Good News From Wall Street and Detroit

Posted on February 5, 2012 by James Cannon

Paul Taylor Chief Economist for NADA


Nasdaq Sets Record

The Nasdaq rose to its highest point in eleven years as optimism is mounting that the US economy is well on its way to recovery. The good news that fueled the Nasdaq rally was last month’s surge in the number of people hired, paving the way for what many analysts believe is a clear road to economic stability and growth.

The Nasdaq rose by 1.60 percent, reaching 2,905.34 on an increase of 45.66 points. Standard & Poor’s 500 Index grew to 1,344.66 as it surged by 19.12 points, or 1.44 percent. The Dow Jones industrial average climbed by 153.49 points to 12,858.90, which represents an increase of 1.21 percent.

Improved Economy Brings Higher Car Prices

The National Automobile Dealers Association is predicting that consumers are ready to pay more for new and used cars this coming year as the economy shows definite signs of improvement.

Used Cars in Demand with Low Supply

The NADA forecasts a rise of 6 percent for the average car to $30,000. An even higher price increase of 8 percent is expected for used cars, especially for SUVs and pickup trucks. For small second hand cars the price rise will be significantly lower, climbing by only 1 percent to an average price of $9,475.

More People Ready to Splurge

Luxury cars will most likely be in greater demand than in previous years as the economy keeps pushing forward, allowing people the confidence to splurge on more expensive cars. Used cars are in tight supply now because so few people purchased new cars during the years of the recession.

Paul Taylor, NADA chief economist, believes that US car sales will go up by 9 percent to 13.9 million in the year ahead. Low interest rates and enticing new products will most likely boost sales, according to Taylor.

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January Best Month Since October on Wall Street

Posted on February 2, 2012 by James Cannon

As January ended yesterday Wall Street celebrated what investors there are saying was their best month since October, 2011. The optimistic attitude was maintained despite the disappointing weaker-than-expected performance which was reported in Tuesday’s economic reports, which surprised investors after a receiving a series of positive data about the economy in recent months.

According to the most recent data available, the Dow Jones Industrial average closed the session at 12,633.89, down 19.83 points or 0.16 percent. The Standard & Poor’s 500 Index was also down by 0.55 points, 0.04 percent to close at 1,312.46. The Nasdaq Composite Index finished up, however, by 1.46 points, or 0.05 percent, at 2,813.40.

The month of January ended up, with the Dow up by 3.4 percent, the S&P 500 up by 4.4 percent, and the Nasdaq finished in the black by a cool 8 percent.

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Oil Prices Climb to $99 Range

Posted on February 1, 2012 by James Cannon

The price of crude oil approached just below $99 a barrel on Wednesday in Asia due to investor’s reaction to a surge in US oil supply inventories combined with slower than hoped-for economic growth.

The price of benchmark crude, to be delivered in March, climbed by 15 cents to $98.63 per barrel in Singapore in the late afternoon, just in time to make the electronic trading deadline on the New York Mercantile Exchange. By the end of the trading day the contract’s price fell by 30 cents to rest at $98.48 on Tuesday.

Brent crude also rose by 19 cents per barrel, to settle at $111.17 on the ICE Futures Exchange in London.

According to the American Petroleum Institute, crude inventories went up by 2.1 million barrels last week. In a survey conducted by Platts, the energy information section of McGraw-Hill Companies, of analysts’ predictions, they found that there had been a prediction of an increase in the inventories of 3.0 million barrels.

"U.S. economic releases tilted toward the bearish side, and that these figures followed last Friday's negative GDP guidance conjured up images of some disappointing employment data," energy consultant Ritterbusch and Associates said in a report. "A difficult, choppy trading environment could be sustained well into February."
 

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Obama Announces Expanded Refinancing Plan for Homeowners

Posted on January 31, 2012 by James Cannon

President Obama

In an attempt to help boost the sluggish economy’s growth President Obama announced a proposal which will allow all homeowners to refinance their mortgages at more attractive rates, even if what they owe on their mortgages is actually more than the worth of the house. This is a crucial issue in many states which are pivotal to Obama’s re-election.

Details

Obama wanted to outline more specific details of the proposal he only outlined in his State of the Union Address concerning finding a way for homeowners to cash in on the nation’s record low mortgage rates. It is estimated that the average homeowner could save about $3,000 a year by re-financing.

Will Congress Agree?

The proposal, however, will need to pass through Congress, which is not necessarily in favor of such a plan if it would allow homeowners to refinance even if they own more to the bank than the actual value of the house, a situation which many homeowners find themselves in today due to the housing slump.

Not As Popular as Predicted

The plan is an enlargement of an already existing program, the Home Affordable Refinance Program. This plan lets borrowers who have government affiliated mortgages from Fannie Mae and Freddie Mac to refinance at more affordable rates. A disappointing one million people have use the plan, much fewer than the 4 to 5 million the Obama administration was predicting. The new plan also expands to include “underwater” borrowers; those that own more than the value of their homes.

Economists in the private sector believe that if the plan is expanded to all borrowers, then about 10 million homeowners would be qualified to refinance, giving the economy a jumpstart not to be underestimated. The Federal Reserve has been more conservative in their assessment of the plan’s impact, saying closer to 2.5 million additional Americans would be eligible to refinance under the terms of the expanded program.

CoreLogic, a real estate data firm, notes that about 11 million Americans are “underwater,” about 1 out of 4 homeowners who have a mortgage.
 

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Able Planet Bringing Affordable Hearing Aids to the Market

Posted on January 30, 2012 by James Cannon

Kevin Semcken Photo by Mary Semcken via Bloomberg

Electric hearing aids were developed around the time of the end of the nineteenth and beginning of the twentieth century. In all those years no one was ever able to create a hearing aid that would be affordable and effective for many people who suffer from hearing loss, until now.

Affordable and Efficacious Hearing Aids

Based in Colorado, Able Planet is a manufacturer of headphones, but they are planning on launching a new line of amplification devices designed to do the job right. Beginning in March Able Planet will release their first new product of this type, the Personal Sound AMP. A band holds the device in place within the ear, into which it fits perfectly, as its dimensions are smaller than the size of a dime.

Able Planet estimates that the device will cost about $800 for a pair, favorably competitive with traditional hearing aids which often cost thousands of dollars. Due to the prohibitively high cost only 9 percent of seniors who need hearing aids in the US who make less than $50,000 a year actually own a pair, according to a 2010 survey conducted by a medical devices research firm called Parks Associates.

Serial Entrepreneur

Chief Executive Officer Kevin Semcken bought Able Planet six years ago. Semcken is 52 years old and has bought built and sold seven medical technology companies over the years, as a serial entrepreneur and private investor.

Semcken bought Able Planet when it was mired with debt problems and multiple design lawsuits, but it hasn’t stopped him from continuing to lead the charge into the hearing aid market.

Although it is true that Able Planet’s income today derives mostly from sales of its consumer headphone products, the company was originally founded to be a source of the manufacture of hearing devices. It has been the expense of research and development made it a prohibitive undertaking financially during the doldrums of the recession.

One Percent of Market Share

Ninety percent of Able Planet’s $30 million in revenue in 2011 came from its consumer electronics. The products are sold on-line and in retail outlets such as Costco in the US and in Mexico and Japan. Able Planet, which is headquartered in Wheat Ridge, Colorado, competes with the likes of Bose, Monster Cable Products and Sony, industry leaders in the $900 million domestic market for stereo headphones. Ben Arnold, and audio and video industry analyst at market research firm NPD Group says that Able Planet has about 1 percent of the market share for stereo headphones.
 

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