Archive for the ‘Economics’ Category
U.S. housing starts continue to fall in June
Housing starts fell 5.0 percent in June, as the expiration of the homebuyers’ tax credit led to a pullback in new building. Single-family starts slipped 0.7 percent. Permits for multi-family, however, rose 19.6 percent.
The National Association of Home Builders/Wells Fargo Housing Market Index declined for the second consecutive month in April to its lowest level in over a year as homebuilders remained less confident about housing market conditions. The downward trend in builder sentiment, mortgage applications, sales, permits and starts continues to suggest residential construction will likely fall this summer.
Retail sales in the U.S. stalled in June: Maybe the iPhone will save us
By Wells Fargo Research
Retail sales fell slightly more than expected in June, with overall sales declining 0.5% and sales excluding motor vehicles declining 0.1%. The weakness was not totally unexpected as several weekly sales measures have been posting declines for much of the past two months and consumer confidence and buying plans both fell sharply in June. The loss of momentum is most apparent in the three-month rate of growth, which has slowed to a 4.1% pace for overall sales and just a 2.7% pace for sales excluding motor vehicles.
Sales at motor vehicle dealers fell 2.3% following a 0.6% drop in May. The major motor vehicle manufacturers recently announced they would keep assembly plants operating throughout the summer, as sales were reported to be robust and inventories were reported to be in line with demand or possibly even a bit tight. This morning’s sales figures cast some doubt on these predictions and raise the possibility that we may see an unintended build in inventories this summer that requires more extensive sales incentives or production cutbacks to clear out inventory.
The one big gainer for the month was electronics stores, where sales jumped 1.3 percent, following a 0.9 percent jump in May. The increases likely reflect the introduction of a number of new smartphones, most notably the newest iPhone, which debuted in June.
IMF World Economic Outlook Update
Last 7 July, the IMF updated its World Economic Outlook and is now expecting the world economy to grow at around 4.5% in 2010 and 4.25% in 2011. That is, increasing by 0.4 percentage points its growth estimate for 2010 and leaving 2011 intact.
This better short-term outlook for 2010 is product of a rosier picture in emerging economies (especially in Latin America and Developing Asia).
How to Pitch Venture Capitalists: Guy Kawasaki
- Know the sweet spot. VCs have types of companies and industries they tend to invest in, as do partners. If you do not match their investment criteria or fit into their area of expertise, you need to find another VC. No matter how good the idea. Do your homework, just as you would do before a sales call. Find out what they like to invest in and why.
- Reach out and get connected. Your company’s ability to communicate with the outside world is directly related to a VCs willingness to fund you. Get the word out about your personal brand and the company’s efforts and manage the information about you from the start. This means more networking, attending conferences, engaging industry leaders, blogging, tweeting and generally be active in the social media world. Your ability to network and publicize your business is directly related to how well you will be able to sell your product. And remember, VCs view cold-calling as a sign of weakness. Emailing a partner directly with no introduction from a connected contact just screams “desperate.” Navigate to a strong, warm introduction every time.
- Think like a risk manager. Every salesperson will tell you: sales 101 is getting inside the head of your target customer. For a VC, a funding decision revolves around minimizing risk and maximizing profit. Don’t make them uncover the risks. Feature them as part of your pitch and lay out your plan for managing the risks. Provide realistic assumptions—nothing kills a deal faster than when a VC rolls their eyes at the hockey stick charts that promise great profit margin than a monopoly like Microsoft! Project the image of a confident executor, not a dreamer.
- Read the rest of this entry »
La diferencia entre la crisis de 1995 y ahora
En 1995, la economía de México tenía un punto a favor. El entorno económico externo era favorable, por lo que el consumo de productos intermedios (procesados por el sector industrial mexicano) era positivo. Además, la fuerte depreciación del peso mexicano hacía que los ingresos de dicho sector se acentuaran aún más. Eso propició un rebote que permitió a la economía mexicana recuperarse en 1996 a una tasa de +5.2% después de haber caído -6.2% en 1995.
En 2009 la economía mexicana caerá casi un -8.0%. El origen de esto fue principalmente de factores externos: la crisis hipotecaria en EE.UU. (y otros países), sus efectos sobre el sistema financiero mundial, el significativo aumento de la aversión al riesgo y condiciones crediticias mucho más endurecidas. Tal crisis ha dejado mal paradas a las economías desarrolladas (principalmente EE.UU. y Europa), lo cual contribuirá negativamente a la recuperación en México.
Prueba de esto es que se estime un crecimiento en torno al +2.0 o +3.0% en 2010. Esto sería un número paupérrimo comparado al observado en 1996 después de la crisis. Ahora, con una economía cayendo aún más, el rebote debería de ser aún mayor que entonces! Sin embargo, la debilidad del entorno mundial será un factor negativo, en esta ocasión, que no permitirá a la actividad mexicana en recuperarse significativamente. La recuperación del empleo no será lo que todos esperamos.
La muerte anunciada de PEMEX
La semana pasada la revista The Economist publicó un artículo en su edición impresa en el que analizaba la salud de la paraestatal PEMEX. Se preguntaba cuántos mexicanos se necesitaban para perforar un pozo en el Golfo de México. Son 140,000 los empleados que laboran en PEMEX, y se estima que sobran más de 30,000 de ellos. Sin embargo, despedir a tal cantidad de gente en una sentada sería políticamente tóxico para el PRI.
Entre los sindicatos y la “inmunidad” de los empleados de PEMEX es imposible mantener a ese gigante de barro. La inversión es necesaria pero gente, como el PRD, dice que el petróleo es de todos los mexicanos. Totalmente de acuerdo, pero si no permitimos la inversión de al menos 10 mil millones de dólares al año, México será un importador neto de petróleo en 2017.
Entonces, ¿qué vamos a hacer? Esperar a que se nos terminé el petróleo y reducir brutalmente el gasto del gobierno, o peor aún, incrementar los impuestos sustancialmente para sostener el desequilibrio fiscal que se generaría al dejar crecer este problema.
Hace cinco años, Cantarell –nuestro galgo más pesado– solía producir 2.1 millones de barriles al día, ahora sólo produce 600 mil, poco menos de una tercera parte. ¿Cuál sería el escenario más factible en 10 años? ¿Cuáles son las soluciones? ¿Seguir diciendo que el petróleo es de los mexicanos? ¿Cuál petróleo?
Estén preparados para perder al gigante de pies de barro. Parece ser un cáncer irremediablemente fatal. Qué lástima que tuvimos la solución frente a nosotros y nunca se tuvo la voluntad política de hacer lo correcto.
The demise of the dollar
In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
Firms Get a Hand With Twitter, Facebook
From the WSJ
Sylvester Chisom began paying a consultant last summer to blog on Twitter, post status updates on Facebook and run marketing campaigns on both sites for his auto-detailing business.
He thinks the service, which costs $450 a month, is worth it. “It’s just better having somebody else dedicated to thinking of stuff to put up,” says Mr. Chisom, co-owner of Showroom Shine Express Detailing LLC in St. Louis.
Some small-business owners, overwhelmed by the time commitment required of marketing their products and services via social media, are hiring consultants to lend a hand. But the price of such support can vary widely based on the extent of work involved, and many entrepreneurs with already meager resources for marketing and advertising may need to think carefully before taking on the extra cost.
The start-up 3 Green Angels, for example, charges clients a $400 fee to organize Twitter parties — real-time discussions on specific topics. Everywhere LLC, another specialty firm in Atlanta, charges clients up to $20,000 to arrange three streaming video press conferences led by popular bloggers.
México, la mejor opción para invertir en AL: Santander
De El Economista
El mercado accionario mexicano es la mejor opción para invertir durante el resto del año en América Latina, por encima de Brasil y Chile, de acuerdo con Banco Santander en Estados Unidos.
En un reporte emitido este miércoles en Nueva York, Santander elevó la calificación de las acciones mexicanas, mientras que redujo las de sus antiguos mercados recomendados: Brasil y Chile.
El reporte señaló que una de las razones para elegir a México es que las valuaciones actuales del mercado accionario mexicano darán mayores retornos que las del chileno y el brasileño.
Lifestyles of the Chinese Rich
By Robert Frank from the WSJ
How does the typical rich family in China live their lives and spend their cash?
The folks at the Hurun Report, the Chinese wealth trackers and luxury publishers, have put out a ‘report’ on the new Chinese rich.
Bloomberg News
A chauffeur stands besides a Rolls Royce Silver Shadow car outside the Shanghri-la Hotel, in Shanghai.
It is unclear exactly what Hurun’s methodology is, or who they surveyed. Hurun says there are 8,800 billionaires in Beijing and 7,000 in Shangai–presumably ‘yuan’ billionaires. A yuan billion equates to about $150 million.
But as relayed in the China Daily newspaper, Hurun finds that the ‘typical rich family’ in China has a 43-year-old dad, 42-year-old mom and one 14-year-old child.
The report says the rich in Beijing need to spend at least 87 million yuan (or about $12.7 million) on property, cars and other luxury goods to be regarded as ‘one of the city’s new aristocrats.’ The bulk of their spending is on real estate, furnishings and fabrics, the report said.
The Chinese rich have at least three homes, often filled with porcelain and jade collections mixed with modern art. They spend more than $7,000 a year on piano lessons.
Rich men in Beijing drive Mercedes Benz R500 limos and usually are members of Yongfoo Elite, the popular Beijing club. Their wives belong to the Lan Club and wear Bulgari platinum and diamond watches when their drive their BMW sport cars.
‘During the past several years, the complexion of the rich in China has changed in many aspects,’ said Rupert Hoogewerf, founder and publisher of the Hurun Report. ‘Many of them say they want to be a sort of upper class, rather than only being rich.’
The conclusions sound more like a big ad for a European luxury magazine, rather than a profile of the uniquely Chinese rich. Perhaps that isn’t a coincidence for a luxury publisher supported in part by luxury advertisers.
But maybe in today’s globalized wealth culture and economy, the Chinese rich are increasingly indistinguishable from the America or European rich: buying the same Italian bags, driving the same German cars and frequent similar social clubs.
What do you think the new Chinese rich are really like?
(Via WSJ)
Reminds me of Yen (Shaobo Qin) in Ocean’s Thirteen representing Mr. Weng and having Linus Caldwell (Matt Damon) as his personal assistant.
Where Apple Prints Money
That would be the Apple Store on 5th Avenue in New York City. Newmark Knight Frank Retail estimates it pulls in over $350 million in revenue a year, or about $35,000 per square foot for the 10,000 square foot space.
To put that in perspective, Tiffany & Co. says diamonds has sales of about $18,000 per square foot. In fact, it might be the highest grossing retailer on Fifth Ave. ever, according to an estimate by Prudential Douglas Elliman Real Estate.
$350 million. Kee-rist. Good luck touching that, Microsoft.
(Via Gizmodo)
Cramer sneezes!
Bless you, Cramer.
I have never seen anyone else sneeze on T.V. How do they repress it?
Hedging Bets on Bank of America
From the New York Times
John A. Paulson and Sallie L. Krawcheck are staking a lot on the revival of Bank of America’s fortunes, Breakingviews.com writes. Mr. Paulson, the billionaire hedge fund manager, is now the bank’s fourth-largest shareholder.
Meanwhile, Ms. Krawcheck, Citigroup’s former wealth management and finance chief, has been brought in to run the bank’s asset management and Merrill Lynch brokerage businesses, making her a contender for the top job. She has also snapped up $1 million worth of shares.
These might seem like gambles. After all, Bank of America is hardly out of the woods. Its core operations are likely to continue losing money for the rest of the year. Takeovers that struck both at the height of the bull market and in the depths of the crisis either used up precious capital or revealed poor risk management — or both — and left the bank in need of $45 billion of taxpayer support. And the shenanigans surrounding year-end losses and bonuses at Merrill cost Kenneth D. Lewis the chairman’s role and his reputation.
9 Free Advertising Solutions – Free Advertising, Marketing on a Budget, Marketing Your Business
From Entrepreneur.com
When sales slump due to a slow economy, a business owner’s first inclination is often to cut the marketing budget. After all, one has fixed costs and cash flow can be irregular. But marketing should be the last activity you eliminate or you risk an even faster downward spiral. Advertising your business and attracting new customers should be an ongoing process, and there are many things you can do that cost absolutely nothing. In these times money might be tight but the need for revenue is continuous, here are just a few suggestions.
Become the expert
Submit articles related to your business to the local paper, trade journals and professional organization’s newsletters. Choose a topic that reflects your expertise on the subject and make sure your business is mentioned. You might also find a website that may be interested in letting you host a guest column. Whenever you get published, make copies and send them to all your current and potential customers.
Be a great public speaker
Professional meeting planners are always looking for presenters and workshop leaders for conferences. Research contact names in the Directory of Meeting Planners or start with your local Chamber of Commerce or Rotary Club. If, like most people, you dread the thought of public speaking, join your local Toastmasters [http://www.toastmasters.org/] club; this is also a great way to meet potential customers. When you do get the opportunity to make a presentation, be sure to collect business cards for a drawing to win a book or other prize related to your business.
Paulson Hedge Fund Buys Banks That Lost Value in Credit Crisis
From Bloomberg
John Paulson, the hedge-fund manager whose wagers against the U.S. housing market helped him earn an estimated $2.5 billion last year, bought Bank of America Corp. and Goldman Sachs Group Inc. stock in the second quarter, while adding to stakes in gold companies.
His firm, Paulson & Co., bought 168 million shares of Charlotte, North Carolina-based Bank of America valued at $2.2 billion as of June 30, according to a filing yesterday with the U.S. Securities and Exchange Commission. It was the biggest new purchase in the second quarter for Paulson, 53, and made him the bank’s fourth-largest owner.
‘It’s ironic because he was the one that made the right call shorting subprime,’ said Jerome Dodson, who oversees $2.5 billion at Parnassus Investments in San Francisco. ‘His timing is good but he probably won’t be as successful with this purchase as he was with betting the housing market would collapse.’
Walmart Profit Tops Estimates on Inventory Management
From Bloomberg
Wal-Mart Stores Inc., the world’s largest retailer, reported second-quarter profit that exceeded some analysts’ estimates after managing inventory to reduce costs. Comparable-store sales trailed the company’s forecast.
Net income totaled $3.44 billion, or 88 cents a share, the Bentonville, Arkansas-based company said today in a statement. Analysts projected 86 cents, the average of 22 estimates compiled by Bloomberg.
Walmart will accelerate efforts to cut costs after U.S. stores reduced inventory by almost 6 percent, Chief Executive Officer Mike Duke said today on a recorded call. The chain also attracted more customers, helped by price reductions on its Sam’s Choice Black Angus beef patties, baked beans and flat- panel televisions to lure consumers grappling with shrinking paychecks and the worst unemployment since the Great Depression.
World’s Most Expensive Streets Fall in Value
Times are tough in Monaco.
According to the Wealth Bulletins latest list of the Worlds Expensive Streets, prices on Avenue Princesse Grace (still the priciest street in the world) have plunged by more than a third. One square meter of prime space now costs the equivalent of a mere $11,152 a square foot–down from $17,657 last year.
The overall value of prime residential property on the 10 most expensive streets in the world fell 12% in the past year, the survey found, with European streets faring better than those in the U.S. and in emerging markets. The overall markets in the U.S. and London have fallen 20% or more. Here is the Bulletins list of the Most Expensive Streets. Caveat emptor, it is developed with luxury Realtors.
Stock Traders Find Speed Pays, in Milliseconds
From the New York Times
It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices.
It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets.
Powerful computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else’s expense.
These systems are so fast they can outsmart or outrun other investors, humans and computers alike. And after growing in the shadows for years, they are generating lots of talk.
Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer.
Apple’s Share of Cellphone Industry Profit Estimated at 32% for First Half of 2009
From MacRumors
All Things Digital reports on research from analyst Toni Sacconaghi of Bernstein Research that shows Apple holding 32% of the cellphone handset industry’s operating profits for the first half of 2009. Apple’s profit share is driven by high average selling prices and high margins on the iPhone, which accounts for only 8% of industry revenue and under 2% of industry unit sales.
‘Our analysis indicates that Apple’s iPhone accounted for only 8% of handset industry revenues but 32% of industry operating profits in 1H09,’ Sacconaghi wrote in a note to clients today. ‘Even if we exclude the operating losses generated by Motorola and Sony Ericsson, Apple still accounted for 25% of industry profits. iPhone’s success is akin to Apples position in the PC industrywhere the company enjoys an estimated 25% of industry profits, despite capturing only 6% of industry revenues.’
The Top Ten Lies of Entrepreneurs
1. “Our projections are conservative.” An entrepreneur’s projections are never conservative. If they were, they would be $0. I have never seen an entrepreneur achieve even her most conservative projections. Generally, an entrepreneur has no idea what sales will be, so she guesses: “Too little will make my deal uninteresting; too big, and I’ll look hallucinogenic.” The result is that everyone’s projections are $50 million in year four. As a rule of thumb, when I see a projection, I add one year to delivery time and multiply by .1.
2. “(Big name research firm) says our market will be $50 billion in 2010.” Every entrepreneur has a few slides about how the market potential for his segment is tens of billions. It doesn’t matter if the product is bar mitzah planning software or 802.11 chip sets. Venture capitalists don’t believe this type of forecast because it’s the fifth one of this magnitude that they’ve heard that day. Entrepreneurs would do themselves a favor by simply removing any reference to market size estimates from consulting firms.
3. “(Big name company) is going to sign our purchase order next week.” This is the “I heard I have to show traction at a conference” lie of entrepreneurs. The funny thing is that next week, the purchase order still isn’t signed. Nor the week after. The decision maker gets laid off, the CEO gets fired, there’s a natural disaster, whatever. The only way to play this card if AFTER the purchase order is signed because no investor whose money you’d want will fall for this one.