The Greatest Investors: David Dreman

David Dreman

Born:	Winnipeg, Manitoba, Canada in 1936
Affiliations:	Rauscher Pierce Refsnes Securities Corp. J&W Seligman Value Line Investment Service The Journal of Psychology and Financial Markets International Foundation for Research in Experimental Economics (IFREE) Dreman Value Management, L.L.C
Most Famous For:	David Dreman's name is synonymous with contrarian value investing strategies. His first book, "Contrarian Investment Strategy: The Psychology of Stock Market Success" (1980) is an investment classic. He has authored numerous scholarly investment articles in the Journal of Investing, Financial Analysts' Journal and The Journal of Financial Behavior. Dreman has also written the highly respected "The Contrarian" column in Forbes magazine for some 22 years.

Personal Profile
David Dreman graduated from the University of Manitoba (Canada) in 1958. After graduating, he worked as director of research for Rauscher Pierce, senor investment officer with Seligman, and senior editor of the Value Line Investment Service. In 1977, he founded his first investment firm, Dreman Value Management, Inc., and has served as its president and chairman.

Investment Style
It is reported that Dreman came to contrarian investing the hard way. In 1969, Dreman, a junior analyst at the time, was following the crowd as the shares of companies with negligible earnings skyrocketed. He is quoted as saying, "I invested in the stocks du jour and lost 75% of my net worth." As a result of that painful lesson of following the herd, he became fascinated with how psychology affects investor behavior and became a contrarian investor.

In an interview for Kiplinger's Personal Finance Magazine in 2001he explained his approach: "I buy stocks when they are battered. I am strict with my discipline. I always buy stocks with low price-earnings ratios, low price-to-book value ratios and higher-than-average yield. Academic studies have shown that a strategy of buying out-of-favor stocks with low P/E, price-to-book and price-to-cash flow ratios outperforms the market pretty consistently over long periods of time."

Publications

• "Contrarian Investment Strategy: The Psychology of Stock Market Success" by David Dreman (1980)
• "The New Contrarian Investment Strategy" by David Dreman (1982)
• "Contrarian Investment Strategies: The Next Generation by David Dreman (1998)

Quotes

"Psychology is probably the most important factor in the market – and one that is least understood."

"I paraphrase Lord Rothschild: ‘The time to buy is when there's blood on the streets.'"

"One of the big problems with growth investing is that we can't estimate earnings very well. I really want to buy growth at value prices. I always look at trailing earnings when I judge stocks."

"If you have good stocks and you really know them, you'll make money if you're patient over three years or more."

investopedia.com

Kronologi Krisis Finansial AS

Washington - Amerika Serikat (AS) mencatat sebuah krisis finansial terburuk. Bank-bank investasi besar bertumbangan, indeks saham terpuruk hingga level terendahnya.

Krisis itu berakhir pada sebuah upaya penyelamatan raksasa bernilai hingga US$ 700 miliar atau sekitar Rp 6.450 triliun. Sebuah harga yang sangat mahal dari sebuah krisis.

Pemerintahan presiden AS George Walker Bush meminta Kongres bergerak cepat menyetujui rencana tersebut untuk mengatasi krisis finansial terburuk setelah 'Great Depression'. Tanpa persetujuan yang cepat itu, perekonomian bisa kolaps.

"Kami perlu ini berjalan lancar dan cepat," kata Menkeu AS Henry Paulson.

Pemimpin partai Demokrat meminta agar rencana untuk membeli aset-aset bermasalah dari lembaga finansial itu harus juga membantu masyarakat AS yang terkena dampak paling parah dari merosotnya sektor perumahan di AS.

"Ada banyak masyarakat yang memerlukan pertolongan. Namun bantuan paling besar yang dapat kita berikan kepada masyarakat AS adalah menstabilkan sistem finansial kita sekarang ini," kata Paulson.

Inilah kronologi berbagai kejadian yang menyebabkan krisis finansial AS, seperti dikutip dari AFP, Senin (22/9/2008).

16 Maret:

Bank investasi Bear Stearn dijual murah hanya pada harga US$ 236 juta kepada JP Morgan Chase. Kesepakatan itu 'diotaki' oleh Federal Reserve.

7 September:

Departemen Keuangan AS mengambil alih raksasa pembiayaan perumahan AS, Freddie Mac dan Fannie Mae, sekaligus menjamin utang setiap institusi itu masing-masing hingga US4 100 miliar.

15 September:

• Bank investasi Lehman Brothers mendaftarkan proteksi kebangkrutan, setelah pemerintah AS menolak untuk mem-bail out.
• Bank investasi lain, Merrill Lynch akhirnya mencapai kesepakatan dengan Bank of America dalam sebuah rencana akuisisi bernilai US$ 50 miliar.
• Lembaga pemeringkat menurunkan peringkat utang American International Group (AIG). Perusahaan asuransi terbesar dunia itu harga sahamnya anjlok hingga 60,8%, melanjutkan penurunan yang sudah terjadi sebelumnya.
• Federal Reserve menyuntikkan US$ 70 miliar ke pasar.
• Indeks Dow Jones anjlok hingga 4,42%. Indeks FTSE London merosot 3,92%, CAC Paris anjlok 3,78% dan DAX Frankfurt anjlok 2,74%.

19 September:

• Pemerintah AS menyelamatkan AIG dengan menyuntikkan US$ 85 miliar, dengan imbalah 79,9% saham perusahaan asuransi itu.
• Federal Reserve kembali menyuntikkan US$ 50 miliar ke pasar.

17 September:

Saham-saham kembali berjatuhan akibat ketidakpastian ekonomi. Indeks Dow Jones kembali anjlok 4,06%. Bapepam As melarang aksi short-selling di sejumlah saham sektor finansial.

18 September:

• Federal Reserve dan bank-bank sentral dari berbagai dunia menyuntikkan US$ 300 miliar ke pasar kredit. Saham-saham kembali melonjak berkat kabar meluasnya bail out oleh pemerintah AS, indeks Dow Jones meloncat 3,86%.
• Setelah penutupan pasar, Menkeu AS Henry Paulson meminta persetujuan dari kongres untuk membeli aset-aset bermasalah yang berhubungan dengan mortgage dari para lembaga institusi.

19 September:

Pemerintah AS mengumumkan rencana penyelamatan krisis finansial senilai US$ 700 miliar. The Fed menyuntikkan lagi US$ 20 miliar ke pasar kredit. Saham-saham menguat, dengan indeks Dow Jones naik hingga 3,35%.
www.detikfinance.com

Krisis Global, AS Inginkan Intervensi Luas

WASHINGTON - Amerika Serikat (AS) menginginkan intervensi lebih luas guna mengatasi krisis keuangan global. AS secara agresif akan menekan negara lain untuk meniru langkah mereka dalam menjamin institusi keuangan.

Menteri Keuangan AS Henry Paulson mengatakan, proposal Depkeu AS kepada Kongres untuk meminta pengesahan belanja sebesar USD700 miliar (sekitar Rp6.600 triliun) guna membeli aset terkait kredit perumahan dapat menjadi cetak biru negara lain.

"Kami memiliki sistem keuangan global dan kita bicara dengan sangat agresif dengan negara lain di seluruh dunia dan mendorong mereka melakukan hal yang sama. Saya yakin beberapa dari mereka akan mengikuti langkah kami," ujar Paulson di Washington.

Menteri Keuangan itu tidak memberikan keterangan lebih lanjut, tapi beberapa pejabat keuangan AS tengah melobi rekan-rekan mereka di Eropa dan Jepang selama 10 hari terakhir untuk mencegah jatuhnya sistem keuangan global. "Saat ini kita bekerja sama dengan partner internasional," ungkap Paulson.

Seperti diberitakan, pemerintahan Presiden George W Bush mengajukan rencana anggaran jaminan sebesar USD700 miliar untuk membeli sekuritas terkait kredit perumahan dalam usaha cepat menenangkan pasar keuangan. Draf rencana itu telah dikirimkan ke anggota Kongres pada Jumat (19/9) malam lalu.

Paulson menambahkan, bank asing masuk dalam rencana jaminan USD700 miliar yang disiapkan pemerintah." Ya,dan mereka harus bisa karena jika sebuah institusi finansial memiliki operasi bisnis di AS dan mempekerjakan orang di AS,kalau mereka terhambat dengan aset tidak cair, mereka memiliki dampak yang sama pada orang Amerika sebagaimana institusi lain,"lanjut Paulson.

Pakar dan pelaku ekonomi bersilang pendapat mengenai langkah pemerintah ini. Intervensi pemerintah atas kredit macet swasta ini dianggap mengubah dogma lama sikap Pemerintah AS atas penanganan kredit macet. Satu per satu perusahaan swasta berusaha diselamatkan, namun hal itu menimbulkan pertanyaan, berapa banyak lagi yang harus diselamatkan.

Alan Blinder,ekonom Universitas Princeton mengatakan, dengan menanggung begitu besar kredit macet, pemerintah juga dihadapkan pada kondisi anggaran yang mengalami defisit begitu besar. Para pembayar pajak alias para pekerja AS yang menjadi aset akhir ekonomi menjadi taruhannya.

"Utang tersebut akan jatuh tempo dan jumlah sangat besar," kata Blinder, seperti dikutip New York Timeskemarin. Nouriel Roubini, ekonom dari Stern School of Business di New York University mengatakan, resesi ini akan berjalan 18 bulan ke depan, sebelum hasil intervensi pemerintah bisa terlihat jelas.Jika rencana pemerintah ini berhasil, katanya,sasaran utama adalah mengatasi inti krisis ini, yaitu kredit rumah yang macet dan anjloknya harga rumah.

Isu Panas
Sementara itu, momen krisis ekonomi yang sedang melanda AS terus menjadi isu panas bagi para kandidat presiden, yaitu Senator Barack Obama dari Partai Demokrat dan Senator John McCain dari Partai Republik. Baik Obama maupun Mc- Cain menegaskan akan mempelajari proposal permintaan pemerintah kepada Kongres untuk menyetujui penggelontoran dana USD700miliar .

Juru bicara Obama, Jen Psaki, mengatakan, Demokrat ingin bekerja sama dengan pemerintahan Presiden George W Bush dan Kongres untukmenjaminagarrencana itu juga mengurangi beban yang ditanggung pekerja, bukan hanya bos dan pemegang saham perusahaan. Obama menginginkan paket yang diajukan pemerintah itu menjadi bagian dari semua rencana. Bukan hanya untuk Wall Street, tapi juga melindungi wajib pajak dan membantu pemilik rumah.

Sementara itu, McCain menyatakan penanganan krisis finansial ini membutuhkan pemimpin dan tindakan untuk memperbaiki fondasi pasar finansial dan mengurangi beban warga Amerika kelas menengah. Berjanji mengkaji proposal itu, McCain menggembargemborkan rencananya untuk sebuah perserikatan "Institusi Hipotek dan Finansial".

"Serikat seperti itu akan secara proaktif menyelesaikan masalah institusi finansial, menegakkan disiplin manajemen dan saham, serta meminimalkan beban wajib pajak," ujarnya. Di sisi lain, krisis ekonomi di AS belakangan telah mengatrol popularitas Obama.

Dipicu ketidakpuasan terhadap cara Republikan menangani perekonomian di saat terjadi krisis finansial, Obama mendapatkan angka tertinggi dalam pollingharian Gallup dengan 50 persen suara, sedangkan McCain hanya memperoleh 44 persen dukungan.

McCain memperoleh peningkatan dukungan pascakonvensi setelah menggandeng Gubernur Alaska Sarah Palin sebagai calon wakil presiden.Walau begitu, dukungan itu semakin berkurang setelah terjadi krisis ekonomi. Sebuah polling negara bagian Florida di Sun Sentinel dan Florida Times-Union menunjukkan, Obama menang tipis atas McCain dengan perolehan 46 persen melawan 45 persen.

"Ini kompetitif, tidak diragukan lagi dan jelas sekali bahwa ekonomi adalah isu pentingnya. Apa yang terjadi di Wall Street pekan ini membantu Obama di Florida," ujar Del Ali of Research 2000, perusahaan independen yang melakukan survei.
www.okezone.com

Week Ahead In US Financial Markets ( September 22 - 26 2008)

Financial Markets Summary For The Week of September 22-26

The week of September 22-26 will see a modest week of US macro data. However, given the dislocation in the markets, the upcoming week will provide a test to see if recent steps taken by global central banks and the immanent mergers of large financials can inject a measure of confidence and stability into markets. The major data releases for the week will be the publication of the existing homes sales and new home sales data for August on Tuesday and Thursday respectively. The durable goods report will be released on Wednesday and the weekly jobless claims report will be published on Thursday. The week will conclude with the final estimate of Q2'08 GDP and the consumer sentiment report from the University of Michigan.

Fed Talk

In light of the recent upset in financial markets caused by the collapse of Lehman and the problems at AIG the market will observe the most important week of Fed Talk in some time. The major event for the week will be the testimony of Fed Chair Ben Bernanke and U.S. Treasury Secretary Paulson on the takeover of Fannie and Freddie on Thursday before a House panel. Dallas Fed President Richard Fisher will speak on the economy and financial industry on Monday. Fed Governor Warsh will give the keynote speech at the Chicago Fed's annual international banking conference on Thursday. St. Louis Fed President Hank Bullard will speak on the economic outlook Friday.

Existing Home Sales (August) Tuesday 10:00 AM

Sales of existing homes during the month of August should see a modest increase on the back of the sale of foreclosed properties selling at distressed prices and slight decrease in the cost of a 30 year fixed mortgage. Our forecast implies that sales of existing homes should come in at 5.09 million for the month of August. However, with the stock of existing homes still standing at 11.2 months the rate of sales needs to pick up to adequately address the number of homes currently on the market and those on the way through foreclosure or normal cyclical activity. The seizure of Fannie Mae and Freddie Mac by the U.S. Treasury has been the primary catalyst behind the recent decline in the 30yr fixed mortgage rate that should be partially captured by the September report which will be impacted by the seizing up of short term credit markets in the aftermath of the failure at Lehman.

Durable Goods Orders (August) Wednesday 08:30 AM

After three straight months of growth, we anticipate that the durable goods orders for the month of August should decline by -1.3%. on the back of a month of weak orders of civilian aircraft and a moderation in global demand. The core ex-transportation estimate should come in flat as the demand for machinery, primary and basic metals continue to be solid.

Initial Jobless Claims (Week ending Sep 20) Thursday 08:30 AM

Jobless claims should see a slight moderation to 450K for the week ending September 20. According to the Department of Labor, for the week ending 13 September if it were not for the increase in claims in Louisiana due to hurricane Gustav, the headline would have declined for the week. However, continuing claims should move higher to 3.501mln.

New Home Sales (August) Thursday 08:30 AM

New home sales should see a second straight month of improvement on the back of a modest decline in the cost of a 30yr fixed mortgage. The flexibility to attract new consumers on the part of the development community has pushed the inventory rate down to 10.1 months, down from the peak of 11.2 months seen in March 2008. However, going forward the recent decline in the cost of long-term mortgage rates may be partially offset by the disturbance in domestic credit markets following the bankruptcy of Lehman.

U.S. GDP Final Estimate (Q'2 2008) Friday 08:30 AM

The final estimate of economic output during the second quarter of 2008 should see the rate of growth hold steady at 3.3%. Given the events of recent days, whatever positive momentum from the increase in growth inspired by the combination of the fiscal stimulus and demand from the external sector should wither. We anticipate that the market will look at the rate of growth as one decisively located in the rearview mirror and not have any substantial reaction to it.

University of Michigan Consumer Sentiment (September-Final) Thursday 10:00 AM

The decline in the cost of gasoline prices throughout much of the country and the fall in the price of imported oil were the primary catalysts behind the above expectations increase in the preliminary release. Of interest to the market will be the reaction among consumers to the recent upset in the market in the aftermath of the bankruptcy at Lehman. We think that this will serve as a factor in causing consumer sentiment to retreat to 63.9 for the month of September.

Joseph Brusuelas
Chief Economist
Merk Investments
http://www.merkfund.com/

The views in this article were those of Axel Merk as of the newsletter's publication date and may not reflect his views at any time thereafter. These views and opinions should not be construed as investment advice nor considered as an offer to sell or a solicitation of an offer to buy shares of any securities mentioned herein. Mr. Merk is the founder and president of Merk Investments LLC and is the portfolio manager for the Merk Hard Currency Fund. Foreside Fund Services, LLC, distributor.

The Greatest Investors: Carl Icahn

Born:	New York City, in 1936
Affiliations:	Icahn & Company (securities firm) Icahn Enterprises L.P. (NYSE:IEP) Icahn Partners (hedge fund) Controlling ownership positions in several major corporations Carl C. Icahn Center for Science at Princeton University
Most Famous For:	The "Icahn Lift." This is the Wall Street catchphrase that describes the upward bounce in a company's stock price that typically happens when Carl Icahn starts buying the stock of a company he believes is poorly managed. Since the mid-1980s, Icahn has had titanic battles with multiple U. S. corporations resulting, most of the time, in significant capital gains for these companies' shareholders and, of course, making Icahn a multibillionaire, whom Forbes ranked as the 46th richest in the world in 2008. Icahn is viewed either as one of history's most ruthless corporate raiders or as a positive force for increased shareholder activism, who seeks to correct the abuses of greedy and/or incompetent corporate management.

Personal Profile
Icahn grew up in a middle-class family in the Far Rockaway section of Queens in New York City. He went to Princeton University on a scholarship and graduated in 1957 with a degree in philosophy. He attended New York University's School of Medicine, but dropped out before graduation, reportedly because he didn't like corpses.
He took an entry level stockbroker's job in New York with Dreyfus & Company in 1961. Seven years later, he bought a seat on the New York Stock Exchange and began his finance career, mostly trading options. However, it didn't take long for Icahn to develop into an activist, pugnacious investor and to begin using ownership positions in publicly held companies to force changes to increase the value of his shares.

Icahn started his corporate raiding activities in earnest in the late 1970s and hit the big leagues with his hostile takeover of TWA in 1985. He was known as an extremely tough negotiator and a clever strategist, whose persistence and personality quirks often distracted his opponents. A string of corporate battles included such names as RJR Nabisco, Texaco, Phillips Petroleum, Western Union, Gulf & Western, Viacom, Revlon, Kerr-McGee, Time Warner and Motorola.

Because of his substantial fortune, Icahn has become a major philanthropist, particularly with donations to his alma mater, Princeton University. Accordingly, he has been the recipient of a number of civic awards for his work and contributions to public health, medical research and education charities in the New York area.

Nevertheless, he is still an active financier. Time Magazine interviewed Icahn on the occasion of his 71^st birthday in February 2007. When he was asked about retirement, he answered, "Well, a number of CEOs have offered to host my retirement party. But I'm just a competitive guy that grew up in Queens. I can't see myself spending the rest of my life in Florida playing golf."

It's reported that Icahn has built a team of two dozen associates to help him find targets and mount his corporate crusades and will likely continue to pursue his investor activism.

Investment Style
Renowned investor Wilbur Ross, Icahn's longtime friend and frequent adversary, referred to Icahn in a May 2007 Fortune Magazine article as "the most competitive person I know … he's especially good at terrorizing people and wearing down their defenses." For many corporate executives, that pretty much sums up Carl Icahn's business operandi and investing style.

Icahn's strategy involves targeting a company he thinks is poorly run and whose stock price is trading below value. He thrives when the markets are on a downtrend; when everyone else is selling, he starts buying. He accumulates enough of an ownership position to lobby for a position on the company's board of directors. Usually his first demand is to dump the CEO and, oftentimes, to consider breaking up the company into separate parts and selling them off. Wall Street professionals say that most of the time he is successful because he's intimidating and relentless. He's viewed as such a surefire moneymaker that investment managers typically start buying up the company's stock, which, whether Icahn is successful or not, leaves him with healthy stock price gains.

A classic example of this phenomenon is Icahn's push in 2006 to oust CEO Richard Parsons and break up Time Warner. It didn't work out that way. When Icahn was asked about his failed attempt in a February 2007 Time Magazine interview, Icahn said "… Dick Parsons agreed to do what we wanted most - a $20 billion buyback of the stock. He did what he promised, and the stock is up 30%. That helps shareholders. Our [hedge] fund made $250 million. It's a nice way to lose."

So how has Icahn's investment style worked out? A 2007 Fortune Magazine profile reported "in its less-than-three-year existence, the Icahn Partners hedge fund has posted annualized gains of 40%; after fees, investors pocketed 28%. That 40% gain trounces the S&P 500's return of around 13%, as well as the 12% for all hedge funds calculated by the HedgeFund.net research firm."

Publications:
"King Icahn" (1993) by Mark Stevens

Icahn Quotes:
"I make money. Nothing wrong with that. That's what I want to do. That's what I'm here to do. That's what I enjoy."

"CEOs are paid for doing a terrible job. If the system wasn't so messed up, guys like me wouldn't make this kind of money."

"When most investors, including the pros, all agree on something, they're usually wrong."

Week Ahead In US Financial Markets ( September 8-12 2008)

Financial Markets Summary For The Week of September 8-12

The week of September 8-12 will see a heavy week of US macro data. Inflation will be at the forefront with import prices and producer prices released on Thursday and Friday, while the advance retail sales estimate for August to close out the week figures to be the primary market moving release of the week. The week will kick off with the Tuesday publication of the July pending home sales release. The majority of the data for the week will be published on Thursday, which will also see the release of the July trade balance, weekly jobless claims and US monthly budget statement. Friday will also see the publication of the University of Michigan’s preliminary estimate of consumer sentiment for September.

IFed Talk

The only Fed speaker scheduled for the week is FRB Dallas President Fisher, who will speak in Austin, Texas, topic and time TBA on Monday, September 8. The remainder of the week falls under the traditional blackout period on Fed talk ahead of the September 16 FOMC meeting.

Pending Home Sales (July) Tuesday 10:00 AM

Pending home sales for July should fall -1.3% after a strong 5.3% uptick in June. The modest increase in sales activity during the summer months of 2008 has been fueled by purchases of foreclosed homes in the existing stock of houses. According to the National Realtors Association, up to 40% of all homes purchased in the existing home sales report fall under that category. This number will probably have to increase given the quantity of Alt-A and prime borrowers that are expected to see their homes enter into foreclosure over the coming months. Some cash buyers and other well positioned consumers may find good opportunities to re-enter the housing sector over the next several months, but we do not think in the short-term that this will be sufficient to clear the outsized level of inventories currently on the market.

Trade Balance (July) Thursday 08:30 AM

The price of West Texas intermediate crude oil hit its recent peak on July 14 at $146.13 per barrel. This should provide a bit of a drag on the recent improvement in the trade deficit. We expect that deficit should increase modestly to -$58.5bln for the month. However, the real dollar goods balance should continue to see modest declines and the external sector should continue to provide support for overall economic activity during the third quarter of 2008.

Import Prices (August) Thursday 08:30 AM

US inflation indicators should see their first sign of relief reflecting the decline in headline costs. We expect that import prices will fall -0.7% the month vs. the previous 1.7% increase in July. On an annual basis, import prices should show a 19.8% increase. The primary catalyst behind the August headline decline should be the fall in petroleum costs.

Initial Jobless Claims (Week ending Sep 7) Thursday 08:30 AM

Initial claims should fall back slightly to 440K during the upcoming week. Over the next several weeks look for the weekly claims series to be quite volatile on the back of dislocation in the labor sector due to the series of hurricanes that look to hit the Southeast portion of the United States.

US Budget Statement (August) Thursday 2:00 PM

The US budget statement should continue to spill red ink again in August, when our forecast suggests that the deficit should grow to -$107.1bln for the month. The combination of increased outlays, falling tax revenues that final rebate checks being cashed should push the deficit higher for the second straight month.

Producer Price Index (August) Friday 08:30 AM

The market will focus on what we expect to be a decline of -0.4% m/m in headline costs for producers. This improvement, which should be driven by the fall in oil costs, has been widely priced in to expectations. However, we note that core prices can be expected to rise 0.3% m/m and 3.8% y/y in additional the 10.2% annual increase in headline prices. For the past several months we have pointed out the risk due to rising total intermediate costs, which are up 16.6% annually on a headline basis and 10.2% in the core. Fueling this rise has been the 23.9% increase in the cost of material for non-durable manufacturing, 36.4% cost of processed fuels and lubricants and 12.5% advance in the cost of materials for durable manufacturing. We do not think that these costs will be receding anytime soon and the risk of inflation into the core will continue for some time even as headline costs continue to abate. Most importantly, this is what led the Kansas City, Chicago and Dallas Fed regional banks to ask for a 25 basis point hike in the discount rate to 2.5%. According to the three Fed regional banks “higher input costs were being passed through to product prices and that inflation expectations had risen and judged that the upside risks to inflation were of greater concern than the downside risks to growth.”

Advance Retail Sales (August) Friday 08:30 AM

The retail sales environment during the month of August should reflect the increasing strains that have become quite visible on the consumer. With the impact of the stimulus fading and a lackluster late summer sales season in the auto and back to school sales, we think that overall sales should see a tepid increase of 0.1% in the headline and a -0.2% in the core, with risk to the downside in both. Anecdotal reports from retailers do not bode well for the series and the typical later summer surge associated with the fall school season looks to have failed to materialize. Should the Redbook and retail chain reports come in below our modest expectations, we will revise down our forecast accordingly.

University of Michigan Consumer Confidence (September) Friday 08:30 AM

The recent decline in the price of gasoline should continue to provide support to consumer confidence, which seems to have reached cyclical lows during June. The preliminary September estimate of consumer sentiment should rise to 63.9 as the recent fall in headline prices is passed through to consumers in the guise of cheaper prices for energy. We think that the modest outbreak in optimism is likely to be transitory once consumers, especially those in the Northeast and upper Midwest, turn their attention to the cost of heating oil and electricity costs during the upcoming winter months ahead.

Joseph Brusuelas
Chief Economist
Merk Investments
http://www.merkfund.com/

The views in this article were those of Axel Merk as of the newsletter's publication date and may not reflect his views at any time thereafter. These views and opinions should not be construed as investment advice nor considered as an offer to sell or a solicitation of an offer to buy shares of any securities mentioned herein. Mr. Merk is the founder and president of Merk Investments LLC and is the portfolio manager for the Merk Hard Currency Fund. Foreside Fund Services, LLC, distributor.