November 2010

A Strengthening Chicago PMI Index

by Glenn Busch November 30, 2010
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The Chicago PMI is a regional manufacturing index but it is widely followed because of the large concentration of manufacturing in the mid-west. Also, it is released a few days before the national ISM index, a major market mover, and is considered an advanced look at the national index.

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Telestone Technologies’ (TSTC) Cash Flow Crunch

by Glenn Busch November 30, 2010
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Telestone Technologies (TSTC) has $136.014 million in receivables on its balance sheet, which is more than its trailing twelve-month revenue of $103.814 million. Such high receivable levels indicate a company that can sell but can’t collect on payments or is too aggressive in recording revenue.

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Future Price War for Netflix Inc. (NFLX)

by Glenn Busch November 24, 2010
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Netflix (NFLX) trades at multiples that would suggest it offers a premium service with strong price protection but it is a commodity service business. Also, as it changes its business structure into a pure digital streaming business, whatever pricing power it has as the leading DVD-by-mail rental company will be lost. The online streaming of movie titles presents a lower barrier of entry than DVD-by-mail rentals and Netflix’s competition will increase.

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Deflation or Inflation? What the Lastest PPI Index is Showing

by Glenn Busch November 17, 2010
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The Producer Price index (PPI) measures price changes in the prices received by domestic producers on the goods they manufacture. In other words, it tracks price changes in materials manufacturers use to produce their products. While most attention is focused on the CPI, Consumer Price Index, the PPI is another tool to measure inflation. Since the PPI tracks price changes through several different stages of production we can see which stage in the manufacturing process is being affected by inflation.

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Business Inventories Keeping Pace with Demand

by Glenn Busch November 16, 2010
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Industrial output and demand, summed up in the inventory-to-sales ratio, provides key information in the direction of industrial production. Is inventory too high when compared to demand? If yes then production, spending, and income should decline in a self-reinforcing cycle. If no then production, spending, and income should grow.

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Fallen Angel Report: Roll With The Cycles, Grab Some Cisco While It’s Cheap Again

by Gabriel Wisdom November 15, 2010
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Time frames may be different based on secular trends, weather phenomenon, innovations in health care, and government intervention, but generally, what goes around, comes around. For example, economic booms and busts occurred, on average, every 14 years for 2,000 years. Beginning in the late 20th century, they began cycling every seven years as a direct result of government efforts to stimulate economic activity during recessionary downturns. While they occur more frequently, they’re cycles nonetheless.

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University of Michigan Consumer Sentiment Rises in November

by Glenn Busch November 12, 2010
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The recently released University of Michigan Consumer Sentiment Index increased from 67.7 in October to 69.3 in November.

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Uptrend in the Velocity of Money

by Glenn Busch November 11, 2010
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Quantitative Easing Part Deux has been predicated on levels of inflation too-low for the U.S. Federal Reserve’s liking. However, looking at the recent Velocity of Money chart from the St. Louis Federal Reserve Bank the U.S. Federal Reserve might get more inflation than they hoped for.

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AOL Inc.’s Earnings Beat? Not Really

by Glenn Busch November 10, 2010
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AOL Inc. (AOL) has been making some noise in the financial markets lately. First, AOL Inc. reported an earnings beat for the third quarter of 2010. Second, The Wall Street Journal printed an article that AOL was in talks with various financial advisers about AOL’s strategic options. One of the rumored options is a tie-up with Yahoo! (YHOO). In regards to AOL’s recent earnings, the noise becomes just that, noise.

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The October 2010 Employment Report

by Glenn Busch November 6, 2010
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Yesterday the U.S. Bureau of Labor Statistics released the October Employment Report. The monthly report is one of the most widely followed economics reports as it provides one of the best summaries of economic conditions. Employment growth provides the fuel to keep an economy growing through income growth needed and sustained consumer spending. The report also provides insight into the health of the overall economy and individual business sectors. The Employment report has also historically had a large impact on monetary policy.

While the initial headline on the monthly change in non-farm payrolls will grab the market’s attention some of the other key areas of the report to look at are: jobless rate, monthly payroll changes by industry, average hourly earnings, average workweek and overtime, average duration of unemployment.

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