[via Reason.com]
Archive | August, 2010
Africa’s growth acceleration was widespread.
Future economic growth will be supported by Africa’s increasing ties to the global economy.
Africa’s economic growth is creating substantial new business opportunities that are often overlooked by global companies.
Today the rate of return on foreign investment in Africa is higher than in any other developing region.
The rise of the African urban consumer also will fuel long-term growth.
Raising Bets On Crash
31 Aug
Image by Matt Biddulph via Flickr
“Titan Capital Group LLC, whose flagship volatility fund rose 21.6 percent as stocks tumbled in May, has raised bets on extreme market moves because investors’ views on the economic outlook have polarized. The New York-based hedge fund, which manages about $400 million, has added “a lot more” cheap, out-of-the-money options, betting the market is underestimating the likelihood of a crash, founder Russell Abrams said in a phone interview. Treasuries, German government bonds and Japan’s yen are pricing in economic outcomes that are bleaker than the stock market expects, said the former co-head of U.S. equity derivative trading and convertible arbitrage at Merrill Lynch & Co.
Nassim Nicholas Taleb, whose book “The Black Swan” is about how unforeseen events can roil markets, said Aug. 11 he is “betting on the collapse of government bonds” and that investors should avoid stocks.”
More on Bloomberg here and related post on The Business Insider: Face It, Nobody Is Bullish Anymore.
Why Cold, Dark, Small, And Depressive Nations Top The Rankings
31 Aug
Image by Ruslіk via Flickr
“The world’s “best countries” seem to have this in common: they avoid war, they live in the dark, and they maintain a steady state of depressive and productive activity. No wonder, then, that we in the United States rank a pathetic No. 11. We are the only country in the world that has written “the pursuit of happiness” into its founding document, thus guaranteeing that we’ll never be satisfied. We are a geographically and socially diverse nation doomed by law and custom to optimism. We are not too healthy, are quite belligerent, and we borrow too much without thinking much about how we’ll pay it back. To achieve better metrics we’d need to tolerate a lot more (smorgas) boredom.”
Read the essay on Newsweek here. On the bright side, maybe the Nordics are moody as well, according to Forbes the counties in the northern part of Europe are also the happiest: The World’s Happiest Countries.
A 10-point Republican Lead On Congressional Preferences
31 Aug
“Republicans lead by 51% to 41% among registered voters in Gallup weekly tracking of 2010 congressional voting preferences.”
Go to the Gallup Poll for details: GOP Takes Unprecedented 10-Point Lead on Generic Ballot – Republicans also maintain wide gap in enthusiasm about voting.
Carmen and Victor Reinhart: After The Fall
31 Aug
Carmen and Victor Reinhart’s research paper: After The Fall (.pdf), places the recent economic and financial crisis in historical context. Abstract:
“This paper examines the behavior of real GDP (levels and growth rates), unemployment, inflation, bank credit, and real estate prices in a twenty one-year window surrounding selected adverse global and country-specific shocks or events. The episodes include the 1929 stock market crash, the 1973 oil shock, the 2007 U.S. subprime collapse and fifteen severe post-World War II financial crises. The focus is not on the immediate antecedents and aftermath of these events but on longer horizons that compare decades rather than years. While evidence of lost decades, as in the depression of the 1930s, 1980s Latin America and 1990s Japan are not ubiquitous, GDP growth and housing prices are significantly lower and unemployment higher in
the ten-year window following the crisis when compared to the decade that preceded it. Inflation is lower after 1929 and in the post-financial crisis decade episodes but notoriously higher after the oil shock. We present evidence that the decade of relative prosperity prior to the fall was importantly fueled by an expansion in credit and rising leverage that spans about 10 years; it is followed by a lengthy period of retrenchment that most often only begins after the crisis and lasts almost as long as the credit surge.”
[via The Business Insider]
Seadrill Q2: Current Market Volatility Is A Good Environment For Investment Opportunities
31 Aug
“The world’s number two deepwater-driller, Seadrill Ltd (SDRL.OL), reported earnings before interest, taxes, depreciation and amortisation (EBITDA) in the three months to the end of June rose to $493 million from $438 million a year earlier, beating the $471 million average estimate in a Reuters poll of analysts.
The offshore oil drilling sector has long been seen as ripe for consolidation. But the conditions created by the oil spill should accelerate deals, as it becomes tougher for smaller drillers to compete.
Most drillers smaller than the U.S. “big three” — Transocean Ltd (RIGN.VX)(RIG.N), Diamond Offshore Drilling Inc (DO.N) and Noble Corp (NE.N) — could be targets, investment bankers say. “
More from Reuters on SDRL Q2 here and the numbers form the company here.
[image via Seadrill]
Bad Timing: Bullish And Bearish At The Exact Wrong Times
31 Aug
Previously:
McKinsey: Equity Analysts Are Still Too Bullish (June 2nd, 2010)
[via Bloomberg & The Big Picture]
Rogers Wish Fed Was European
31 Aug
Image via Wikipedia
“I’d rather have the Europeans running the U.S. central bank than the people running the U.S. central bank. At least they know how to try to build for the future,” Rogers told CNBC Monday.
“In America, Bernanke just says we’ll print more money, we’ll spend more money, even though the United States is now the largest debtor nation in the history of the world.”
Not a very “shocking” statement, just a while since i heard an american investor say “look too European politics – they know how to do it”. Rogers is also bullish on agriculture, read the full article on CNBC here.
Before The Bell
31 Aug
"Le Montrachet had long been hailed as the world's greatest dry white wine; Claude Arnoux, writing in 1728 could find no words in either French or Latin to describe its splendors (an example that wine critics should sometimes ponder) and Thomas Jefferson was a big fan; after tasting the 1782 vintage he ordered an entire 130-gallon cask, according to John Hallman's "Thomas Jefferson on Wine."// WSJ// Image by saragoldsmith via Flickr
Barron’s: Retail Stocks Headed for a Markdown.
BBC: India growth rate rises to 8.8%.
Bloomberg: Toyota Prius May Lead Japan Car Sale Collapse as Subsidies End.
BusinessWeek: Investors Embrace Bear Market Funds.
Forbes: Why Glenn Beck Is A Great Communicator.
MarketWatch: Morgan cuts crude forecast: Analysts predict drop from the current $75 a barrel to $65 by mid-October.
Reuters: Global stocks fall, yen climbs on U.S. recovery fears.
SmartMoney: Most Economists Favor Extending Bush Tax Cuts.
The Economist: Britain’s economic recovery is on track.
The Business Insider: If the US is Japan, here comes another big leg down.
The Financial Times: Eurozone economic sentiment rises.
The Guardian: There is no proof that economic health depends on manufacturing.
The New York Times: The Tax Foundation recently broken down some new state and local tax data from the Census Bureau, and found some stark variations in where states get their tax revenue from.
The Wall Street Journal: The Grace Kelly Of Wines: The white Burgundies of Puligny-Montrachet have an angular beauty, says Jay McInerney. A vintner tells of “seeking the unconscious of the earth.”
Genghis Khan Is Back: Volvo To Challenge BMW, Audi, Mercedes
30 Aug
“Volvo Cars, the Swedish automaker owned by Zhejiang Geely Holding Group Co., plans to challenge Bayerische Motoren Werke AG and Daimler AG with its new V60 station wagon in Europe.
The V60, which started production today at the Torslanda plant near Volvo’s Gothenburg, Sweden, headquarters, features a sloping rear windscreen that gives it a sportier look compared to the carmaker’s V70 and V50 station wagons. Volvo will use the model to challenge BMW’s 3 Series Touring, Volkswagen AG’s Audi A4 Avant and Daimler’s Mercedes-Benz C-Class.”
Bloomberg discussed the plans with Volvo’s Tomas Ahlborg; Read the full interview here.
The Mongol Empire never got a firm hold of Europe in the 13th Century, and after Khan the Chinese never quite learned the art of conquering other parts of the world (unlike the European Merchants). I doubt that it is any easier today, especially with an auto industry already struggling in a sluggish market, americans subsidizing their brands and excellent German engineering occupying a substantial share of the targeted market. Why not consentrate on trying to excel in Asia first?
Got to hand it to Volvo, they did a great job losing that boxy look.
[images via niotauto.net, iloveindia.com, bmwcoop.com, yosax.com]
Exess Housing: U.S. = Canada x2
30 Aug
“The number of vacant houses in the U.S. is now about 2x the entire Canadian housing stock according to a new Moody’s report.”
[via Paul Kedrosky]
Happy 80th Birthday, Warren Buffett!
30 Aug
“In March Buffet claimed that money put into his flagship company, Berkshire Hathaway [BRK.A 118100.0 
3667.00 (+3.2%) ] had returned an average of 20% in annualized gains over a 45-year period. He is the third richest man in the world with a net worth of $47 billion, according to Forbes. In 2006 he said he would give most of his fortune to charity.”
More from CNBC: As Warren Buffett Turns 80, A Look Back at His Life.
[Quote via MarketWatch]
Porsche: From Tiger To Elephant – A Good Thing?
29 Aug
The merger of Porsch and Volkswagen, planned next year, clearly makes industrial sence judging by their aquisition record:
“Lamborghini, which VW acquired 12 years ago, is one of nine brands in the Volkswagen Group — a stable that also includes economical VW and Skoda cars, upscale Audis and one-of-a-kind Bugattis with a price tag of well over $1 million. Lamborghini has sold more cars since the acquisition — 14,000 — than it did during all the previous 40 years, Mr. Winkelmann said. It even uses some VW parts, but not for more than 10 percent of any car and never anywhere they might be visible to owners.”
"Porsche produced several designs for heavy tanks during the war, however, not all this work was wasted, as the chassis Porsche designed for the Tiger I was used as the base for the Elefant tank destroyer." via Wikipedia
Adopting luxury brands may not be that profitable for shareholders if major markets; European and U.S, continue to decline – but great fun for enthusiasts if the result of the merger is improved technology and bargain prices. Read the story on New York Times: Can Porsche Shine at Volkswagen?
“Porsche must remain small and independent,” Mr. Porsche, who died in 1998, says as strings swell in the background and drums pound ominously. “No Porsche will ever be created by a committee, but by a handful of people inside these walls who know what a Porsche is.”
[image via Porche.com]
Oslo Stock Exchange: Financial Calendar (Week 35)
29 Aug
| 30/08/2010 | Solstad Offshore ASA | Results 2nd quarter 2010 |
| 30/08/2010 | Repant ASA | Results 2nd quarter 2010 |
| 30/08/2010 | Avinor AS | Results 2nd quarter 2010 |
| 30/08/2010 | Global Tender Barges ASA | Results 2nd quarter 2010 |
| 30/08/2010 | Bionor Pharma ASA | Results 2nd quarter 2010 |
| 30/08/2010 | AGR Group ASA | Results 2nd quarter 2010 |
| 31/08/2010 | Grenland Group ASA | Results 2nd quarter 2010 |
| 31/08/2010 | Marine Farms ASA | Results 2nd quarter 2010 |
| 31/08/2010 | Frontline Ltd. | Results 2nd quarter 2010 |
| 31/08/2010 | Seadrill Limited | Results 2nd quarter 2010 |
| 31/08/2010 | BW Offshore Limited | Results 2nd quarter 2010 |
| 31/08/2010 | Jinhui Shipping and Transportation Limit | Results 2nd quarter 2010 |
| 31/08/2010 | Petrolia Drilling ASA | Results 2nd quarter 2010 |
| 31/08/2010 | Color Group ASA | Results 2nd quarter 2010 |
| 31/08/2010 | Morpol ASA | Results 2nd quarter 2010 |
Upcoming Norwegian Earnings Highlights:
“Frontline Ltd. has established itself as the world leader in the international seaborne transportation of crude oil, with one of the world’s largest fleets of VLCC and Suezmax tankers, and Suezmax OBO carriers.” More here.
Frontline performance compared to Dow Jones:
Frontline and Seadrill – a leading offshore deepwater drilling company (below) is also publicly listed on NYSE.
Seadrill compared to major peer Transocean and DJ US Energy:
Seadrill; OSE Quote:
Additional company insights – Analyst Coverage Of Frontline here and Seadrill here.
The End Of The World? Explosive Bunker Shares To Buy In A Rough Market
29 Aug
"If it's the end of the world, what do you buy? Canned foods, guns and the generators," said Keith Springer, president of Capital Financial Advisory Services. "There are a huge number of people who feel this is the end of the world."// The Wall Street Journal // Image via Wikipedia
The combination of falling house prices and decreasing wages in the U.S private sector makes investors cautious. Fear of deflation caused the market to correct in the last three weeks, you don’t want to risk owning assets that may be cheaper the next week.
“Amid the market tumult, a handful of stocks have seen their share prices ratchet up to record highs in recent weeks. And many of them are connected by a curious, if disconcerting, thread: Between them, they provide an investor with essentials for any respectable fallout shelter—makers of bottled water, canned goods, dehydrated broth, gas masks and auxiliary generators.
A portfolio of the 18 companies that reached their peaks in the past month would be up about 24% this year, compared with the broader market’s 4.5% decline, a sign some investors may be taking the prospects of financial Armageddon more seriously than one might think.”
Find out more about the companies that hit lofty highs now on The Wall Street Journal: Investors Head for Bunkers, Driving Up ‘Shelter Shares’.
[Graph via Wall Street Journal, Quote via MarketWatch]
Africa – Entering The Asian Rally
28 Aug
"Asia's economies altogether accounted for 28 percent of Africa's total trade in 2008, more than double their share in 1990. Western Europe's share shrank during the same period, from 51 percent to 28 percent." // BusinessWeek// Image by Tambako the Jaguar via Flickr
This summer McKinsey & Co released a report focusing on growth in Africa. China is now emerging as the main foreign investor in the continents attractive recources, the result; collective GDP rising to 1.6 trillion USD in 2008 – roughly equal to Brazil’s or Russia’s.
“While Africa’s increased economic momentum is widely recognized, less known are its sources and likely staying power. Among the key points:
“The biggest business opportunity of the four lies in consumer goods and services, followed by natural resources, agriculture, and infrastructure.”
Definently time for the OECD countries to support this strong development by trading more with the region. How? Start by cutting tariffs and subsidies in the domestic agriculture sector. Navigate to the full report and details: Lions on the Move: The Progress and Potential of African Economies.
[via BusinessWeek & McKinsey]
Read the executive summary (PDF – 1.76 MB)
Read the full report (PDF - 2.17 MB)
Download eBook as ePub for Apple iPad, Barnes & Noble Nook, Sony Reader and other devices
Download eBook for Amazon Kindle
iPort: In-wall Home for iPad
28 Aug
“iPads are cropping up everywhere — inside of old Macs, inside of cars and just about everywhere in this unique video about iPads and velcro. Now iPads are making inroads into the walls of our homes.”
[via Cult of Mac]
Robust Corporate Profits?
28 Aug
Scott Grannis continues to stay optimistic after today’s downward revision to second quarter GDP:
“Regardless, it remains the case that profits have more than doubled since 1998, while the S&P 500 has not budged, on balance, over the past 12 years. As I’ve been arguing for a long time, the equity market looks very undervalued to me. Perhaps that’s because, like the bond market (see my post from yesterday), the equity market believes the future will be very grim.”
Read the rest of his thoughts: Corporate profits are very strong.
.
[via Calafia Beach Pundit]
“Meanwhile, of course, growth across the overall United States economy has been lackluster, slowing down significantly in recent quarters. And while companies may be sitting on mountains of profits, they have still been reluctant to use those profits to hire additional workers.”
Readers of The Wall Street Journal are not that confident:
Vote here.
Betman Vow “To Do Whatever It Takes” – Gotham Seems Somewhat Safer
28 Aug
“Just because I know most of you can’t bear the thought of reading Ben Bernanke’s entire speech today in Jackson Hole, here is the word cloud version. It’s just as opaque, but much nicer colors.”
[via Paul Kedrosky]
Goldman Sachs: Google Voice, A Threat To Facebook
27 Aug
An analyst from Goldman Sachs is worried about tougher competition from Google:
“We assume Google’s ulterior motive is less about disrupting the telecommunications industry (it will still pay termination fees to telcos) and more about driving engagement within Gmail and its social networking activities, to better compete with social networks such as Facebook.We assume Google’s ulterior motive is less about disrupting the telecommunications industry (it will still pay termination fees to telcos) and more about driving engagement within Gmail and its social networking activities, to better compete with social networks such as Facebook.”
Some differing views on how it might effect Skype as well:
eWeek Europe: 10 Reasons Google VoIP Is A Serious Threat To Skype.
BusinessWeek: Google Web Calling Needs Mobile, Business Support, Analysts. Say.
[via Jim Cramer & CNNMoney.com/Fortune, Quote via MarketWatch]
A Jewel? Glittering At Tiffany & Co, Profit Up 19%
27 Aug
Image by joanna8555 via Flickr
Rising Asian sales are boosting profits for Tiffany (TIF 40.91, +0.48%):
“In Asia, sales jumped 21% to $111.5 million and would have been up 17% excluding currency translations, with the growth led by China, Hong Kong, Macau and Korea. Comparable-store sales rose 7%. The company added its fourth store in Singapore and 12th in China during the quarter.”
Quotes & story via MarketWatch here.
Robert Shiller On The Recession And How To Stimulate The Economy
27 Aug
The Wall Street Journal talked to Yale-Economist and best-selling author, Robert Shiller. He shares his thougts on “the sharp falloff in home sales, the likelihood of a double-dip recession and what the Federal Reserve should do to stimulate the economy.” Watch it here.
The Rising Corporate State
27 Aug
Image via Wikipedia
Writer of the Coyote Blog, Warren Meyer, updated his Forbes column today and covered one of my favourite topics; political economy – read it! Excerpt of The New American Corporate State:
“In return for publicly supporting the administration’s green agenda, General Electric ( GE - news - people ) is rewarded with a series of proposed rules tilting regulations to favor key technologies it controls or has a strong position in.
The administration throws out hundreds of years of contract law and takes a large portion of General Motors from secured creditors and hands it to the United Auto Workers union. Nearly simultaneously, Congress and the administration bring their full power to bear trying to damage the reputation of Toyota ( TM -news - people ), GM’s largest foreign competitor.
While their only hope of financial recovery lies with their strong position in trucks and SUVs, GM proves its loyalty to the administration by backing misguided (and unreachable) fuel economy standards and going all-in on the money-losing Volt electric vehicle program.
Like Europe, the ultimate price for the growing corporate state will be paid by the American consumer (in the form of higher prices, reduced choice, and foregone innovation), and the American taxpayer, who is already facing an enormous bill from the direct subsidy of favored constituents. This corporate-government-labor coalition is ready to come together in the U.S. right now, and only the political energy of the rest of the American citizenry continues to resist it.”
Photos by Maersk Line
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