Too Big To Kick (TBTK) corporate asses became a problem last week. Obama’s outbursts failed to wipe the smirk off BP CEO Hayward’s face; Brits said they can’t let BP go under as it accounts for about an eighth of dividend payouts. BP bought search results for “oil spill” from Google even as Florida demanded $2.5 bn in escrow for cleanup costs and Mexico feared spilled oil will reach its shores by December. TBTF Stanchart says BP is ripe for takeover by PetroChina. British pensioners have lost over $5 bn. Yet, nobody knows how much oil is getting into the sea and why the leak cannot be fixed. Oil clawed its way back to $75 last week, pushing indices up and perking up commodities in general.
US economy, despite its high dependence on services, is able to expand its output even after cutting over eight million jobs and India is able to expand industrial production 17% with less than 6% extra electricity. In China, prices of clothing, vegetables, home appliances and consumer goods are either steady or falling but the world is worried about inflation hurting its economy.
Euro recovered to 1.21 late last week but Roubini says parity with dollar is inevitable. Eventual default by Greece is considered a given by most. Uncertainty on euro has resulted in four Persian Gulf states postponing their plans for a common currency. Germany, France and Italy are determined to preserve the euro and significant convergence has been achieved on checking speculation. However, the overall scene is that everybody expects something to happen in Europe, though nobody knows what will happen when.
US economy continues to be shrouded in mystery. Even as retail sales are either flat or falling (gasoline demand dropped 5.8% in the most recent week), Bernanke says recovery is solid, without saying how long will the US keep 8 mn on dole. Public debt is already close to GDP, though without counting social security and trust programs it is still below $10 tn. CMBS issuance last year was 3.04 bn compared to 232 in 2007. Debate on the Volcker rule and issuing periodic warnings to China on the yuan issue have become perennial. Last week a 32 year old got Democratic nomination for the Senate from S Carolina without any campaigning or spending while former CEOs of eBay and HP won Republican nominations after spending nearly 100 mn dollars. Someday the US just may list its administration on NYSE, letting a dozen TBTFs ‘elect’ the President.
Number of millionaires in the world recovered to its 2007 figure in 2009 when global AUM was estimated at $111 tn, of which US+Canada account for 35 tn and Europe 37. IATA says worldwide industry profits will be $2.5 bn this year. Japan’s new PM, 5th in 4 years, says he wants to “drastically rebuilt Japan.”
China’s economy is going strong and it expects trade surplus to decline significantly this year. S Africa operationalised its first rapid rail system last week to connect Johannesburg airport to the city. Kenya wants to have a new constitution to usher in peace and investments. It has been doing that for several decades now.
As Americans and Europeans save more, liquidity is going to rise. Where the money will go remains an open question. Besides, the austerity wave sweeping Europe is going to have some political fall out too, contours of which may take time to develop.
After having sold a peak 8.75 mn iPhones last quarter, Apple unveiled iPhone4 last week, with a thinner body, better resolution and a front facing camera. Sprint says it did overstate launch day sales of EVO 4G phone 200%. Following merger of phone units of NEC, Casio and Hitachi, Fujitsu and Toshiba have decided to merge theirs. Motorola and BlackBerry have settled their IPR disputes.
France Telecom is to set up a 17K Kms cable to connect 23 African countries with broadband and India’s Bharti Airtel has taken over Zain’s African business to have total customer base of 180 mn. Emirates has decided to order 30 more A380 superjumbos, in addition to 58 already in the pipeline. Cathay and Air France have started introducing airbags in economy class also. GM is recalling 1.53 mn vehicles worldwide because of potential fire hazards and Volkswagen is to set up a 10th plant in China to double capacity to 3 mn vehicles.
AIG has been sued for having underreported premiums between 1985 and 1996 and while it is still undecided on its Asian operations, Manulife says its Asia business now accounts for a sixth of its revenue of C$40 bn. Lehman has sought court clearance to invest $255 mn in a Park Av building to protect an existing investment of $437 mn. Santander, Spanish bank, is buying out partner BofA in a JV in Mexico.
Warren Buffett’s famous lunch was auctioned for over $2 mn this year and Kellogg has agreed to stop claiming that its Krispies strengthen children’s immune system.
Macau is planning to ban smoking in casinos in three years. Catholics in US are angry because Empire State Building refused to illuminate itself in honour of Mother Teresa. Germany’s corporate honchos have magnanimously resolved that employees should be allowed to watch World Cup matches during office hours also.
Research says it costs about half-a-million to raise a child, without counting college. Add an equal amount for a couple’s own retirement and every family needs a million. Obviously, it is cheaper to import people from India and China. In Scotland, they say 97.5% of adults are either smokers or heavy drinkers or overweight. Donna Simpson of New Jersey weighs 600 lb and intends to touch 1,000 to become the heaviest living woman in the world.
US is determined to keep the roulette rolling but eurozone, and now S Korea (it has made prior approval necessary for derivatives; govt had to pay $3 bn to get exporters out of currency options in 2008) give cause for hope.
xxxxx
Showing posts with label gasoline. Show all posts
Showing posts with label gasoline. Show all posts
In Massachusetts by-election winner Republican got 49% against 47% of his Democrat opponent and the world came crashing down last week. Obama announced his “Volcker Rule,” vowing to take Wall St head on, and markets plunged real heavy. The man on the street was vastly amused because he has written off the hope that the new Prez offered in 2008 and would now exercise his mind only in 2012. The rest of the world remained passive because one needs to have a BofA or Citi before one can think of forcing it to downsize! Who says economics has become more important than politics? Even Warren Buffett is demanding that assets of CEOs (and their spouses) of failed companies should be forfeited! Who knows, in 2012, he may consider being the Prez; if Berlusconi and Sarkozy can head governments, why not Buffett?
Volatility has declined significantly and confidence in the US and the dollar has apparently returned with a vengeance but basic figures cannot really be ignored. 30-year mortgage rates are now below 5%, between June 2008 and Sep 2009, outstanding construction loans plunged from 630 to $490 bn and gasoline demand is failing to perk up despite sheets of snow all over the country. US commercial mortgage-backed securities sales plunged from $237 bn in 2007 to $1.4 bn last year as commercial real estate prices in Dec 2009 were 43% below Oct 2007.
Dividends are once again being paid out of new (junk) bond issues as the so-called high-yield bonds returned 57% last year, and hedge funds are busy designing innovative products that can be sold to pension funds with or without inducements for managers. Citi expects a 17% increase in global M&A activity this year.
Never mind how different economies are performing, or are likely to perform. Obama’s fat cats are merrily continuing with carry trade, which has the ability to bugger the best and make the worst shine the most. Meanwhile, US is slapping a 10% tax on 20,000 indoor tanning salons to raise $2.7 bn in revenue.
China has reported GDP of USD 4.9 tn for 2009, and is likely to overtake Japan as the world’s second largest economy in 2010. Rio Tinto’s 49% jump in iron ore output in Q4-2009 is being attributed to Chinese demand. Analysts are vying with each other in doling out advice on hot money, inflation and bubbles and what not but the juggernaut seems to be rolling on. With retail sales still at around USD 2 tn (40% of 5), China has a long way to go. What others need to watch out for is prices of basics like oil and metals.
Greece, Argentina, Russia, Ireland, Portugal, Italy, Spain and Mexico are being viewed as risky economies. UK continues to worry about London’s status as a global financial centre, particularly after peak tax rate rises from 40 to 50% in April. Japan’s spending on plant and equipment is down about 25-30% and prospects of most east European economies are being viewed as lacklustre.
Spain has successfully reduced the number of illegal migrants from Africa,
Chile has elected conservative billionaire Pinera as its president, Hong Kong has been declared as the world’s freest economy for 16th consecutive year even as China has dropped to 140th, and its Disneyland appears to be growing steadily. Oil-rich Venezuela is facing a steep power crisis because of a severe drought but is continuing with its anti-West stance – French-Colombian supermarket chain Exito has been taken over by the government.
Singapore’s export shipments declined 11% last year, Kuwait is facing a popular demand for waiver of all interest on outstanding consumer loans. Icelandic banks operating in UK and Netherlands failed and the two governments provided money for repayment of deposits of their respective citizens. Now UK and Netherlands want Iceland govt to pay this money and the people of Iceland are refusing to approve this payment.
Japan Airlines finally failed to get a fifth bailout and filed for bankruptcy last week, making bigwigs like Toyota, Honda and Hitachi realize that shortfalls in pension plans can cause bankruptcy. JAL’s market value is about $ 150 mn or one standard passenger airplane.
Kraft finally got its hands on Cadbury, after raising bid to $19.6 bn, Ebay expects revenue of about $9 bn this year and its PayPal unit expects total payment volume of over $20 bn this year. Nestle is due to begin selling nutritional drinks for the elderly in Switzerland, Toyota expects to double its output of hybrid cars to a million units by 2011, Travelport is selling shares worth $2 bn to cut debt and Apple is serious about replacing search software of Google with that of Microsoft. Target is preparing to open stores in Canada and LatAm by 2013.
A trim and a shampoo for a dog costs over $100 in Japan, where annual spending on pets is $10 bn; in UK, sales of dog coats are up 70% because of the weather. After Russia, UK too has started cracking down on excessive drinking; measures include ban on speed drinking and unlimited drinking promotions.
A survey says young people in US are spending more than 53 hours a week on the net and a US firm is seeking patent for a new exclamation mark it has designed. Germany will soon have its first Muslim bank, with ten branches, which will charge a fee, instead of interest, for loans. Germany’s population decreased by about a quarter of a million in 2009. Italians’ wagers rose 13% to USD 78 bn last year. Americans have stopped splurging on bottled water; retail price has dropped from 7 to 2.5 USD per 12 liters.
Leave your portfolio in His hands and go to Haiti with half-a-dozen suitcases full of life saving drugs and inexpensive clothing, and a few cartons of packaged food. Consider it a spiritual investment that needs no hedging; the peace the trip would yield will be more than what any junk bond returned last year.
xxxxx
Volatility has declined significantly and confidence in the US and the dollar has apparently returned with a vengeance but basic figures cannot really be ignored. 30-year mortgage rates are now below 5%, between June 2008 and Sep 2009, outstanding construction loans plunged from 630 to $490 bn and gasoline demand is failing to perk up despite sheets of snow all over the country. US commercial mortgage-backed securities sales plunged from $237 bn in 2007 to $1.4 bn last year as commercial real estate prices in Dec 2009 were 43% below Oct 2007.
Dividends are once again being paid out of new (junk) bond issues as the so-called high-yield bonds returned 57% last year, and hedge funds are busy designing innovative products that can be sold to pension funds with or without inducements for managers. Citi expects a 17% increase in global M&A activity this year.
Never mind how different economies are performing, or are likely to perform. Obama’s fat cats are merrily continuing with carry trade, which has the ability to bugger the best and make the worst shine the most. Meanwhile, US is slapping a 10% tax on 20,000 indoor tanning salons to raise $2.7 bn in revenue.
China has reported GDP of USD 4.9 tn for 2009, and is likely to overtake Japan as the world’s second largest economy in 2010. Rio Tinto’s 49% jump in iron ore output in Q4-2009 is being attributed to Chinese demand. Analysts are vying with each other in doling out advice on hot money, inflation and bubbles and what not but the juggernaut seems to be rolling on. With retail sales still at around USD 2 tn (40% of 5), China has a long way to go. What others need to watch out for is prices of basics like oil and metals.
Greece, Argentina, Russia, Ireland, Portugal, Italy, Spain and Mexico are being viewed as risky economies. UK continues to worry about London’s status as a global financial centre, particularly after peak tax rate rises from 40 to 50% in April. Japan’s spending on plant and equipment is down about 25-30% and prospects of most east European economies are being viewed as lacklustre.
Spain has successfully reduced the number of illegal migrants from Africa,
Chile has elected conservative billionaire Pinera as its president, Hong Kong has been declared as the world’s freest economy for 16th consecutive year even as China has dropped to 140th, and its Disneyland appears to be growing steadily. Oil-rich Venezuela is facing a steep power crisis because of a severe drought but is continuing with its anti-West stance – French-Colombian supermarket chain Exito has been taken over by the government.
Singapore’s export shipments declined 11% last year, Kuwait is facing a popular demand for waiver of all interest on outstanding consumer loans. Icelandic banks operating in UK and Netherlands failed and the two governments provided money for repayment of deposits of their respective citizens. Now UK and Netherlands want Iceland govt to pay this money and the people of Iceland are refusing to approve this payment.
Japan Airlines finally failed to get a fifth bailout and filed for bankruptcy last week, making bigwigs like Toyota, Honda and Hitachi realize that shortfalls in pension plans can cause bankruptcy. JAL’s market value is about $ 150 mn or one standard passenger airplane.
Kraft finally got its hands on Cadbury, after raising bid to $19.6 bn, Ebay expects revenue of about $9 bn this year and its PayPal unit expects total payment volume of over $20 bn this year. Nestle is due to begin selling nutritional drinks for the elderly in Switzerland, Toyota expects to double its output of hybrid cars to a million units by 2011, Travelport is selling shares worth $2 bn to cut debt and Apple is serious about replacing search software of Google with that of Microsoft. Target is preparing to open stores in Canada and LatAm by 2013.
A trim and a shampoo for a dog costs over $100 in Japan, where annual spending on pets is $10 bn; in UK, sales of dog coats are up 70% because of the weather. After Russia, UK too has started cracking down on excessive drinking; measures include ban on speed drinking and unlimited drinking promotions.
A survey says young people in US are spending more than 53 hours a week on the net and a US firm is seeking patent for a new exclamation mark it has designed. Germany will soon have its first Muslim bank, with ten branches, which will charge a fee, instead of interest, for loans. Germany’s population decreased by about a quarter of a million in 2009. Italians’ wagers rose 13% to USD 78 bn last year. Americans have stopped splurging on bottled water; retail price has dropped from 7 to 2.5 USD per 12 liters.
Leave your portfolio in His hands and go to Haiti with half-a-dozen suitcases full of life saving drugs and inexpensive clothing, and a few cartons of packaged food. Consider it a spiritual investment that needs no hedging; the peace the trip would yield will be more than what any junk bond returned last year.
xxxxx
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