Archive for US economy news

New Deal Means A Sort of Old Liberal Keynesianism

Yesterday I noticed an interesting trend on the financial investments blogs – many started to talk recently about a New Deal. Which is normal, don’t get me wrong – with stagflation and investments decimated in the US, with the BRIC markets trailing behind expectations and a sluggish Europe, things look hardly “rainbowy” for the global asset managers.
Which of course gets the economic policy makers and thinkers worried. Especially in the US, the world’s powerhouse in economics 101. No wonder that famous and serious bloggers, such as Rortybomb, turned their attention to that. After all, what’s easier than taking an old wheel, polishing it and using it to restart a virtuous economic cycle?
My short answer is – everything. The neo-liberal thinking pushed the US economy in this prolonged recession – by allowing the US government to throw billions of dollars into several sector’s arms which used them sub-optimally. Of course, all those blogs are against this policy. Or pro this policy with changes (big or small).
Then, what’s the problem? Why do I argue for a new paradigm?
It is very simple. It is called “behavioral finance”. And NLP. 2 in 1, crash course my friends:
1. New Deal is an old paradigm Continue reading “New Deal Means A Sort of Old Liberal Keynesianism” »

Apple Stock Should Rise with the Ipad Mini – But How Much?

Yes, this is the question. At every new product launch, the Apple stock rises almost automatically in anticipation to the future earnings. In this respect, Apple exhibits something quite close to the perfect market hypothesis – data about future earnings should be incorporated into the stock price at the time of the announcement.
The question is thus not how much will the apple stock rise in the incoming weeks, but how much. In fact, if you make it right, you could do a fortune. Most of the equity analysts are battling and scratching their heads for this question – what will be the impact of the Ipad mini launch into the stock price?
Let us try to do a small calculation here:
Between the launch announcement of the first Ipad (January 27, 2010) and the first sales hitting the stores (typically first two weeks of sales, starting with April 3rd, 2010) the Apple shares rose from $208 to $259 (24.5%). At 4 million units as the first Ipad was to be sold, the impact of each IPad into the 904 million shares was at the time $15 billion (assuming a 1/3rd impact of Ipad from the total results).
The Ipad 2 story is somehow different, in a sense that the market has anticipated the launch of the second Ipad in March and the Apple share price has increased in advance with approximately 30 USD.Following the same logic of calculation, Apple had an IPad 2 impact in its share growth of around 10 billion USD. Again, Ipad 3rd generation had again a stock impact of $15 billion USD. Calculations are shown below: Continue reading “Apple Stock Should Rise with the Ipad Mini – But How Much?” »

Interesting US Elections – Will The Businessman Win?

We are still on an early stage of the US elections, yet the battle is hot. Mitt Romney, the ex-Bain executive, famous for his jobs creation/destruction yin yang, is spearheading the Republican army. Still, since his victories are not decisive, but rather marginal, which saps the Republican convictions that he is the right candidate. Actually this is the core question – is Mitt Romney good for United States at this stage?
On one hand, he claims he has created in his business career more than 100,000 jobs via its decisions. This is a good thing for an economy still at the bottom of the recession after several years of financial crisis decline. Never mind these jobs were created mostly in retail – or that they added millions of dollars for the Bain’s shareholders. The point should be taken – and so the consequences
On one hand, his business experience is far from qualifying him for the top spot of the world superpower that US is. He is rather a classical type of politician, not the heavy hand that US sometimes needs. Well, this might actually be a benefit for a country who far too often slammed the fist on the table demanding his will to be obeyed. But at the end of the day, his global business experience is far from replacing a global political game experience.
We are too early to predict Romney’s success or failure. Never mind, he will be a very interesting change for the US, should he win. Whilst Obama brought a major change by listening to the masses and promoting leftist measures, Romney might bring a much needed balloon of oxygen for the struggling US businesses. And at the end of the day this could make a major differences because “it’s all about the money”, right? Maybe..

Incoming Global Status-quo Meltdown – Investing Alert

My fellow investing folks, we are in for a tough ride again. The markets are dropping all over the world with 3 to5%, led by banks and commodities. And all of these have happened only during one week.
What was behind it? Apparently, all the press hauls about Eurozone emergency bail-outs – the banks are close to a liquidity crisis again since they have less revenues from the Italy and Greece (and other European) bonds. And with the deposits fees charged by NY Mellon, with Japan trying to avoid the yen appreciation and the Turkish Central Bank dropping the reference rate, it seems that nobody wants hot money anymore in their country.
Apparently. The signs are (as one Financial Times columnist – Gillian Tett’s insight article – put it in today’s newspaper) that we are actually facing once more a confidence crisis. It seems that everybody is pulling out of the stock market and of the volatile areas of investments and running for safety. The problem is similar to the global meltdown we experienced in the US crisis – the safety areas are limited and they can only absorb so much of the hot money floating around. The safety refuges of today are the gold (already up to 1,640 USD or so), the swiss franc, the yen and a couple of other places unknown to the wide public. All of these were already crowded because of the prolonged crisis – and now they are massively overcrowded. I think this lead accidentally to over-pricing of those assets – and in turn to a loss of confidence in the financial areas of refuge. Continue reading “Incoming Global Status-quo Meltdown – Investing Alert” »

Tech Bubble Bursting or Still Ongoing?

yandex-image-and-logo-courtesy-of-the-investment-blog-doitinvestcom Just as we discussed about the LinkedIn IPO, another piece of news hits the shelves of Internet. Yandex, Russia’s largest search enngine (and often compared to Google), entered the NASDAQ market. Yandex is not the first but still an important player on the latest string of internet companies listed in the US. The price of Yandex’s shares has increased with 50% in the first day of trading., which is good news. However, the signals of the stock markets are mixed: for example RenRen, the Chinese Facebook, now trades for less than the issue price, which means that some speculative activity was at play during the initial listing.
Yandex is not quite a child company. In March 2011, the website attracted 38.3 million unique visitors. It also has a 64% market share of all the Russia searches, which is quite impressive. However, the share is declining, as Google and Yahoo are bidding aggressively to enter that market.
The Yandex technology is a bit older than its competitors and dates from 1989-1990, when Yandex technology was first developed in partnership with the language experts from the Academy of Sciences as
a search system for the government of the Soviet Union. Since then, it has aggressively expanded to become one of the largest search engines in the world, with an algorithm quite different from its US counterparts.

Freefall by Joseph Stiglitz – A Book Review

I must admit I was a bit impatient when I saw the book being postponed for publishing for February 2010. Not only because “Freefall – America, Free Markets, and the Sinking of the World Economy” by the famous Joseph Stiglitz is a book which promissed to demistify the current prolonged global crisis in a more academic manner (read – with some stone hard economic analysis behind, not the small talk books written usually on the topic). I was expecting it with impatience also because Stiglitz is a non-compromises author – he does not fiddle around the topics, but shoots and moves ahead. And my expetations were actually a bit exceeded.
So, an “Freefall” is an economics book about the recent global crisis and how it spread from US to the rest of the world. I think that besides me, the first one thousand copies were bought by the following characters:
– president Obama and his financial advisors;
– ex- double president Bush, Alan Greenspan and all the economic advisors who accompanied him and
– the bankers who invented lots of arguments to get trillions of dollars in cheap loans from the US government to make even more profits. Continue reading “Freefall by Joseph Stiglitz – A Book Review” »

Stock Index Futures on Wall Street

Well, we are back. And not in any conditions – actually we are back with our investment blogging in the middle of an apparent market recovery.
Futures for the DJIA, the Nasadaq and the Standard and Poor’s 500 have risen today 0.5 to 1%. This indicates that further increases on the US stocks are expected.
Is this optimism justified? Continue reading “Stock Index Futures on Wall Street” »