Bill Mann, of the Motley Fool, thinks Chinese stocks are priced ridiculously cheap right now.
http://www.fool.com/investing/international/2008/11/07/why-i-believe-in-the-chinese-miracle.aspx?source=ihprlklcb0000002
Dan Ross
http://www.BetterBizIdeas.com
Sunday, November 9, 2008
Market Review - Nov 9th, 2008
So, as the week comes to an end, what did we see and, more importantly, what SHOULD we be forecasting?
1) Unemployment levels on two reports wednesday (challenger gray and some other private report), then one more on friday (gov't data) confirmed that unemployment is at 6.5% and 10 million people. I thought we were due for a record unemployment rate (in my generation) but this number is climbing quicker than I thought. What concerns me is the number of people who are REMAINING on unemployment (continued claims) within the data. I believe that number is at its highest levels in nearly 25years. WOW! Below is a 14 year graph I found in an AP press release. I could have pulled the data myself but I am a bit pressed for time today. I have got tons of stuff to get done in the next 1-2 weeks before family comes into town as I am sure everyone reading this does too :)
2) Obama won the election on Tuesday and the stock market slid 10% on Wed/Thurs. as the market was reacting to his tax policies and their impact? No, the lousy unemployment data came out on Wednesday, which shocked the hell out of everyone. On top of that, U.S. auto companies began pandering for $$$ on Wednesday looking for a handout from Uncle Sam. Lets remember that just about every U.S. poll had Obama winning this for weeks, maybe even months now.
Here is a picture of the situation Obama is going to be walking into.
Here is my take on the U.S. auto companies and their situation: I don't see how Uncle Sam can hand out BILLIONS to many banks that irresponsibly lent out $$$ and had senior executives that directly profited from those risky lending behaviors. The impact reaches globally. While we worry about job loss here in the U.S. as well as in industrialized nations developing nations worry that a financial crisis will turn into a HUMANITARIAN crisis where the world's poor are forgotten and die of starvation. That point should NOT be lost on everyone. I am NOT liberal but I do like to think of myself as socially responsible.
Getting back to the point, to bail out Wall Street, who are apparently going to get FAT bonuses this year, and turn a blind eye to blue collar workers is LUDICROUS.
Now, having said that, lets realize a few things about the auto industry.
1) They have been uncompetitive for 25 years and have been saying the same rhetoric for as many years. The graph below highlights this.
2) There is more health care costs in a car than steel. Some cost containment/restructuring has to happen BIG TIME.
3) Letting one of them go into bankruptcy would have a MAJOR ripple through on the economy (suppliers, cities, etc.)
Where I take exception to giving them $$$ is this:
1) What will be different? What will fundamentally change that will enable them to make money or gain marketshare back? I just don't see why we should toss good $$$ after bad $$$.
2) No company should be allowed to pay dividends. These loans shouldn't be flowing to the shareholders as these guys are LOSING $$$.
3) While giving $$$ to bankers is bad, at least we know they are doing things differently today, right? I mean the percentage of people geting approved for loans has dropped NOTABLY in this credit crisis and those that can get a loan are oftentimes having to pay a higher interest rate to get financing. RISK is now being priced into the banking system whereas it was NOT before.
K, that's about it for now......This issue just gets me IRRATE.
3) Thursday (and throughout the week) was the first REAL numbers of retail sales for October. We also had Cisco comment about October sales. They were the first technology comment to really comment on a full month of October sales and are regarded as an industry "bellweather" company.
* Auto sales were off 25% + for the auto industry.
* Wal-mart was up 2.8% month-over-month. Quite impressive
* Most department store chains were down 10%-20% based on comparison store sales (comps.) This Christmas sale season is really starting to look bleak quickly
* I also noticed that Walmart was running some SERIOUS sales on Saturday a.m. such as a Compaq Computer for $299 and a 46" LCD for $799.
So we found out that consumers continued to take on debt in September but they must have REALLY cut back in October. More comments after the graph below
Americans are clearly becoming more pessimistic as a result of the loss of jobs. The Reuters/University of Michigan preliminary index of consumer sentiment fell to 56.3 in November, the lowest level since 1980, from 57.6 the prior month, according to the Bloomberg survey median.
4) Finally, and it would be RIDICULOUS of me to neglect this. Oil is in the low 60s and many people here in the loan star state are finding regular unleaded as low as $1.90 a gallon now. I've seen $2 - $2.05 being quite common but a few are lower. Why is gas 40 cents more now for premium vs. 20 cents before? I have noticed a widening of that gap in the last few years.
Good luck to all in the next week. I hope everyone has a wonderful holiday season ahead.
Dan Ross
http://www.betterbizideas.com/
Guy Kawasaki on his new Book
Guy was the marketing guy behind the first McIntosh and now runs his own VC company. He was an Apple Fellow and helps entrepreneurs now. He has written over 8 books in his years and this is basically an "entrepreneurs manual". At 500 pages it might take some time to read! Probably full of tons of useful info. though.
Dan Ross
http://www.betterbizideas.com
Saturday, November 8, 2008
Wall Street Bonuses - Why are they getting ANY bonuses at all!?
Many people feel, and I have to agree with them on this, that many investment banks generated profits by SIGNIFICANTLY overleveraging themselves and using their capital like a casino. They rolled CRAPS and now the taxpayer has to pay bonuses?
The average American would say "would these guys get the bonuses if not for the U.S. taxpayer? HELL NO!"
I get that these guys work crazy hours, are brilliant people, etc. But part of bonuses is to RETAIN people and to help them walk across the street to the competitor offering even STUPIDER bonuses. Guess what? There are a TON fewer people even around this year, let alone paying bonuses at all!
The taxpayer is going to get VERY pissed VERY quickly if big bonuses come out. I'll even be bold enough to say that some may ask the LEFT LEANING congress, soon to be under Obama's watch, to seriously look at revoking Goldman Sach and Morgan Stanley's bank charter status. Are they really banks? How long can they survive without being able to borrow billions from the federal government for nothing and use it to gamble each day with the taxpayer's money? Now, I would ask Wall Street. Do you really want to piss off the general public and a left leaning congress right now? Your thoughts? Please comment.
Dan Ross
http://www.BetterBizIdeas.com
The average American would say "would these guys get the bonuses if not for the U.S. taxpayer? HELL NO!"
I get that these guys work crazy hours, are brilliant people, etc. But part of bonuses is to RETAIN people and to help them walk across the street to the competitor offering even STUPIDER bonuses. Guess what? There are a TON fewer people even around this year, let alone paying bonuses at all!
The taxpayer is going to get VERY pissed VERY quickly if big bonuses come out. I'll even be bold enough to say that some may ask the LEFT LEANING congress, soon to be under Obama's watch, to seriously look at revoking Goldman Sach and Morgan Stanley's bank charter status. Are they really banks? How long can they survive without being able to borrow billions from the federal government for nothing and use it to gamble each day with the taxpayer's money? Now, I would ask Wall Street. Do you really want to piss off the general public and a left leaning congress right now? Your thoughts? Please comment.
Dan Ross
http://www.BetterBizIdeas.com
Unemployment zoomed past 10 million....6.5%
http://biz.yahoo.com/ap/081108/financial_meltdown.html
The unemployment rate soared to a 14-year high of 6.5 percent, the government said Friday, up from 6.1 percent just a month earlier. The nation's jobless ranks zoomed past 10 million last month, the most in a quarter-century, as piles of pink slips shut factory gates and office doors to 240,000 more Americans with the holidays nearing. Politicians and economists agreed on a painful bottom line: It's only going to get worse.
With the three U.S. auto companies seeking financial assistance to avoid bankruptcy (at least GM & Chrysler) my thoughts of 9% + unemployment are becoming more probable. My thoughts were that this recession would be notably worse than the prior one and, if one auto company fails, it would get us to 9% unemployment very quickly as the ripple effects would go through the economy over a few months.
Banks have exposure, which they would then have to book losses
Auto suppliers would go belly up as many aren't just SOLELY GM, Chrysler or Ford dependent. They lose 35% of their production and potential receivables (uncollected bills) then they' ll have to cut their production, let people go, etc.
Oh yeah, and the communities are dependent on them. So that would ripple through the local economies where the manufacturer is located.....
It could get UGLY quickly is my point here.
FYI, I think the guy with Task is DEAD WRONG for one reason. This economic cycle and downturn is being caused by something NOT SEEN IN 80 years! This is a CREDIT CRUNCH / devaluation cycle and it will take quite a bit of time to work through the system. It can happen quickly or slowly. That is the choice of politicians and policy makers. Either way, I think it will be painful.
Dan Ross
http://www.betterbizideas.com/
The unemployment rate soared to a 14-year high of 6.5 percent, the government said Friday, up from 6.1 percent just a month earlier. The nation's jobless ranks zoomed past 10 million last month, the most in a quarter-century, as piles of pink slips shut factory gates and office doors to 240,000 more Americans with the holidays nearing. Politicians and economists agreed on a painful bottom line: It's only going to get worse.
With the three U.S. auto companies seeking financial assistance to avoid bankruptcy (at least GM & Chrysler) my thoughts of 9% + unemployment are becoming more probable. My thoughts were that this recession would be notably worse than the prior one and, if one auto company fails, it would get us to 9% unemployment very quickly as the ripple effects would go through the economy over a few months.
Banks have exposure, which they would then have to book losses
Auto suppliers would go belly up as many aren't just SOLELY GM, Chrysler or Ford dependent. They lose 35% of their production and potential receivables (uncollected bills) then they' ll have to cut their production, let people go, etc.
Oh yeah, and the communities are dependent on them. So that would ripple through the local economies where the manufacturer is located.....
It could get UGLY quickly is my point here.
FYI, I think the guy with Task is DEAD WRONG for one reason. This economic cycle and downturn is being caused by something NOT SEEN IN 80 years! This is a CREDIT CRUNCH / devaluation cycle and it will take quite a bit of time to work through the system. It can happen quickly or slowly. That is the choice of politicians and policy makers. Either way, I think it will be painful.
Dan Ross
http://www.betterbizideas.com/
The best way to invest in China?
Interesting take on how to play the growth of the Chinese economy. I think it is a pretty sound strategy. Tough to gauge everyone's EPS though right now. Everything I keep seeing right now says OPEC is cutting production, which will BOOST barrel prices and cause oil to go back up at some point.
The real question is "when will demand destruction end?"
Dan Ross
http://www.BetterBizIdeas.com
The real question is "when will demand destruction end?"
Dan Ross
http://www.BetterBizIdeas.com
Thursday, November 6, 2008
Branding of Presidential Candidates and the Impact
Interesting take from
http://www.thebrandbubble.com/blog
What is interesting about the book is that these guys work for Young and Ribicam Group and have a HUGE vested interest in branding. In an age of overabundance to brand values decline? Do you put as much of a premium on Starbucks vs. McDonalds? I think it is one of a market decline.....
Dan Ross
http://www.BetterBizIdeas.com/
http://www.thebrandbubble.com/blog
What is interesting about the book is that these guys work for Young and Ribicam Group and have a HUGE vested interest in branding. In an age of overabundance to brand values decline? Do you put as much of a premium on Starbucks vs. McDonalds? I think it is one of a market decline.....
Dan Ross
http://www.BetterBizIdeas.com/
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