Ellison Chair in International Floriculture
Ellison Chair in International FloricultureTeaching, Research, Extension and Service

Who do you believe?

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From the WSJ: The good news is your home may be worth more than the rock-bottom price that your neighbors’ houses fetched. The bad news: No one but you might think so.

The one point of widespread agreement in the real-estate industry is that there is no single accurate index of home prices. They are all over the map, cover different sets of homes and may exclude parts of the country or be unduly influenced by the mix of homes sold in a given month.

No matter which index is correct, until a large inventory reduction takes place, housing prices will not stabilize. Click here for the Money Morning housing forecast for 2009.

Unemployment rates vary by state

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Facts from the October BLS report on state unemployment rates, ranked from lowest to highest:

1. Five states have unemployment rates at 3.6% or less (SD, WY, ND, UT, and NE).

2. 33 states have unemployment rates below the national average of 6.5%, 15 states are above 6.5%, and two states are at 6.5%.

3. The median unemployment rate by state is 5.7%, with 25 states at or below 5.7% and 25 states at or above 5.7%, and mean by state is 5.86%.

Based on #2 and #3 above, Mark Perry suggests that the reason the national average of 6.5% is above the median of 5.7% is either because: a) the states with higher-than-average unemployment rates are also states with higher-than-average population, and/or b) there are more extreme “outliers” above the median than extreme outliers below the mean, bringing the mean of 6.5% above the median of 5.7%.

Both of these are probably correct. Some of the states with the highest jobless rates are also states that have large populations (MI at 9.3%, CA at 8.2%, OH at 7.3% and, IL at 7.3%). Moreover, the two states with the highest rates are Michigan and R.I. with 9.3% rates, 3.6% above the median, while the two states with the lowest rates are SD and WY with 3.3%, or only 2.4% below the median.

The bottom line is that economic problems and labor market weakness are not necessarily distributed equally around the country, but the biggest problems are perhaps somewhat concentrated in some of the states with the largest populations. Fourteen states have unemployment rates below 5% for example, which would normally considered to be pretty far from recessionary levels.

Why the auto industry is in trouble

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If you want to figure out why the U.S. auto industry is in deep trouble, while Japanese car companies operating in the United States are doing a bit better, this picture from Mark Perry, an econ prof of University of Michigan, Flint, may be a good place to start.

10 Market Rules to Remember

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Bob Farrell’s (Merrill Lynch chief market strategist from 1967-1992) 10 Market Rules to Remember (link):

1) Markets tend to return to the mean over time.

2) Excesses in one direction will lead to an opposite excess in the other direction.

3) There are no new eras — excesses are never permanent.

4) Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.

5) The public buys the most at the top and the least at the bottom.

6) Fear and greed are stronger than long-term resolve.

7) Markets are strongest when they are broad and weakest when they narrow to a handful of blue chip names.

8) Bear markets have three stages — sharp down — reflexive rebound —a drawn-out fundamental downtrend.

9) When all the experts and forecasts agree – something else is going to happen.

10) Bull markets are more fun than bear markets

Source: Dennis Gartman of “The Gartman Letter”

Green Industry Risk Management Guide

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As I mentioned in an earlier post, three colleagues and I recently conducted a series of risk management workshops that were held across the nation for nursery and greenhouse growers. A concluding part of these workshops was the development of a hands-on publication that folks in the Green Industry could use in analyzing and addressing the various risks they face, including production, marketing, financial, legal, environmental, and human resource risks. Click here to view a PDF version of this timely Green Industry Risk Management Guide (large file size = 20MB).

Top 10 most irritating phrases

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According to Oxford University researchers, here are the top 10 most irritating phrases:

1 – At the end of the day

2 – Fairly unique

3 – I personally

4 – At this moment in time

5 – With all due respect

6 – Absolutely

7 – It’s a nightmare

8 – Shouldn’t of

9 – 24/7

10 – It’s not rocket science

At the end of the day, what would you add to this fairly unique list? With all due respect, I personally, at this moment in time, absolutely shouldn’t of suggested that it’s not rocket science because people are saying this 24/7 and it is literally a nightmare!

Frankel on the recession

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Professor Jeffrey Frankel of Harvard University’s Kennedy School of Government is also on the Recession Dating Committee at the National Bureau of Economic Research.

Last night, he was on Bloomberg discussing the recession. He has a terrific piece in the cafe on the same subject, titled, NOW Are We In Recession?

Go check em out.

Free Fallin'

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Interestingly, the Dow was off nearly 500 as of yesterday.

No clue as to why . . . maybe the 18% gain since October 10th is as good an explanation as anything else ?

Perhaps John Mayer has some insight.

Also, a re-post of the following: A Look Back at the past 18 Elections – See What Elections Have Meant to the Economy Over the Past 72 Years (click here)

In “Presidential Cycle,” Ned Davis Research notes the S&P; 500 posted its weakest returns in the first year of the four-year election cycle. Since 1900, stocks have gained just 3.4% on average in the post-election year, compared with gains of 4.0% in the midterm year, 11.3% in the pre-election year and 9.5% in an election year.

U.S. stocks tumbled for a second day today after Cisco Systems Inc. forecast the first revenue decline in five years and News Corp. cut its profit outlook, deepening concern the economic slowdown is hurting earnings. Exxon Mobil Corp. slumped 4.9 percent, leading energy companies to the biggest declines in the Standard & Poor’s 500 Index, as oil slid to a 19-month low near $60 a barrel.