The November trade gap from the prior month was originally reported as $47.75 billion., but that was revised lower to $47.06 billion. 

The full preliminary figure for the trade deficit in 2011 is up 11.6% from 2010 at a level of $558.02 billion.  That is the highest level since 2008.  The deficit with China also hit a new record with an 8% gain to $295.46 billion.

JON C. OGG

• The first non-footwear Crocs-branded products included a line of adult and children’s socks from Sock and Accessories Brands, which launched in the holiday 2011 season.  These will also be available in Europe.
• Crocs has also signed up with Accessory Exchange for it to produce Crocs-branded accessories for men, women and children. These will include hats, bags, backpacks, socks and gloves for Crocs retail stores and the Crocs.com website.
• In April 2012, the Crocs brand will extend to children’s apparel through an agreement with the A Group in 46 countries. Crocs-branded sunglasses and sunglass accessories also will launch in May 2012 in a deal with Eye King, LLC to produce sunglasses for adults and youth for retail and wholesale distribution in the U.S. and Canada.
• Crocs Professional Footwear Division is in a partnership with ICER Brands to “build on the loyal following of medical professionals with the introduction of Crocs-branded scrubs. This new medical gear is available now through specialty stores and online.” 
• Paramount, a sports licensee, recently kicked off Collegiate and MLB licensed footwear for the brand.

OK. so let’s get this straight.  Medical scrubs, baseball shoes, eyeglasses, hats backpacks, and gloves… All with the Crocs label on them.

This just sounds bad on the surface.  As far as investors are concerned, if it grows the brand and captures new sales that were previously uncharted then it is a win.

200 million pairs of shoes sold is probably a better judge than us calling Crox one of the ugliest brands that there is.  After all, opinions greatly differ and the sales results probably speak louder than critical words.

JON C. OGG

There is a one-week lag on the army of unemployed measured by the continuing jobless claims, but that figure rose by about 64,000 to 3.51 million.  Again, there is a one-week lag to that data but it goes against the improving conditions in the weekly data at least on new claims.

With news of a deal being reached in Europe this morning, investors have just one more small bit of data to cheer about to support a bullish economic thesis. S&P and DJIA futures are now in positive territory.

JON C. OGG

The company beat earnings by $0.05 at $0.65 per share and revenues rose almost 13% to $3.39 billion versus Thomson Reuters estimates of $3.38 billion.  Whole Foods even raised guidance for its Fiscal year of 2012 to a range of $2.28 to $2.32 earnings per share from a prior target of $2.21 to $2.26 and against a consensus target from Thomson Reuters of $2.27 EPS.  It also raised revenue guidance for 2012 to a range of 13.5% to 15% and that looks mostly in-line with the expected figure of $11.6 billion expected.

Whole Foods is a great growth story, it is an incredibly well run organization, and it deserves a premium over traditional grocery stores which run on razor-thin margins.  Whole Foods has far higher margins and its expansion of its own 365 private-label brand is likely going to help it capture even higher margins even though the products are generally priced lower than other organic and natural brand-label foods. 

So, everything is positive… except for our headline.  The guidance is not exactly far higher than what was already expected.  At the mid-point of its new earnings range, Whole Foods stock trades at a massive 33.9-times the fiscal September 2012 consensus estimate and it trades at 1.2-times expected revenues.

Compare Whole Foods forward 2012 valuations of 33.9-times earnings and 1.2-times sales to The Kroger Company (NYSE: KR) and Safeway Inc. (NYSE: SWY).  Kroger trades at only 10.6-times earnings and only about 0.14-times sales; Safeway trades at 12-times expected earnings and only 0.17-times total sales.
 
The good news for the bulls is that Whole Foods has always been a premium stock.  It is even easy to argue that Whole Foods will always trade at a premium to grocery chains.  It has the whole lifestyle trade attached to it.  Whole Foods is far more of a fun experience compared to most grocery stores, at least until the bill comes.  Whole Foods is arguable the biggest luxury brand that there is. 

The bad news is simple.  Valuations at some point just have to give.  At $77.93 and after the stock hit a new high of $78.31, how can it rise?  The consensus target from analysts is $79.29 and even if that gets raised it can only rise so much.  With a $13.99 billion market cap, it is worth roughly two-thirds of the combined values of Safeway and Whole Foods while it is expected to generate only about 8% of the combined sales of the two food giants.

A great company, at a price that just feels too high to justify on any traditional financial metrics.  The stock can run up on news.  It just looks too hot now under rational evaluations.

JON C. OGG

Jon Marino of PEHub.com noted that P.E. firms are hiring and referenced a follow-up report for BDO USA’s third annual private equity “PErspective” report… 57% of private equity executives increased professional staffing and 62% plan to hire again this year.  This is a complete reversal from the layoff waves of prior years.  Here is more detail from that report.

Whether you like millionaires or billionaires or hate them, the one aspect that is so unfairly portrayed about companies bought by private equity firms is as follows: Most businesses bought by private equity firms need to be turned around or need to be run better.  Sure, they get leveraged up and they scrap inefficient operations.  The dirty secret that private equity firms are not defending enough is that many of these companies would have headed for bankruptcy in the long-term if they had not stepped in.  If that results in a liquidation rather than a pure bankruptcy, guess how many jobs get lost at those companies… all of them, rather than some.

The business sector is not just a one-way street.  Companies hire workers in good times and most fire in bad times.  We even ran our own 2011 Layoff Kings.

JON C. OGG

New data from Gallup show the trend, state-by-state, of employees who say their employers are hiring compared to cutting jobs. Employees at companies in North Dakota, a state with an unemployment rate below 5% for most of the past three years, said 42% of the places they work are adding jobs, while only 8% said their companies were cutting workers. Iowa, Oklahoma and Utah were next on the positive trends list.

At the bottom of the list of states based on probable job gains and losses according to employee perceptions were Rhode Island, Nevada, New Jersey, New Mexico and Oregon, among others. Each of these has had a high unemployment rate over the course of the recession. Those figures have been in double digits for many months in some cases.

Gallup summarized its analysis of the data:

Five of the nine states with the highest Job Creation Index scores are Midwestern states, including North Dakota, Iowa, Nebraska, Indiana, and South Dakota. The states with the lowest scores are largely a mixture of Eastern (Rhode Island, New Jersey, New Hampshire, and New York) and Western states (Nevada, Oregon, and New Mexico).

The results of the poll once again show the extent to which the jobs problem is local more than national. The states that continue to do well have large energy and agricultural industries. Those still doing poorly are part of the old industrial belt of the U.S. or in areas that went through the real estate bust. Some data show a rebound among American manufacturers, but it is much too weak to make up for the hundreds of thousands of jobs lost. As for the real estate market, it continues to be destroyed by falling home prices and foreclosures.

An argument can be made that if unemployment in the economically strongest states falls below 5%, then across the nation the average may reach below 7%. That would seem to be a real recovery, at least on the surface, but only on the surface. Nevada and Rhode Island will not stage recoveries anytime soon.

Methodology: Results are based on telephone interviews conducted as part of Gallup Daily tracking January to December, 2011, with a random sample of 198,412 employed adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia.

Douglas A. McIntyre

We want to know what you think below.  Look at how much some banks have paid to settle overdraft charges and then decide in our poll below…. Should banks have overdraft fees???

So here are some recent settlements and other overdraft fee news…

J.P. Morgan Chase & Co. (NYSE: JPM) was asked by the U.S. District Court of Southern Florida in Miami to pay $110 million over a class suit for charging of inappropriate overdraft fees to its customers. Zions Bancorp. (ZION) was accused in late 2011 of improper overdraft fees over its policies in place from 2005 to 2010.

Bank of America Corporation (NYSE: BAC) and Commerce Bancshares Inc. (NASDAQ: CBSH) were ordered to make payments over unfair trade practices in overdraft situations: Commerce Banc paid $18.3 million; Bank of America was asked to pay $410 million to settle unfair overdraft fees charges.

Now go back to 2010. Wells Fargo & Co. (NYSE: WFC) was ordered to pay $203 million by a California court to compensate customers suing over unfair overdraft fees.

JON C. OGG

Read the States That Believe in the Recovery

Read the States That Do Not Believe in the Recovery

The Gallup Economic Confidence Index measures Americans’ assessments of current conditions and their views of whether the economy is improving. 24/7 Wall St.’s analysis of the index revealed several interesting relationships between a state’s confidence level and its own economic conditions. The states with healthier local economies are more optimistic than those that still struggle with the effects of the recession.

Many of the states that have a relatively high degree of confidence in the economy have felt this way for several years now, ranking high on the list previously. North Dakota, for example, which is the most optimistic state, was also the most optimistic in 2008.

All of the states that are more optimistic relative to other states have healthy job markets. In December, all of the states with the most confidence had unemployment rates lower than 7%, significantly below the national average of 8.5% at the time. While some of the states with the least confidence had good unemployment figures, five of them had unemployment rates above the national average, and four had among the 10-worst unemployment levels.

The housing market condition of a state also appears to play a meaningful role in its economic confidence. Home values in states that are most worried about the economy dropped from the third quarter of 2010 to the third quarter of 2011, according to Fiserv Case-Shiller. The states with the five worst-performing housing markets were among the most pessimistic ones. The reverse is also true. Home values only improved in seven states during the period. And four of those seven states are among the most optimistic about the economy.

The most economically confident states also have among the lowest poverty rates in the country, measurably below the 15.3% national average. In fact, most states that believe the economy is doing well have poverty rates of less than 12%.

Wealth and affordable living are also related to economic confidence. The states that are most pessimistic about the economy are generally poorer and have among the highest costs of living relative to median income. Maine — one of the most pessimistic states — has the 19th-lowest median income and the 12th-highest cost of living. The states that are least pessimistic are wealthy and have relatively low costs of living. Utah, one of the least pessimistic, has the 13th-highest median income in the country and the sixth-lowest cost of living.

24/7 Wall St. reviewed the states that were most and least optimistic about the economy based on Gallup’s Economic Confidence Index, which can go as low as -100 and as high as +100. Negative scores indicate there are more negative responses about the economy than positive ones. As many as 48% of Americans think the economy’s current condition is poor, and only 11% think it is excellent or good. Only 29% think the economy is improving, while over 66% think it is getting worse. Because there were more negative responses about current conditions and about the economy’s prospects, all of the states have negative scores.

These are the states that believe in the recovery and those that do not.

The Fed Funds Futures are very different today from a week ago after Ben Bernanke and his minions at the FOMC predicted that rates would be “exceptionally low through at least the end of 2014.”  Prior to that, it was a mid-2013 promise.  The reality is the FOMC has no obligation to commit to any time frame and the late-2014 was a projection rather than a commitment.  Still, this was a ‘risk-on’ signal if there ever was one.

Fed Funds Futures are now showing a 100% chance of a rate hike in December 2013.  That is the first month where the price is under 99.75 and this is the first time in quite a while that a rate hike has been this close.  What is interesting is that there is still close to an 80% chance of a rate hike by August of 2013.  Should you panic?  Absolutely not.  The rate hike would just remove the 0.00% to 0.25% range up to a formal 0.25% Fed Funds Rate.

It is still all the way out to September of 2014 now before the Fed Funds Futures are calling for a 100% chance of a 0.50% Fed Funds Rate.

Daily rates can be seen here for Fed Funds Futures from the CME.

JON C. OGG

iShares MSCI Global Agriculture Producers Fund (NYSE: VEGI) targets the front end of the production chain (fertilizers or agricultural materials) while excluding exposure from companies at the end of the production chain (packaging and marketing). This is a bit similar to but nowhere near identical to the Market Vectors Agribusiness ETF (NYSE: MOO).
 
iShares MSCI Global Energy Producers Fund (NYSE: FILL) tracks the MSCI ACWI Select Energy Producers Investable Market Index.  This is similar to the ProShares Ultra Oil & Gas (NYSE: DIG), but without the leverage.

iShares MSCI Global Select Metals & Mining Producers Fund (NYSE: PICK) aims to track the MSCI ACWI Select Metals & Mining Producers Ex Gold & Silver Investable Market Index. This one is not identical to but has overlaps with the SPDR S&P Metals & Mining ETF (NYSE: XME).

iShares MSCI Global Gold Miners Fund (NYSE: RING) aims to track the MSCI ACWI Select Gold Miners Investable Market Index.  We consider this an alternative to the Market Vectors Gold Miners ETF (NYSE: GDX).

iShares MSCI Global Silver Miners Fund (NYSE: SLVP) aims to track the MSCI ACWI Select Silver Miners Investable Market Index.  We would consider its an alternative to the Global X Silver Miners ETF (NYSE: SIL).

As far as why these are different from some other ‘production’ ETFs, iShares explains that these include only companies at, or near, the initial phase of production of the commodity. Investors can target the front end of the production chain instead of including the back-end of the production chain to focus on the aspects more sensitive to fluctuations in the underlying commodity price.  Companies further down the production cycle are impacted by a number of factors in addition to commodity prices.

An ETF for just about anything… now competing ETFs for many more strategies.

JON C. OGG