Archive for December 14th, 2010

Good News: Corps accumulating cash and increasing dividends

December 14, 2010

OK, the headline has the gist of the story. Here’s the meat.

  1. The WSJ reported that companies are sitting on almost $2 trillion in cash reserves … the largest cash share of corp assets since 1959.
    http://online.wsj.com/article/SB10001424052748703766704576009501161973480.html?mod=WSJ_hp_LEFTWhatsNewsCollection
  2. GE – a corporate bell cow, raised its dividend for the second time this year … reported a healthy balance sheet, cited an optimistic near tern sentiment, and declared an intention to distribute 45% of profits as dividends.  Analysts expect many companies to follow suit.

    ”A senior analyst at S&P, said the big factor for investors this year is that companies largely have stopped cutting their dividends. Next year, he expects over half the S&P 500 to raise their payouts.”
    http://online.wsj.com/article/SB10001424052748704457604576011561050926064.html?ru=yahoo&mod=yahoo_hs

    Disclaimer: I hold a bunch of GE stock and I am totally biased re: the company.

  3. As part of the extension of the Bush tax cuts, the tax rate on dividends stays at 15% for high-earners and zero for low earners.  So, dividends will continue to be welcome on an after-tax basis.

    Technical note: The double-taxation of dividends – at the corp level and at the individual level — is stupid.  The tax rate should be zero.

  4. As dividends go up, so do stock prices … which increases individuals’ net worth … in their Schwab accounts, in IRAs, in 401Ks, in pension accounts, etc. … some pundits are predicting the S&P will go to 1,450.

    ”The Fed’s data, known as the “flow of funds” report, show that the net worth of U.S. households increased to $54.9 trillion in the third quarter, up from $53.7 trillion in the second quarter, as rising stock-market wealth more than offset declining home values.”
    http://online.wsj.com/article/SB10001424052748703766704576009501161973480.html?mod=WSJ_hp_LEFTWhatsNewsCollection

  5. As net worth goes up, consumer confidence goes up … consumers can use the “new found money” to finish cleaning up their balance sheets … and eventually, will start spending again.  That’s good.

There’s reason to be optimistic …

Posted in Economics, Taxes | 1 Comment »

Grocery stores learn some new tricks

December 14, 2010

TakeAway: The improved lighting in the produce section of your grocery store isn’t just for aesthetics.  

It’s part of a concerted effort by grocery stores to drive sales of healthier food that consumers say they want.

Studies indicate lighting alone can increase sales nearly 30%.  Expect these practices to become more widespread.

* * * * *

Excerpted from NPR, “Nudging Grocery Shoppers Toward Healthy Food,” by April Fulton, November 8, 2010

Grocery stores are not necessarily designed to help customers choose the healthiest food. Signs and specials advertise chips and soda, and the coupons are usually for the pre-packaged, processed foods advertised by big brand-name companies with deep pockets. …

Some stores are getting wise to shoppers’ desires to eat better, as well as the challenges they face in doing so. Some are subtly shifting the focus to healthier products by using the same marketing tricks the large food companies and restaurants have used for years. …

Brian Wansink, the co-director of the Cornell Center for Behavioral Economics in Child Nutrition Programs, says grocery store sales goals are compatible with public health goals. …

He’s done a lot of research on produce and found that there are small things stores can do that will help them move a lot more volume of the healthy stuff.

Take product placement and soft, focused lighting, for example. Items that are highlighted in this way — even if they aren’t on sale — sell about 30 percent more, Wansink says. They just look more appealing than products under harsh, overhead fluorescent lights. …

… Smells can be used as an enticer, rather than just “fanning them out of the building,” as many stores do …

The danger with these marketing tools is in going overboard, bombarding people with public health messages about how they should eat better. If people feel persuaded, they will resist, Wansink says. Stores have got to make the shoppers feel like it’s their choice. …

 

Edit by DMG

 

* * * * *

Full Article
http://www.npr.org/templates/story/story.php?storyId=131074210

* * * * *

Posted in Retailing | Leave a Comment »

U.S. close to losing Aaa credit rating …

December 14, 2010

As you read this, keep in mind that Moody’s (a Warren Buffet company), rated billions of dollars of mortgage backed securities AAA …

Moody’s warned Monday that it could move a step closer to cutting the U.S. Aaa rating if President Obama’s tax and unemployment benefit package becomes law.

The plan agreed to by President Obama and Republican leaders last week could push up debt levels, increasing the likelihood of a negative outlook on the United States rating in the coming two years, the ratings agency said.

A negative outlook, if adopted, would make a rating cut more likely over the following 12-to-18 months.

For the United States, a loss of the top Aaa rating, reduces the appeal of U.S. Treasuries, which currently rank as among the world’s safest investments.

“From a credit perspective, the negative effects on government finance are likely to outweigh the positive effects of higher economic growth.”

Moody’s May Cut US Rating on Tax Package, 13 Dec 2010
http://www.cnbc.com/id/40641123

Posted in Financial Crisis | Leave a Comment »