Trends

For Active Traders, 2010 Can’t Come Soon Enough

According to a recent online survey of more than 270 retail investors conducted by online broker TradeKing, most investors are writing off hopes of a recovery this year and looking to 2010 for relief.

In the survey conducted during the last week in October 2009, 47 percent of investors described their market outlook as “neutral” or “not sure,” which are among the highest levels reported since the survey’s inception in July 2007. Accordingly, most of those surveyed maintain a skeptical view of the Obama administration’s handling of financial market matters, with more than 62 percent of respondents saying the administration’s policies either make them feel “less confident in the market” or had “no effect at all” on their market confidence, up two percentage points from last quarter.

“One thing is certain: uncertainty dominates right now,” said Don Montanaro, Chairman and CEO of TradeKing. “We see at TradeKing how investors’ bullishness comes in the form of very specific moment-in-time opportunities, but the overall sense is that the market could go either way on any given day until we see some solid trending data signaling long-term recovery.”

Unemployment Remains #1 Trade Trigger for Second Consecutive Quarter

U.S. Unemployment Claims held fast as the top trade trigger for both equities and options traders, with 41 percent of respondents pointing to this issue as their primary concern. U.S. Housing, Consumer Spending and Interest Rates all tied for second at 30 percent. These concerns knocked Quarterly Earnings from its #2 spot last quarter, falling sharply from 36 percent to 27 percent in this most recent survey.

Energy and Technology Sectors Have Moved Up Sharply As Top Long Opportunities for Equities and Options Traders

For the sixth straight quarter, Energy remained the favorite sector for both equities and options traders as having the greatest potential for success in a long position for the coming quarter, followed closely by Technology.

• 58 percent of total respondents selected Energy as their top long play in the coming quarter, up from 49 percent in July. It was followed by Technology at 47 percent, which rose from 34 percent just three months ago.

From a short position, Transportation and Travel took top spot for the second consecutive quarter, followed by Finance and Retail as the most promising short plays.

• Transportation and Travel was selected by 24 percent of the respondents for the top overall sector to short, up from 19 percent last quarter. Finance took second at 23 percent and Retail came in third at 21 percent.

Most Americans Are Still Upbeat and Optimistic – But Less So than in the Recent Past

A new Harris Poll finds that the great majority of the public is satisfied with their lives, and that most people believe that their personal situation will improve over the next five years. The numbers who feel this way are lower today than they were in the last few years, but most Americans are still upbeat and optimistic in spite of the economic tough times and the increase in unemployment. Furthermore, a majority of Echo Boomers (aged 18-30), and pluralities of Gen X (aged 31-42) and Baby Boomers feel their present situation today is better than it was five years ago. Only among Matures (aged 62+) is there a plurality who feels that their situation has become worse.

Some of the most interesting findings are:

• Fully 88% of all adults are satisfied with their lives, and 54% are very satisfied. However, these numbers are lower than in any of the four other Harris Polls that asked these questions since 2003.
• More people (40%) feel that their situation has improved over the last five years than feel it has got worse (27%). However, among Matures (aged 62+), more people feel their situation has become worse (30%) than better (20%). The 40% who feel their situation has improved is lower than it was in any of the four previous surveys. In 2005, a 56% majority felt this way.
• Notwithstanding the economic bad times, a 54% majority of adults believe their personal situation will improve over the next five years. However, this is lower than it was. In 2005, fully 65% believed their situation would improve.
• On this question about the future, there are very large differences between generations. The older people are, the less likely they are to be optimistic. Fully 82% of Echo Boomers (aged 18-30) and majorities of Gen X (64%) and Baby Boomers (54%) believe their situation will improve. Only 21% of Matures believe this.
• Republicans are more likely than Democrats to be very satisfied with their lives (63% vs. 49%) but are less likely to believe that their personal situation will improve in the next five years (52% vs. 63%).
• People with higher incomes are a little more satisfied with their lives, and are much more likely to feel their personal situation has improved in the last five years (52% among people with household incomes of $75,000 or more, compared to 32% of people with incomes of less than $35,000). However, they are not significantly more optimistic about the next five years than are people with incomes below $50,000 or below $35,000.

These are some of the results of The Harris Poll of 1,019 adults surveyed by telephone between October 13 and 18, 2009 by Harris Interactive.

R&D Spending Increases Despite Recession Trends

In the face of a severe global recession, the world’s 1,000 largest publicly traded corporate research and development spenders actually increased spending on R&D in 2008, affirming the critical importance of innovation to their corporate strategies, according to global management consulting firm Booz & Company’s fifth annual analysis of global innovation spending, released today. R&D outlays for these companies rose by 5.7 percent to US$532 billion, even as sales were up only 6.5 percent. While the increase in 2008 R&D spend was less dramatic than 2007’s gain of 10 percent, it was just slightly less than the 7.1 percent global five-year compound annual growth rate (CAGR) for R&D.

Overall, more than two thirds of companies maintained or increased their R&D spending in 2008, despite more than a third (34 percent) reporting that net income plummeted last year, according to the study. More than a quarter of companies decreased their R&D allocation in 2008.

The study looked at R&D spending and its link to corporate performance, uncovering insights into how organizations can get the greatest return on their innovation investment. New to the study this year is an in-depth survey of nearly 300 senior managers and R&D professionals from 250 companies around the globe that probes the impact of the downturn on innovation spending and strategy.

Key findings of the report include:

Innovation is viewed as increasingly vital to corporate strategy. More than 90 percent of those surveyed say that innovation is critical as their companies prepare for the upturn, and fully 70 percent of respondents state their companies are either maintaining or increasing their spending on R&D in 2009, according to Booz & Company. Furthermore, the top 100 companies in the Innovation 1000 clearly signaled their investment priorities by increasing R&D spending by 3.2 percent while reducing overall capital expenditures by one percent.

Companies are spending more, but more wisely. “One result of the recession is that it has forced companies to think more carefully about their innovation processes and portfolios – for both good times as well as bad,” observed Kevin Dehoff, a Booz & Company Partner. “This held true through the most turbulent quarters these companies have navigated, indicating they’re ready to make smart bets that will pay dividends in the coming upturn.” Accordingly, the survey of senior managers and R&D directors reveals that seven in 10 companies are now adjusting their strategies to better capture changing customer requirements. Nearly half of the respondents report becoming more risk averse in their approach to innovation, changing the filters they apply when green lighting new R&D projects. More than 40 percent said their companies are focusing on process improvements to change R&D spend during the downturn, and a similar number say they’re getting better at killing bad projects, as well as focusing more on newer products that have the potential to grow faster.

The top 20 innovation spenders increased their budgets by just 3.2 percent. This gain is less than one-third the 10.7 percent rise in 2007 and was the result of a precipitous 35 percent drop in net income among the 20 companies, which fell from $115 billion in 2007 to just $75 billion in 2008. Still, the top 20 spenders accounted for 26 percent of spending by the entire Innovation 1000.

Recession’s impacts on R&D vary widely by industry. In 2008, as last year, two-thirds of R&D spending was concentrated in three industries: computing and electronics (28 percent), health (23 percent), and automotive (16 percent).

• No industry felt the pain more than auto with nine out of the top 10 R&D spenders in the category cutting their innovation outlays in 2008. Overall, 60 percent of auto companies in the Global Innovation 1000 decreased R&D spending, compared with 25 percent who decreased R&D last year. Yet the remaining 40 percent of auto companies on the list increased spending enough that the auto sector on a net basis slightly increased R&D spending overall by 0.6 percent.
• The Software and Internet sector, on the other hand, clearly has seen the recession as an opportunity. Eight out of the industry’s top 10 R&D spenders increased their R&D spending last year.
• R&D spending in the computing and electronics industry was up more than 4 percent, though the proportion of companies that increased R&D spending was essentially unchanged from last year.
• Healthcare companies spent the most on R&D as a percentage of sales –- 12 percent –- followed by Software and Internet (11.4 percent). In contrast Telecom, and Chemicals and Energy, spent the least, 1.4 percent and 0.9 percent, respectively.
• Aerospace and Defense was the only industry to see innovation spending sink, down 2.3 percent.

Every global region increased its spending. North American, European, and Japan-based companies retained their 94 percent share of the global 1000 innovation spend. Every region, including China and India, increased its expenditures, though they did so at slower rates. Japan upped its allocations by just 0.5 percent, Europe by 6.3 percent and North America, 6.5 percent. These levels were below the global five-year CAGR of 7.2 percent.

Additional study findings include:

• The top 10 global R&D spenders in 2008 were, in descending order: Toyota, Nokia, Roche Holding, Microsoft, General Motors, Pfizer, Johnson & Johnson, Ford, Novartis and sanofi-Aventis.
• R&D spending among the Global Innovation 1000 ranged from just under $9 billion spent by #1 Toyota to the $58 million spent by #1000 Laird PLC, a London-based maker of electronics equipment, a wide range that explains why the top 100 companies account for fully 62 percent of the total R&D spend of the Innovation 1000.
• Sales of the Global Innovation 1000 grew 6.5 percent to $15 trillion in 2008, a significantly smaller increase than the 10 percent increase this group registered in 2007, and R&D spending as a percentage of sales remained the same as the previous year, 3.6 percent.
• North American-headquartered companies on this year’s list spent 4.6 percent of sales on R&D, a slight decrease compared with 2007, while Japanese-headquartered companies spent 3.7 percent of sales, significantly up from last year, and European-headquartered companies spent 3.2 percent, a decrease from the prior year.
• Booz & Company estimates that the Global Innovation 1000 accounts for 81 percent of 2008 total global corporate R&D spending of $660 billion.

Consumer Confidence Continues to Rise

Consumer confidence in the overall economy improved, while confidence in technology and consumer electronics fell slightly in October, according to the latest figures from the Consumer Electronics Association and CNET.

The CEA-CNET Index of Consumer Expectations (ICE) climbed five points to 174.1 in October. The ICE, which measures consumer expectations about the broader economy, is up 10.4 points from this time last year, and has climbed in three of the last six months.

“Consumers were met with positive news regarding economic recovery this month,” said Anne Claudio, vice president of research at CBS Interactive. “The stock market rallied to levels not reached in years while optimism is being expressed by economic leaders that the end of the recession is near.”

The CEA-CNET Index of Consumer Technology Expectations (ICTE) declined four points this month. The ICTE, which measures expectations for buying CE and spending more on CE products and services, is up 3.1 points from this time last year.

“With the holiday shopping season right around the corner, consumers are still being cautious towards spending,” said Claudio. “Continued good news on the economy will drive spending in many categories, including technology, as consumers look to enjoy the holidays.”

Small Businesses Getting Ready to Hire

The nation’s unemployment rate may have hit a 26-year high in September but many small businessowners are getting ready to hire.  The latest Intuit Payroll survey found that nearly half of the small business owners surveyed, 44 percent, are planning to hire new employees within the next 12 months. At the same time, many small business owners believe that benefits are key to attracting new hires but are finding them difficult to afford.

“Economists may have declared the recession over, but on Main Street, unemployment figures are what really matter,” said Nora Denzel, senior vice president of Intuit’s Employee Management Solutions Division, which helps more than 1 million small businesses easily and affordably manage their payroll. “There are struggles ahead, nobody is uncorking the champagne bottle quite yet, but we are starting to see small signs of optimism.”

These 12-month hiring plans coincide with a somewhat optimistic view of their own prospects for growth. Sixty percent expect their business to grow in the next year. Newer businesses are the most bullish: 80 percent of companies founded less than three years ago expect to grow over the next year, compared to roughly half that have been in operation for 10 years or more.

When it comes to hiring, small business owners are looking for candidates with a broader skill set. Fifty percent of the small business respondents said they were looking for a “people person” or “jack of all trades,” over a “creative genius” (11 percent) or “mathematical wizard” (4 percent).

Benefits Key to Attracting Talent

While small business owners get ready to hire, many of them are in a quandary when it comes to attracting talent. Nearly 90 percent of survey participants said that health insurance benefits are important to attracting and retaining good employees. Yet 58 percent don’t offer healthcare insurance, with nearly 50 percent stating that they can’t afford it.

Employer-provided retirement plans are even scarcer. Among the businesses surveyed just one-fourth offer retirement benefits. Of those who don’t, nearly two-thirds said they don’t have a responsibility to do so while the remainder said that they can’t find an affordable plan.

“There’s a widening gap of expectations,” said Denzel. “On one hand, we as a society assume that health and retirement benefits are part of every employee’s compensation package. And yet even as these small businesses gear up to hire, according to our results, small businesses are leery about what those benefits will cost.”

Additional Findings

The survey also found that:

• Friends and family matter. Seventy-nine percent of small business owners surveyed have hired a friend or family member and only 22 percent said that this was a bad decision. The reason may have to do with trust, which was cited as one of the two biggest hiring challenges, along with finding employees with the right experience.
• Long-term relationships are important. Forty-four percent of the small business owner respondents reported that their first employee still works for them.
• Stimulus funds not a factor. Consistent with the previous Intuit Payroll Survey conducted three months ago, only 1 percent of respondents reported receiving federal stimulus money. Yet 74 percent admit that they are probably not taking advantage of all the benefits available to their business under the federal economic stimulus plan.

Online Retailers to Emphasize Free Shipping, Social Media this Holiday Season

The economy is not only impacting shoppers, it’s affecting online retailers, too. According to results of Shop.org’s eHoliday Study shoppers will see changes in retail marketing and promotions this holiday season in response to economic uncertainty.

With an understanding that many of today’s shoppers use Facebook and Twitter regularly, and because these tools are more cost-effective than traditional advertising, 47.1 percent of retailers surveyed will be increasing their use of social media this holiday season. More than half of retailers said they have added or improved their Facebook page (60.3%) and Twitter pages (58.7%) this year, while two-thirds (65.6%) have added or enhanced blogs and RSS feeds. In addition, to provide consumers with an extra incentive to start shopping, one-third of retailers (34.3%) say they will offer holiday deals earlier this year.

As another sign of the times, free shipping offers will abound this holiday season. Four out of five online retailers (79.4%) will offer free shipping with conditions at some point during the holiday season, while more than half (57.4%) also plan to offer free shipping without conditions. More than one-third (35.7%) said their budgets for free shipping are higher than last year, and nearly as many (30.0%) said free shipping offers will start earlier than a year ago.

“Retailers know that times are tough so they have created promotions and incentives to help Americans save money this holiday season,” said Scott Silverman, Executive Director of Shop.org. “From free shipping to Facebook, online retailers are combining new initiatives with tried-and-true tactics to make their companies stand out.”

Online retailers are also compensating for the economy by making operational changes to help them protect their profits. According to the survey, 41.4 percent of retailers have scaled back on inventory levels and 22.9 percent have hired fewer people in their stores.

While online growth is expected to slow this holiday season, it remains a bright spot in retail. According to the survey, 45.8 percent of online retailers expect their holiday sales to increase at least 15 percent over last year, while one-third (33.9%) expect sales to grow up to 14 percent. As a testament to the economy and the maturity of online retail, just one in five online retailers (20.3%) expects sales to be flat or decline.

In addition to a strong focus on sales and free shipping, many online retailers have revamped their websites this holiday season to make it easier for people to shop. According to the survey, many retailers have added or revamped their sites’ shopping cart (45.2%), search capabilities (44.3%), suggested items (42.9%), customer ratings and reviews (40.6%), and featured sale pages (37.1%).

Largely due to the convenience of the web, more than one-fourth of online shoppers (26.7%) said they plan to spend a larger portion of their holiday budget online this year. Reasons behind why people will spend more online range from the ability to shop at all hours of the day (41.9%) to shoppers feeling it is easier to compare prices (34.0%) to Americans’ insatiable appetite for free shipping (33.1%). Others said they will spend more online because it’s simply more convenient for them (32.4%), they don’t want to fight crowds in stores (24.9%) or because it’s easier to find items (16.7%).

The small percentage of people (5.7%) who plan to spend less of their holiday budget online said that they’ll pull back due to expensive shipping charges (22.8%), because they like to see or handle items before they buy (12.5%) or because they prefer a store experience (10.8%). A fraction of shoppers said they hesitated to shop online due to concerns about security (1.1%), credit card theft (0.6%), privacy (0.1%) or concerns about retailers tracking online activity (0.1%).

“In a year where every penny counts, many people will start their holiday shopping online to find deals, search customer reviews to select products, and get gift ideas,” said Phil Rist, Executive Vice President, Strategic Initiatives, BIGresearch. “The benefits of online shopping far outweigh the drawbacks, as far as most shoppers are concerned.”

With online retailers diversifying payment options, customers have more ways than ever to pay for holiday gifts. According to the survey, two-thirds of shoppers (67.3%) will use a credit card for some online purchases this holiday season, though one-third will also use a debit card (35.6%) and PayPal (33.9%) for purchases. In addition, 11.5 percent of shoppers plan to use a gift card or gift certificate to pay for holiday items online this year.

About that Crackberry…

Website Above the Law reported that a partner at law firm Quinn Emanuel Urquhart Oliver & Hedges chided a young associate by emailing the whole firm that associates should be checking their Blackberries once an hour unless they are sleeping or in a tunnel. Apparently the unfortunate new lawyer didn’t see an email from the partner just before he left the office asking him to stay to take care of a project.

When I started law practice way back in the 1980s, there was no Internet, no email, and the fax was this very new machine. I had a PC at home but it wasn’t hooked up to anything. Don’t get me started on how much of a pain it was just to get a distribution of drafts of documents out to a team of lawyers on a transaction which can now be done with one click of a mouse. When we left the office, we left. Of course the phone was there at home, but we all had answering machines, and I know a number of my colleagues would simply screen calls so that a call from the firm could be ignored while the associates claim to be out or unavailable.

Nowadays, getting deals done is more about brainpower than manpower, which helps make a boutique firm like mine much more competitive with the big boys. But with instantaneous communication of course comes cost. I recently turned off the vibration on my Blackberry that went off when each email came through. I check it often, but I will check it when I check it. Unfortunately young associates in law firms don’t have that luxury. Our 24/7 world gives us many conveniences, but that old idea of private time or small escapes is pretty much gone.

Americans Split on Attitudes towards Ads Which Mention the Recession and Economic Troubles

As economic woes continue, advertisers have to decide how to deal with the issue of the recession. Some ignore it and find different ways to encourage people to buy in troubled economic times while others put the economic troubles front and center and mention the recession. What strategy actually works is a different issue altogether and the American consumer is mixed about that.

Just over one-quarter of Americans (27%) say advertisements which mention the economic troubles and the recession make the brand seem more manipulative while just under one-quarter (23%) say the advertisements make the brand seem more realistic. Just over one in ten (12%) say these types of advertisements are depressing and make them less likely to purchase the brand. Two in five Americans (39%), however, have no opinion about advertisements which mention the recession.

These are some of the findings of a new Adweek Media/ Harris Poll, survey of 2,186 U.S. adults surveyed online between September 25 and 29, 2009 by Harris Interactive.

Different groups have different attitudes on these ads

Different groups have different opinions on advertisements which mention the recession and economic troubles. Men are more likely than women to say these ads make the brand seem more manipulative (29% versus 25%) while women are more likely to believe these ads make the brand more realistic (27% versus 18%).

There are also age differences on ads which use the recession. Those aged 18-34 are more likely than those aged 55 and older to say these types of ads make the brand more realistic (27% versus 18%).

Education and household income are other differentiators on the use of the recession in advertisements. Looking at education, those with a college degree are more likely than those with a high school or less education to have an opinion at all, both believing that the ads make the brand seem more manipulative (31% versus 24%) and make the brand seem more realistic (26% versus 17%). Those who have a household income of less than $35,000 are more likely than those with an income of $75,000 or more to say the ads are depressing and make them less likely to purchase the brand (16% versus 8%). Those with a household income between $50,000 and $74,999 a year are more likely to make a brand more manipulative (32%).

So What?

Advertisers have to walk a fine line with their ads when dealing with the economic issues Americans are currently facing. Do they discuss the recession or pretend it doesn’t exist? We know there are certain tactics which work better than others for addressing the economy (mostly value propositions and luxuries for less), so when it comes to actually mentioning the recession, these tactics should be interwoven so advertisers do not seem to be manipulating the consumer or, even worse, depressing them and leading them to not purchase the brand.

New Survey Shows Affluent Have Hopeful Outlook— But Not Convinced Recession is Over

A new survey of the wealthiest 10% of US households by the American Affluence Research Center shows the affluent have a negative opinion of current business conditions, but have a positive 12 month outlook for improvements in business conditions and the stock market.

In the near term, the affluent have concerns regarding their personal household income. This is contributing to weakness in their plans for December holiday gift purchases, which they estimate will average about $2,400 or a 5% decline from what they spent in 2008. As an extension of this, spending plans over the next 12 months for 8 major items and 17 different categories of products and services continue to be soft though somewhat stronger than in the spring 2009 survey.

There are expected near term reductions in expenses such as purchases of primary residences, vacation homes, cruises, and motor vehicles. Also major home appliances, vacation travel, and designer apparel are expected to experience declines. The surveys also track changing investment objectives as the stock market rises and falls.

Conducted twice annually, the American Affluence Research Center survey provides insights into the concepts of the “new normal”, “stealth wealth”, and “luxury shame” that are contrary to the anecdotal examples appearing in recent media coverage of the luxury market.

Most affluent expect to return to pre-recession levels of spending once they are convinced the recession is over and they see a recovery in their net worth, which has been hit by declines in the value of their savings and their home. They do not expect to see the end of the recession, with real improvements in the rate of unemployment and the value of their savings and their homes, for about 18 to 24 months and possibly in to early 2012.

Women Led Businesses Continue to Fuel Growth in a Tough Economy

According to the Small Business Administration, there are 9.1 million women owned businesses in the U.S., employing 27.5 million people and contributing $3.6 trillion to the economy.

“Female leadership of companies is changing how businesses are organized, managed and insured,” said Mary Claire Bonner, head of Local and Regional Business, a combined organization that includes Aetna Small and Middle Market Business. “Our work with women-led companies has taught us that the idea of communities – places where different people come together to share interests, goals, and values – is central to their success. This is how we have developed the benefit plans and tools needed to serve the health and well-being of companies led by women.”

In response to this growth, Aetna has launched a new website,www.aetnawomenatwork.com, which features pertinent information, videos, events, education courses, and more, to help women balance their often dual roles as business and family caregivers and decision-makers.

The site content is built around three core areas: Healthy Business, Healthy Family, Healthy Life — three themes that resonate with women business leaders regardless of their industry.

Healthy Family

When families share the value of health, the benefits are experienced by everyone—parents, children, colleagues, and employers. This section of the site is designed to help people get engaged in their health with the tools and information they need to make smart, healthy decisions, including:

• How health benefits can help save money
• Screening tests every family should consider
• Creating Personal Health Records for everyone in your family

Healthy Life

• How to find doctors in your area
• How to get more from your insurance coverage
• How to plan for retirement

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