Pending Home Sales Slide in October

From Calculated Risk: Pending Home Sales Decline in October

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, slipped 0.7 percent to 88.9 from an upwardly revised reading of 89.5 in September, and is 1.0 percent below October 2007 when it was 89.8.

Existing home sales have been boosted by all the distress sales in low priced areas. Over time, as foreclosure activity shifts to middle and upper income areas, existing home sales will probably decline.

Existing home sales are reported at the close of escrow, pending home sales are reported when contracts are signed. The Pending Home Sales index leads existing home sales by about 45 days, so this suggests existing home sales will decline in December (from November).

Semiconductor Firms Slash Forecasts - Reduce Headcounts, Reduce Capital Spending

Research firm Forrester slashed its growth forecast for U.S. technology spending in 2009 to 1.6 percent from 6.1 percent, saying the recession is deeper and will last longer than it assumed in previous forecasts.

Semiconductor Firms Slash Forecasts:

Several large chip makers, including Texas Instruments Inc. and National Semiconductor Inc., sharply cut their financial forecasts Monday, as the global economic slowdown saps demand for devices that use a variety of semiconductors.

- TI, which makes chips used in cellphones and high-definition televisions, warned sales in the current quarter would drop as much as 35% from a year ago.
- National Semi, whose chips are used in cellphones, computer displays and other products, posted a 63% decline in profit for the period ended Nov. 23 and said revenue could drop 30% in the current quarter.
- Broadcom, Altera warn of sales shortfall.
- Nokia, TI's top customer, issued two warnings in three weeks about phone demand. Nokia predicted that mobile-phone industry sales will decline 5 percent or more in 2009, the first contraction since 2001.
- Analog Devices warns of weak 1st-quarter sales, profit
- Chipmaker Intersil Corp cut its fourth-quarter estimate, expects a 37 percent to 41 percent fall in revenue.
- Samsung Electronics Co., the world’s largest maker of memory chips, liquid-crystal displays and televisions, said the global recession is wiping out profits at those businesses this quarter.
- Hynix Semiconductor Inc., the world’s second-largest computer-memory chipmaker, will probably post a record operating loss in the fourth quarter.
- Infineon Technologies AG, Europe’s second-biggest maker of chips, reported a seventh straight quarterly loss last week.

Join the layoff waves:

1. Dow Chemical to Slash 5000 jobs, shut down 20 plants
2. 3M to cut 2,300 jobs
3. Anheuser-Busch InBev to cut 1,400 jobs (6%)
4. Tribune Co, the privately held publisher of newspapers including the Los Angeles Times and the Chicago Tribune, filed for Chapter 11 bankruptcy protection.
5. Sony Corp to eliminate 16,000 jobs, include 8,000 full-time employees, or 5 percent of the company’s electronics workforce, and another 8,000 part-time and seasonal workers. Sony said it will invest 30 percent less in its electronics business than planned. The company will also cut the number of manufacturing sites by 10 percent by the end of next fiscal year, from 57 currently.
6. Chip equipment maker Novellus Systems Inc. said Tuesday that it will shrink its work force by 10 percent and cut its chief executive's pay in half as sales dry up
7. Texas Instrument will suspend its hiring process

From Calculated Risk: FedEx: "Significantly weaker macroeconomic conditions":

[S]ignificantly weaker macroeconomic conditions are expected to offset the benefits from lower fuel prices and the announced departure of DHL from the U.S. domestic package market.

Second quarter results benefited from rapidly declining fuel prices and continued cost management,” said Alan B. Graf, Jr., executive vice president and chief financial officer. “However, demand for our services weakened sequentially throughout the quarter and global economic trends continue to worsen, substantially reducing our second half outlook. We are adjusting our expense plans to more closely align with the weaker business conditions, and are now targeting capital spending of $2.5 billion for fiscal 2009, down from $3.0 billion at the start of the year.”

International Markets

From CNBC: Japan Deeper in Recession, Third-Quarter GDP Shows

Japan's economy sank more deeply into recession in the third quarter than initially thought (weakness in exports and capital spending). The export-driven economy now looks likely to keep contracting at least until the first quarter of next year -- which would mark an unprecedented four straight quarters of decline -- as leading Japanese manufacturers cut output sharply to deal with a slump in global demand.

The economy contracted 0.5 percent in July-September, far more than the preliminary figure of a 0.1 percent decrease and economists' median forecast of a 0.2 percent fall.

Japan's economy shrank at an annual rate of 1.8 percent in the quarter, three times faster than the contraction in the U.S. economy in the same period. The revision was mainly due to a mark down in inventory and government spending.

From Bloomberg: Japan Default Risks Signal Stocks are a sell!

The link between corporate default risk and stock prices indicates Japanese shares trading at record low valuations may have room to fall further.

The CHART OF THE DAY shows the inverse relationship on a 120-day basis between the Topix index and the iTraxx Japan Index benchmark of credit-default swap spreads, which measures perceived default risk. On Dec. 5, the correlation coefficient reached minus 0.75 on a scale of plus 1 to minus 1. A positive reading shows moves in the same direction and a negative number indicates moves in opposite directions.

“The CDS index is at its highest since its creation, indicating a deterioration of corporate financial conditions.”

Similar prediction has been made for S&P, which ultimate target is 450-600 region.

From Bloomberg: China's exports shrink, output cools

“November figures will come out soon, and industrial growth will be something around 5 percent and export growth will be negative.”

A collapse from October’s 19.2 percent export growth would add pressure on policy makers meeting in Beijing this week to do more to sustain the expansion of the world’s fourth-biggest economy. The government has already unveiled a 4 trillion yuan ($582 billion) stimulus package and cut interest rates by the most in 11 years as a global recession cuts demand for the nation’s toys, textiles and electronics.

Industrial-output growth of 5 percent would be the weakest since Bloomberg data began in 1999 and worse than the 7.2 percent median estimate of 14 economists in a Bloomberg News survey. Production rose 8.2 percent in October.

High Re-Default Rate

From Calculated Risk: Dugan: High Re-Default Rates

Comptroller of the Currency John C. Dugan said today that new data shows that more than half of loans modified in the first quarter of 2008 fell delinquent within six months.

“After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent."

In general, the third quarter report will show many of the same disturbing trends as other recent mortgage reports. Credit quality continued to decline across the board, with delinquencies increasing for subprime, alt-A, and prime mortgages – and the greatest increase in percentage terms was in prime mortgages. Similarly, total foreclosures in process increased, as did foreclosure sales, just as they had done in the previous quarter.



From Calculated Risk: Credit Suisse Forecast: 8.1 millions foreclosures by 2012

Credit Suisse analysts are now forecasting 8.1 million homes will be in foreclosure by the end of 2012, representing 16% of all households with mortgages.

The analysts projected this could be as low as 6.3 million in a mild recession, with a somewhat successful loan modification program (re-default rates at around 40%), and as high as 10.2 million in a more severe recession.

Weekend Picture Post

Dow Comparisons

From dshort.com: Meditations on the Dow: Weekly Update

The Dow now hovers in the mid 8,000 range. With a long-term view in mind, an obvious question is whether the decline to date has taken us below the mean value of the index. If we plot a linear regression through the Dow since 1950, it appears that we've fallen sharply below the mean.

If we chart the Dow since 1928, the current level appears to be a regression just slightly below the mean.

However, if we chart the Dow since 1900, the picture is less optimistic. Regression to the mean would require an additional decline to the vicinity of 5,500 to 6,000.

Semiconductor Industry Gets Hit Again!

From Yahoo! Finance: Analyst predicts deep job cuts at Intel

Intel Corp. could be preparing to lay off as much as 10 percent of its work force and cut its fourth-quarter guidance for the second time, an analyst said Friday, because the economic crisis has caused computer makers to sharply curtail the amount of processors they buy for those machines.

Last month, Intel whacked more than $1 billion from its fourth-quarter revenue forecast and lowered its profit forecast because of declining demand. AMD, which has racked up more than $5 billion in losses over the past two years, has also cut its quarterly guidance. The company said revenue would come in about $400 million lighter than expected.

AMD announced last month that it was cutting 500 jobs, about 3 percent of its staff, after having already laid off 1,600 workers, replacing its chief executive and inking a deal with the Persian Gulf state of Abu Dhabi to spin off AMD's factories into a separate company to cut costs.

From Bonddad: Chip Sales Decreasing

Toshiba Corp the world's No. 2 maker of NAND flash memory, will halt chip production at two plants for nine days due to weak demand, in its first output break in seven years.

Let's take a look at some of the companies' stock performance for the year (YOY):

1. Intel: -52.5% ($13.29 - $27.99)
2. AMD: -77.6% ($2.13 - $9.53)
3. MRVL: -68.5% ($5.76 - $18.31) Marvell
4. MXIM: -60% ($11.03 - $26.95) Maxim
5. TXN: -58% ($14.56 - $34.60) Texas Instrument
6. ADI: -55% ($16.60 - $36.35) Analog Devices
7. LLTC: -48% ($19.81 - $37.77) Linear Technology
8. NSM: -59% ($10.26 - $24.96) National Semiconductor
9. ISIL: -74% ($7.92 - $29.84) Intersil
10. SMTC: -45% ($10.16 - $18.56) Semtech
11. QCOM: -44% ($31.90 - $56.88) Qualcomm
12. MCRL: -40% ($6.55 - $10.77) Micrel
13. STM: -60% ($6.28 - $15.78) STMicroElectronics
14. LSI: -60% ($3.16 - $7.87)
15. SNDK: -77% ($9.23 - $39.63) SanDisk
16. NVDA: -80% ($7.36 - $36.4) NVIDIA

Oil = $40: A 4-Year Low

From MarketWatch: Oil Tallies worst week since 1991 on demand worries

Credit oil futures fell Friday for a sixth straight session to their lowest level in four years, ending the week with the biggest loss since the Persian Gulf War in 1991.

Crude oil for January delivery ended down $2.85, or 6.5%, at $40.81 a barrel on the New York Mercantile Exchange, the lowest closing level since December 2004. Oil lost 25% during the week, the largest drop since the week ended Jan. 18, 1991.

Crude's weekly loss, the second biggest since oil futures started trading in 1983, surpassed the 24% decline recorded in the week ended March 21, 2003, when the U.S. government confirmed that coalition troops had seized control of Iraqi oil fields.

Total U.S. petroleum products supplied in the past four weeks dropped 6.6% from the same period a year ago, the Energy Information Administration reported Wednesday. Motor gasoline demand in the world's biggest oil consuming country dropped 2.8%.

Global oil demand will show an "outright contraction" of 0.5% next year, according to Merrill Lynch analysts, led by Francisco Blanch. They expected crude prices to average at $50 next year.

Also on the Nymex, January reformulated gasoline fell 7% to 90.12 cents a gallon, and January heating oil fell 5.5% to $1.4265 a gallon. January natural-gas futures tumbled 4.6% to $5.742 per million British thermal units.

However, there is a strong support at $40.

More on Nonfarm payroll employment

View slides: 10 States with the Highest Unemployment Rate

From Mish's Global Economic Analysis: Jobs Contract 11th Straight Month; Unemployment Rate Hits 6.7%

The official unemployment rate is 6.7%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is 12.5%.

Looking ahead, I expect the service sector to continue to weaken. Mall vacancy rates are rising and a huge contraction in commercial real estate is finally started. There is no driver for jobs and states in forced cutback mode are making matters far worse. Expect to see the official unemployment rate hit 9% in 2009.

Small Businesses Have Largest Decline In Seven Years

The ADP Small Business report found that small businesses lost 79,000 jobs in November, the largest decline in more than seven years.

From Calculated Risk:Employment Declines Sharply, Unemployment Rises to 6.7 Percent

From Big Picture: NFP: -533,000

Horrible Job Data

The job data for November is really really ugly, employers slashed 533,000 jobs! The 11th-month of decline. That is 17,766 per day!

It's only the fourth time in the past 58 years that payrolls have fallen by more than 500,000 in a month. Since the recession began 11 months ago, a total of 1.9 million jobs have been lost. Nonfarm payroll has shrunk to mid-2006 level.

From Yahoo! Finance: Employers cut 533K jobs in Nov., most in 34 years

Skittish employers slashed 533,000 jobs in November, the most in 34 years, catapulting the unemployment rate to 6.7 percent, dramatic proof the country is careening deeper into recession.

As companies throttled back hiring, the unemployment rate bolted from 6.5 percent in October to 6.7 percent last month, a 15-year high.

The unemployment rate would have moved even higher if not for the exodus of 422,000 people from the work force. Economists thought many of those people probably abandoned their job searches out of sheer frustration. In November 2007, the jobless rate was at 4.7 percent.

Since the start of the recession, the economy has lost 1.9 million jobs, the number of unemployed people increased by 2.7 million and the jobless rate rose by 1.7 percentage points.

The loss of 533,000 payroll jobs was much deeper than the 320,000 job cuts economists were forecasting. The rise in the unemployment rate, however, wasn't as steep as the 6.8 percent rate they were expecting. Taken together, though, the employment picture was dismal.

The job reductions were the most since a whopping 602,000 positions were slashed in December 1974, when the country was in a severe recession.

All told, 10.3 million people were left unemployed as of November, while the number of employed was 144.3 million.

Job losses in September and October also turned out to be much worse. Employers cut 403,000 jobs in September, versus 284,000 previously estimated. Another 320,000 were chopped in October, compared with an initial estimate of 240,000.

Workers with jobs saw modest wage gains. Average hourly earnings rose to $18.30 in November, a 0.4 percent increase from the previous month. Over the year, wages have grown 3.7 percent, but paychecks haven't stretched that far because of high prices for energy, food and other items.

From MarketWatch: Payrolls plunge by stunning 533,000 in November

Job losses in September and October were revised sharply lower by a total of 199,000. Over the past three months, payrolls have fallen by an average of 419,000 per month, compared with average monthly losses of 82,000 earlier in the year. The percentage drop in employment over the past three months is the largest since 1980.

An alternative gauge of unemployment - which includes discouraged workers and those whose hours have been cut back to part-time - rose to 12.5% from 11.8%. The number of workers forced to work part-time rose by 621,000 to 7.3 million.

Total hours worked in the economy fell 0.9% in November and are down 2.8% in the past year. The average workweek fell to a record-low 33.5 hours in November.

In goods-producing industries, 163,000 jobs were lost, according to a survey of work places. Manufacturing lost 85,000 workers, while construction lost 82,000. In the services, 136,000 jobs were lost in business services, including 101,000 in employment services, such as temporary jobs. Financial services cut 34,000 jobs. Retail shed 91,000 jobs, including 24,000 at auto dealers. Leisure and hospitality industries cut 76,000 jobs. Health and education services industries added 52,000 jobs. Government added 7,000.

In November, 637,000 people dropped out of the workforce. The employment-population ratio fell to 61.4% in November from 61.8%. The labor force participation rate fell to 65.8% from 66.1%.

Delinquency, Foreclosure Jump, CEO Confidence Plunges

From Yahoo! Finance: 3Q auto-loan delinquency rate jumps 15.9 percent
The percentage of auto loans that were past due 60 days or more rose 15.9 percent in the third quarter compared to last year, according to credit reporting agency TransUnion. The rate rose to 0.80 percent of outstanding loans, from 0.69 percent in 2007's third quarter.

Delinquencies shot up 17.6 percent from the second quarter of 2008, when they stood at 0.68 percent of outstanding loans. And TransUnion expects even more people to have trouble paying their auto loans, projecting the rate will rise another 10 percent by the end of the year, to 0.88 percent of outstanding loans. And the rate is likely to top 1 percent early in 2009.

Like credit card delinquency rates, the number of people falling behind on paying their auto loans tends to be cyclical, said TransUnion officials say. But the fourth quarter is typically the least problematic. Auto loan delinquencies haven't been above 1 percent since early in 2001.

Delinquencies were highest in Mississippi at 1.46 percent, and Louisiana, at 1.41 percent. California, Alabama, Florida, Tennessee, Arizona and Georgia all had rates over 1 percent. The states with the lowest auto-loan delinquency rates were Wyoming, at 0.29 percent, North Dakota, at 0.36 percent and South Dakota, at 0.46 percent.

Average auto debt also increased for the third quarter, up about 1 percent to $12,861, from $12,722 in the year-ago quarter. Average debt was basically flat from the 2008 second quarter, average when it stood at $12,869. Nevada had the highest average auto loan, at $15,774, followed by Washington D.C. at $15,433. The lowest average was in Nebraska, at $10,944.

From Yahoo!Finance: Home Loan troubles break records again:

A record one in 10 American homeowners with a mortgage were either at least a month behind on their payments or in foreclosure at the end of September as the source of housing market pressure shifted to the crumbling U.S. economy.

The Mortgage Bankers Association said Friday the percentage of loans at least a month overdue or in foreclosure was up from 9.2 percent in the April-June quarter, and up from 7.3 percent a year earlier.

Job losses are already having an impact in rising delinquency rates for traditional 30-year fixed rate loans made to borrowers with strong credit. Total delinquencies on those loans rose to 3.35 percent in September from 3.07 percent at the end of June, the Mortgage Bankers Association said.

From CNBC: CEO Confidence Plunges as Most Plan Cutbacks

The Business Roundtable's quarterly CEO Economic Outlook Index tumbled to 16.5 in the quarter, the biggest drop it has ever taken, to the lowest point by far in the survey's six-year history. A reading below 50 means that CEOs expect contraction rather than growth.

The index had stood at 78.8 in the third quarter; the prior low of 49.3 was recorded in the first quarter of 2003.

The CEOs, who were polled between Nov. 3 and Nov. 17, said they expect the U.S. economy to be flat overall next year, with recovery in the second half offsetting a weak start.

The majority, 60 percent, expect to cut their U.S. head count over the next six months. Fifty-two percent expect to cut U.S. capital spending and 45 percent foresee a decline in sales over that time period.

Business Roundtable's 160 member companies together employ almost 10 million people and generate $5 trillion in annual revenue.

U.S. data due out tomorrow is expected to show that employers cut 340,000 jobs in November, according to a Reuters poll of economists.

Over time, the cuts become part of a self-reinforcing cycle, hurting consumer spending—which is responsible for the lion's share of U.S. economic activity—and further pinching corporate results, economists said.

A survey by Chief Executive magazine found that 75 percent of CEOs expected employment to fall over the next quarter.

Another study by The Hackett Group predicted that some 350,000 U.S. jobs in corporate finance, information technology and other back-office functions would move offshore to India and other low-cost countries over the next two years.

Factory Orders Slump, Retail Sales Stink

From Yahoo! Finance: Factory Order Drops

Factory orders plunged a bigger-than-expected 5.1 percent in October caused by big cutbacks in demand for steel, autos, computers and heavy machinery. It was the largest decrease since an 8.5 percent fall in July 2000.

Retail posted huge sales declines for November, despite a shopping boost the day after Thanksgiving. The Goldman Sachs-International Council of Shopping Centers sales index fell 2.7 percent to its lowest reading since its inception in 1969.

Results from Wal-Mart Stores Inc. beat Wall Street estimates and the world's largest retailer predicted that sales for established stores for the current month should be at the high end of estimates. However, Costco Wholesale Corp., usually a strong performer, reported a bigger-than expected sales decline. And mall-based stores such as teen stalwart Abercrombie & Fitch Co., Kohl's Corp. and Macy's Inc. fared much worse, reporting percentage declines of over 10 percent.

Macy's Inc. said its same-store sales, or sales at stores open at least a year, fell 13.3 percent. Same-store sales are a key measure of a retailer's health. Target Corp. said its same-store sales for the month fell 10.4 percent.

From the WSJ: Nokia Sees Shrinking Handset Market

Nokia Corp., the world's largest mobile handset maker, Thursday cut its global handset market forecasts for the second time in three weeks, warning that the slowdown has accelerated more rapidly than expected.

From Yahoo! Finance: Starbucks CFO: Company may miss 1Q profit estimate

Starbucks Corp. does not expect to meet Wall Street's profit expectations in the current quarter, the coffee retailer's chief financial officer said Thursday. During the first few weeks of the quarter, same-store sales declined 9 percent.

From Bonddad: Retailers Report Terrible November

Jobless at 26-Year High

From Yahoo Finance: Jobless rolls at 26-year peak:

The number of U.S. workers on jobless benefits rolls hit a 26-year high last month, and it may head higher as a deepening economic slump forces a broad spectrum of firms to cut jobs.

BENEFIT ROLLS HIT 1982 HIGH

The U.S. Labor Department said the number of unemployed workers drawing benefits after claiming an initial week of aid jumped to 4.087 million in the week ended November 22, the highest since December 1982, from 3.998 million the prior week.

While first-time claims for benefits unexpectedly fell last week to 509,000 from 530,000, a four-week moving average of new claims, a better gauge of underlying labor trends, rose to 524,500, also a 26-year high.

The insured unemployment rate, a measure of the workforce receiving unemployment benefits, edged up to 3.1 percent in the week ended November 29 from 3 percent the prior week. This was the highest reading since September 1992.

The data did not bode well for the U.S. government's monthly report on employment due on Friday, with analysts forecasting employers could have reduced payrolls by anything between 250,000 and 550,000 last month.

The consensus of economists polled by Reuters is for a drop of 340,000 in non-farm employment and a jump in the jobless rate to 6.8 percent from 6.5 percent in October.

Less-comprehensive data on Wednesday showed U.S. private employers cut 250,000 jobs in November, the biggest drop in seven years, after eliminating 179,000 positions in October.

From Calculated Risk: Weekly Unemployment Claims:


Contributing to the labor-market gloom, a host of U.S. companies announced large-scale layoffs, including:
1. Top U.S. phone company AT&T Inc, which is eliminating 12,000 jobs (4%)
2. Chemical maker DuPont, which is cutting 6,500
3. Media conglomerate Viacom Inc. said it will eliminate about 850 jobs (7%)
4. State Street Corp., the world’s largest money manager for institutions, plans to cut 1,700 jobs, about 6 percent of its 28,700 employees by March
5. Credit Suisse to cut 5,300 jobs (11%)
6. Nomura Holdings Inc. to cut 1,000 jobs (22%)
7. Belden Inc. to cut 1,800 jobs (20%)
8. Adobe to cut 600 jobs (8%)
9. NBC Universal to cut 500 jobs (3%)
10 Auto parts maker Hayes Lemmerz International to cut 1,700
11. AbitibiBowater, Steelcase, UTi Worldwide also unveiled job-cut plans

Commerical Real Estate Delinquencies Up

From The Bonddad: Commercial Mortgage Hitting the Skids:

Commercial mortgage delinquencies rose in November and will climb more as the economy slows and unemployment grows, according to Barclays Plc.

Payments more than 60 days late on commercial real estate loans that were bundled together and sold as bonds increased to 0.69 percent last month, compared with 0.57 percent in October and 0.51 percent in September, Barclays data show.

The “relative spike” in delinquent loans marks the “beginning of a sustained, upward trend,” Barclays analysts led by Aaron Bryson in New York said in a report yesterday. “We have repeatedly stressed that CMBS delinquencies are a lagging indicator of performance and tend to lag changes in employment by close to a year.”

Commercial property owners are having a harder time making debt payments as the recession curtails spending and crimps business growth. U.S. companies eliminated an estimated 250,000 jobs last month, the most since November 2001, ADP Employer Services said today.

Mid - Week Picture Post

Readings of the Day

Nice reading article:

From Mish's Global Economic Trend Analysis: Prepare for Depression Level Unemployment

From Calculated Risk: House Prices and Interest Rates

High Tech Layoff Tracker

From Tech Crunch: High Tech Layoff Tracker:

Total Layoffs Since August 27, 2008: 255 Companies
Total Employees: 76,063

Some of the big companies and known ones in Bay Area:

Click for larger image

High-yield bonds defaults beat Great Depression

From Bloomberg: Defaults May Beat Great Depression, Junk Bonds Say

Yields on speculative-grade bonds imply a U.S. default rate of 21 percent, higher than the record set during the Great Depression in 1933, according to Moody’s Investors Service.

The extra yield investors demand to own U.S. high-yield bonds was 19.19 percentage points on Dec. 1, according to Moody’s. Assuming a 20 percent recovery rate, the spread implies a default rate of 20.9 percent. That compares with a rate of 11 percent in January 2001, 12.1 percent in June 1991 and 15.4 percent in 1933.

Defaults and bankruptcies are accelerating as financing options for high-yield companies dwindle amid the longest U.S. economic recession in at least 26 years. The U.S. default rate rose to 3.3 percent in October, according to Moody’s, which forecasts the rate to increase to 4.9 percent in December and 11.2 percent by November 2009.

“There’s a lot of forced selling of high-yield bonds by hedge funds owing to the need to de-lever as well as by mutual funds in response to redemptions,” Lonski said. “You’re looking at a market where the sellers well outnumber the buyers and the reluctance on the part of buyers makes sense if only because a bottom for economic activity is not yet in sight.”

High-yield, high-risk bonds are rated below Baa3 by Moody’s and BBB- by Standard & Poor’s.

High Earners Cut Spending

From Yahoo! Finance: American Express CEO: high earners cut spending

The chief executive of American Express Co said on Wednesday that the current financial downturn is strongly affecting the spending of people in high income levels, a departure from prior economic slowdowns.

"It's very different from the last two downturns," Kenneth Chenault said during the Fortune 500 Forum. "The impact on spending has been very strong ... across a range of income levels and high income levels."

He said discretionary spending has dropped substantially and that he sees tough business conditions through next year.

"We think that this is going to continue to be a challenging environment certainly through 2009," Chenault said, adding that until housing prices stabilize, conditions will remain "very, very challenging."

Bailout Comparisons

From Big Picture: More Bailout Comparisons:

Prior Bailouts as a % of US GDP

via mindtangle (note that this data is already old!)

Service Sector Plunges in November - worst on record

From Yahoo! Finance: Service sector shrinks as new orders fall in Nov.

The U.S. service sector contracted dramatically in November, as employment, new orders and prices fell precipitously, hurting retailers, hotels and other industries.

The Institute for Supply Management, a trade group of purchasing executives, said Wednesday that its services sector index fell to 37.3 in November from 44.4 in October. It was far below the reading of 42 expected by Wall Street economists.

Readings for new orders, employment and prices all hit the lowest levels on records dating back to 1997. Of 18 industries in the survey, including warehousing, real estate, restaurants and wholesale trade, only one -- health care and social assistance -- reported growth.

The report, based on a survey of the institute's members, covers indicators including deliveries, inventories and backlogs. Its sister manufacturing report on Monday showed the worst reading since May 1982, when the country was near the end of a 16-month recession.

Another weak job report

From Yahoo! Finance: Private sector sheds 250,000 jobs in November

Private employers cut 250,000 jobs in November, the most in seven years, a report by a private employment service said on Wednesday.

ADP Employer Services also said it revised the number of jobs cut in October to 179,000 from the originally reported loss of 157,000.

Economists had expected the ADP report to show 200,000 private-sector jobs were lost in November, according to the median of forecasts in a Reuters poll. The 24 forecasts ranged from a drop of 350,000 to a decline of 175,000.

How low can the rate go? Zero?

As Bernanke announced plans of buying back treasuries, the 10-year yield fell to a record low of 2.72%, and the yield on 3 month treasuries in 0.05%, which is essentially zero!

From Mish's Global Economic Trend Analysis: Helicopter Ben Pulls Out Bazooka




Former Treasury undersecretary Peter Fisher even started to talk about issuing 100-year bonds.

How low can FED slashes the rate? to Zero? We are already there for the short-term, so they are going to bring down the long term yield too. Are we going to be the next Japan?

Detroit Big Three request $34 Billion

From Yahoo! Finance: Big Three Survival bailout requests rise to $34 Billiion:

Detroit's once-mighty automakers appealed to Congress with a retooled case for a bailout as large as $34 billion Tuesday, pledging to slash workers, car lines and executive pay in return for a federal lifeline. GM and Chrysler said they needed an immediate cash infusion to last 'til New Year's, and warned they could drag the entire industry down if they fail.

Chrysler LLC said it needed $7 billion by year's end, and General Motors Corp. asked for a quick $4 billion as just the first installment of as much as $18 billion to stay afloat and weather even worse economic storms. Ford Motor Co. had a more upbeat report, but the other two members of the U.S. Big Three painted the direst portraits to date -- including the prospects of shuttered factories and massive job losses -- of what could happen if Congress doesn't quickly step in.

Ford, in far better shape than GM and Chrysler, asked for a $9 billion "standby line of credit" to stabilize its business but said it didn't expect to tap the funds unless one of Detroit's other Big Three went bust. Its plan projected Ford would break even or turn a pretax profit in 2011.

All three auto companies proposed slashing workforce, facility, production; reducing management salaries, bonuses, cutting employee benefits; investment on fuel-efficient vehicles such as hybrid and electric cars. But bottom line we should not use taxpayers' money to save them. Are they really too big to fail?

Bottom is in?

Nice reading pieces

Big Picture: Bottom is in?

Big Picture: How big? How low? How now brown cow?

Auto sales hit 26 year low

GM sales fell 41% in November.
Ford fell 31%, Toyota 34%, Honda 32%, Volvo tumbled 46.5%, Chrysler U.S. sales dropped 47%

From Calculated Risk: Hamilton on Auto Sales:

Bear Market Rally

From Big Picture: 8th Bear Market Rally Since October 2007:

Merrill Lynch’s David Rosenberg notes that last week’s pop was the eighth bear market rally since October 2007. As the chart below shows, they have ranged in strength from ~8% to over 24%.

Each one was treated (”enthusiastically”) as if a bottom had been made. Each one saw a subsequent lower low, excepting the most recent one that ended Friday.

These included:

1. The TAF (S&P 500 at 1500)
2. January 75 bp rate cut (1325)
3. The Bear Stearns deal in March (1270)
4. The fiscal package in April (1200)
5. The GSE conservatory in July (1200)
6. The TARP in October (1180)
7. Pre-election Rally (840)
8. The Citi bailout in November (750)

Rosenberg added late Sunday:

This is now a five-day rally that has seen the S&P 500 surge 19%. Then again, we did see a 7-day rally tally up to 18.5% from late October to early November. And before that a 4-day rally in mid-October that netted equity traders an 8.5% spike. What is happening is that the bear market rallies are getting shorter and more flashy – but they are still bear market rallies. The ones we have seen thus far in this bear market have seen the S&P 500 rise nearly 10% and last 18 days on average. These are rallies, in our opinion, that investors should using as an opportunity to sell into.

Bear Market Rallies, October 2007 to November 2008

chart courtesy of FusionIQ, Bloomberg

When will we hit the bottom?

Market Watch - Goldman to lose $2 Billion in 3rd Quarter

Goldman Sachs Group Inc., is likely to report a fiscal fourth-quarter loss of as much as $5 a share, five times the current analyst consensus, The Wall Street Journal reported. The expected loss for the quarter ended Nov. 28 would be the firm's first quarterly deficit since it went public in 1999, the Journal reported. The company will write down the value of assets in private equity, commercial real estate and more, the Journal reported.

Calculated Risk: A2/p2 Spread Blow Out

From Calculated Risk: A2/P2 Spread Blow Out

The A2/P2 Spread hit 586 bp as of Friday.

The current yield is at 2.72%. It is the lowest yield in the 46 year history of the 10 year treasury note.

This spike was probably because of comments by Fed Chairman Ben Bernanke that the Fed might buy longer term treasuries.

[T]he Fed could purchase longer-term Treasury or agency securities on the open market in substantial quantities. This approach might influence the yields on these securities, thus helping to spur aggregate demand.

Credit Cards May Pull Back $2 Trillion in Lending

From CNBC: Credit Cards May Pull Back $2 Trillion in Lending

The U.S. credit-card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.

The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer analyst noted.

"In other words, we expect available consumer liquidity in the form or credit-card lines to decline by 45 percent." "Pulling credit when job losses are increasing by over 50 percent year-over-year in most key states is a dangerous and unprecedented combination, in our view," the analyst said.

Another last hour diving

Dow off 680 points, 7.7%; Nasdaq off 137 points, 9%; and S&P off 80 points, 9%


Isn't people already priced in these news? Nothing is really a big surprise today. What will happen next? Will market be able to break the downward trend?

From Bonddad: Today's Market:


We are back below 10 & 20 DMA again, and in the down trend patten formed for more than a month now.

U.S. in a recession since December 2007

From Yahoo! Finance: It's official: U.S. in a recession since December 2007

The National Bureau of Economic Research said Monday that the U.S. has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy .

The NBER is a private group of leading economists charged with dating the start and end of economic downturns. It typically takes a long time after the start of a recession to declare its start because of the need to look at final readings of various economic measures.

"The committee views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment," said the group's statement. "This series reached a peak in December 2007 and has declined every month since then."

Employers have trimmed payrolls by 1.2 million jobs in the first 10 months of this year. On Friday, economists are predicting the government will report a loss of another 325,000 jobs for November.

Construction Spending

From Calculated Risk: Construction Spending Declines in October:

The Census Bureau reported this morning that private non-residential construction decreased in October with declines in both residential and non-residential spending. I expect that non-residential investment will decline sharply over the next year or two.

From the Census Bureau: September 2008 Construction at $1,060.1 Billion Annual Rate:

Spending on private construction was at a seasonally adjusted annual rate of $756.5 billion, 2.0 percent (±1.1%) below the revised September estimate of $771.9 billion. Residential construction was at a seasonally adjusted annual rate of $338.8 billion in October, 3.5 percent (±1.3%) below the revised September estimate of $351.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $417.7 billion in October, 0.7 percent (±1.1%)* below the revised September estimate of $420.6 billion.

Market Monday

WOW, all major indexes dropped more than 5% on Monday morning after five up days in a row.

Consumer spending concerns, 26-year low ISM, and construction spending fell by a larger-than-expected amount in October are all major factors why the market heads lower strongly this morning.

Index of Manufacturing activity fell to a 26-year low in November for the twelfth consecutive month from 38.9 in October to 36.2, which is much worse than Wall Street economists' expectations of 38.4.

The Commerce Department reported Monday that construction spending dropped by 1.2 percent in October, much bigger than the 0.9 percent decline many analysts expected.

Bear Market Comparisons

From dshort.com:





From Big Picture: Mega-Bear Quartet:

Thanksgiving Weekend Shopping

We didn't wake up at midnight on Black Friday to wait in line with crowds this year. However, we went to Premium Outlet Stores on Friday afternoon and Union Square during the weekend. You are surrounded by holiday music, beautiful lighting decorations, and giant Christmas tress. Open space ice-skating in the middle of the Union Square sure lure many tourists. There are a lot of people; however, less than half of them carrying bags in their hands. I guess most of the people are just buying things in necessity rather than nonessential goods even with huge discounts all over the stores. Shopping behaviors have definitely been changed, and shoppers are more cautious. I think we are still going to see a weaker holiday season this year as economic future continues grim with rising unemployment rate, dropping housing values, tighter credit market and depressing stock market.

Shoppers hold their purchase on items they can wait; they trim their holiday shopping budgets only towards children. Sales will be steeper when Christmas is closer.

According to Calculated Risk: NFR: Holiday Season Off to Energetic Start

Though the holiday season is far from over, retailers across the country are breathing a collective sigh of relief after shoppers headed to stores and websites in droves over the weekend. According to the National Retail Federation's 2008 Black Friday Weekend survey, more than 172 million shoppers visited stores and websites over Black Friday weekend*, up from 147 million shoppers last year.

Shoppers spent an average of $372.57 this weekend*, up 7.2 percent over last year’s $347.55. Total spending reached an estimated $41.0 billion.

Friday was clearly the busiest day of the weekend with 73.6 million people hitting stores and websites for doorbuster sales. Though traffic did subside after Friday, retailers were also buoyed by two-day sales as 56.9 million people shopped on Saturday, up from 48.3 million last year, while another 26.2 million people planned to shop on Sunday. Thanksgiving Day also continues to increase in importance as the number of people who shopped on Thursday was up 48 percent over last year (16.2 million people vs. 10.9 million people).

Bargains appeared to be so good that people have more of a jumpstart on shopping. According to the findings, Americans have completed more slightly shopping than they had one year ago (39.3% vs. 36.4%), indicating that traffic and sales over the next several weeks will moderate.

NRF continues to project that holiday sales will rise 2.2 percent this year to $470.4 billion.

*Spending data includes Thursday, Friday, Saturday and projected spending for Sunday.

Economic Data in Coming Week

From MarketWatch:

On Monday, the Institute for Supply Management will release its manufacturing survey for November. Construction spending figures for October will also be released.

Tuesday will feature U.S. auto sales while Wednesday will bring the November ADP employment survey of the private sector, productivity figures for the third quarter and the ISM's November survey of the service sector of the economy.

Also on Wednesday, the Fed is expected to release its Beige Book of economic conditions, which is "likely to paint an even bleaker picture than the October report," as it captured a near seizure in credit markets "and the resulting knock-out punch to consumers and businesses," said Sal Guatieri, senior economist at BMO Capital Markets.

On Thursday will be weekly jobless claims. Federal Reserve Chairman Ben Bernanke is also expected to speak on housing at a Fed conference in Washington.

Also on tap, the European Central Bank and the Bank of England are expected on Thursday to make decisions on interest rates.

Friday will bring the jobs report. BMO Capital expects the economy to have shed 350,000 jobs in November, and the unemployment rate to have risen to 6.8%, from 6.5% in October.

Weekend Picture Post

Some Delightful Videos for the holiday

From Comedy Central, have a laugh!

Russel Peters:
Indian vs. Chinese

Gabriel Iglesias:
Drink Driving & Presidential Election

Black Friday Sales Rise 3%

From American Research Group, Inc.: Shoppers Cut 2008 Christmas Spending Plans in Half from 2007

"Shoppers around the country say they are planning to spend an average of $431 for gifts this holiday season, down from $859 last year. The overall average planned spending is down almost 50% from 2007 and it is the lowest level of planned spending recorded by the American Research Group since 1991."

Year	Average Spending	Percent Change
2008	$431	-50%
2007	$859	-5%
2006	$907	-4%
2005	$942	-6%
2004	$1,004	+3%
2003	$976	-6%
2002	$1,037	-1%
2001	$1,052	+ 9%
2000	$968	+ 3%
1999	$939	+ 1%
1998	$928	+ 34%

Combined with the sharp plunge in October retail sales, this suggests a very weak fourth quarter for personal consumption expenditures (PCE) and suggests that forecasts for Q4 GDP might be too high.

From Yahoo! Finance and Bloomberg:

"The nation's retailers got a much-needed sales boost during Black Friday's traditional shopathon as consumers, lured by deep discounts, spent nearly 3 percent more than they did last year.

Sales on the day after Thanksgiving rose to $10.6 billion from $10.3 billion last year, according to preliminary figures released Saturday by ShopperTrak RCT Corp., a Chicago-based research firm that tracks sales at more than 50,000 retail outlets.

While it isn't a predictor of overall holiday season sales, Black Friday is an important barometer of people's willingness to spend during the holidays. Last year, it was the biggest sales generator of the season.

But experts caution that this year's sales growth may be hard to sustain for the remainder of the holiday shopping season, which has 27 days between Thanksgiving and Christmas instead of the 32 last year.

Across the country, sales in the South were up 3.4 percent from last year while they climbed 2.6 percent in the Northeast."

Frontline (FRO) slashes its dividend

According to MarketWatch:

As OPEC ended its meeting without any production cut during the weekend, they decided to meet again on Dec.17 to "take any additional decision to balance oil supply and demand and to achieve market stability". Crude oil prices have been down more than 60% since its record high in July. In October, OPEC agreed to cut production targets by 1.5 million barrels a day.

Frontline on Friday reported to slash its third-quarter dividend to 50 cents a share from $2.75 and $3.00 for the first two quarters of 2008. Tanker companies pay out dividends on the profits they earn from leasing their ships on the spot market. In June and July spot, or day rates, soared to record highs, but as oil prices began plummeting so did charter rates. The stock price of Frontline has dropped 60% YoY from $72 to $29.

Frontline, Ltd., through its subsidiaries, engages in the ownership and operation of oil tankers, including oil/bulk/ore (OBO) carriers. The company primarily transports crude oil, as well as raw materials, such as coal and iron ore.

As we discussed few months ago (at that moment, the dividend is 17.6%, right now (before slash it), the dividend is 36.4%):

"When a stock pays a dividend > 7% the dividend is not safe. By the time a stock dividend is twice the CD rate the risk to the dividend is large. I'll bet that the dividend will be cut soon."

S&P Monthly Update

S&P Moving Averages: Month End Update from dshort.com:

"At November's close, the S&P 500 10-month moving average (10-MA) and exponential moving average (10-EMA) both continue to signal a cash position. In essence, when the monthly close of the index is above the moving average value, you hold equities. When the index closes below, you move to cash.

The SP&P 500 closed the month at 896.24, which is 27.1% below the 10-MA (1,229.92) and 24.5% below the 10-EMA (1,187.40). Since 1950 only once before (September 1974) has the index gapped more than 25% below the 10-MA."

Please also read "A Quantitative Approach to Tactical Asset Allocation" (Please download the PDF format) from Mebane Faber explaining in detail on longer term monthly MA timing strategy and its performance against buy and hold.

Everything About China - Calculated Risk

Read the World Bank Quarterly Report on China

As China's unemployment rate hiking and GDP reduces to its lowest level in a decade, China is facing a critical period of merging social unrest.

From Bloomberg: China property slump

House prices in Shanghai, Shenzhen and Guangzhou are plunging, and the global economy may grind almost to a halt next year because of it.

Construction of homes, offices and factories fell at least 16.6 percent in October after rising 32.5 percent a year earlier, according to Macquarie Securities Ltd. That's squeezing an economy already slowed by recessions in the U.S., Japan and Europe that have cut demand for exports. Building is the biggest driver of China's expansion, contributing a quarter of fixed-asset investment and employing 77 million people. Real estate investment is now close to zero. Construction will contract 30 percent next year after expanding 9 percent in the first three quarters of 2008.

In 2005, China vaulted past the U.K. to become the world's fourth-largest economy, after expansion averaged 9.9 percent annually for the previous 30 years. GDP has increased 69-fold since free market began in 1978. China accounted for 27 percent of global growth last year.

Black Friday Market

Market extends its gain for five consecutive days and ends up higher in a short trading day today. We have not seen a five consecutive up days in 2008 at all. This is the best performance week since 1974, surged 12% in a week; however, the worst November since 2000, dropped 7.4%.

Even more impressive, the Dow gained 1,277 points, or 17%, in just five sessions, marking its best five-day percentage gain since 1932, and its best five-day point gain on record.

S&P is up 1% to 896. It breaks its downtrend in November, and is higher than its 10 and 20 DMA.

Today is the Black Friday, the biggest shopping day in a year. There are a lot of crazy deals provided by the retailers, such as blu-ray player for $99, and 50" Panasonic Plasma-HDTV for $899.

After rebounding from the 2002-2003 lows strongly, are we going to see the market continue its uptrend in December? VIX is down to 55 from its record high of 90.

Let's wait for the Black Friday retail data to come out.

Weekend Picture Post

California Unemployment Rate Spikes

From LA Times: California unemployment jumps to 8.2%, third-highest in the U.S.:

Reporting from Los Angeles and Sacramento -- California's unemployment rate soared to a 14-year high in October, hitting 8.2%, and economists predicted that it could rise substantially over the next year and a half.

The state's economy shed 26,400 people from its payroll last month, raising the total number of lost jobs to 101,300 since October 2007, the California Employment Development Department reported Friday.

And the situation is about to get worse, predicted Ross DeVol, director of regional economics at the Santa Monica-based Milken Institute. The unemployment rate is seen reaching 9.9% in the first quarter of 2010, with the loss of 360,000 more jobs before then.

Trading Golden Rule

"Always place an inital stop-loss at 7% below your entry price on any new position. Always! Always! Don't look back and don't second-guess yourself. Wait a couple of days for your emotions to cool and then use that time to analyze your mistake before trying again.

In some cases, you will get stopped out on the same day you buy. (Today probably would've been one of those days.) So it goes. But if you fail to take your medicine early, you can get into big trouble fast. Biting the bullet quickly if you guess wrong is far better than finding yourself trapped with a big loss in a losing trade.

This is the most difficult discipline of investing: taking your losses early while they are still small. I have suffered greatly (as many have) by trying to be a hero and fighting this sell discipline. It's always the same tale of woe... "should've bailed out at $such and such a price" instead of riding it down to the bottom hoping to get out even.

Once you have a profit, keep your stop set at your entry price. Never let a profit turn into a loss. Never! Never! If the trade really starts making nice gains, follow it up with a trailing stop at the previous day's low. Remember, your primary objective is to stay with the momentum. If the price dips below the prior day's intraday low, it's a good indication that momentum is waning.

Finally, don't ever expect to get in at the bottom or out at the top. You will kill yourself emotionally with all the "woulda coulda shoulda" profits that you didn't make. The idea is to catch the middle bulk of the move. Don't try to squeeze out every last dime if you've made a nice chunk.

Suppose you were to buy SSO at the open on any given day since October 1st. The average range from the open to the intraday low has been 6.4% over these 40 trading days. With only one exception, when the price fell more than 7% from the open to the day's low, it continued to move lower in the subsequent 6 days (average) for an average loss of 25%. Those quick 7% losses look pretty good by comparison.

As for entry points, I personally prefer to buy when the fast stochastic oscillator (both %K and %D) dips below 20, indicating a short-term oversold condition. You can use your own favorite indicator or just your gut feeling. The most important thing to keep in mind is not "where" to get in, but "how" to get out. Unless you have steely resolve to exercise a ruthless sell discipline, you would be better off staying in cash."

Weekend Picture Post

Will vs. Trust: Which fits you better?

Will vs. Trust, which is better? Will subjects to probate proceedings and the cost could be substantial, while Trust costs more to prepare. Is a lawyer needed in preparing Will or Trust? or can use the legal services provided by Susan Orman or Legal Zoom?

From Legal Zoom:

"What Is a Will?

A will is a written document—signed and witnessed—that indicates how your property will be disposed at the time of your death. It is revocable and subject to amendment at any time during your lifetime. A will that contains a trust can provide after-death property management and be used for estate planning. It does not provide the same pre-death management as a trust but a general, durable power of attorney used in conjunction with a will can provide similar functions. A will also can provide the same estate tax savings as a living trust. The pre- and after-death management and tax savings of the two can be identical.

What Is a Living Trust?

A Living Trust provides lifetime and after-death property management or carry out tax-related estate planning. If you are serving as your own trustee, the trust instrument will provide for a successor upon your death or incapacity. Court intervention is not required. Livings trusts also are used to manage property. If a person is disabled by accident or illness, the successor trustee will manage the trust property. As a result, the expense, publicity and inconvenience of court-supervised protection of your estate is avoided

If a living trust is properly written and funded you can:
· Avoid probate on your assets;
· Name a guardian and make provisions for minor children;
· Plan for the possibility of your own incapacity;
· Control what happens to your property after you are gone;
· Use it for any size estate; and
· Prevent your financial affairs from becoming a matter of public record.

While a trust sounds appealing there are drawbacks. A living trust is more expensive to set up than a typical will because it must be actively managed after it is created. This estate plan has no effect on any taxes—income, gift or estate. Most importantly, however, a living trust is useless unless it is funded. A living trust only can control those assets that have been placed into it. If your assets have not been transferred or you should die without funding the trust, the trust will be of no benefit as it will still be subject to probate and there may be significant estate tax issues.

Trust vs. Will Considerations

There are many positive reasons to establish a trust but do not overlook the fact that it will involve more upfront effort and expense to set it up properly. To determine if you should make the extra effort and invest in the expense of a trust, answer these questions.

Is informal probate an available option? Most states have an expedited or simplified form of probate for estates under a certain dollar threshold (that dollar value varies by state). If your estate could pass under an expedited form of probate, or if you live in a state where probate is not a complex or burdensome process, a will could be appropriate.

Do you own more than one piece of real property? If so, you may want to consider a living trust since each property will likely be subject to some form of probate.

Do you have minor children? If you do have children, a trust may be appropriate. It allows you to name a guardian for any minor children (so does a will) to establish provisions specifying particular life events when a child will be entitled to any assets held in trust.

Do you have children, grandchildren or other dependents with special needs? In those instances the access or control those heirs have over their inherited property may need to be limited. With a standard will your property can be passed on to those heirs but a will alone does not allow you to exercise much control over their use of the property.

Will your estate be subject to estate taxes? If the value of your estate (all possessions including home, life insurance benefits, retirement accounts) will be $1.5 million or higher (as of 2004 and 2005) you may wish to consider setting up a trust with tax planning provisions, such as an AB or an ABC trust.

Will you actively manage your estate plan? If not, a living trust may not be a suitable solution. Again, a trust will only be beneficial if assets are transferred into it.

So what is best for you? In many respects, a living trust and a will accomplish similar objectives. A trust, however, allows you to realize other objectives that a will cannot. But those advantages don’t come without a price. Whether or not a living trust is better for you than a will depends on whether the additional advantages are worth the cost. When choosing, remember one size does not fit all. What is right for one person may not be right for everyone. Your estate plan should be prepared in a way that best meets the needs of you and your family."