Newsletters

I write this installment of my newsletter on an unofficial holiday which now follows almost directly behind Thanksgiving, Cyber Monday. No, you dont get to stay home from work or school, but sit at your computer and shop till something drops (coffee, breakfast, checking account balance). That is unless you finished your shopping on Black Friday. But based on the numbers we are seeing, not many more people this year shopped on the Friday after Thanksgiving than last year. We now have to wait to see if less shopping is in fact, a 2009 trend as many expect it to be, including me. Hopefully, you and yours had a very wonderful Thanksgiving and had time to spend with immediate family, distant relatives and friends. As you are busy this time of year, this issue will be quite short, but I must comment on a few items of interest out in the world.

My first comments relate to the goings on in Dubai. I think most were surprised when word came as we were digesting the pumpkin pie, that Dubai was not going to be able to make timely payments on 60 Billion dollars of debt over the next 6 months. A little clarity is called for here. It is not the country of Dubai threatening default, but rather Dubai World, an investment company which owns much commercial real estate in that region of the world. Investors are waiting for clarification on the issue of who will come to their rescue. The Dubai government has said, at least for now, that it wont bail them out (must not be watching the US news and how we deal with defaulting companies). They further claim that while their government owns Dubai world, that Dubai world is on their own for lending and borrowing. That is not what Americans are used to hearing from our government about our companies.

For now, we will have to wait and see how this plays out, but international investors are certainly a bit nervous. However, to put this in perspective, the most immediate concern is $5.7B in debt due to mature by May 2010. Just the price tag on the bank bailout was $787B for our country. So, stay tuned for further developments.

In the United States, this week brings three important items to light. The first issue is the continuing digesting of sales numbers for shoppers, in person and online. Dont look for great numbers, but as has been the pattern lately, less bad news is good news. Also, it will be very important to listen to what the actual retailers are saying. Sales might be up, but I am fairly certain that margins will be down, leading to less profits.

The second item this week is finally, the announcement by the President of additional troop commitment to Afghanistan. Normally, this is not such an economic event, but we are hearing about a tax on the wealthy to pay for any additional troops and that has everyone curious. In addition, we are starting to hear suggestions that the health care bill, about to begin the debate phase in the Senate, be scrapped in favor of paying for the troops and other more pressing economic issues. The interaction of the health care debate and troop expense will ramp up this week. I actually think that as each day passes, we move further away from passing anything related to health care reform in Congress.

Finally, the third issue is the unemployment report which will come out on Friday. This number may not be so bad as it will include some seasonal hiring. However, the actual unemployment rate, even if it dips, will remain at or near 10% and for any meaningful recovery to happen, the rate must drop below 8%, in my belief and that is quite some time away.

Have a great start to the Christmas season and be careful out there.