Archive for March 9th, 2009

So really, how strong is Obama’s approval rating ?

March 9, 2009

Reflecting “Main Street”, all polls report that Obama has sky high approval ratings … ranging from the low 60s to the mid-70s.  Pundits are still calling it a mandate for change, and O is certainly rushing through programs as if it were a sweeping mandate.

But, reflecting  “Wall Street”, the Dow and other broad market indices have dropped by about 25% since inauguration day.  True, O inherited the problem, but the market seems to voting “no confidence” on O’s recovery plans and team on the field.

So, what is truth?

I’m a fan of the Rasmussen daily tracking poll — in part, because it reports daily numbers on a consistent basis and because it provides some interesting drill down detail.

Here’s what the latest Rasmussen data says: (see chart below)

Obama’s Total Approval is in the high 50s … down from its high mark right after the inauguration (mid 60s).

Obama’s “top box”  (Strongly Approve) has trended down slightly … from a couple of points over 40 to a point or two under 40.

Obama’s “bottom box” (Strongly Disapprove) has been steadily trending up … from 16 right after the inauguration to its current high at 31.

So, Obama’s Approval Index (Strong Approve minus Strong Disapprove) has dropped to 8 from about its high of 30 right after the inauguration.

See Ken’s Take below the chart  …

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Ken’s Take:

(1) First, Rasmussen leans right … so, there may be bias in the numbers … I doubt it’s significant

(2) Most market researchers consider Total Approval (Strongly plus Somewhat) to be a very weak measure … they tend to focus on the top box and bottom box extremes … in customer satisfaction studies, the equivalent to Rasmussen’s Presidential Approval Index is called the “Net Influencers Index” … some market researchers brand it to be “the only number you need to know”

(3) Obama’s Total Approval rating is bound to stay high … in part because of his rock hard support among blacks … in part because the more than 50% of folks who don’t pay income taxes have every reason in the world to think his spending programs are awesome — they get gain with no apparent pain

(4) The bottom boxers (Strong Disapprove) are the taxpayers … the increase in Strong Disapprovers is attributable to folks ‘in the middle” who originally were giving Obama the benefit of the doubt — hoping he’d govern from the pragmatic middle — but are becoming disenchanted as he keeps his way left campaign promises.

(5) This could get ugly … pitting the beneficiaries of Obama’s programs against the folks who are paying for them

(6) No pundits seem to have seized on this point yet … let’s see when they catch on

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Data from Rasmussen Presidential Approval Tracking Poll, March 9, 2009
http://www.rasmussenreports.com/public_content/politics/obama_administration/obama_approval_index_history

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Stock funds drew inflow In January … then gave it up in February

March 9, 2009

Ken’s Take: Mutual fund inflows are generally an indicator or market strength.   Chmn Bernanke testified that Jan. inflows were up.  Made me curious re: the actual data.  He forgot to mention that February outflows more than offset January’s inflows. Oops.

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Source: IBD, “Stock Funds Drew Inflow In January”, 2/26/2009

In a notable reversal, investors stuffed $9.05 billion into stock funds in January.

It was the first inflow into stock funds since May 2008, after seven straight months of outflow.  January’s net inflow was a sharp U-turn from December’s $20.43 billion outflow.

It was a welcome contrast to January 2008’s net outflow of $43.67 billion. January is one of the biggest inflow months of any year. That’s often when bonuses get invested and retirement accounts get started or funded.

Still, there were indications that the situation deteriorated during February.

The inflow couldn’t make up for the declining stock market in January. Fund assets fell by $191 billion, or 2%, to $9.411 trillion in January from $9.601 trillion the month before. They stood at $11.999 trillion at the end of December 2007.

Stock fund assets fell $269.1 billion, or 7.3%, to $3.439 trillion from $3.708 trillion the prior month. They were $6.521 trillion at the close of 2007.

Early indications were that flows decreased in February. Stock funds gave back $10.6 billion in February through Feb. 24

http://www.investors.com/editorial/IBDArticles.asp?artsec=19&issue=20090226

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Raising prices? … Put the spotlight on value

March 9, 2009

Excerpted from WSJ, “P&G, Others Are Confident Higher Prices Will Stick” By E. Byron and A. Cordeiro, Feb 20, 2009

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Chief executives from several big household-products makers voiced confidence they could make higher prices stick, even as the recession ratchets up pressure on retailers and consumers to cut costs.

“Our products don’t deliver value [just] because the prices on the shelves are lower,” A.G. Lafley, chief executive of Procter & Gamble Co., told analysts and investors … Like several other industry executives … Mr. Lafley said his company doesn’t plan to roll back the significant price increases it has made over the past several months.

Pricing has become a contentious issue between retailers and their suppliers, as retailers — desperate to lower prices as consumer spending weakens — want their suppliers to help them foot the bill. But manufacturers such as P&G … argue they need to maintain prices to offset stubbornly high commodity costs, currency fluctuations and lower sales volumes …

Clorox Co. CEO Don Knauss told the conference his company had succeeded recently in imposing additional price increases … Nestlé SA, whose brands include Gerber and Purina, cited higher prices as a factor in the 70% increase in net profit it reported for 2008. And Kimberly-Clark Corp., known for its Scott, Kleenex and Huggies brands, said it would maintain its prices, at least for now, after hefty increases in 2008.

P&G’s Mr. Lafley described the promising sales performance of several new products that command significantly higher prices than established ones in the same P&G product lines … Newly launched Tide Total Care, which claims to make clothes last longer, is priced 60% above the base Tide detergent. Clairol’s Perfect 10 hair color, which touts better color quality and faster results, is 70% pricier than P&G’s basic Clairol Nice ‘N Easy, but aims to tempt women trying to cut back on even costlier hair-salon appointments.

Rather than broadly lowering prices, many household-product manufacturers plan to emphasize the extra benefits they say make their premium-priced products worth the money. In ads for its Charmin brand, P&G focuses on the toilet paper’s durability, saying that means users require fewer sheets. It also advertises … that Olay skin cream outperforms products costing hundreds of dollars …

Continually adding product features — and then advertising heavily to advise shoppers why they should pay more for them — is a critical way manufacturers of branded products drive higher profits and fend off increasing competition from private-label goods.

Indeed, P&G is the world’s biggest spender on advertising, constantly telling consumers that paying more for the company’s paper towels, mouthwash or diapers is worth it … Still, as more consumers cut spending — even on staples such as food — some industry watchers fear the time will come when they are unable or unwilling to pay for product features they can do without. Some observers also worry about the prospect of another “Marlboro Friday,” the day in 1993 when Philip Morris said it would sharply reduce the price of its Marlboro cigarettes to better compete with bargain brands.

The dramatic price cut, in addition to launching a tobacco price war, unleashed a wave of doubt about the value of big brands and their ability to sway consumers to pay more for them …

Mr. Lafley tried to calm concerns about drastic price cutting, arguing that P&G’s brands are still increasing their market share. “I don’t think you are going to see a return to irrational price wars,” he said.

Edit by SAC

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Full Article:
http://online.wsj.com/article/SB123508966388628145.html?mod=testMod

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