Saturday, March 29, 2008

Riddle Me This Batman...

At one time Joe "Batman" Battipaglia at Gruntal Securities (now at Ryan) was the trumpeter of Dow 20,000 during the Bull Market of the late 1990's. However, he is now the the consummate critic of Fed policies in general, and specifically the U.S. consumer's ability to grow the economy. When Batman turns bear...then everyone should take notice. One need not look further than the consumer spending numbers for February (now down three months in a row.) While the official party line from the Fed suggests that inflation is under control at 2%, Battipaglia believes the Fed's method of gathering these numbers is antiquated and in-effective at best. He went on to say that the real inflation numbers are much closer to a 2.3-2.7%. (That's only 10-20% off right???)

With inflation on the rise...out-right scary consumer spending numbers, is it a mere coincidence that gas prices nationwide are now falling? Let's face it gas effects EVERY aspect of the U.S. economy. From a cheeseburger at McDonald's to a gallon of paint at Sherwin-Williams. Gas prices hit everyone. And the lower on the food chain you are, the more it hurts! While servicing one of my daughter's vending machines at a Dairy Queen, I struck up a conversation with a fellow who worked as a driver for a semi-truck supplier. He said his job is safe for now...but the semi-truck business is getting killed. One of his customers spent $3,000.00 last month for diesel fuel. The truck suppliers are almost at a standstill. The truckers are hurting as well. It is these types of people who represent the bread and butter of our know, the little guy. The ones who get our stuff from point A to point B. The behind the scene types who really make things happen. They are the ones who are going to feel the least at first. From here a domino effect could easily take place all the way up the food chain. I'm waiting for schools to start canceling field trips...or consolidating athletic events. If there is a school district that is considered poor...and things are financially out!

In a recent article from New York Times columnist Edmund L. Andrews, he expounded on the White House's desire to expand the FED's oversight powers on financial markets!!! What the heck! Why not! If President Bush is looking for a super hero to save the day...maybe it's the Fed. Let's give the Fed enough power to to regulate banks, brokerage firms, hedge funds, and even private equity firms! But remember, the FED is not part of the U.S. government... And if Congress were to give the President his request, I am sure everything will be just fine...or would it be a case of the fox guarding the hen house. How can a group of people, who resides in the shadows of the Fed, control 99% of our money? Does absolute power corrupt absolutely? In the end I think Congress always has the power to pull the plug...I think!

I have never been one to think that there is a grand scheme of manipulation going on...but now I am starting to second guess myself!

Here is the vending machine money is going:
College Plan #1:
Altira (MO)
Kraft (KFT)
British Petroleum (BP)

College Plan #2:
Dominion Natural Resources (D)
Reynolds American Tobacco (RAI)

College Plan #3:

Coca-Cola (KO)
Wal-Mart (WMT)
Dominion (D)
*will soon be adding additional plays to the portfolio.


AX said...

Coach, good anecdotes...part of the masses that will soon be drowning in debt. Interesting to see if gas goes down as we approach a possible "debt deflation" where retailers have to lower prices to compete with overwhelming debt backlogs and no purchasing power. B&D has referenced this indirectly with his recos on Walmart...

moneythoughts said...

Hi Tiger Coach,

Thanks for taking a look at my blog. That inflation number unfortunately is also highly political as COLAs (Cost of Living Allance) being the reason they spike it to the downside! You will not get an argument from me that it is not under stated. Take a look at some of my earlier postings, I have covered a wide variety of topics, though all in the same ball park. Drop back anytime you get a chance. I write Monday through Friday unless the market is closed, then I post my art.