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  • Under the Hood of the CPI: Transportation Inflation [View article]
    The CPI and how it affects a family are not directly related. There is generally no month to month measurement of changes in consumer expenditure patterns. It assumes that the consumer expenditures per item are constant as in a base period. Then it measures the change in prices weighted by the importance of expenditure of the average family during that base period. For most items the base period weights do not change. Items such as interest rates and home ownership may rely on a more frequent measure of change than the base period for store purchased items.

    For this reason, I believe there is a bias in the index in not accurately measuring price change for items that are rapidly changing from technology and rapid shifts in consumer preference.

    When the flat screen TV came out it probably was not priced at all and then its impact to infaltion not measured well its price fell.
    Feb 1 03:51 PM | Likes Like |Link to Comment
  • Under the Hood of the CPI: Transportation Inflation [View article]
    Unfortunately the price index doesn't work that way at all. The weights from month to month are constant. The only thing that is measured is price change. The weights change periodically when they conduct a consumption/expenditure survey.
    Feb 1 03:36 PM | Likes Like |Link to Comment
  • Under the Hood of the CPI: Transportation Inflation [View article]
    The main problem in the CPI to accurately reflect inflation changes is that the adjustments in pricing items covered are changing more rapidly than ever before. Also, consumer preferences are changing very rapidly be it consumption of organic food, to purchasing hybrid vehicles to using new electronic mobile computing devices. The weights are constantly changing but month to month and quarter to quarter weighting remains unchanged.

    Items are not phased out quickly enough. Consumer expenditure shifts also are not measured as frequently as the price monitoring. Items such as the i-Pad and 4G network connection fees are probably not yet considered but comprise a significant portion of consumer expenditure where price competition for these items from similar items are actually providing a deflationary affect.

    Kudos however should be extended to the BLS, who I consider the best statistical agency in the Federal Government, when they phase out obsolete items and replace items with more consumer preference change items.
    Feb 1 10:52 AM | Likes Like |Link to Comment
  • Under the Hood of the CPI: Transportation Inflation [View article]
    Quality adjustments can be adjusted by the item description of what is being priced on the survey. When I doing price surveys for USDA and when we were doing farm household consumption items, I noticed bi-modality for refrigerators when ice-makers were becoming popular. This indeed increased the price of the item. Simple revision to the description on the survey questionnaire stating cubic capacity and the phrase "without ice-maker" did the job of standardizing the comparability of price change for the item in the index.
    Feb 1 10:38 AM | Likes Like |Link to Comment
  • 10 'Buy Rated' Income Stocks With Increasing Dividends [View article]
    I like your picks, own some of them and will look into your energy picks. Some increased exposure to energy companies especially to domestic ones may be prudent.

    On T you may want to hedge your bet with VZ. VZ has a monster network and the i-Phone should give them a boost. I own VZ based on my first day ownership of the Droid on a 3G network that is soon to expand to 4G.

    On UVV I trimmed back my position based on sluggish quarterly results and problems with some of their overseas deals. VGR was also a larger holding that was trimmed back because of their outrageous financing in the face of non coverage of their dividend. Otherwise tobacco should not be a taboo for the investor where it is good for your economic health.

    Dividend increases alone should not be a sole criteria for stock selection. You got to get a good view of the man behind the curtain.
    Feb 1 10:23 AM | 2 Likes Like |Link to Comment
  • ADM Reports 30 Percent Increase in Second-Quarter EPS [View article]
    With corn processing profits up sharply by approx 25% and the new crop still almost a whole season away - expect similar increases for the next 2 quarters.

    Another company to benefit greatly is GMK - the largest corn processor in Mexico with ADM owning a considerable share interest in this Mexican company. Corn trade to Mexico and Gruma's increasing positioning for their products will add to ADM corn deliverys to Mexico.
    Feb 1 09:46 AM | Likes Like |Link to Comment
  • Why I Am Short Caterpillar [View article]
    CAT is going bonkers. Good to see you got out of your short alive.

    The snows and Winter weather is raising havoc on our Nations roadways. CAT equipment is going to be in big demand for road repairs and resurfacing. Pot holes galore just can't be patched anymore. Major road resurfacing will boost CAT sales by an additional 10% over current analyst expectations.
    Feb 1 09:24 AM | Likes Like |Link to Comment
  • WSJ's latest quarterly survey of housing market conditions finds that prices declined Y/Y in all 28 major metro areas tracked during Q4. Home values dropped most in cities already hit hard, such as Miami, Orlando, Atlanta and Chicago, but price declines also intensified in several markets that had escaped the worst, such as Seattle and Portland.  [View news story]
    Not all housing market areas declined. The Wash DC area increased by as much as 27% but is still well below the peak of 2005. As employment improves see a stronger housing rebound. With interest rates low housing costs remain at a multi-year low.
    Jan 31 04:27 PM | Likes Like |Link to Comment
  • At the close: Dow +0.56% to 11890. S&P +0.76% to 1286. Nasdaq +0.49% to 2700.
    Treasurys: 30-year -0.77%. 10-yr -0.31%. 5-yr -0.13%.
    Commodities: Crude +2.88% to $91.91. Gold -0.75% to $1331.60.
    Currencies: Euro +0.59% vs. dollar. Yen +0.1%. Pound +1%.  [View news story]
    Good to see the market rally. The worst fears are not materializing. Shipping through the Suez is the big talk. As shipping is resumed at a normal level expect the DOW to rally back to its previous level and economic recovery should resume with the markets leading the charge.
    Jan 31 04:24 PM | Likes Like |Link to Comment
  • Saudi Stock Market Offers Glimmer of Hope [View article]
    Great analysis but I'm reading it after today's great start. Can you tweet me on this for future alerts.

    Jan 31 10:59 AM | Likes Like |Link to Comment
  • U.S. Energy Policy Is Responsible for Unrest in Egypt [View article]
    Excellent reply. Middle East oil supply has kept the price lower than it would otherwise be, LOL. But we do need to find alternatives to get away from the political volatility.
    Jan 31 07:07 AM | 1 Like Like |Link to Comment
  • Flir Systems: Unique, High-Quality Company With Exposure to Best Part of Defense [View article]
    The only weakness I can see is the need to cut defense spending in the sector but the trouble in the Middle East might give this some play. I like FLIR. They have good technology. I've seen their equipment in action at FPED (Force Protection Equipment Demonstration) at Quantico when I was with Homeland Security. For additional information on them a good source is Brian Rutenbur with Morgan Keegan. An e-mail to him could get you on his list for his newsletter and updates on the companies in this sector. brian.ruttenbur@morgan...

    Jan 31 07:01 AM | Likes Like |Link to Comment
  • 28 Dividend Stocks Acting Like a Money Machine [View article]
    My only holding on your list is MWE. At times it does trade volatile but picking it up on a dip is the thing to do. Its nice to see them increasing the payout which is only a penny more per quarter and not quite the full 2% increase as claimed. At least they are keeping up with inflation.
    Jan 31 06:37 AM | 1 Like Like |Link to Comment
  • Despite further deterioration in Egypt over the weekend - military jets buzzed the capital and opposition figure Mohamed ElBaradei claimed the departure of President Mubarak is "non-negotiable" - the Saudi stock market traded up 2% Sunday, perhaps portending a better than feared open for U.S. markets on Monday.  [View news story]
    Egypt is small potatoes as long as the crisis is contained and does not spill over to others. No evidence exists that there is any outside influence on what is going on in the street. The military is not taking any decisive side. If sectarian violence erupts or outside influence sends in troops to support a faction this could escalate to a UN resolution to send in peace keeping troops to contain the problem. Needless to say this would worry investors.

    The US Federal reserve will step up the QE program and flood the world financial markets with liquidity if financial contagion spreads.

    I believe what we are seeing in the news is journalistic zeal to show the worst that is happening. The situation will improve and markets would rally with more certainty the longer the time horizon.

    Long-term, this development in Egypt is a good omen to see that the people are wanting more freedom. More freedom and more free enterprise will diminish the threat of violence in the future. People with a secure job, food and any store of wealth would not want to risk losing it. But the current problem is that the masses in Egypt have close to nothing.
    Jan 30 04:37 PM | 14 Likes Like |Link to Comment
  • Despite further deterioration in Egypt over the weekend - military jets buzzed the capital and opposition figure Mohamed ElBaradei claimed the departure of President Mubarak is "non-negotiable" - the Saudi stock market traded up 2% Sunday, perhaps portending a better than feared open for U.S. markets on Monday.  [View news story]
    His comments about Fed. Reserve management is a bit flakey
    Jan 30 04:19 PM | 12 Likes Like |Link to Comment