The Big Picture |
- Get Ready for the Bounce Attempt
- LIPA Style (WBLI)
- Bob Lefsetz’ History Lessons
- 10 Tuesday PM Reads
- U.S. Fiscal Contagion Risks in Europe
- 11 Years of the iPod
- Q3/Q4 Earnings Beats & Misses S&P500
- IMF and Eurogroup publicly disagree over Greece
- 10 Tuesday AM Reads
- Greece/Germany/Asia/US small biz
| Get Ready for the Bounce Attempt Posted: 14 Nov 2012 02:59 AM PST click for updated futures
Will today be the day the bounce attempt actually works? So far, we have seen nothing but failed rally attempts for 2 weeks. Be back soon . . .
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| Posted: 13 Nov 2012 02:00 PM PST Are you STILL without power because of Hurricane Sandy? Then you’ll certainly enjoy this. The WBLI Parody of PSY’s Gangnam Style! Hat tip Josh |
| Posted: 13 Nov 2012 01:30 PM PST SONY Succeeded with radical breakthroughs. Failed with incremental improvements. Shed your past if you want to succeed in the future. You may be angry that Apple changed its connector, but look what backward compatibility did for Microsoft… It kept the company in the doldrums to the point where the Redmond enterprise completely missed tablet computing and is now playing catch-up ball. Poorly. The spoils go to the innovator. If he is willing to double down and never rest on his laurels. Apple will fade without a breakthrough product. Your fans will give you momentum, but they won’t keep you relevant. We’re trained to look for the new, to be titillated by innovation. He who worries more about the past than the future is doomed. GALLUP Three bad elections in a row. The Sony of polling is now vulnerable. LOS ANGELES TIMES When you put the bottom line first, you head straight towards obsolescence. There’s so little in the newspaper now, it’s not worth reading. Either it’s got to be the repository of all things local or be a fount of investigative journalism. Now it looks like a child’s toy, a Coleco headed for the dumpster. BILLBOARD “Hollywood Reporter” changed its mission. “Daily Variety” was sold. “Billboard” is already irrelevant, but it will lose its imprimatur when everybody wakes up and realizes its charts are meaningless. In a world where Nate Silver triumphs slicing and dicing data, we’ve got no quants in music, no one who can make sense of the data and tell us who is truly succeeding and failing. Mediabase will tell you what radio is playing, but radio is the new MTV, a ruling force that will crater. When you can hear what you want to on demand, who’s gonna wait to hear it played on radio? We need people to tell us what to hear, we don’t need it as radio. No one has figured out how to decipher the reams of online data to tell us who is happening, who is trending and who is over. But they will. SELFISHNESS You want to get Medicare and hide under the roof of self-reliant entrepreneurship. But people can see what that truly is. Self-interest, putting yourself first. Kids are now brought up in a do-gooder environment, they’ve all given back via charity. If you don’t realize we’re all in this together, you’re going to be marginalized. INTIMIDATION Just because Karl Rove said it was so didn’t make it true. __________________________________________ ASCENDING FASHION The media tells us to all be alike, fashion tells us to be an individual. You succeed today by liberating people and respecting them. Imprison them, talk down to them, and you’re history. This is what killed the record business. Instead of getting in the river and swimming alongside its audience, the record business insisted consumers play by its rules. It will never recover. Because the record business continues to follow, not lead. If you want to be relevant, you’ve got to lead. CREDIBILITY In a world where everybody can get his message out, most messages are ignored. You must establish a bond, trust, in order to succeed today. Mainstream media is in bed with publicists and advertisers, neither of which have a direct relationship with the audience. You want to get the public to trust you, people will do your marketing if they believe in your product. CRAZY It started with that astronaut in diapers… Now we’ve got Patricia Broadwell. Who cares if Petraeus had an affair. But once we know he was brought down by a crazy woman fearful someone else was honing in on her territory, we were fascinated! Stunts don’t work. You’ve got to be Charlie Sheen, willing to put it all on the line. What sold both Broadwell and Sheen was passion. People who cared enough about their mission to cast off the rules of society, who were willing to risk everything to achieve what they wanted. If you don’t do this, you’ll never be a rock star. We’re drawn to the heat as well as the music. We can tell when you’re playing it safe. We’re not interested in that. FACTS That’s the story of the election. Fox and the Republicans had it wrong. Karl Rove melted down. The hurricane is the turning point. Bloviating is secondary to statistics. He who forgets this is destined to die. Digital is 1′s and 0′s. Intimidation and obfuscation are passe. P In a four team test in the last two weeks of the season, 12% of Major League Baseball e-ticket purchasers opted for Passbook delivery of their tickets, even though iOS 6 had just been released. Paper baseball tickets were less than 33% of the total in 2012, down from 55% in 2011. If you’re not on the paperless bandwagon, if you’re not doing your best to get concert tickets into the hands of your true fans, eliminating the middleman/scalper/reseller, you’re going to get caught in the middle soon, you’re going to be subject to fan ridicule. In other words, technology is going to solve the scalping problem, since the acts and business were too greedy to address it. Digital delivery of tickets is here. Use it to your advantage or be exposed as being greedy. http://on.mktw.net/UE4499 FOOD The food revolution is not being led by me-too bland tastes. Turns out the public is adventuresome. They’re the same way in music, which is why the doubling-down on me-too Top Forty music is hurting the business, no one as much as the major labels. If the major labels were smart, and they’re not, they would immediately start investing in that which is not radio-friendly, which takes a long time to develop, that can hook fans like velcro. If you’re not preparing for the future, you’re destined for the scrapheap. REALITY Reality TV might be fake, but its underlying appeal couldn’t be more now. The blander you are, the less traction you’re gonna get. If you want to be famous, have a personality, offend somebody, be real. HOMELAND It’s not on HBO. It’s not at the movies. And it’s the most talked about visual entertainment in America. “Skyfall” got all the press, but it will be over in minutes. “Homeland” is built to last. If you’re excellent, the public will sell you. And the public made “Homeland.” Publicity no longer works. If anything, it comes after the fact, on the victory lap. “Sons Of Anarchy” is triumphing years in. If you’re not in it for the long haul, you’re never gonna make it. Don’t change the formula, improve it. RACHEL MADDOW Smart is sexy. Gay or straight, ugly or beautiful, in a sea of b.s., we’re all drawn to intelligence. If you’re betting on the unwashed masses, you’ll be stunned to find out everybody under thirty knows how to use a computer, everybody under thirty knows geeks rule. IRREVERENCE Once upon a time, we had Frank Zappa. Thank god for Jon Stewart. Poking fun at the absurdity of a society of which music is a baked-in element. Yes, music used to lead, now people make fun of it. – http://www.lefsetz.com/lists/?p=subscribe&id=1 |
| Posted: 13 Nov 2012 01:00 PM PST My afternoon train reads:
What are you reading?
Looking Past Fiscal Cliff to Fixing Taxes |
| U.S. Fiscal Contagion Risks in Europe Posted: 13 Nov 2012 12:15 PM PST Some more clips from yesterday’s Bloomberg appearance: Ebrahim Rahbari, an economist at Citigroup Global Markets Ltd., talks about Europe’s debt crisis and U.S. fiscal policy. Rahbari speaks with Tom Keene and Sara Eisen on Bloomberg Television’s “Surveillance.” Barry Ritholtz, chief executive officer of FusionIQ, also apeaks. Rahbari Sees U.S. Fiscal Contagion Risks in Europe ~~~ Thilo Wrede, an analyst at Jefferies & Co., talks about Unilever’s efforts to find a buyer for its Skippy peanut butter brand and reports the company has attracted interest from ConAgra Foods Inc. and B&G Foods Inc. Wrede speaks with Tom Keene and Sara Eisen on Bloomberg Television’s “Surveillance.” FusionIQ’s Barry Ritholtz also speaks. ConAgra Buy of Skippy Would Pass Review, Wrede Says |
| Posted: 13 Nov 2012 11:30 AM PST |
| Q3/Q4 Earnings Beats & Misses S&P500 Posted: 13 Nov 2012 09:10 AM PST click for larger table
Standard & Poor (whom I frequently criticize as awful when it comes to ratings) does excellent work when it comes to assembling data on earnings for their flagship index, the S&P500. Their S&P 500 earnings and estimate report is quite excellent. You can download a spreadsheet from their site (go here, than click “Download Index Data“). In addition to the entire earnings universe, it breaks down the SPX by Sector, Quarterly data, Actual operating, as reported and sales are from S&P Compustat. The two charts below show an ominous turn down in Operating earnings:
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| IMF and Eurogroup publicly disagree over Greece Posted: 13 Nov 2012 07:30 AM PST Australian October business confidence declined to -1, from zero in September. The business conditions component, an indication of sales, profits and employment, declined to -5, from -3 previously. The capex component declined to the lowest since August 2009. The head of the Australian Industry Group warned that “Key employing sectors – manufacturing, construction and the broader services industry – are all in contraction and have been for most of this year”. Having said that the A$ rose to US$1.0419 today – amazing; Press reports confirm that Mr Li Keqiang will indeed be confirmed as the next Chinese premier, taking over from Mr Wen Jiabao. He is considered to be a “good Party bureaucrat”, who will not take any radical decisions. Suggestions that he is a reformist are misplaced in my humble view – more of a “yes man” and placed there as he will be good for the vested interests in China Chinese stocks fell to a 7 week low today as the government hinted that they may expand a property tax trial. The market does not seem to have been carried away by the better “official” economic data – I wonder why?. Retail sales are expected to slow somewhat, as well; Russian GDP rose by +2.9% Y/Y last Q, slightly above the +2.8% forecast. Analysts expect the economy to slow further. The recent drought hurt the agricultural sector and mining also is being hit. Mr Putin has proposed to increase investment and create 25 mn new jobs, though with corruption a major issue, his targets look ambitious; A material difference of opinion (basically a public row) over Greece between Mr Jean-Claude Juncker, the chairman of the Euro group and Mrs Largarde (head of the IMF) emerged at yesterdays press conference. (Remember, Mr Juncker has previously stated that it is OK for politicians to lie). Mr Juncker advised the press that the target (for Greece to reach the debt to GDP target of 120%) had been moved to 2022. Mrs Lagarde insisted that it remained at the original date of 2020, stating that a debt sustainability percentage for Greece “In, our view, the appropriate timetable is 120% by 2020. We clearly have different views”. The EU has been trying to fiddle the numbers to achieve the outcome they desire. Furthermore, the IMF believe that without any debt forgiveness on official sector loans already provided to Greece, debt to GDP will rise to 150% by 2020, rather than the 140% or so suggested by the EU. Without an agreement between the EU and the IMF, the EZ will find it more difficult to keep this charade going, but the odds are that they will go ahead – the politicians are committed to achieving some kind of “deal”. Sticking to 2020, will require the EZ to agree to a haircut on existing loans, something which is politically unacceptable; The French have stepped in. The French Finance Minister states that they intend to reach an agreement on Greece with Germany by the 20th of this month, so as to disburse funds to Greece by the end of November. The bottom line is that the IMF, unfortunately, will be ignored and the EZ will press ahead with this nonsense. Mr Schaeuble suggests that interest rates on loans to Greece need to be cut, rather than go for haircuts. He adds that previous targets for Greece were not realistic. However, the general tone of his comments suggested that Germany remains committed to fixing a deal. A leaked draft of the Troika’s report on Greece reveals that the country will need an aggregate of E32.6bn by the end of 2016. A 2 year extension to allow Greece to meet its budget deficit target (-3.0% of GDP) will require a further E15bn of additional bail out funds through to the end of 2014 and E17.6bn for 2015/16. In addition, it will force Greece to increase the amount it needs to raise through austerity measures to E20.5bn, rather than the E13.5bn which was approved by the Greek parliament last week. That is going to be simply impossible for the Greeks to deliver. The estimates are, as usual, likely to be a (significant?) underestimate of the funds required and/or the further savings needed, in any event. The draft report states that “risks to the programme remain very large”. Well no surprise there – its not credible in the slightest. Mr Weidmann’s call for an “unblemished and honest” report has fallen on deaf ears – the EZ have resorted to their usual practices. The German finance minister states that the Bundestag will take time to consider the report, a view expressed by his Dutch counterpart. The draft report does not include proposals as to how to plug the financing gap and/or views on debt sustainability (reports suggest that the EU and IMF are 800bps apart), a key issue for the IMF, or the next steps to be taken to turn around Greece. Options that have been discussed include reducing interest rates, extending maturities, handing back “profits” made by the the ECB on previous purchases of Greek bonds and a debt buy back – debt forgiveness is off the table, as its politically unacceptable. The Troika have admitted that Greece’s debt to GDP will peak at over 190% in 2013. Mrs Merkel is determined to keep Greece going – at least until her general election in September next year and she must not be underestimated. However, she has her Parliament (the Bundestag, who are increasingly disenchanted at the prospect of further bail outs) to deal with and countries such as Holland and Finland who remain, indeed are becoming increasingly sceptical. Having said that, some fudge remains the most likely conclusion. Finally, Mr Juncker reported today that the EZ had no dispute with the IMF !!!! – that’s exactly why I continue to believe that the EU/EZ is a basket case; The German November investor confidence index, the ZEW, came in at -15.7, much worse than the -10.0 expected and weaker than the -11.5 in October – the 1st decline since August. The current situations component declined to 5.4 as opposed to 8.0 expected and 10.0 in October. Mr Franz of the ZEW confirmed that Germany was slowing – well he’s really insightful !!!. He confirmed that Germany was not decoupled from the EZ – well, finally, I cant understand why the German’s had previously believed that they were. He added that Germany will not face a sharp recession, due to consumer demand holding up. Germany is likely to face a decline in GDP this Q, with Q3 GDP expected to be around +0.1% – Q3 data to be released on the 15th November; France’s September current account deficit came in at -E3.3bn M/M, better than the revised deficit of -E3.6bn in August. French Q3 non farm payrolls came in at -0.3% lower, worse than the -0.2% expected and -0.1% in Q2. The data confirms the problems that France is facing; UK October CPI came in at +2.7% Y/Y, higher than the +2.4% expected and up from a 3 year low of +2.2% in September. Whilst CPI was expected to rise, it rose to the highest since May this year and may rise further due to higher utility charges in coming months. Inflation in the UK has traditionally been “stickier” than in other developed economies. The BoE is to release its inflation report tomorrow; UK October input prices rose by +0.4% M/M , much higher than the -0.2% expected and -0.2% in September. UK October output prices rose by +0.1% M/M (+2.5% Y/Y), in line with expectations and +0.5% in September; Outlook Asian markets closed sharply lower on a lack luster US last night and the continued saga in the EZ. European markets are over 1.0% lower at present, with US futures indicating that markets will open some -0.5% lower. Equity markets have been particularly weak in recent weeks, and look somewhat oversold – some kind of stabilisation/ bounce is likely. Spanish 10 year yields crept up to 5.96% this morning A 6 week high), though Mr Rajoy, the Spanish PM continues to dither. As the budget deficit will come in higher than the ludicrous forecast of 6.3% predicted by Spain, have the Spanish raised the amount they need for the current year – don’t think so Mr Rajoy. Furthermore, pre this financial crisis, Spanish GDP was dependent on construction and consumption, though had double digit unemployment. Neither sectors look positive for years to come. As a result, where’s the future growth going to come from Mr Rajoy. I remain convinced that Spain will have to restructure its debts in due course. Unconfirmed German press reports (Bilt) just out suggest that Greece will get E44bn in aid in 1 payment, basically bundling 3 (sort of) agreed payments to Greece – closed my Euro short for the time being – will reload in due course. The German ministry of finance has denied the report by Bilt, but……. Happy Diwali by the way – its a fun Indian festival. Kiron Sarkar 13th November 2012 |
| Posted: 13 Nov 2012 07:00 AM PST My morning reads:
What are you reading?
Looking Past Fiscal Cliff to Fixing Taxes
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| Greece/Germany/Asia/US small biz Posted: 13 Nov 2012 06:28 AM PST Markets this morning are worried about how European officials plan on further funding Greece with extra money to bide them over for a few more years. The EU is completely unrealistic in thinking they can pull this off without taking any losses on their debt holdings while the IMF on the other hand understands that the only way Greece has a chance is if more debt is written off, the debt now mostly held by the EU/ECB. At around 6:30am ET, a German news story said the Germans plan on packaging the money already owed to Greece from Q2 with the Q3 and Q4 payments in one 44b disbursement. On the story, the euro bounced as did Greek stocks off their lows but even if Greece gets more money (which markets assume they will), public debt writeoffs are inevitable. German’s ZEW investor confidence in their economy over the next 6 mo’s fell to -15.7 from -11.5 in Sept and -18.2 in Aug. It’s negative for a 6th straight month and the current conditions component fell to the lowest since June ’10. Spanish bond yields continue to creep higher with the 2 yr yield at the highest in a month and the 10 yr yield is approaching 6%. UK CPI in Oct rose to 2.7% from 2.2%, a 5 month high led by higher tuition and food costs but gilt yields are little changed. In Asia, the Shanghai index closed at a 7 week low and Australia (Chinese growth proxy) business confidence went negative for the 5th month in the past 6. In the US, the NFIB small business optimism index rose .3 pts to 93.1, a 5 month high but still remains the high of the yr of 94.5 reached in April and the NFIB said “while 4 of 10 survey components rose, the index still remains in solidly pessimistic and recessionary territory.” |
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