Walmart, Did they drop the Soap?
Research for Online Investors

by John Dalt

7/01/09

Walmart made headlines today when it appeared they succumbed to the desire to curry favor with the government. Walmart now backs a push for an employer mandate for health insurance. The story is more complicated than capitulation on Walmart’s part. The Washington Post has a good article on Walmart’s endorsement of an employer mandate.

Walmart has fought state efforts to force mandates on them, but these state mandates were union sponsored initiatives. In most cases they were designed to saddle Walmart with expenses that other local retailers would not have to shoulder.

The idea of an employer mandate is moving in the wrong direction, from a global competitive perspective. Our exporters have a health care cost in every widget sold. It would be much better to have an individual mandate, and remove this cost from our GDP.

John McCain could not sell this during the presidential campaign, his fault. He was never able to cut through the personal interests of people thinking it was going to cost them money. If we want a free, competitive market, we should embrace individual responsibility for our family’s health care.

An individual tax deduction for health care, with a penalty if you do not buy a tax deductable plan would lead us to a faster solution to the current “health care crisis.” Couping this with ending the corporate deduction for health care, would instantly lower costs for domesticly produced goods whether exported or sold in America. Yes, everything would cost less at our stores!

Walmart needs to be careful. They are playing the same game so many have tried before. You cannot deal with a government that seeks to destroy you. They will learn this as all others have.

Read about who needs health care in America.

It is important to comply with the law. When business advocates for a law out of perceived self-interest, they cross into the never land of becoming a lap dog of the world improvers that want dictatorial powers and control. Woe is us.

According to the Case-Schiller Index, home prices in 20 major U.S. cities fell 18.1% in April. This after a drop of 18.7% in March. Phoenix had the worst decline in values at 35%. 73% of existing homes and condos sold in Las Vegas were foreclosures, as were 51% of all sales in California. Amazing, these numbers were considered good! Forecasters feared deterioration worse than these numbers.   Don’t you love gallows humor?

Mortgage applications fell to a seven month low last week. Demand for refinancing plunged 30% according to the Mortgage Bankers Association. 30-year mortgages averaged 5.34% last week, down from the week before, but significantly higher than the low of 4.61% set the last week of March.

This is the problem for the Fed, as rates go higher demand dries up. The government needs people to borrow and buy homes, cars, durable goods, and consumer goods. The government has to borrow over $150 billion every month to fund the deficit, leaving little room for personal and corporate debt without rates rising. Stagflation here we come. Buy TBT.

Chrysler sales were down 41.8% in June over last year, GM down 33.4%, Toyota down 31.9%, Honda minus 29.5%, Nissan down 23.1%, and Ford only down 10.7% GM had 582,000 finished vehicles in inventory, and only sold 1,454 hybrid vehicles in June.

Ford is looking like the survivor, they have announced increasing production in the third quarter to meet demand. While it is counter to the taxpayers interest, it would be wonderful to watch GM and Chrysler struggle and die under government ownership.

ADP, the payroll processing company reported net job losses of 473,000 for June. This is higher than expected and if confirmed tomorrow morning by the Labor Department will cause some indigestion in the marketplace.

Rolling Stone has peeled back the veneer of Goldman Sachs. In an article this month, Rolling Stone asserts that “Goldman Sachs took over Washington by engineering every major market manipulation since the Great Depression.”

The EIA (Energy Information Agency) released their weekly report today, and crude prices dropped. Wait a minute, crude inventory dropped by 3.7 million barrels last week, almost double the expected draw. Gasoline and diesel supply built, but traders are skittish. The trend remains the same, less and less oil. We are approaching the fulcrum when prices will catapult higher.

On Janary 22, 2009 we talked about “Super Contango” in the crude oil market. Goldman and other big players were buying oil on the spot market, putting it in tankers and reselling it on the futures market. Estimates of 80 to 100 million barrels of oil floating in the Gulf of Mexico and on the North Sea were accepted as fact. That oil is contracted on the futures market and making it's way into the supply!  Spot prices may suffer short term. Oil is still the trade of the year, but market forces may cause a hiccup.

“We cannot insure success, but we can deserve it.”
-----------John Adams

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions. It may contain errors and you should not make investment decisions based solely on what you believe you have read here. Do your own research, it is your money. If you lose it, it is your responsibility, not ours or your grandmothers! The editor may or may not have a position in any securities discussed. The editor may have held a position in a security earlier, or in the future.

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