Wednesday, December 20, 2006

PPI UP WHOPPING 2.0% IN NOVEMBER

The Producer Price Index experienced a 2.0% gain in November, the biggest monthly advance since 1974. PPI is a measure of wholesale prices. Core PPI, which excludes energy and food, rose 1.3%, the biggest increase since 1980. The big jump in PPI caught economists and experts by surprise as the consensus estimate was for a 0.5% increase.

According to Kirk Shinkle of Investor's Business Daily, investors should not be overly concerned with the big jump as the majority of the increase in prices was due to volatility in the auto sector. Wholesale car prices rose 2.2%, while light truck prices jumped 13.7%.

Bureau of Labor Statistics

Monday, December 18, 2006

ILLINOIS RAISES MINIMUM WAGE

Governor Rod Blagojevich signed a minimum wage increase into law that will raise minimum wage to $7.50 per hour starting July 1, 2007. The minimum wage will then be increased three times by one quarter each, growing to $8.25 per hour in 2010. Democrats have pledged to increase the federal minimum wage next year. Currently, 29 states have minimum wage laws that require payment of more than the federally mandated $5.15 per hour.

International Herald Tribune

UNUSED GIFT CARDS = BIG PROFIT

Best Buy earned $43 million in fiscal 2006 from gift cards that have not been used for two or more years. Limited Brands reported $30 million in revenue in 2005 from the unused cards. Consumer Reports estimates that 19% of gift cards go unused. Keane Co. has a lower estimate of about 6%, or $4.8 billion.

AP at Yahoo!

Tuesday, December 05, 2006

NYC BOARD BANS TRANS FATS AT RESTAURANTS

The Board of Health in New York City voted unanimously to ban artery-clogging trans fats at restaurants. The ban will go into effect in July of 2007, at first eliminating trans fats only from cooking oils, then in July of 2008 the full ban eliminating trans fats from all foods will begin. From the AP article at Yahoo!:
Mayor Michael Bloomberg, who banned smoking in bars and restaurants during his first term, has dismissed cries that New York is crossing a line by trying to legislate diets.

"Nobody wants to take away your french fries and hamburgers — I love those things, too," he said recently. "But if you can make them with something that is less damaging to your health, we should do that."

Chicago is also considering its own trans fat law, which wouldn't ban the fats outright but would severely restrict the amount that kitchens can use. The measure would apply only to large restaurants, defined as those that make more than $20 million in sales per year.

Here is a pie chart from the U.S. Food and Drug Administration that shows the major sources of trans fat for American adults:



Sunday, December 03, 2006

COMPETITION FOR CABLE AND SATELLITE TV?

Before satellite TV, most cable companies enjoyed a monopoly, typically regulated by the municipality in which they operated. As such, cable providers were guaranteed a "reasonable" profit, but without competition, prices climbed steadily over the years.

When satellite TV entered the picture, most believed that the competition would be good for consumers and that increases in prices for cable would slow. That has not been the case. In fact, cable and satellite TV providers have settled into a cozy duopoly, not so much competing as coexisting without much competition.

Prices for cable TV between 1995 and 2005 shot up 93%. In municipalities with only satellite and one cable provider, the average price for cable was $43.34 per month. In municipalities where there was more than one cable provider, the average price was $35.94, demonstrating that the increased competition was good for consumers.

The FCC wants to increase competition nationwide by adopting new rules that would make it easier for phone companies to compete directly with cable TV companies. Verizon already provides TV service in 300 municipalities, while AT&T does so in 24.

The problem in rolling out TV service via phone lines has been the requirement for the phone companies to seek permission and agreements one at a time from local governments. This is time-consuming and inefficient. The U.S. Congress could pass a law eliminating the tedious one-at-a-time agreement requirement, but has failed to do so thus far. Three states - Texas, California, and New Jersey - have passed laws allowing speedy rollout and competition, and their consumers have benefited.

The new FCC proposal would speed things a bit by requiring municipalities to act on applications by phone companies to provide cable TV services within 90 days in most cases, 180 days in the remainder of cases.

As we know, capitalism thrives on competition and the consumer benefits. The sooner new FCC rules or a new law can be passed, the sooner we will all see lower cable and satellite TV bills.

USA Today

Saturday, December 02, 2006

NOVEMBER AUTO SALES RESULTS

Here is the list of winners and losers for November U.S. light-vehicle sales (includes light trucks and SUVs). The comparison listed is November of 2006 to November of 2005.

Winners
Acura +24.0% (division of Honda)
Toyota +15.9%
GM +6.1%
DaimlerChrysler +4.7%
Chrysler Group U.S. +2.9%

Losers
Ford -9.7%
Honda -3.0% (Honda brand only)
Nissan -1.6%

This was only the second month ever that Toyota sold more vehicles in the United States than Ford. Toyota sold 196,695 vehicles to Ford's 181,111.

USA Today
WSJ.com
BusinessWeek

Friday, December 01, 2006

MIXED RETAIL SAME-STORE SALES RESULTS FOR NOVEMBER

Retailers have reported mixed same-store sales results for the important pre-holiday shopping month of November. Overall, same-store sales rose 2.1%, the weakest increase since March. Comparisons of same-store sales are made only for stores open more than one year and compare November of 2006 to November of 2005.

Losers
Wal-Mart -0.1%
Ann Taylor -4.3%
Abercrombie & Fitch -5.0%
Gap -8.0%
Pier One Imports -15.3%

Winners
Kohl's +3.7%
Costco +5.0%
Nordstrom +5.4%
Target +5.9%
CVS +8.4%
Federated Department Stores +8.5%
Limited Brands +12.0%

MSN Money
BusinessWeek
MarketWatch
Trading Markets