Friday, November 28, 2008

Shop Talk

A special greeting to Oregon,where I advertised for the first time this week.I always think of Mount Hood when I think of your state,and the Mount Hood daffodils on the property.They are both tranquil thoughts.Goodness knows we can use such thoughts in the wake of the Mumbai battle.It was a somber backdrop for the American Thanksgiving,but we managed to celebrate anyway,not letting the militants have their way.The uncompetitive National Football League games on T.V. were a joke.That can't be good for ratings or the sport itself.There's a real problem with selecting the teams so far in advance.You can't always tell which teams might be incompetent or dominant in a season. It would probably be best to have the day be more fully-scheduled.If the games turn out to be poor,you could just switch the coverage to another one.

Tuesday, November 25, 2008

What Geithner Is Like

Tim looks at you and is very frank,telling you what a policy can and cannot do,Mr.El-Erian revealed.He has the self-confidence that comes from years of experience.There is no alternative for government involvement;Mr Geithner understands it has to be targeted and reversible,and that's a good thing,Mr.El-Erian observed.Susie Gharib,co-anchor of Nightly Business Report,has served with Mr.Geithner on the board of trustees of the Economic Club of New York.She describes him as very smart,thoughtful and humble.He is very diplomatic,she said.Mr.Geithner,who is the married father of two,is Mr.Experience.He has served under three presidents and five Treasury Secretaries,holding posts in the Federal Deposit Insurance Corporation,the Federal Reserve and the Treasury Department,where he was Assistant Secretary for International Affairs.He is currently President of the Federal Reserve Bank of New York,helping to resolve the Bear Stearns,American International Group and Citigroup issues.

What Geithner Faces

There are so many moving pieces in the financial crisis,you can't find a bottom,Mohamed El-Erian feels.It's better to have the mindset that we are in a protracted healing process.Stay on the sideline and wait for the crisis to morph.Don't be a hero at this point,Mr.El-Erian counsels.

Who Is Timothy Geithner ?

Mohamed El-Erian,co-CEO and co-Chief Investment Officer of PIMCO,says he met Timothy Geithner,President-elect Obama's Treasury Secretary-designate,in the midst of the Russian and Asian crisis.He is very cool,Mr.El-Erian said.He has the crisis management experience that you need at this point.Hank Paulson,the current Treasury Secretary,and Mr.Geithner have worked together.The more certainty we can get,the more the healing process can go forward in a good manner,Mr.El-Erian thinks.

Bush Leaving Regional Stage

President Bush has probably attended his last regional summit,the Asia-Pacific Economic Cooperation event in Lima,Peru last weekend.Mr.Bush told the Pacific Rim gathering that recovering from the financial crisis will take time,but we'll get there.There are times when government intervention is essential;yet it is also essential that nations resist the temptation to over-correct by imposing regulations that would stifle innovation and choke off growth.The president insisted that free markets,free trade and free peoples are the way out of the crisis.One of the lessons of the Great Depression is the harmfulness of global protectionism.The APEC countries agreed to refrain for 12 months from raising new barriers to investment or to trade.They also endorsed the principles agreed at the Summit on Financial Markets and the World Economy,which Mr.Bush hosted the previous weekend.President Bush met with Russian president Dmitry Medvedev while in Lima.Their talks were described as cordial,but direct and frank,covering the Georgian flare-up,as well as the financial crisis and anti-missile defense in Poland.The two leaders appear to be friends,readily smiling and shaking hands.

Friday, November 21, 2008

Shop Talk

Hello to the U.K.,where I advertised this week.The U.K. and the rest of the world are focused on a truly global firm today,Citigroup,whose stock has fallen below five dollars a share.One of the most impressive aspects of the news is the loyalty of Citi's investor, Prince Alwaleed of Saudi Arabia.His Royal Highness has not only not sold his stake in the financial giant;but increased it from less than four up to five percent.He is more than an investor;he is a great friend.Anyone with an interest in the firm should be thanking Prince Alwaleed for being indefatigable.If only the trading floor of the New York Stock Exchange were inspired by his judgement,instead of bolting like a herd of crazy buffalo.

Tuesday, November 18, 2008

The Essential Task

The British government will work with our partners to establish a new International Monetary Fund as a sentinel,Prime Minister Brown promised,and to achieve the transparency,integrity and responsibility of the financial system.Confidence in the future is the key to bringing back confidence today.I am confident in the future,Mr.Brown asserted,wearing a white bow tie,white shirt and black dinner jacket,a red poppy on his lapel to commemorate Armistice Day.

The Role of the West

The prime minister,who had been heralded by trumpets,continued his observations:While I see a world that is facing a financial crisis,there is evidence of this new multilateralism at work.Together we can create a new global society.The challenge is to build a consensus for a new global financial system.I believe we in the West should approach these challenges with a degree of humility.The alliance between Britain and America,Europe and America,can and must provide leadership.The election of Barack Obama can only be a source of hope and inspiration.Let that hope be fulfilled with a pact with the rest of the world to lead and fulfill the first truly global society.

A Steep Economic Path

The world today can seem a daunting place,Prime Minister Gordon Brown admitted.Today we rise to the challenge of an open free trade and flexible globalization.It is likely that,in the next two decades,the global economy will double in size.We shall encounter,not just the insecurities we now know about,but the opportunities of tomorrow as well.The livelihoods of British families and businesses are shaped by this ever-more interdependent world,Mr.Brown pointed out in the ornate Guildhall setting.

Special Access:With the Prime Minister

British Prime Minister Gordon Brown recently addressed the Lord Mayor's banquet in the City of London,the British financial centre.These last weeks and months will be studied by generations to come,the prime minister predicted.They will be seen as a time when one chapter ended,and another began.To us falls the challenge of leading Britain through the first financial crisis of the new global age.The range,complexity and impact of these forces have shaped the steps we're taking to the new global society.

Bush Leaving World Stage

President Bush is in the process of taking his leave of international conferences.Mr.Bush hosted the Summit on Financial Markets and the World Economy this past weekend,which he described as a very successful summit.A 44-page statement of principles for preventing financial crises was agreed,such as greater transparency,more participation by emerging markets,the need for new alert systems and closer supervision of financial products and key corporations.The details are to be worked out by a number of working groups.On the other hand,the president indicated there will be further meetings.A meeting is not gonna solve the world's problems,he said,but will help begin a process.President Bush told the leaders that President-elect Obama's transition team has been fully briefed,that the president will work for a smooth transition,and that he hopes the president-elect succeeds.The president thanked the press for covering the summit,then said goodbye with a wave and a smile.

Friday, November 14, 2008

Shop Talk

A special greeting to Massachusetts,the state that is as difficult to spell as Mississippi.The weekend focus,however, will be on Washington,D.C.,where the G20 leaders will be meeting to discuss the financial crisis.The G20 are the biggest of the developed and developing economies.They will look at what new standards may be applied to the global markets,in order to prevent another crisis of this magnitude,and who should apply them.The International Monetary Fund has been mentioned as a prospective regulator.It was intended to take on such a task,it has been said.France and the U.K. intend to play a prominent role in the deliberations this weekend.They are pushing hard to get the problems addressed in short order.The conference is taking place at the National Building Museum,and is expected to be the first of a series.The world has never been so interconnected,yet the structures to manage the interconnections have not been updated for many decades,if they indeed exist at all.

Wednesday, November 12, 2008

When It Will End

I wish I could say there are compelling stocks,Dan Niles said,but there really isn't one.There's gonna be a lot of layoffs by the end of the year.Q1 of 2009 really scares me.That's the earliest I expect to see stocks bottom.Summer of 2009 is more likely.The layoffs will affect tech consumption.I expect 9-10% unemployment,Mr.Niles predicted.We are currently at 6.5%.These analysts' views are not optimistic for the medium term.Nonetheless,a number of advisers feel that long term investors should continue to dollar cost average into the stock market,taking advantage of the extremely low share prices-even if they may not be at absolute bottom.No one can call that.

How Tech Will Fare

Tech analyst Dan Niles of Neuberger Berman notes that the September-October sell-off caused some tech issues.There will be a lot of cutbacks.Numbers will have to be cut lower for 2009.A president can only do so much.We're in a down business cycle.You can't go out and buy every house on the market,Dan Niles remarked.

Willing To Wager

Meredith Whitney says she will bet you a lot of money that banks will come back for more capital.I think they'll probably cut their dividends again,Ms.Whitney conjectured.Citigroup's share price will go down to the single digits.Stock prices are still way too high.With government support,however,Citigroup could find a mate,Ms.Whitney feels.

Cold Water For Us

Noted analyst Meredith Whitney believes unemployment will reach double digits.Bank revenue will be down by up to seven percent.There will be a protracted period of negative operating leverage.We're going back to a 2001-2002 revenue environment.Estimates for the big banks are coming down.We're in for a rude awakening,resulting in a slow grind-down for these stocks,Ms.Whitney warned.

With Clear Eyes:Medium Term Outlook

Two leading business analysts,Meredith Whitney and Dan Niles,have been giving their medium term outlooks.Ms.Whitney specializes in financial services,while Mr.Niles covers technology.Meredith Whitney,Director of Equity Research at Oppenheimer,says that financials and the economy are so far off the tracks right now,it's hard to see how President-elect Obama could help.If banks modify loans,they will make less,not put capital back into the system.The securitization market isn't coming back.You're gonna actually see mortgage contraction.You're gonna see credit taken away from consumers by a large degree.We've never seen that before,Ms.Whitney observed.

Friday, November 7, 2008

Shop Talk

Hello to Taiwan,our old friend.The miles between us are many,but the bonds are strong.Today you will be watching with us as President-elect Obama gives his first news conference just over an hour from now,having conferred with his economic advisers.Few presidents-elect have had to deal with so many crises.Most Americans have gotten behind him,regardless of their political views.They're giving him time to present and implement his ideas.If they don't work,he'll be accountable in good time.Governor Sarah Palin of Alaska is still in the news.She is such a striking individual,there's little chance she will fade into obscurity.She's one of the few interesting conservatives.Her geographic knowledge apparently had gaps,but that is typical of Americans under 50.Geography hasn't been emphasized enough in recent decades.She's a quick study,in any event.Please note that I will not be publishing on Tuesday in observance of Veterans Day.Veterans,thank you for serving.I will try to publish later in the week.

Tuesday, November 4, 2008

Looking At the History

Alfred Goldman of Wachovia Securities has been reflecting on October.It was a big sell-off,with the S and P 500 Index down about 20%.It was the greatest level of fear I've seen in my whole career,Mr.Goldman said.Corporate earnings are gonna be miserable,but he market is oversold.Hopefully the market will rally when the new president is known.These are probably the best values I've seen in the past forty-eight and a half years,the distinguished analyst noted.You look at the history of this country since 1776,and you selectively start buying-with some cash on the side in case of hiccups,Mr.Goldman advised.He likes John Deere(DE) and Illinois Tool Works(ITW).

New Oriental Leads Field

New Oriental(EDU) is the leading provider of language instruction in China.The firm provides instruction in English,Japanese,Korean,German,French and Italian to over 4.5 million students.Classes are held in 41 schools and 207 learning centers,and materials are distributed in 22 bookstores and over 5,000 third party bookstores.Instruction begins at age five,according to Louis Hsieh,the Taiwan-born Chief Financial Officer,who was raised in California.

Federal Reserve United

By a rare unanimous vote,the Federal Reserve has cut its key interest rate by o.5, to 1.0%.It can cut the rate all the way to zero if it chooses to.In its statement,the central bank noted that industrial output has weakened,but inflation is expected to moderate to levels of price stability.While recent actions have helped,downside risks to growth remain.Slow foreign economies will hurt U.S. export prospects.Recently,the Fed has expanded its balance sheet-unlike in the Great Depression,when the Fed contracted it.Today,the Fed has over 700 billion dollars in its account.And it has extended swap lines to 14 countries.A swap line provides U.S. dollars in exchange for foreign currencies,in order to increase confidence.Swap lines of 30 billion dollars each have been granted to Brazil,Mexico,South Korea and Singapore.

Exxon Scores Largest Profit

Exxon Mobil reported the largest profit in the history of the world.Q3's record oil prices helped the Irving,Texas firm achieve a 58% increase in net income,to 14.83 billion dollars.The increase amounted to 2.86 a share.Revenue was 137.74 billion,up from 103.34 billion year over year.Exxon(XOM) plans to maintain current production levels,although the targets will be reviewed in March of 2009.It intends to spend 30-40 billion a year on exploration.The recent slump in demand,as well as down time for maintenance,are expected to cut Exxon's Q4 earnings by about 0.5 billion dollars.