Wednesday, April 13, 2011

The Toilet Paper Caper

We don’t like to talk about it, but most of us use toilet paper. It’s one of those things you don’t want running out. We take TP for granted. For years I found the inner cardboard fit nicely on the TP holder. Then I started to notice that the paper seemed to wiggle a bit in the holder. Then it began to seem that the holder had shrunk. I realized that what was happening is that the size of the cardboard holder of the paper was becoming larger. By golly, when I looked, I found the number of sheets of paper on a roll had been reduced. To the eye, the roll seemed unchanged, but it was changed. I noticed this in passing and I also began to notice that the orange juice container was the same size with less product, the coffee bag looked the same but had fewer ounces of coffee, etc. Yesterday, however, the toilet paper caper moved to a new level. While up until now the paper fit exactly into its space, suddenly there was a lot more room around it. Not only was the cardboard roll larger, the width of the roll had shrunk! The next step will be to introduce a new, higher priced, larger roll of toilet paper, that will look like the old roll with a marketing strategy telling me it is Newer, Bigger, Better and overall less expensive! Why is this relevant? As commodity prices have increased, businesses find themselves in a tight spot. They want to keep their profit margins up but they don’t want to raise prices for fear that consumers will not use their products. With the price of oil rising, the cost of gas is increasing, and therefore the cost of transportation is higher, too. We are seeing how insidious inflation can be, even when overall it does not appear to be a problem. Consumer income has not been growing, but consumers are forced to pay more for staples, leaving less discretionary income. If this continues, it could have a negative impact on the growth of the U.S. The key to growth is more money in the hands of consumers for discretionary spending. Ed Mallon

Friday, April 1, 2011

Odd Things - March 31, 2011

Sometimes I see things that strike me as odd. Today is opening day for baseball. Doesn’t seem to make sense, to me, that baseball would begin when the weather, in most of the country, is not warm and sunny. On March 10th, the front page of the Wall Street Journal had two articles next to each other. First was “Discovery’s Last Flight Caps Era in Space Exploration” and next to it “Deficit Proposal Picks Up New Allies.” Seems that only yesterday we were “investing” in space exploration to bring about new innovation here on earth, and oddly, now it’s gone. Recent reaction to continuing drops in job losses and increases in job creation has been mixed. At 10 a.m. this morning, the “Jobs Report” article on MSN Money noted that the DJIA was down because of the report. By the time the “Strong Jobs Report” (same report) was issued by MSN Money at 12:26 p.m., the DJIA was up +87, also noted because of the jobs report. As I was looking at this new posting it was 2:30 p.m. and the DJIA was down again. Seemed odd to me and I wondered if the same report would be renamed again based on how the DJIA finished the day; and it was, to "Lack Luster Jobs Report." So here is the thing: the economy appears to be improving, but what is really happening with the stock market? I like to follow the S&P 500; seems to me that more stocks in the index make it a better gauge of what is happening. On December 31, 2011, the S&P 500 closed at 1257.64. On March 16, 2011, after going up and down for many weeks, it stood at 1256.88 (a slight loss). Now we are at the end of the first quarter of 2011 and the S&P 500 is up about 5.6% since March 16th. It all seems odd to me, but I am happy it is back up. Ed Mallon