For More Information... For more information regarding Spicy Pickle Franchising as an investment opportunity, be sure to review the entire research report in a printable PDF format by clicking the link below:  Spicy Pickle Franchising Inc. Report  Or, to discuss Spicy Pickle, contact:  The Micro Cap Press  15233 Ventura Blvd.  Suite #310  Sherman Oaks, CA 91403 http://www.microcappress.com 1-800-277-9081    Unemployment Trend - Is The Worry Actually Merited This Time?  We'd be the first to say investors tend to over-react to most news. It's not their fault - the media tends to make everything a life-or-death situation...even if it's not. They're just trying to sell ad time. The problem arises when investors become desensitized to things they should truly be watching.  As of last week, one of those 'things' is unemployment. The move to an unemployment rate of 5% is actually part of a long string of subtle increases in the figure. More than that though, it actually is something that could be a challenge for stocks.  The premise is one we detailed back on September 10th, in our 'What's Really Good For Stocks?' edition of the newsletter. In a nutshell, we looked at how certain economic indicators were assumed to have a predictive effect on stocks, but not proven to do so. Our study of the facts concluded that very few pieces of economic analysis were actually helpful to investors using them to make stock market predictions. We discovered that certain uses of unemployment data, capacity utilization, and inflation did indeed help make general market forecasts. Many of our readers were surprised that we found no discernible predictive value in GDP, nor most opinion polls (investors are notoriously wrong at the exact worst time).  Anyway, the reason we bring it up now is simple - the unemployment rate sure looks like it's trending higher. Those shifts from downtrends to uptrends have not exactly been kind to stocks (a link to the chart is below). The ill effect varied in results and longevity, but it's a reasonable cause for concern now.  DON'T OVER-REACT! We're not saying it's the eve of destruction. We're just saying be aware. Click here to see the chart.

Spicy Pickles Grow In Chi-town

Score another one for Spicy Pickle, or should we say score five more? After markets closed yesterday, Spicy Pickle (OTCBB: SPKL) announced a new franchisee in the Chicago area had signed a five store commitment. There's one already up and running in Chi-town (though through a different franchisee), so the newest agreement will eventually bring six of the fastest growing franchised restaurants to the area. According to the press release, this franchisee will be focusing on the suburbs and greater metropolitan areas. 

For those of you keeping tabs, that pushes the total store count up to 110...36 are in operation, and 74 more are now on the way.

All well and good, but don't forget the company's near-term goal is still 500 restaurants. Though the unfinished 74 are expected to be opened by the end of 2008, also bear in mind the company will also be marketing themselves to new franchisees at the same time. They've opened ten stores in fifteen weeks, and during the same time they signed agreements for eighteen more units on top of that. So, getting to 500 looks achievable within only a few years. 

Back to present day. The news of five more stores is also a good reason to remind you of how the 'company' (at the corporate level) makes money. Aside from the one-time franchise fee of $35,000 for a franchisee's first store (and $17,500 for subsequent stores), the restaurants also pass along 7% of all top line sales to the company. With the average restaurant contributing about $50K worth of revenue to the organization every year, the five on tap for Chicago could improve the company's top line by about $250K per year. 

With a little extrapolation we can guess - with 36 stores open for business - the corporation is pulling in monthly royalties of about $150,000....a figure that's getting more interesting by the day. 

What's so special about $150K a month? We haven't really talked about it much yet, as there was no immediate need to do so. There may be a need now though. The company's monthly expenses total up to be about $200K. Though the figure goes up (very) modestly with each new opening, with only 10 to 15 more stores opened we think the company should be within striking distance of operational profitability. That could really light a fire under the stock. 

The full press release is below.
 

Strange Days Indeed

If the first five trading days seem strangely bearish to you, you're not imagining things. For the S&P 500, this is the worst start to any year since 1930. For the Dow, it's the worst start since 1978. The NASDAQ? The worst since 1971...when the exchange's composite was first launched. The year-to-date results so far are (respectively) -5.3%, -5.1%, and -8.0%. 

Yet, despite the painful pullback, we can't help but see the glass as half full. 

Don't misread that...the half-full glass may well be half-full of hemlock. A lot of companies are really being challenged, and the expectation for earnings season - which is upon us - is for a general decline in profits. Recession fears are growing as well...and looking more legitimate. 

However, the market sometimes has a way of pricing in that bad news before it becomes official. Could those risks be the root cause of the S&P 500's 11.8% decline since October's peak? There's a common phrase among investors....'buy the rumor, sell the news'. Less common, though possibly just as meaningful, is the term 'sell the rumor, buy the news'. Maybe that's where the market is now. 

At the same time, there are relative limits to how far an index fall or gain before a trend is attacked. And usually, those resulting tops or bottoms are signaled by a peak in fear or greed, wildly skewed volume, and a gross imbalance between rising and falling stocks. 

Take for instance the NYSE's 450 stocks hitting new lows yesterday. We've seen worse, like Friday's 498 news lows. We saw a peak of 530 lows on November 20th, and a massive 1183 new NYSE lows on August 16th. So what? August 16th and November 26th (three days after the November peak in new lows) were major bottoms - and the beginning of big rallies. 

Though 450 new lows may not rival the levels we saw in August and November, considering the 'normal' new low reading is under 100, we can't help but think there's not much selling left to do. 

Never say never, and never assume anything, but the nearby chart speaks volumes. This time may be an exception (and the beginning of something much more awful), but the odds say we're close to a market bottom if not there already.

Here's the Spicy Pickle news:
 

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The Managing Member of Pacific Shores Investments, LLC purchased 200,000 shares of Spicy Pickle at $.25 per share. This purchase was made in a Spicy Pickle private offering back in November of 2006. The Managing Member of Pacific Shores Investments, LLC has also purchased 50,000 shares of Spicy Pickle in the open market with an average cost basis of $.55 per share. Additionally, Pacific Shores Investments, LLC has been paid a fee of $30,000 cash and 250,000 shares of newly issued restricted stock by Spicy Pickle Franchising, Inc. for coverage of the Company.

From time to time PSI sells shares received as compensation for coverage of client companies. Shares received are sold in the open market. Since the shares are received as compensation for services as previously disclosed, and not for investment purposes, PSI does not view the sale of the shares as contradictory to any opinions delivered in the content. This should be viewed as a conflict of interest by shareholders or prospective shareholders of the client companies.

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