Monday Report
Monday Report - Declining US Dollar December 3rd , 2007

Economic Notes:

This Weeks Leads



Decline in the U.S. Dollar (USD)

Less than six years ago, as Euro notes and coins were launched - the Euro was worth less than 90 US cents.

This week, as the Euro heads towards $1.50.

  • What does it mean to the US?
  • What does it mean to Utah?
  • Who Wins?
  • Who Looses?
  • Housing Prices Falling
  • Commodity Prices Rising
  • Most Fed watchers expect Bernanke will lower interest rates again
  • Thus putting increased downward pressure on the dollar.
  • What does it mean to the US?
  • What does it mean to Utah?
  • Who Wins?
  • Who Looses?

Who Wins:

  • Mineral exporters including:
    • Kennecott
    • Utah Coal producers
    • Uintah Basin and other petroleum producing areas
  • Sellers of property and other investments to Europeans
    • Industrial property
    • Recreational developments
  • Utah Manufacturers exporting to Europe
  • Utah Hospitality businesses catering to Europeans
  • Utah ski areas catering to Europeans
  • Southern Utah travel venues catering to Europeans
  • Boeing
  • Large borrowers with excellent credit
  • Who Looses:
    • Purchasers of European luxury cars
    • Purchasers of European luxury goods
    • Travelers to Europe
    • US & Utah manufacturers with lots of expensive European components
    • US or Utah purchasers of European property or investments
    • Airbus
    • Small borrowers with weak credit
  • Public Policy Recommendations:
    • Utah tourism promotion dollars should be targeted to Europe.
    • Utah tourism promotion dollars should be targeted to travelers in the Eastern US who may have otherwise gone to Europe.
    • Utah economic development promotion efforts should be targeted to European manufacturers and investors.
    • Refinance or finance capital improvements with low interest rate borrowing.

    Note: The above notes with regard to European, means those countries using the Euro as their national currency:

    • Andorra
    • Austria
    • Belgium
    • France
    • Finland
    • Germany
    • Greece
    • Ireland
    • Italy
    • Kosovo (Serbia)
    • Luxembourg
    • Monaco
    • Montenegro
    • Netherlands
    • Portugal
    • San Marino
    • Slovenia
    • Spain
    • Vatican City
    • Does not include Denmark, Sweden, Norway

    Source: Bonneville Research, November 2007

  • The Ten Things Everyone Should Know About Science Part 1

    • You may be able to quote Shakespeare, but what are you like on Big Bang theory?
    • The Financial Times gives non-scientifically minded readers a leg up the tree of knowledge.
    • Can you distinguish molecules from atoms? Genes from genomes?
    • Do you know what makes an experiment statistically significant? If not, do you care?
    • Are you embarrassed by your scientific ignorance - or almost proud of it?
    • Scientists have been complaining for decades that, while they would be ashamed to admit knowing nothing about Jane Austen's novels, literary colleagues can get away with total ignorance of relativity and quantum theory. As Larry Summers noted on his installation as Harvard University president in 2001, students rarely admit to never having read a Shakespeare play but find it ''acceptable not to know a gene from a chromosome or the meaning of exponential growth''.
    • In Britain, it is socially acceptable for an arts graduate to say with a certain insouciance: ''I failed chemistry GCSE'' or ''I scraped a C grade in maths.'' But a scientist would be brave indeed to reply: ''Well, I only got a D in English literature.''
    • In this science issue of the FT Magazine we do our bit to fill the ignorance gap, by explaining the 10 key concepts that everyone needs to understand if they are not to feel an ignoramus when science comes up in conversation - and if they are to have a handle on important developments reported in the news. This selection is intended to encompass the mainstream fields of biology, physics and chemistry.
    • Inevitably, such a list is somewhat arbitrary. Concepts that just missed the top 10 include risk, plate tectonics and the laws of thermodynamics. But compiling this list was simpler and less contentious than, say, choosing the best 20th-century novels - let alone the most important concepts in literature - because fewer candidates are available for selection, and there is more agreement among scientists than literary critics about what really matters.
    • Ruthless simplification is required to squeeze complex subjects, on which libraries of textbooks have been written, into chunks of about 300 words.
    • Non-scientific readers will, I hope, find the explanations reassuring rather than perplexing. A good reaction would be: ''Ahh, I see... that's not as difficult as I thought.'' As well as providing a basic description of each concept, we have indicated why it matters, and how the field is likely to move forward. We also assess the level of fear it may induce in the uninitiated.
    • The important thing is not to be too earnest about science. The main reason that children turn off the subject is that it stops being fun, argues Natalie Angier, a leading US science writer whose guide to scientific essentials The Canon will appear in the UK next year.
    • ''Science should not be seen as a boring body of facts but as an exciting series of ideas,'' says Angier.
    • ''Science is not just one thing, one line of reasoning, or a boxable body of scholarship like, say, the history of the Ottoman empire. Science is a great ocean of human experience.''
    • In Britain, experts in science communications also say there is too much concern about knowledge for its own sake. Clare Matterson, who runs the extensive public engagement activities of the Wellcome Trust, the research charity, says: ''It is not important for everyone to know everything about science, but we should all be able to ask the question: *How do you know?'
    • The more relevant we can make science, the more people have a place to become interested and engaged.''
    • Beyond the intrinsic intellectual interest, there are myriad practical reasons why as many people as possible should have a basic knowledge of science. An obvious one is that a scientifically savvy population is less likely to fall victim to fraud and superstition, from astrology to quack cures. And when so many contemporary political issues (from global warming to embryo research) have a big scientific component, voters and politicians need to understand what is really at stake.
    • The icon of transformation from scientific ignorance to wisdom is the travel writer Bill Bryson. Shame about not knowing a proton from a protein, or a quasar from a quark, prompted him to spend three years researching and learning what he was missing. The result was A Short History of Nearly Everything, the best science book of the 21st century so far. If you do not have three years to spare, reading A Short History of Nearly Everything is an excellent short cut. And if you don't even have time for the book, this magazine is your quick fix.

    Next Week - Evolution

    After that! - Fear factor: mild tremors

    Source: Financial Times, London, 2007


    Declining US Dollar

    • Who wins?
    • Who looses?
    • Nationally?
    • Utah?

    The Ten Things Everyone Should Know About Science, Pt 1

    Bob Springmeyer

    Bonneville Research

  • Economic Notes:
    • Global Business Confidence
    • Business confidence fell notably during Thanksgiving week. While the lower number of responses during the holiday week may have colored the results, the slide in U.S. business sentiment bears close watching as it is consistent with recession. Responses turned more negative across all nine questions in the survey, with respondents' expectations regarding the six-month outlook falling to a new record low. Businesses are more positive when responding to more specific questions regarding payrolls and equipment investment. Confidence is stronger outside the U.S., most notably in Asia. Sentiment is weakest among firms in housing and financial services, and strongest among high- tech businesses.
    • GDP
    • There was a larger-than-expected upward revision to economic growth in the third quarter. Annualized real growth was revised up to 4.9% for the quarter, from 3.9% in the advance estimate; the consensus expectation was for an upward revision to 4.8% growth. The overall upward revision came from upward revisions to inventory investment and exports, and a downward revision to imports; there was some offset from a downward revision to personal consumption expenditures. Although the third quarter was very good, underlying growth is below potential due to the problems in housing and mortgage markets. Profits from current production fell an annualized $19 billion in the third quarter.
    • Investor Confidence Index
    • Tighter credit concerns, increased volatility in equity markets, elevated energy prices and eroding housing markets are weighing heavily on investor optimism. In November, the UBS Index of Investor Optimism plummeted 26 points to fall to 44. The latest decline puts the index at its lowest level since the aftermath of Hurricane Katrina. The Fed's decision to cut interest rates at their past two meetings is doing very little to repair sentiment, which is down 59 points since the beginning of this year.
    • New Home Sales (C25)
    • Heavy discounting is helping to buoy sales in the new home market, but housing is still not out of the woods. Home sales increased m/m in October by nearly 2% to 728,000 annualized units. On a year-ago basis sales are still down by 24%. Additionally, Census revised downward the September reading. The median house price is down by 13% y/y. Inventories are slowly improving.
    • Existing Home Sales
    • The October National Association of Realtors report brings more bad news to the housing market. Existing home sales are down by 1.2% from September to 4.97 million annualized units. The median existing house price is down by 5.1% from one year ago, and available inventories are up to near 11 months.
    • Home Price Index
    • The 10-metro house-price index decreased 5.5% year to year in September. The 20-metro index decreased 4.9%. Virtually all markets in the 20-city index recorded declines from last month and a year ago
    • OFHEO Home Price Index
    • Confirming trends in the median existing house price and the S&P/Case Shiller price index, OFHEO's repeat-purchase house price index is turning in its worst performance since 1994. In the third quarter of this year, the index is down by 0.4% on a q/q basis, while y/y it is up by 1.8%. The purchase only index is faring about the same. Housing markets remain in a slump.
    • MBA Mortgage Applications Survey
    • Mortgage demand decreased 4.3% in the week ending November 23. Purchase applications increased by 6.1% and refinance applications decreased 15.3%. Caution is to be exercised before reading too much into this Thanksgiving weekend index.
    • Durable Goods (Advance)
    • Durable goods orders fell 0.4% in October following a 1.4% decline in the prior month. Consensus forecasts were expecting a rise in orders. This was the third consecutive drop in durable goods orders. Core capital goods orders fell 2.3% following a 1.2% rise in September. Core capital goods shipments fell 1.2% and total shipments rose 0.6%. Inventories posted a 0.2% gain over the month.
    • Chain Store Sales
    • Chain store sales declined 0.1% in the week ending November 24, but year-over-year growth increased to 2.5%. Colder weather supported demand for apparel. The latest results include Black Friday and the following Saturday. Customer traffic during Black Friday was relatively healthy with consumer electronics reportedly among the strongest sellers.
    • Jobless Claims
    • Initial jobless claims increased by 32,000 to 352,000, well above expectations. Volatility is a distinct possibility, given the Thanksgiving holiday, but regardless this is the first time initial claims have broken 350,000 since February and thus perhaps an early sign of a more severe deterioration in the labor market.
    • Oil and Gas Inventories
    • Crude oil inventories fell by 0.4 million barrels for the week ending November 23, according to the Energy Information Administration, less than expectations of a 0.9 million barrel draw. Distillate supplies fell by 0.1 million barrels, short of expectations of a 1.3 million barrel decline. Gasoline supplies rose by 1.4 million barrels, above expectations. Refinery activity rose substantially from 87.0% to 89.4%. Today's report is bearish.

    Source: Economy.com 2007

  • This Weeks Leads
    • Hallmark Gold Crown
    • Hallmark Cards trades as Hallmark Gold Crown at 3,800 locations nationwide.
    • The card and gift shops occupy spaces of 2,500 sq.ft. to 4,500 sq.ft. in regional malls, lifestyle and power centers.
    • Plans call for 40 openings nationwide during the coming 18 months.
    • Typical leases run five years with a five-year option.
    • Specific improvements are required.
    • For more information, contact
      • Karen Springer,
      • Hallmark Cards,
      • PO Box 419850,
      • Kansas City, MO 64141;
      • 816-274- 8431,
      • Fax 816-274-3708;
      • Web site: www.hallmark.com.
    • The Great Frame Up, Deck The Walls and Framing & Art Center
    • Franchise Concepts, Inc. trades as The Great Frame Up, Deck The Walls and Framing & Art Center in 300 locations nationwide and throughout Canada.
    • The Great Frame Up, selling art and home décor and offering custom framing services, occupies spaces of 1,200 sq.ft. to 1,700 sq.ft. in community, neighborhood, power and strip centers.
    • Deck the Walls, selling art and home décor and offering custom framing services, occupies spaces of 1,200 sq.ft. to 1,700 sq.ft. in malls.
    • Framing & Art Center, selling art and home décor and offering custom framing services, occupies spaces of 1,200 sq.ft. to 1,700 sq.ft. in community, neighborhood, power and strip centers, as well as malls, in Canada.
    • Growth opportunities are sought throughout the existing markets during the coming 18 months.
    • Typical leases run 10 years.
    • A vanilla shell and specific improvements are required.
    • Preferred demographics include a population of 75,000 within a three-mile radius earning an average household income of $90,000.
    • Competitors include Michaels.
    • The company is franchising.
    • For more information, contact
      • Mike Glazer,
      • Franchise Concepts, Inc.,
      • 101 South Hanley Road,
      • Suite 280,
      • St. Louis, MO 63105;
      • 866-719-8200,
      • Fax 314-719- 8290;
      • Web site: www.franchiseconceptsinc.com.

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