Headlines (Scroll down for complete stories):
1. Fed Legend Warns Bernanke on Inflation
2. Homebuilder Lennar Warns Again
3. Consumer Confidence Rebounds in September
4. Switzerland Tops Competitiveness Poll, US Drops
1. Fed Legend Warns Bernanke on Inflation
Paul Volcker, famous for rescuing the nation's economy from hyperinflation in
the 1980s, is warning the current Fed not to stand idly by as inflation creeps
into the economy, says Bloomberg.
"I am a little bit more worried about inflation," said Volcker yesterday at a
Women's Economic Round Table discussion held at Bloomberg headquarters in New
York.
Story Continues Below
Volcker wouldn't characterize inflation pressures as "high" or "running away,"
but he did say "[inflation] is kind of creeping up, and I am impressed by the
degree of pressure, if that's the right word – psychological pressure, political
pressure – there is not to do anything about it."
The current Federal Reserve Board of Governors has voted to keep interest rates
steady for the past two meetings. The Fed says a moderate slowdown of the U.S.
economy will likely ease inflation pressures. Plus, the Fed says its previous
interest rate increases have not fully worked their way through the economy yet.
Volcker went on to say, "A lot of people out there on Wall Street, and on Main
Street, are operating on the assumption that nothing very startling will happen
in terms of restraint (on inflationary pressures). That is reflected in
attitudes pretty broadly. But once people are convinced that that's the case, it
can creep up and the more it creeps up on you, the more difficult it becomes to
do something about it."
Gerald Corrigan, New York Fed president from 1985-1993 and now managing director
at Goldman Sachs Group, agreed with Volcker. He commented that there is "a small
risk that the old inflation genie could sneak out of the bottle on us again.
Once the genie is out of the bottle, it is very, very difficult and expensive to
put it back in the bottle."
Editor's Note:
- Inflation is even higher than the government reports. To read more
about the government's manipulation of inflation data, check out our report,
"The Inflation Lie." Go here
now.
2. Homebuilder Lennar Warns Again
Homebuilder Lennar Corp. is warning once again that its earnings will not
come in as promised due to the deteriorating housing market.
MoneyNews readers will recall that Lennar lowered guidance on its fiscal third
quarter earnings on Sept. 8. Today, the Miami-based company has lowered its
fiscal fourth quarter earnings guidance.
The nation's third largest homebuilder now says that fiscal fourth quarter
earnings will be somewhere from $1 to $1.30 per share, down from earlier
guidance of $2.55 to $2.60 a share. Marketwatch says the consensus estimate
among analysts is $1.60 a share.
"Although the economy remains strong and unemployment and interest rates remain
relatively low, it is not clear that the homebuilding downturn has yet found a
floor," said Chief Executive Stuart Miller in a statement.
Lennar admitted that the housing market slowed much faster and deeper than it
had expected, according to the Financial Times.
Lennar's fiscal third quarter earnings came in at $1.30 a share, smack in the
middle of the $1.25 to $1.35 a share the company estimated two weeks ago. Before
that, Lennar had called for earnings of $1.90 to $1.95 a share. Lennar's
earnings per share are 37 percent lower than last year's earnings of $2.06 a
share.
In addition, Lennar's profit margins shrank from 26.3 percent last year to 18.7
percent in the quarter ended August 31.
Editor's Note:
- One expert tells Financial Intelligence Report that housing prices
nationwide could fall by as much as 40% over the next few years. Find out the
five ways to protect yourself and profit from the coming real estate crisis.
Go here now.
3. Consumer Confidence Rebounds in September
Thanks to sinking gas prices, consumers are optimistic again about the economy.
Consumer confidence jumped higher than expected in September, says the
Conference Board.
The Conference Board's consumer confidence index rose to 104.5 in September from
an upwardly revised 100.2 in August. According to the Associated Press, analysts
were banking on a reading of 103.
"A more favorable assessment of current conditions coupled with a less
pessimistic short-term outlook boosted consumer confidence this month," said
Lynn Franco, director of The Conference Board Consumer Research Center, in a
statement. "However, even though consumers' concerns have eased, there is little
to suggest a significant change in economic activity as we enter the final
quarter of 2006."
Both present conditions and future expectations improved in September. The
present situation index rose to 127.7 from 123.9 the previous month, while
expectations of the future jumped to 89 from 84.4.
However, when asked about buying plans, consumers said they are pulling back on
spending. Despite falling gas prices, Moody's Economy.com says that the
declining housing market and rising debt burdens may account for their caution.
Editor's Note:
- The Baby Boom crisis is just beginning. Protect your wealth from this
looming tidal wave before it's tool late.
Go here now.
4. Switzerland Tops Competitiveness Poll, US Drops
U.S. economic competitiveness fell significantly over the last year, as high
budget and trade deficits hurt America's business environment, according to a
survey released Tuesday by the World Economic Forum.
The disappointing response to Hurricane Katrina, government corruption and a
decreasing talent pool for employment due to immigration restrictions were other
factors cited by the forum, which moved the United States to sixth in its
"global competitiveness index" from the top spot a year ago.
"While strengths in the technological and market efficiency sectors explain the
country's overall high rank, the U.S. economy suffers from striking weaknesses,"
the report said. "There is significant risk to both the country's overall
competitiveness and, given the relative size of the U.S., the future of the
global economy."
Switzerland topped the poll, which was conducted for the 27th consecutive year,
but only the second year using a new formula, the forum said.
Over 11,000 business leaders in 125 countries took part in the survey, which
found that the Alpine nation's institutional environment, infrastructure,
efficient markets and high levels of innovation made it the world's most
competitive business environment. It ranked fourth a year ago.
"The country has a well developed infrastructure for scientific research,
companies spend generously on (research and development), intellectual property
protection is strong and the country's public institutions are transparent and
stable," the forum said.
Nordic countries -- traditionally strong in the survey -- took the next three
places, with Finland, Sweden and Denmark all praised for running budget
surpluses and having low levels of public debt. The forum also lauded the high
quality of education and social services in these countries. Singapore was fifth
ahead of the United States.
Rounding out the top 10 were Japan, Germany, Netherlands and Britain.
The aim of the survey, the World Economic Forum says, is to examine the range of
factors that can affect an economy's business environment and development as it
seeks to maintain economic growth -- including the levels of judicial
independence, protection of property rights, government favoritism in
policy-making and corruption.
Emerging economies such as China and India fared modestly.
India came in at 43rd, carried by its innovation and the sophistication of
operations. Poor health services, education and public infrastructure held the
country back, however, as fewer people enjoy the benefits of the country's
robust growth rates. The government also has failed to reduce the public sector
deficit, one of the highest in the world.
China dropped six places from last year to 54th. While it has high savings rates
and a favorable macroeconomic outlook, the country's state-controlled banking
sector and low penetration rates for new technologies need attention, the forum
said. Education and environment are other significant weaknesses.
At the bottom of the list were countries primarily in sub-Saharan Africa:
Burkina Faso, Malawi, Mali, Zimbabwe, Ethiopia, Mozambique, East Timor, Chad,
Burundi and Angola.
Editor's Note:
- Find out why Switzerland is still the ultimate investment for anyone
looking to grow and protect their wealth.
Go here now.
Editor's Notes:
- Inflation is even higher than the government reports. To read more
about the government's manipulation of inflation data, check out our report,
"The Inflation Lie." Go here
now.
- One expert tells Financial Intelligence Report that housing prices
nationwide could fall by as much as 40% over the next few years. Find out the
five ways to protect yourself and profit from the coming real estate crisis.
Go here now.
- The Baby Boom crisis is just beginning. Protect your wealth from this
looming tidal wave before it's tool late.
Go here now.
- Find out why Switzerland is still the ultimate investment for anyone
looking to grow and protect their wealth.
Go here now.
- Is there a killer lurking in your mouth? Read this before you chew your
next meal or drink a hot cup of coffee.
Go here now.
