Investing in the Future

There is a message to Detroit from Americans who participated in the Cash for Clunkers program: don’t make any more Ford Explorers, F-150s or Jeep Cherokees. These were the most traded-in clunkers. 

Actually, the F-150 truck is pretty useful, so maybe we can just lose the Explorers and Cherokees. 

Cash for Clunker Cars Ends, Cash for Clunker Stocks Going Strong

Yesterday, I mentioned that I thought the Cash for Clunkers was a pretty decent idea, as far as stimulus plans go. Rather than simply hand the automakers cash, the government came up with the Cash for Clunkers program that not only got some desperately needed extra cash in the automakers pockets and also took a few low-MPG cars off the streets. It also put cash into the hands of car dealers who have been struggling and a small percentage of that money into local economies.

Even Wal-Mart is Having Trouble

Last week’s better-than-expected payroll data is being offset by new jobless claims today. 558,000 people filed new claims for unemployment benefits. That was more than the median estimate of 545,000. 

The number of people collecting unemployment fell by 141,000 and that lowers the unemployment rate. That sounds good, but I don’t think it is. Most likely, benefits for these 141,000 have run out. So what little money they had coming in is now gone and they’ve just stopped asking. 

Interest Rates and Inflation

The next 12 months look great. Economists are now raising their GDP expectations for the U.S. economy to a minimum of 2% growth for the next four quarters. That’s a significant improvement to what they were expecting just a few weeks ago. (One thing to keep in mind however, is that this is moving target, one week they’re doom and gloom and the next it’s all sunshine.) 
The reason should be clear – cheap money and stimulus spending is kick starting both lending and spending, albeit from low levels. 


Analyst Downgrades Drag Down Stocks

Have you noticed that analysts are starting to downgrade stocks? Sprint Nextel (NYSE:S), Yum Brands (NYSE:YUM), PETsMART (Nasdaq:PETM), MBIA (NYSE:MBI) and Aegon (NYSE:AEG) were all marked down by analysts yesterday. 
Coverage was initiated on American Express (NYSE:AXP) at "Sell" by Ladenburg Thalman. Boeing (NYSE:BA) and Research in Motion (Nasdaq:RIMM) have also been downgraded in the last few days.