Daily Archives: December 16, 2007

OPEC May Increase Procuction In February

It will probably be a cold winter in the Northern Hemisphere. It has certainly started that way.

Recent indications are that consumer spending moved up sharply in November, and retail sales are somewhat better than expected.

But, on the other side of the economic coin, there is evidence of inflation in the US economy which is probably mirrored in Europe. Certainly China, where inflation is running in the double digits is facing uncontrollable price increases for food and commodities, including oil. A big piece of the increase in US consumer prices was also driven by energy.

Oil producing nations are now facing a change, and a fairly new one. Inflation and the potential that the West will dodge a recession were not the big headlines two weeks ago. An economic slowdown took most of the front page ink.

But OPEC & friends have looked at the recent energy price spikes in the US and China and they now have to worry about whether global inflation may take a hand in hurting the worldwide economy. Perhaps because of that the cartel is beginning to put out word that it will look hard at increasing production in February.

Algeria’s oil minister told Bloomberg that a long winter and good economies could be cause for a production increase. Demand is rising, he says.  But, it was all along  Algeria’s Chakib Khelil does not hold all of the votes, but it is likely that his comments to a major news agency are a testing of the waters. OPEC wants to make as much as it can on every barrel, but inflated oil prices may be getting to the point where the barrels comes too dearly.

Douglas A. McIntyre

Posted on: December 16, 2007 – 6:25 pm in Oil & Gas

Holiday 2007 E-Commerce Winners And Losers

comScore today released data that shows households with incomes under $50,000 are not lifting their online spending much from the holiday season last year. Sales from this demographic group are up only 10%.

For people from households above $100,000, the increase is 28%. That is likely to create some big winners and losers in the e-commerce sector.

Wal-Mart’s (WMT) online business is not likely to be helped. Neither is Target’s (TGT). Deep discounter Overstock (OSTK) probably gets beaten up as well. The online businesses for Macy’s (M) and Sears (SHLD) are not likely to be helped.

RedEnvelop (REDE) may be in for a good holiday period. Ditto Blue Nile (NILE)

Douglas A. McIntyre

Posted on: December 16, 2007 – 12:30 pm in Internet, , , , , , ,

Middle Class Killing Online Holiday Spending

The great debate over whether online spending its in trouble this holiday season now has another data point. So far in 2007, e-commerce revenue for the period from November 1 throught December 16 is up 18% to $22.67 billion. Last year the comparable number was 26%.

According to comScore it turns out that the dollar amount of 2007 online purchases is up only 10% in households with incomes under $50,000. Among households with incomes over $100,000 the value of online buying is up 28%.

Household Income           Online Spending Growth Vs YA
Less than $50,000                     10%
$50,000 – $100,000                    17%
Greater than $100,000                28%

Douglas A. McIntyre

Posted on: December 16, 2007 – 11:54 am in Internet

Ford (F) Likely To Pick Tata

Ford (F) looks likely to pick Tata of India to buy Rover and Jaguar. The Times of London says the price for the sale will be slightly over $2 billion.

The upcoming sales begs that question of why Ford is selling the companies at all. Jaguar has certainly lost a lot of money and its sales have been sliding, but, if another car company can make a fix, what is wrong with Ford?

Ford is struggling in the US. Jaguar and Rover are global brands. The would appear to be ideal leaders for Ford’s moves into fast-growing markets like China, India, and Russia. They are certainly better lead products than the Mercury Sable or Lincoln Navigator.

Ford has new world class management. They ought to act world class, turn the brands around, and build some shareholder value from them.

Douglas A. McIntyre

Posted on: December 16, 2007 – 5:11 am in Autos,