As they say, one man’s plight is another joy. Recently Moody downgraded France to Aa1, on concerns that the public deficit of 90% of GDP might slow growth considerably. My first reaction was – “What growth?”. In France, this is a long term discussion, yet there is no end in sight – neither is there a program for sustained growth in this country.
As a consequence, most French companies are now eying major cost reductions. It is well known that France lags behind the other major Eurozone economies in terms of productivity – the 35 hour workweek, together with the increased power of unions for sure cannot help here.
As said, this was good for shares. Global European Indices went up – “the FTSE Eurofirst 300, which had its biggest one-day gain for 10 weeks on Monday, recouped most of its early losses and was down 0.1 per cent at 1,089.71.” (quoted from Financial Times). This is only natural – if government bonds are not longer trustworthy, it means that money will flow to other investment vehicles, the most in hand being shares. Companies are also much more likely to reduce costs than the socialist Hollande government, which now faces more and more tough demands from both its electors and from the companies, all in suffering. And by the way, Moody’s threatened it can downgrade further France’s investment rating, if it fails to implement reforms.
Tag Archive for investing blog
Good news hit the markets as fast as bad news and this is what happened with the recent announcement that Greece managed to secure another EUR 5 billion loan these days via a public auction. Not great, but critical news were these. Without the new bonds issue, Greece would have defaulted the next week’s repayments.
Unfortunately, the story is far from over. The Eurozone decision makers have failed to reach an agreement on how to tackle Greece’s huge debt. Some minister’s proposal to cap the public debt at 120% of the country’s GDP was strongly opposed by other countries (mostly the Nordics), especially because this would mean a haircut on the loans. Borrowers never want to lose money. Read more
For our Eurozone criris blog published periodically on Doitinvest, we have chosen today the topic of the double dip recession. What is double dip recession? Well, when you like a biscuit you dip it twice in your coffee (or chocolate or yoghurt). When recession likes a region, it pushes it back into its arms two years in a row. It seems that after the infamous 2011,European Union countries will go back into the same recession for the second year in a row.
But enough with definitions. The hidden fear for the Eurozone is called stagflation, the neo-liberal’s greatest worry. It is made of economic stagnation and inflation, all together. If economic stagnation is clearly here, inflation is actually quite a long short, since the raw materials prices are at normal levels and inflation in the member countries is quite low (1-2%). This does not mean safety from price increases, anyway. The problem is that most companies are struggling to improve their bottom lines and (whilst they cannot grow sales because the markets are stagnant) they are very keen to rise prices. And they will start doing price increases sooner or later… which means inflation.
So even if inflation is a long shot (6 months to 1 year according to my estimations), stagnation is here and I guess we might need to cope with it for the next quarters. At least this is what most of the economic journalists are saying today…
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 yandex.ru 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.
I am sure this is a question that haunts most of the today’s traders. And of course if you would know the answer, we would not know on which island you would live :).
A simple graph (at the beginning of this blog) is showing that the EUR/USD pair has ramped up from 1.3552 to 1.4825 (as of today May 4). This is a historically large level, as the EUR/USD has rarely jumped above 1.5 (and this only in the great crisis). So why is the dollar so weak nowadays versus the Euro?
There are several reasons for that I guess:
1. Large USD deficit
I was recently reading an article in The Economist showing that by the same method of calculation, the US budget deficit is larger (as a % of GDP and at 11% or so) tha the one of Portugal. A large deficit also means problems for the dollar, since the US government has to finance this somehow and devalue the currency. Thus the consequence. Read more
Book review on “Human Resource Management”, 2nd Edition by Greg L. Stewart (University of Iowa), Kenneth G. Brown (University of Iowa)
One more trigger for my reading “Human Resource Management” is my own experience (as I mentioned several times on the investing blog). Book reviews should bring in something tangible for the reader – and for me it provided a link with my experience. Specifically, at certain moments of time all of us find themselves managing other people – be it our subordinates or bosses from the same company, our employees in our entrepreneurial endeavors, or other stakeholders. At the end of the day, what counts is how successful we manage all those people, so that:
– they feel motivated, satisfied and rewarded by the working relationship with us;
– we achieve our own objectives and get a feeling of achievement.
There are two ways you can do this:
– you read lots of psychology and management books, then try to round up all the theories and distill what you found out or
– you spend your money and time on a well-written book and get the most of other people’s experiences.
Well, you can guess I chose the second path. And this is what happened with my reading of the “Human Resource Management” study text.
There are countless points where this book proved valuable for my experiences. What I used several times and enjoyed the specific chapter called “Developing Employees and Their Careers”. The question of the egg or the hen is apparent here all the times – should we motivate people to get results or should we make them get results to be motivated? As you would expect, there are no definitive answers to this, but at least I could get a feeling of completeness when I started to apply various theories in various situations, with good to excellent results.
Another feature of the book that I liked was “Research made easy”: Throughout “Human Resource Management” the authors highlight in the How Do We Know section recently published research from scholarly journal in non-technical language. Each of the sections concludes with a “Bottom Line” summary that shows how the findings of the study contribute to our understanding of effective human resource management. This also allows you to pursue your own further research.
All in all, a nice study book on the neglected field of the HR management. Read more