| Cereal ... It's What's For Dinner
December 19, 2009 at 6:40 pm
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| Move over beef, for a small but growing number of consumers, it's Cereal For Dinner.
Cereal for dinner? It's a tough reality for some cash-strapped people.
Rising popularity of cereal among those looking for a cheap meal combined with plunging ingredient costs to boost the second-quarter profit of Cheerios maker General Mills Inc. 50 percent.
The increase is a sign of the economic stress still facing families amid high unemployment who want to cut spending and save time, but don't want to rely on fast food. Food banks are seeing rising demand for cereal as people try to find a nutritious meal that costs as little as possible. That's blurring lines between traditional meals.
Kellie Hotz and her husband, Jeff, eat cereal for dinner three times a week as they struggle to stretch their budgets and care for a toddler. Hotz said cereal is less expensive than fast food, so she keeps a dozen boxes on hand. "It's the fastest, easiest and at least somewhat half-nutritious thing to do during the weekdays," said Hotz, 29, of Arlington Heights, Ill.
Breakfast foods such as eggs are popular now all times of the day because they're quick, nutritious and inexpensive, said Christopher Shanahan, a research analyst with Frost & Sullivan. "The lines of when to eat breakfast, when to eat dinner, when to eat lunch have been slightly blurring," he said.
Food banks across the country are clamoring for cereal to hand out to families, who are increasingly seeking out food assistance.
Cereal is the top priority for Gary Knuth, who coordinates food donations and purchases for the Northern Illinois Food Bank. On Thursday, he put in a bid for a truckload of Shredded Wheat in Iowa. "You can give one box to a family and feed a number of people," he said. "It goes a long way, and it fills a lot of bellies with good stuff." Bacon, The Recessionary Version Of The Truffle
Justin Rohrlich writing for Minyanville expresses his thoughts about What Our Bacon Intake Says About the Economy.Stop the presses, folks -- your world is about to be rocked.
Take a look at this headline from Scott Hume's BurgerBusiness.com: "Data Confirm Sharp Increase in Bacon on Burgers and More."
Yes, it's true. A study by venerable Chicago research firm Mintel, commissioned by BurgerBusiness.com, shows that "menu items of all types that include bacon are up 26.5%" since 2005.
But the gripping statistics don't stop there.
The report goes on to inform us that "the number of bacon-topped burgers at all 580 restaurants in its Menu Insights database soared from 424 in 2005 to 576 in 2009, a 35.8% increase."
Houston fund manager and Minyanville professor Ryan Krueger thinks people are drawn to bacon right now because, in his words, it's a "recessionary version of the truffle."
Brian Dimarco, former account director for Burger King (BKC) at now-defunct advertising agency DMB&B, says, "Bacon is the ultimate comfort food. In times of stress and economic trouble, eating bacon is like being swaddled in comforting fat."
Author Sarah Katherine Lewis has a different take. She wrote, "Bacon is the cocaine of the '00s, a visible sign of decadent rebellion."
Elin Roberts, science communications manager at the Centre for Life education center in Newcastle, England, told the Telegraph newspaper that "The smell of sizzling bacon in a pan is enough to tempt even the staunchest of vegetarians. There's something deeper going on inside. It's not just the idea of a tasty snack. There is some complex chemistry going on."
That's why bacon's not going away anytime soon. And it's never going away for this gal, unless she's got one hell of a laser surgeon:
 What Gives Meat Its Flavor?
The accidental Scientist is pondering the question What Gives Meat Its Flavor? The answer is found in a link Justin Rohrlich cited on the Maillard Reaction.
Bacon, Cereal, Recessions
Let's tie this together. Bacon is what you buy to satisfy your cravings when you want to be "swaddled in comforting fat". In other words, a significant portion of the increased bacon burger buying reflects increased denial about the economic problems at hand.
On the other hand, cereal is what one eats when reality finally sets in and people realize they cannot afford anything else.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post ListMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.  |
| Shoppers Snowed In On "Super Saturday" - Is That A Good Thing?
December 19, 2009 at 3:43 pm
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| Blizzard conditions have closed roads and stranded passengers all along the I-95 East coast corridor. Canceled flights, and the costs of snow removal and salting are not good things. Moreover, retailers will be blaming blizzard condition for poor last minute sales.
Bloomberg: Major Snowstorm Threatens Blizzard for U.S. Northeast
A major snowstorm dumped a foot of snow on Washington D.C. and threatened blizzard conditions throughout the northeast U.S. on the last travel and shopping weekend before the Christmas holiday.
The accumulation was forecast to reach as much as two feet in the Washington area and 15 inches in New York City. Winter storm and blizzard warnings and watches extend from Georgia to Massachusetts.
Both Reagan National Airport and Dulles International Airport were open, but most airlines had canceled flights today. Reuters: Storm threatens retailers' last holiday push
Retailers are counting on time-crunched shoppers to swarm stores on "Super Saturday," but a heavy winter storm threatened to strand them at home on the final weekend before Christmas.
"The one thing a retailer doesn't want is a major snowstorm on the Saturday before Christmas," said Marshal Cohen, chief industry analyst at the NPD Group. "This is definitely not the Christmas gift any retailer would ever ask for."
Severe weather could derail sales on Saturday at retailers with a large presence in cities from New York to Washington D.C., including Bon-Ton Stores, Saks Inc, Macy's Inc and American Eagle Outfitters Inc.
Holiday sales forecasts have narrowed over the course of the shopping season to a range of down 1 percent to up 1 percent from 2008, when sales fell for the first time since the National Retail Federation started tracking the data.
"We believe retail sales will likely suffer as the sales lost during what historically has been the busiest weekend of the year will not be recovered. You can't make up for lost days!" Stifel Nicolaus analyst Richard Jaffe said in a Friday note. AccuWeather: Paralyzing Snow, Drifting, as Nor`easter Rips the East Overnight
Updated: Saturday, December 19, 2009 2:46 PM
Blizzard conditions with 1 to locally 2 foot snowfalls and winds gusting 40 to 60 mph will spread along the direct path of the storm from southeastern Pennsylvania, eastern Maryland, Delaware, New Jersey, Long Island, and southern New England. Essentially, this would be from Baltimore to Boston.
Worst of the storm will wind down this evening from New Jersey on west, but will rage on through the wee hours of Sunday on Long England and in southern New England.
Travel on interstate highways I-76, I-80, and I-95, not to mention countless local streets and highways, will be difficult and dangerous, even impossible.
Air travels will continue to take a major hit with flight cancellations through Eastern airports likely to number in the hundreds thanks to poor visibility and snow-clogged runways. Knock-on effects will be felt nationwide and beyond.
This storm already has a history of monstrous snowfalls. Amounts to 30 inches have buried West Virginia's Potomac Highlands with two-feet burying in between Charlottesville, Virginia, and Beckley, West Virginia.
Every dime shoppers do not spend is economically a good thing as people need to stop spending money they do not have on things they do not need. However, assuming spending is indeed reduced, it would have been far better if the inducement was something other than an economically wasteful blizzard.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post ListMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.  |
| Seven Banks Fail, 140 YTD total, Sheila Bair "prepared to handle an ever-larger number of bank failures next year"
December 19, 2009 at 12:57 am
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| A total of 140 banks have failed year to date and FDIC Chairman Sheila Bair is adding staff, prepared for even more failures next year.
Please consider Seven U.S. Banks Are Seized, Raising Year's Failure Toll to 140
Seven U.S. banks were seized by regulators today, bringing this year's total of failed lenders to 140 as financial companies are tested by the recession and the Federal Deposit Insurance Corp. anticipates more shutdowns.
Banks with $14.4 billion in total assets were closed in six U.S. states, the FDIC said in statements on its Web site. The agency is overseeing the dissolution of banks at the fastest pace in 17 years.
Earlier this week, the FDIC boosted its 2010 budget by 56 percent to $4 billion to manage further shutdowns. The total budget will increase from $2.6 billion and the set-aside for bank failures doubles to $2.5 billion over this year, according to a proposal approved by the FDIC board. The agency staff will increase to 8,653 next year from 7,010 this year.
The budget "will ensure that we are prepared to handle an ever-larger number of bank failures next year, if that becomes necessary," FDIC Chairman Sheila Bair said in a statement. Today's bank closings will cost the agency about $1.8 billion, according to the FDIC statements.
U.S. lenders are buckling under the weight of loans tied to commercial real estate, which is plummeting in value. Prices have dropped 43 percent from their peak in October 2007, Moody's Investors Service said last month. Sheila Bair, tooting Obama's horn, complains banks aren't lending enough.
Looking for a reason banks aren't lending? Here is one reason in pictorial form.
Assets at Banks whose ALLL exceeds their Nonperforming Loans
The above chart courtesy of the St. Louis Fed.
Because allowances for loan losses are a direct hit to earnings, and because allowances are at ridiculously low levels, bank earnings (and capitalization ratios) are wildly over-stated.
Here is an interesting note from the Fed. "For each size category, the sum of all assets held by banks where this ratio is greater than one is divided by the sum all assets held by banks in the class."
In other words, banks whose allowances are negative are excluded from the chart.
There are many more reasons banks are not lending including: rising unemployment, rising taxes, uncertainty over health care costs, proposed cap-and-trade costs, increasing consumer frugality, rampant overcapacity, and boomer demographics.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post ListMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.  | | | 
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