The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

There are so many thing here that require an ass whupping I just don’t know where to begin:

• Why is there even such a thing as a Microsoft Store?
• Is this an example of their innovation?
• Why is the staff being forced to clap rhythmically — did they all do something wrong? Is this how they get punished?
• What is with the tonnage? Is there a free Cinnabon store next door? They seem to average 260+.

Look, I am not an Apple fanboy (though this is being written on a MacBook Pro and I hate to be just be a Mister Softee hater, but damn if this isn’t some bizarre combination of Lame X 10 and hysterical.

What was wrong with having a insanely profitable, widely reviled monopoly? Don’t go getting all warm and fuzzy on us — you are supposed to just mint money.

Instead, you have given the world a new formula for Humor:  Microsoft + Attempts to be Hip = Comedy Gold!

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Evan Newmark writes a regular column on the WSJ’s Deal Journal. His stock in trade is contrarian takes on the markets and politics. To the extent that he represents an extreme version of the Wall Street world view, he’s a bellwether.

Yesterday, he may have run the bell a bit too hard. In a post explaining why Goldman Sachs has nothing to apologize for–a completely legitimate position that can be debated with great nuance from both sides–Newmark insists on rolling this M-80 under the chairs of his readers:

In an economy full of losers, everyone is fixated on hating the winner.

He’s right about the world fixating on a winner. Goldman has made itself a lightning rod for the nation’s frustrations by being particularly ham-handed in their handling of their compensation. But that isn’t the issue here.

Where does Newmark get off describing the US as an economy full of losers? Does he not recognize that the vast majority of workers at all salary, skill and social levels who are out of work right now have lost their jobs due to the miscalculations and mismanagement of others?

The decisions that led to their dire financial situations certainly were not theirs. The loss of their jobs didn’t come because they were incompetent or made lousy products. You could blame them if those problems appeared over time as with the automakers but this is a collapse, an exogenous event in their working lives.

It’s bad enough that the world economy was mismanaged to a level that created a disruption that will fall disproportionately on persons who had no role in creating the bubble or reaping its rewards. That may be unfortunate and unavoidable. But do they really deserve to have Marie Antoinette Newmark call them “losers?”

Later, Newmark sums up with a thought that applies equally (in reverse) to himself:

It’s much easier for the public to point the finger at the great Goldman conspiracy than to point it at itself.

Source:
Don’t Apologize for Anything, Goldman Sachs
EVAN NEWMARK
Deal Journal/Wall Street Journal ; Nov. 19, 2009

http://blogs.wsj.com/deals/2009/11/18/mean-street-dont-apologize-for-anything-goldman-sachs/?mod=djemDeal

Squanderville versus Thriftville (Warren Buffet) in Fortune

Back in October, I laughed off the latest China GDP data as utterly fabricated.

As it turns out, I was not the only one. China expert Gordon G. Chang (author of The Coming Collapse of China) is more than skeptical — he has the data to question much of China’s growth miracle.

Spoiler alert: Its been wildly exaggerated:

“Beijing, in the 1990s, ordered factories to churn out goods in periods of low demand, and there are indications that officials are resorting to this tactic now. While optimistic analysts point to astounding car sales–up 70.5% in July, 94.7% in August and 83.6% in September–there are reports that central government officials have ordered state enterprises to buy fleets of vehicles and that these businesses are storing them in parking lots across the country. These stories are as yet unconfirmed, but they are consistent with statistics showing that gasoline sales have been flat this year–up only 6.4% in August, for instance, and sliding since then from all indications. So here’s another question: At a time when economic activity is supposedly rising at a quick pace, how can large increases in passenger vehicle sales not be accompanied by corresponding surges in fuel usage? (emhasis added)

The answer is that Beijing’s statisticians have gone back to their old tactic of making up figures to support the Politburo’s predictions. The Chinese economy is probably growing due to state-led investment, but it cannot be doing so at the rates claimed. Wen Jiabao’s stimulus plan is, above all, grossly inefficient. For all the money he is pouring into the economy, the country is getting a small return in economic output. That’s why Premier Wen, despite the high growth numbers he’s been reporting, consistently refuses to end his stimulus program. If his numbers were real, he would be worried about overheating. But he’s apparently not.”

Gee, whoever would have guessed that a Totalitarian government would lie in its official data?

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Previously:
Who Believes China’s ‘Bernie Madoff’ Data? (October 22nd, 2009)

http://www.ritholtz.com/blog/2009/10/who-believes-chinas-bernie-madoff-data/

Source:
China’s 8.9% Growth? No Way
Gordon G. Chang
Forbes, 10.23.09

http://www.forbes.com/2009/10/22/china-growth-gdp-economy-opinions-columnists-gordon-g-chang.html

While the US$ caught a bid this week, albeit modest, in part due to Bernanke’s acknowledgement of it on Monday in terms of its impact on commodity prices and thus inflation, the fed funds futures continue to reduce its belief that he’ll follow words with actions. Since Friday’s close, full odds of a 25 bps rate hike have now been pushed out to Sept 2010 from Aug. Odds of a 25 bps hike by Aug have fallen from 100% last Friday to 66% today. Odds are just 4% that the Fed raises to .75% by Sept, down from 46% last Friday.

1. Most Blues begin, “Woke up this morning.”

2. “I got a good woman” is a bad way to begin the Blues, ‘less you stick something nasty in the next line, like “I got a good woman, with the meanest face in town.”

3. The Blues is simple. After you get the first line right, repeat it. Then find something that rhymes … sort of: “Got a good woman – with the meanest face in town. Got teeth like Margaret Thatcher – and she weigh 500 pound.”

4. The Blues are not about choice. You stuck in a ditch, you stuck in a ditch; ain’t no way out.

5. Blues cars: Chevys and Cadillacs and broken-down trucks. Blues don’t travel in Volvos, BMWs, or Sport Utility Vehicles. Most Blues transportation is a Greyhound bus or a southbound train. Jet aircraft an’ state-sponsored motor pools ain’t even in the running. Walkin’ plays a major part in the blues lifestyle. So does fixin’ to die.

6. Teenagers can’t sing the Blues. They ain’t fixin’ to die yet. Adults sing the Blues. In Blues, “adulthood” means being old enough to get the electric chair if you shoot a man in Memphis.

7. Blues can take place in New York City but not in Hawaii or any place in Canada. Hard times in St. Paul or Tucson is just depression. Chicago, St.Louis, and Kansas City still the best places to have the Blues. You cannot have the blues in any place that don’t get rain.

8. A man with male pattern baldness ain’t the blues. A woman with male pattern baldness is. Breaking your leg cuz you skiing is not the blues. Breaking your leg cuz an alligator be chomping on it is.

9. You can’t have no Blues in an office or a shopping mall. The lighting is wrong. Go outside to the parking lot or sit by the dumpster.

10. Good places for the Blues:

a. highway
b. jailhouse
c. empty bed
d. bottom of a whiskey glass

Bad places:

a. Ashrams
b. gallery openings
c. Ivy League institutions
d. golf courses

11. No one will believe it’s the Blues if you wear a suit, ‘less you happen to be an old ethnic person, and you slept in it.

12. Do you have the right to sing the Blues? Yes, if:

a. you’re older than dirt
b. you’re blind
c. you shot a man in Memphis
d. you can’t be satisfied

No, if:

a. you have all your teeth
b. you were once blind but now can see
c. the man in Memphis lived.
d. you have a retirement plan or trust fund.

13. Blues is not a matter of color. It’s a matter of bad luck. Tiger Woods cannot now can sing the blues. Gary Coleman could. Ugly white people also got a leg up on the blues.

14. If you ask for water and Baby give you gasoline, it’s the Blues. Other acceptable Blues beverages are:

a. wine
b. whiskey or bourbon
c. muddy water
d. black coffee

The following are NOT Blues beverages:

a. mixed drinks
b. kosher wine
c. Snapple
d. sparkling water

15. If it occurs in a cheap motel or a shotgun shack, it’s a Blues death. Stabbed in the back by a jealous lover is another Blues way to die. So is the electric chair, substance abuse, and dying lonely on a broken down cot. You can’t have a Blues death if you die during a tennis match or while getting liposuction.

16. Some Blues names for women:

a. Sadie
b. Big Mama
c. Bessie
d. Fat River Dumpling

17. Some Blues names for men:

a. Joe
b. Willie
c. Little Willie
d. Big Willie

18. Persons with names like Sierra, Sequoia, Auburn, and Rainbow can’t sing the Blues no matter how many men they shoot in Memphis.

19. Make your own Blues name (starter kit):

a. name of physical infirmity (Blind, Cripple, Lame, etc.)
b. first name (see above) plus name of fruit (Lemon, Lime,
Kiwi, etc.)
c. last name of President (Jefferson, Johnson, Fillmore,
etc.)

For example, Blind Lime Jefferson, or Cripple Kiwi Fillmore, etc.
(Well, maybe not “Kiwi.”)

20. I don’t care how tragic your life: you own a computer, you cannot sing the blues. You best destroy it. Fire, a spilled bottle of Mad Dog, or get out a shotgun. Maybe your big woman just done sat on it. I don’t care.

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Thanks, Gene!

Compared to historical norms, Nasdaq market capitalization is significantly above median levels relative to GDP.

The Nasdaq’s median percentage of GDP has averaged 61.8%; its now over 100%. As the chart below shows, the big aberrational periods have been due Fed bubble inflation: first in 1998-2000; then more recently in 2006-07.

The present Zero Interest Rate policy (ZIRP) is helping to inflate a 3rd market bubble:

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Chart courtesy of Ron Griess of The Chart Store.

The Nov Philly Fed manufacturing survey was 16.7, 4.5 pts above expectations and up from 11.5 in Oct. It’s the highest since June ’07 but the figure measures the direction of change, not the degree. New Orders jumped sharply to 14.8 from 6.2 but Backlogs fell 4 pts to -5.4. Employment improved by more than 6 pts and is almost flat at -.5, the least negative since May ’08 and the average workweek rose to +2, the 1st positive reading since Jan ’07. Inventories rose to -17.3 from -31.8 but it just back to the Sept level and is in line with the 6 mo average, so again, no sign of inventory rebuilding, just a slowed pace of the destocking. Prices Paid fell 6 pts but is just back to its Sept level. Prices Received rose 3 pts, matching its best level since Oct ’08. The 6 month outlook moderated as it fell 3 pts to the lowest since April ’09. Net-net, this data confirms that manufacturing is slowly improving with slack end demand keeping the sustainability in question.

Phil Gramm, the former Republican Senator from Texas who co-wrote the act that undid Glass-Steagall, has our DQotD:

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“I’ve never seen any evidence to substantiate any claim that this current financial crisis had anything to do with Gramm-Leach-Bliley. In fact, you couldn’t have had the assisted takeovers you had. More institutions would have failed.”

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Your dumb Quote of the Day is sponsored by Cognitive Dissonance, a Nasdaq Company . . .

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Sources:
Wall Street Faces ‘Live Ammo’ as Congress Aims to Unravel Banks
Alison Vekshin and Robert Schmidt
Bloomberg, November 12 2009

http://www.bloomberg.com/apps/news?pid=20601109&sid=az7AcisnxsCA&pos=11