The major stock indices ended February on a positive note, and carried this momentum through the first week of March. As of Friday March 4, 2016, the Dow Jones Industrial Average, the S&P 500, and the Wilshire 5000 are off for the year between 2.1% and 2.6%. This is a significant recovery from the 10% drop of the first two weeks of the year.
The NASDAQ Composite remains off by 5.8%. International markets, while recovering, remain off by anywhere from 5.2% for the Sensex to 10.6% for the Nikkei.
February showed a gain of 242,000 new jobs, according to last Friday’s jobs report, with the national unemployment rate holding steady at 4.9%. There were 555,000 new entrants to the labor force. Service industries added 257,000 new employees, while manufacturing and goods-producing jobs contracted by 15,000.
The average workweek was 34.4 hours in February, down from 34.6 hours in January, and hourly earnings in February dropped by 0.1%. Consumers are maintaining their relatively good savings habits, with the nation’s savings rate at 5.2% of disposable income.
Nancy Reagan, wife of President Ronal Reagan, died last Saturday. She was 94.
Cruz is cruising up on Trump, and Sanders is organizing his communities well against Clinton. This election season is much more entertaining than reality TV.
Last week, we referenced Marlboro, Coke, and Budweiser as the world’s most powerful brands. Alert reader Todd Reich did some fact checking, and it appears my information is dated. According to Forbes, which holds itself out as a Capitalist Tool, the three most valuable brands are currently Apple, Microsoft, and Google. Coke is fourth on the list, with Budweiser coming in at 25, and the Marlboro Man coming in at 27. Hats off to Todd for keeping us on our toes. You can see the entire list here.
Employee fraud and dishonesty is a delicate subject. Good checks and balances can reduce, or even negate, the potential for such. A few ways employees with financial responsibility can steal include creating fictitious vendors or employees, stealing inventory, giving themselves undisclosed or unauthorized pay raises, and taking payment from one customer, and applying it to another.
The three conditions present in any fraud situation include motive, opportunity, and rationalization. Keeping an eye and ear out for financial challenges in the lives of employees can help. Has a spouse been laid off, or changed jobs? Is one of the children, or a parent, sick? Are there rumors of expensive habits?
One of the surest ways to reduce fraud, and its potential, is to learn to read and understand the various financial statements applicable to your business. This includes bank statements. Then, make sure that you review these statements on a regular basis, make sure your financial people know you review these reports, and master the art of asking good questions. Trust, and verify.
If there are serious challenges, there are specialties within accounting, including Certified Fraud Deterrence Analysts, and Certified Financial and Forensic Accountant, who can help determine what has or hasn’t happened, as it should have.
On January 27, 1941, Delta Air Lines announced it was moving its headquarters from Monroe Louisiana to Atlanta Georgia. In 1940, Delta and the city of Atlanta had signed an agreement whereby the city agreed to contribute $50,000 for construction of a new hanger and office building for Delta if Delta would move its headquarters to Atlanta. In turn, Delta agreed to pay the remaining construction costs and then assume a 20-year lease for the new facilities. On January 16, 1941, Delta had secured a $500,000 loan from Atlanta’s Trust Company of Georgia, thus allowing it to make a public announcement of the move.
Delta Air Lines history can be traced to a Macon Georgia crop dusting service. The company moved to Monroe Louisiana, when J.A. Biedenharn and friends, of Vicksburg MS, bought the company. They began passenger service in June 1929. Delta is one of the oldest existing airlines, by operating date, and the oldest airline in North America, offering more than 5400 flights daily, to all parts of the globe. A Biedenharn family member sat on the Delta board until the late 90’s.
Quote of the week:
“When everything seems to be going against you, remember that airplanes take off against the wind, not with it.” – Henry Ford
Randy Brunson is the founding shareholder of Centurion Advisory Group. Mr. Brunson
has invested most of his thirty five year career in the area of financial services.