E-motions: Vol. No. 1, Issue No. 7, September 5, 2005

Brought to you by California News Tech (OTC BB: CNTE)

New Economy Signals Lifestyle Shifts, Affects Related Industries

1. Emotions in Focus: Haves Reassert Status Over Have-Nots

     Currently, one of the top issues on the minds of the public is Hurricane Katrina. Not only has he slow responses of authorities to the disaster hurt people’s confidence in the government, but also it has put into focus problems of social inequality in the United States. Overwhelmingly the people who have been left to suffer in the wake of the hurricane are poor. The press has revealed the condition of the least fortunate of Louisiana to be “disgusting”, “anarchic” and “inhumane”. Meanwhile, faces of the privileged are conspicuously absent from these shocking images. More and more, it appears that the gap between haves and have-nots in America is widening.

     Lately the media have been painting a bleak picture of the future quality of American life. In the professional sphere, companies recovering from fiscal slumps often prefer to keep their increased profits rather than to start hiring again. Many of the employees that they do retain are unhappy. A recent study shows that, with poverty rates in America on the rise, 77% of all workers in the United States are not satisfied with their jobs. Top complaints include insufficient compensation, poor job security, long hours and non-existent employee benefits. At the same time, however, a small upper stratum of the work force is doing better than ever.

     In the socio-cultural sphere, Americans face many other manifestations of the growing divide between socio-economic groups. Perhaps most central to these changes in society are the increasing barriers to a good education. Public education is under threat at all institutional levels. The quality of instruction in public primary and secondary schools is unsatisfactory by many standards, and the cost of college tuition keeps increasing. While the social elite reaps the benefits of expensive university degrees, many other Americans lack the qualifications they need to succeed in the workplace.

     At an even more fundamental level, a growing number of Americans are obese, and lack knowledge about proper nutrition, health and fitness. While many subsist of cheap fast food, the more privileged have become increasingly weight and diet conscious. Interest in nutrition and organic foods is at an all time high in specific socio-economic circles, at the same time as most Americans are at their heaviest and least healthy.

     Overall, our society is at a point of great stratification, where the economy favors a shrinking elite, but leaves many others in a perilous position. Some companies feed off of this economic rift, avoiding the pitfalls of certain depressed sectors by catering to the needs of a well-off few instead.

2. The Big Movers and Why

     Last Monday SkillSoft (NASDAQ: SKIL) went up 24.16% on reports of increased net income, beating last quarter’s expected earnings, and increasing expectations for next quarter. SkillSoft provides educational software packages to commercial sector companies and government offices, teaching everything from basic desktop skills, to IT, to accounting. Customers use many of SkillSoft’s products for continuing education of their employees. Playing upon employers’ desires to avoid hiring additional workers, SkillSoft offers them an opportunity to teach existing employees new essential skills. Furthermore, SkillSoft makes this continuing education many times cheaper than it would be through private or institutional classroom instruction. While many Americans are getting less and less out of their jobs and struggle without the benefits of extensive education, another small section of the workforce has unprecedented access to skill-building educational tools. More than ever, it is in the best interest of many corporations to value the individual, and to invest in the continuing education of the employees they do retain.

     Meanwhile, last Wednesday United Natural Foods Inc. ((NASDAQ: UNFI) went up 9.93%, on positive news about company growth, decreased expenses, and increased profits. United Natural Foods is a major distributor of organic foods, largely packaged goods. Cashing in on the health food trend, United Natural Foods is a major distributor of natural foods to supermarkets, specialty health food chains and independently operated stores. Many working class families do not even have access to the kinds of fresh produce and healthy products that United Natural Foods produces. Nonetheless, those that do have access are willing to spend great quantities of money on these items. In fact, successful health food chain Whole Foods Market, Inc. (NASDAQ: WFMI) has been called “Whole Paycheck” by some of its customers, but the high prices have yet to hurt the store’s popularity. In a climate where unhealthy eating is the norm, the social status associated with good nutrition is high. Therefore, organic food can become an elite trend that signifies health, wealth and education.

3. How to Use the News

     When looking out for future financial trends that play on the growing class divide in the United States, it is important to look either for companies offering some important way of signaling elite social status, or companies offering labor saving products that cut out of the need for hiring additional unskilled or semiskilled employees. Use MediaSentiment Trend™ to scan the news for positive articles about companies that feature specialized educational tools, better healthcare options, or status items. Conversely, look for companies that reduce the need to hire additional employees, outsource healthcare or other services cheaply, or offer lower-quality bargain goods in bulk. Whether targeting companies that aim for the upper stratum, or the lower, the economic pressures driving these markets are just two sides of the same coin.

4. Last Week in Media Sentiment

     Last week's correlations between MediaSentiment.com's thumbs up / thumbs down recommendations for Heads Up rated companies and subsequent trading volume show a strong relationship. The correlation between ratings for MediaSentiment.com selected stocks and their increased trading volume the next day over their three month average is 100%, explaining a majority of the variation in volume. For MediaSentiment.com selected stock ratings and the stocks’ next day highs and lows, the correlation is 73%, explaining a majority of the variation in highs and lows. Therefore, this week, MediaSentiment™ gave an edge up to 100% to smart investors who used Heads Up™ recommendations to trade on volume, and a 73% edge to investors trading on intraday highs and lows!

     All figures reflect all MediaSentiment Heads Up™ recommendations for the week of August 29, 2005 through September 2, 2005, rating companies on the day of their quarterly earnings releases correlated with their stock highs, lows, closing prices and daily volumes for the subsequent day.

5. Links you can use

Poll: US Workers Unhappy
Poverty Rate Up for '04
Battle of the Bulge
When Eating Well Becomes Hell

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