, who supported the 2001 and 2003 Bush tax cuts, Big Ben has not weighed in on specifics (like the Obama administration’s proposal to spur lending to small businesses, or the call by most Republicans to extend all of the Bush-era tax cuts) … but has instead urged that a bipartisan fiscal commission appointed by Obama will deliver specific and meaningful proposals.
Here’s what we got coming up this week …
Tuesday – Chicago PMI, Consumer Confidence, release of the minutes from the last Fed meeting
Wednesday – Construction Spending, ISM Index
Thursday – Jobless claims, Productivity, Pending Home Sales Index, Factory Orders
Friday – Employment report, ISM Services Index
News …
~ Home Loan Refinancing is Booming as Rates Fall; Wary Homeowners Staying Put
http://www.cleveland.com/business/index.ssf/2010/08/home_loan_refinancing_is_booming_as_rates_fall_wary_homeowners_stay_put.html
~ Bernanke Tries to Manage Expectations of Fed’s Role
http://www.cnbc.com/id/38911498
~ As September Comes In, Investors Set to Begin a Rough Month
http://www.cnbc.com/id/38905543
~ Economists: Fed Policy on Right Course
http://www.cnbc.com/id/38914329
~ Economic Reports Could Push Fed to Take Further Action
http://www.usatoday.com/money/economy/2010-08-30-fed30_ST_N.htm
~ US Consumers Split into Two Camps: Spend & Save
http://www.cnbc.com/id/38913627
~ Japan Eases Policy; Plans New Economic Stimulus
http://finance.yahoo.com/news/Japan-eases-policy-plans-new-apf-3849116212.html?x=0&sec=topStories&pos=main&asset=&ccode=
The latest edition of Travel & Leisure Magazine recently did a piece on the “Ten Coolest Suburbs in America”. Coming in at #3? Lakewood, OH.
Dish readers know my history. I am a died in the wool east sider. Raised in Willowick, bachelor pads in Euclid, Mayfield, Mentor … and owned a condo in Mentor before buying a house in Twinsburg three years ago. I honestly think the first time I was ever in Lakewood was for my first interview here at First Federal.
I love working in Lakewood. It’s right on the lake. A 5-10 minute drive down Clifton from being right in the heart of downtown Cleveland. The next city west is Rocky River, which is a great west side suburb in its own right, with a lot of great places to hang out. Lakewood is the youngest city in Ohio per the last census. It’s got all kinds of great little mom and pop shops like the Elmwood Bakery … where I can pick up a box of 24 pastries for the office, baked that morning, for like $16. The same box of pastries in Beachwood, OH would be $40. And Lakewood is absolutely loaded with cool bars and restaurants. Within walking distance of my office are four coffee shops, and eight to nine places I can go get lunch. There is so much to do here. If I was single, I would move here in a nanosecond.
Ultimate guys guy weekend for me. 100+ great people coming out tomorrow for The 3rd Annual TheClevelandFan.com Golf Outing at the beautiful Little Mountain Country Club in Concord, OH. Weather forecast is 82 degrees and “sunny and pleasant”. Four man scramble, followed up by a steak dinner, open bar, and Browns/Lions on their big back patio after the round.
Then, Sunday, my fantasy football draft. This is the 21st year of our league, which I started when I was 11 years old. We have 32 teams, and 50 owners (counting co-owners). It’s actually two leagues in one, with two drafts, two commissioners, and the champions of each side meeting in the championship game for a substantial amount of money and pride and a traveling trophy taller than Charla Voss. We meet for breakfast at 8 AM, then all pile into my buddies dad’s bar in Eastlake at 10 AM for the start of the draft. I’ve won the league six times in the first 20 years, which I will remind everyone of at least 50 times by 2 PM Sunday … to which they will retort with demeaning jokes about my family and questioning my manhood.
God I love being a guy.
Quote of the Day …
“Remember all the movies, Terry, we’d go see … Trying to learn to walk like the heroes we thought we had to be. And after all this time, to find we’re just like all the rest … Stranded in the park and forced to confess.” ~ Bruce Springsteen, 1985, ‘Backstreets’
Market …
We got a report this morning on 2nd quarter GDP (Gross Domestic Product), which basically is the measure of the size of the US economy as a whole. This was actually the revised #. GDP growth for the 2Q had previously been reported at 2.4%. This morning, it was revised down to 1.6%. That’s a frighteningly low amount of growth, but was actually better than economists were expecting. They were expecting the # to be revised down to +1.4%.
The revision follows a week of disappointing economic reports. The housing sector is slumping badly after the expiration of a government homebuyer tax credit. New and existing home sales were both reported as way down this week despite record low mortgage rates. And business spending on big-ticket manufactured items such as machinery and software (AKA durable goods), an important source of growth earlier this year, is also tapering off. As a result, most economists expect the economy will grow at a very weak pace for the rest of this year.
Still, stock futures rose modestly after the announcement as investors appeared relieved the estimate wasn’t lower as some economist had forecast. Investors will now turn their attention to a speech by Fed Chairman Big Ben Bernanke, scheduled for 10 AM that will address what the Fed may do in response to the weakening economy. Bernanke will deliver the keynote speech at an annual banking summit held each year out in Jackson Hole, Wyoming … and the entire market will have their eyes and ears peeled.
News …
~ Economic Growth at 1.6%, Bad … But Better Than Thought
http://www.cnbc.com/id/38878563
~ Bernanke, Trichet Economic Paths May Diverge at Jackson Hole
http://www.bloomberg.com/news/2010-08-26/bernanke-diverges-from-trichet-in-wyoming-as-u-s-falters-germany-surges.html
~ Key Jackson Hole Question: What Can and Will Fed Do?
http://www.marketwatch.com/story/bernankes-helicopter-could-move-to-new-altitude-2010-08-25?dist=beforebell
~ BofA Economist: Bernanke Must Be Clear on Objectives in Keynote Speech
http://www.cnbc.com/id/38869091
~ Markets Await Directional Guidance from Fed Chairman
http://www.mortgagenewsdaily.com/mortgage_rates/blog/169149.aspx
~ SEC on Attack, Vows More Action on Crisis
http://www.cnbc.com/id/38871515
The Plain Dealer released their preseason high school football rankings this morning, and once again, the east side of Cleveland is dominating the top of the rankings. Of the top 17 schools in the rankings, eight are on the east side, including Solon, Mentor, and Maple Heights coming in at 2, 3, and 4. Glenville is ranked #1, with St. Ed’s and St. Ignatius coming in at #5 and #6 respectively.
The Akron area placed four teams (SVSM, Hoban, Buchtel, Walsh) in the top 14 … and the top west side teams in the rankings were Avon Lake at #10, Strongsville at #13, North Royalton at #18, and Olmsted Falls at #19.
High school football gets started tomorrow night. The Buckeyes first game is one week from today. And the NFL gets started the weekend after that.
Finally.
It’s looking more and more likely that The Big Ten Conference is about to sell out the Ohio State/Michigan rivalry for a couple extra dollars each year. They conference appears poised to split Michigan and Ohio State up and put them in opposite divisions of the new 12-team Big Ten to allow for the possibility of a league title game rematch starting in 2011. And move The Game from its traditional end of the year slot to the middle of the season.
This is really infuriating to me. Over the course of the last 20 years, we’ve all watched sports slowly become bastardized by money. We just watched one of the greatest regular season teams in Cleveland sports history come apart at the seams because their star player quit on the team so he could more quickly and easily pursue a pre-arranged agreement to “bring his talents to South Beach” with other equally detestable star players.
Ohio State/Michigan was one of the few pure things left. And not Ohio State/Michigan playing on October 22 and then again later in the year at a neutral site.
Playing one time each year. In the last game. The Game.
You know … I get the whole wanting to go to 12 teams, two divisions, and create a Conference Championship game thing. I’m not for it, but realize it’s inevitable. It doesn’t mean you have to sell out the Ohio State/Michigan rivalry. You put them in the same division, and you keep The Game as the last game of the year, in late November. Just like they did with Auburn and Alabama. End of story.
Anything else would be lunacy.
Quote of the Day …
“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.” ~ Steve Jobs
Market …
Some good news! Relatively speaking that is.
The Labor Department reported this morning that first time unemployment claims last week fell by 31,000 to 473,000. Economists were expecting the # to come in at about 485k. The drop comes after a steep rise during the previous three weeks that sent claims to their highest level in nine months … and comes off the heels of last week’s #, which exceeded 500k, sending the stock market into a four day tailspin.
473,000 is still an unhealthy figure. Claims need to be around 300k for normal levels of job growth. But at least it’s a step in the right direction. Problem has been … the employment sector has seen these blips of better than expected news, but never been able to sustain it. High unemployment remains, by far, the biggest obstacle to a stronger economic recovery because people worried about their jobs have cut back on spending. Companies have been slow to hire because of uncertainty surrounding tax, financial regulation and health care reform costs as well as worries about consumer demand. It’s a vicious cycle right now.
The other big news lurking out there as the week heads to a close is the annual symposium of Fed policy makers and bankers out in Jackson Hole, Wyoming this week. Investors will be closely focused on Fed Chairman Big Ben Bernanke’s keynote speech on Friday. Many feel he may reveal plans for more monetary easing in that speech. We also get a preliminary 3Q GDP reading tomorrow as well as consumer sentiment.
News …
~ Weekly Jobless Claims Fall 31,000 to 473,000
http://www.marketwatch.com/story/weekly-jobless-claims-fall-31000-to-473000-2010-08-26-831190?dist=beforebell
~ Fed Policy Foggy as Economic Picture Clouds
http://www.washingtonpost.com/wp-dyn/content/article/2010/08/25/AR2010082507178.html
~ Huntington Revives Merger & Acquisition Strategy
http://www.thestreet.com/story/10844636/1/huntington-revives-ma-strategy.html?puc=tscft&cm_ven=tscft
~ Capital Investment Slowdown in US Signals Reluctance to Hire
http://www.bloomberg.com/news/2010-08-26/business-spending-drop-in-u-s-may-hit-job-market-undermining-recovery.html
~ Fed in Emergency Bid to Put Bailout Ruling on Hold
http://www.cnbc.com/id/38860972
~ USDA Rural Housing Issues Funding Update: Lenders Still in Limbo
http://www.mortgagenewsdaily.com/08252010_usda_single_family_funds.asp
~ Facebook’s Value Soars as Investors Seek Pre-IPO Stake
http://www.ft.com/cms/s/0/054fc0ee-afa7-11df-b45b-00144feabdc0.html
~ Stock Futures Climb as Jobless Claims Fall
http://www.marketwatch.com/story/us-stocks-futures-climb-after-jobless-claims-fall-2010-08-26?dist=beforebell
Some quick hits today …
Cedar Point announced a new ride yesterday, and did it on their Facebook page … just more proof of how viable social media outlets like Facebook and Twitter are becoming for all types of businesses (we’re desperately trying to get First Fed of Lakewood there). The ride is called WindSeeker, and is a swing ride that spins its riders 30 stories above the ground. Riders sit in two-person swings and are spun at speeds between 25 to 30 mph. The swings will reach out almost 45 degrees from the ride’s tower. WindSeeker’s tower reaches heights of 301 feet, and rises almost as high as the first hill of the legendary roller coaster Millennium Force.
The Buckeyes added a home game with the Colorado Buffaloes to their 2011 football schedule yesterday. Next year’s schedule is a scary one for the Bucks, even if Terrelle Pryor were to come back for his senior season. Road games at Miami of Florida, Penn State, and Michigan. With the home slate now consisting of Akron, Toledo, Colorado, Michigan State, Minnesota, Northwestern, and Iowa.
A man walks into a butcher’s shop and inquires of the butcher: “Are you a gambling man?” The butcher says “Yes”, so the man said: “I bet you fifty bucks that you can’t reach up and touch that meat hanging on the hooks up there.” The butcher says “I’m not betting on that.” “But I thought you were a gambling man” the man retorts. “Yes I am” says the butcher “but the steaks are too high.”
Quote of the Day …
“Great minds have purposes; little minds have wishes. Little minds are subdued by misfortunes; great minds rise above them.” Washington Irving
Market …
The hits just keep on coming to the economy. Yesterday morning we got news that existing home sales fell 27.2% in July, to their lowest level in 15 years, a drop much worse than the very pessimistic expectations. Then this morning, orders for durable goods came in much lower than expected as well. Durable goods are items considered to be useful for at least three years (such as vehicles, large appliances and computers) … and is a good indicator of business investment. After falling by 1.5% last month, an increase in durable goods orders of 2.5% was expected in July. Orders rose just 0.3%.
The real story though is the brutal existing home sales #, which jives with what I’m seeing in the marketplace. With rates at historic low levels, refinance activity has picked up. But we’re not seeing a lot of purchase for how low rates are.
It’s a handful of different things that are causing this. Some people want to buy, but can’t because they have a home to sell. Many others are leery of making an investment as large as a house with the employment picture and US economy so shaky. Others are willing buyers that don’t have good enough credit in today’s tighter environment. And there’s another group that is ready and willing to buy, but feels home prices and mortgage rates are still falling, and they can get a better deal by waiting.
Stocks are going to continue to take a beating today, and the Dow is almost assured of falling and closing below the psychological 10,000 mark. The Dow shed another 130 points yesterday to close at its lowest level in seven weeks, and has now had four straight losing sessions.
There’s one more piece of news due out this morning as new home sales come out at 10 AM. The figure is expected to come in at 335,000 … just north of last month’s 330,000 total.
News …
~ Sales of Existing Homes Plunge, Both Nationally and in NE Ohio
http://www.cleveland.com/business/index.ssf/2010/08/home_sales_plunge_27_percent_t.html
~ Home Refinancing Demand Up; Rates Hit New Lows
http://www.cnbc.com/id/38845472
~ More Bad News; Durable Goods Orders Rise Far Less than Expected
http://www.cnbc.com/id/38846567
~ Global Outlook Casts Shadow Over Fed Mountain Retreat
http://www.cnbc.com/id/38844890
~ Fed Divided over Policy Direction, WSJ Reports
http://www.marketwatch.com/story/fed-divided-over-policy-direction-wsj-reports-2010-08-24?dist=beforebell
~ US Stimulus Boosted by Growth By Up To 4.5%
http://www.cnbc.com/id/38845701
~ Credit Card Debt Drops to Lowest Level in Eight Years
http://finance.yahoo.com/news/Credit-card-debt-drops-to-apf-3078079176.html?x=0&sec=topStories&pos=1&asset=&ccode=
~ AAA: Labor Day Travel Expected to Rise 9.9%
http://www.cnbc.com/id/38846233
~ Toll Brothers Posts 3Q Profit
http://finance.yahoo.com/news/Toll-Brothers-posts-profit-apf-3202681437.html?x=0&sec=topStories&pos=2&asset=&ccode=
~ Fed Unlikely to Lower Rate it Pays on Bank Reserves
http://finance.yahoo.com/news/Fed-unlikely-to-lower-rate-it-rb-3033872049.html?x=0&sec=topStories&pos=4&asset=&ccode=
The questions kids ask. Some funny. Some tough to answer. Why is the sky blue? How do shows get inside the television? Who do you and mommy argue?
Got a tough one at the dinner table from my five year old last night when the Tiger/Elin divorce came up.
“Daddy, why did Tiger have 13 girlfriends?”
What do you say to that? I sounded like Ronald Reagan trying to explain the Iran Contra affair under oath attempting to answer that one.
So after dinner, my kids are playing. My wife is upstairs on the computer, buying God knows what behind my back. Then it hits me … I have a window to relax. Any married men with multiple children under 6 years old know how special these moments are. So I sneak out onto the back patio … throw my shades on, grab a beverage, jump on a lounge chair, and kick my feet up.
Ahhh.
Less than five minutes later, the reality of my life sets in as my son spots me.
Nicholas: “Daddy, what are you doing?”
Swerb: “Nothing son. Go play with Chloe.”
Nicholas: “Are you relaxing?!?”
Swerb: “Of course not … give Daddy a couple minutes to think and I’ll buy you a new Star Wars action figure.”
Nicholas (sprinting towards the stairs): “Mommy!!! Daddy is relaxing!!!!”
Swerb Wife: “What?!? He better not be.”
Nicholas: “He is! On the back patio, all by himself.”
Swerb (now inside, furiously emptying a full carton of milk into the sink): “We’re out of milk! Have to run to CVS … be right back.”
Quote of the Day …
“We have more than 85,000 seats in our stadium and every one of them is filled every game. People from all over the state, no matter what their politics or religion or color, they love and rally round the Buckeyes.” ~ Woody Hayes
Market …
It’s not a pretty picture right now for the US economy. You want sugar coating; you’re not going to get it here. Sorry.
Market is shielding their eyes before all economic #’s and releases right now, expecting the worst. This morning is no different, as we get existing home sale data at 10 AM. The National Association of Realtors is expected to report that sales of previously occupied homes plunged in July to their lowest level in more than a decade. Home sales have tumbled since a home buyer tax credit expired at the end of April, despite mortgage rates falling to record lows. Also, underwriting guidelines on loans are tighter … and there are also many other people that want to buy, but need to sell an existing home to do so. Potential home buyers also remain worried that home prices may still be going down and the job situation in this country is adding to the caution. The unemployment rate remains at 9.5% and weekly claims for unemployment benefits have consistently risen in recent weeks.
Stocks fell yesterday again, with the Dow dropping 39 points … and stock futures are down again this morning ahead of the home sales #.
Looking past today … data on new home sales (today’s # is exiting home sales); durable goods orders, weekly jobless claims and consumer sentiment are scheduled for release later in the week. Also, the government will release a revised report on second-quarter gross domestic product. And Fed Chairman Big Ben Bernanke is expected to give a speech at the end of the week that many investors think will provide further clues about what the Fed might do to help stimulate growth.
News …
~ Report: Fed Divided on August Decision to Buy Treasuries
http://www.cnbc.com/id/38828062
~ Cuyahoga County May Boost Bed Tax, Making Rate Highest Nationwide
http://www.cleveland.com/cuyahoga-county/index.ssf/2010/08/cuyahoga_county_may_boost_bed_tax_making_rate_among_highest_nationwide.html
~ Homebuyer’s Dilemma: Has Market Bottomed?
http://www.npr.org/templates/story/story.php?storyId=129389569
~ States Are Out of Cash, & So Are Their Lending Programs
http://finance.yahoo.com/news/States-are-out-of-cash-and-so-cnnm-3900085030.html?x=0&sec=topStories&pos=8&asset=&ccode=
~ Obama Administration Releases Monthly Housing Scorecard
http://www.mortgagenewsdaily.com/08232010_housing_scorecard.asp
~ BofA CEO Buys 30,000 Shares of Company Stock
http://www.cnbc.com/id/38827412
~ Stock Futures Drop Ahead of Existing Home Sale Data
http://www.marketwatch.com/story/economic-fears-drive-us-stock-futures-lower-2010-08-24?dist=beforebell
They say laughter is the best medicine, and I am a huge believer in that philosophy. It’s been medically proven that laughter relieves physical tension and stress, boosts your body’s immune system, and triggers the release of endorphins, the body’s natural feel-good chemicals.
I go out of my way to try and laugh … and to interject humor into everything I’m doing. After a rough day at work, I cue up the Raw Dog stand up comedy station on my satellite radio on the commute home. Stressed at home? Caddyshack, Old School, Clerks, The Hangover, or Fast Times at Ridgemont High goes into the DVD player after the kids go to bed.
I also love going downtown to see live stand-up comedy. We’re lucky to have two real good comedy clubs here in C-Town. There’s Hilarities over on East 4th in the Pickwick & Frolic building … and then The Improv on the west bank of the flats, which has actually moved out of the Powerhouse and is going into a new larger location next summer. I saw Bill Burr at Hilarities this past winter, and it was the best live performance I’ve ever seen. For my money, Burr, Louis CK, and Jim Gaffigan are the best comics going right now.
If you like funny, check out the David Hasselhoff roast that’s they’re running right now on Comedy Central. It is hysterical. Gilbert Gottfried and Hillary Cummings were the stars of this one in my opinion.
Two down, two to go for the Browns in the pre-season. This week’s effort was nowhere near as crisp as their performance in the preseason opener in Green Bay. The Browns fumbled five times in the first half (losing two) en route to falling behind 13-0, then stormed back to take a 17-13 lead before turning the ball over three more times in the fourth quarter before falling 19-17.
That all said, I was encouraged again. The early turnover woes were due exclusively to pouring rain and a wet ball. That’s a good thing to be able to experience when the games don’t count. And the fourth quarter woes were caused by a bunch of guys that will be delivering Fed Ex packages when the real games are being played in September.
And there was a lot to like. Most notably, more strong play from the quarterback position and the team’s two top draft picks, cornerback Joe Haden and safety T.J. Ward.
Also, if the Browns can get the right side of their offensive line shored up (may have the best left side through center in the league), the running game has a chance to be very special this season. Watching the 240 lb Peyton Hillis run behind 250 lb All-World fullback Lawrence Vickers brought back visions of the days of Earnest Byner and Kevin Mack in the same backfield. Jerome Harrison was the best running back in the NFL during the final month of last season. And rookie Montario Hardesty (6’0, 225 lbs) was looking incredibly impressive in camp before being set back by and injury. Hardesty should be ready for the season opener. And this isn’t even mentioning Seneca Wallace and Josh Cribbs, who will also play big roles in the Browns running game this season.
The potential is there for the Browns to have a dominant running game here in 2010. Teams will load the box against us and force Delhomme and Wallace to beat them through the air. Brian Robiskie is going to be a big key to the offense this year. He needs to be able to get open over the middle of the field and make big catches for us … complementing Ben Watson, Mohamed Massoquai, and Josh Cribbs.
Quote of the Day …
“Knowledge speaks, but wisdom listens.” ~ Jimi Hendrix
Market …
It’s going to be a slow start to the week. No economic releases of note today. And like every Monday morning, there’s no real news to discuss yet. Let’s talk mortgage rates.
The big refinance booms of 2003-2006 were fueled by 30 year fixed rates first in the high 5’s … then eventually the mid to low 5’s. No one thought rates could get lower than that. Then, in December of 2008, 30 year fixed rates fell to about 4.75% on a 30 year fixed. They rose, and then fell again to those same levels in April of 2009. If credit wasn’t so tight, those two most recent refinance booms would have been even bigger than the ones of the past half decade. Again … most people felt that we had finally hit the floor on rates. Yet here we are again at new lows. 30 year fixed rates are now in the 4.25%-4.375% area. And it’s possible (probable?) that they could go even lower than this. How? Why?
The climate could not be any better for mortgage rates right now. Standard, conforming 30 year fixed rate mortgage rates are 100% a byproduct of what investors are willing to pay for pools of packaged loans, called mortgage backed securities (MBS). Joe Borrower goes to ABC Bank and gets a 30 year fixed rate mortgage. His loan and several others are pooled together and sold off into the secondary market. The purchaser of these mortgages receives the yield (4.50% interest rate say today) on these mortgages, but also assumes the credit risk of the loan(s) going bad. Clearly, with rates this low, appetite for these pools of mortgage loans is strong. Seems almost a little weird given how much we all hear in the news about the housing market being so bad, and delinquencies and foreclosures being at all time highs.
But when you think about it, it’s not. Mortgage backed securities are an appealing play for investors all over the globe right now, and the fact that they are gobbling up pools of mortgages at record low rates is evidence of that. Stocks are riskier than ever right now. If the economy continues to fade, and we head in to (or even towards) a double dip recession, stocks could lose mass amounts of value almost overnight. US treasuries are the safest investment, but yields are at all time lows. The 10 year treasury right now is yielding just 2.60% … making mortgage pools yielding 4.50% look very attractive by comparison. Inflation is a non-concern right now, and is the one thing that makes mortgage rates rise. Any slim hints of inflation always lead to spikes in mortgage rates, as it eats away at the fixed return of mortgage backed securities. And lastly, the government is in the game of buying mortgages as well. And most people (myself included) feel there is going to be even more federal intervention into the housing finance markets this year, and into next. In addition to offering their backing on all these Fannie and Freddie securities being formed and traded, the government has also been a big buyer of their own product … driving prices higher and yields (rates to borrowers) lower.
The perfect storm for historically low mortgage rates. And if inflation stays subdued, the stock market sells off, and treasury yields fall lower …we could see 30 year fixed rates in the high 3’s. It would be almost impossible for rates to go lower than that though. MBS do come with credit/delinquency risk to their buyers … and at some point, you need a certain amount of yield to justify that risk.
On the economic news front this week, Existing Home Sales will be released on Tuesday. New Home Sales will come out on Wednesday. Durable Orders, an important indicator of economic growth, will also be released on Wednesday. Revisions to second quarter Gross Domestic Product (GDP) will come out on Friday, along with Consumer Sentiment. There will be Treasury auctions on Tuesday, Wednesday, and Thursday.
News …
~ US Stock Futures Rise as M&A Talk Boosts Sentiment
http://www.marketwatch.com/story/us-stocks-poised-to-open-higher-on-ma-talk-2010-08-23?dist=beforebell
~ Sales Tax Collections Up This Year in Ohio
http://www.cleveland.com/datacentral/index.ssf/2010/08/sales_tax_collections_up_this.html
~ Blackstone Makes Big Move into Chinese Housing
http://www.cnbc.com/id/38812978
~ FDA Looking for Source of Tainted Eggs
http://finance.yahoo.com/news/FDA-commissioner-says-agency-apf-380640816.html?x=0&sec=topStories&pos=main&asset=&ccode=
~ Investors Shake Up Fund Industry with Record Bond Love Affair
http://www.bloomberg.com/news/2010-08-23/-shocked-investors-shake-up-fund-industry-as-bond-love-affair-sets-record.html
~ FHFA Proposal to Effectively End Private Transfer Fees
http://www.mortgagenewsdaily.com/08132010_private_transfer_fees.asp
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