Jim Cramer states:
"The consumer price index comes in just right for a soft
landing. Now where are all of those hard-landing folks who kept weighing in –
and on us? Where are the fearmongers today? Or do they only come out when we get
a "bad" number that agrees with their thesis?" -Good CPI Dashes Hopes of Fearmongers
I don’t think of myself as a fearmonger, but rather as a realist and anti-cheerleader. But since Jim threw down the gauntlet, let’s address some recent data points:
• Core CPI was actually +0.2423%; (Rounding brings it down to +0.2%). That’s 2.9% annualized;
• Industrial production, capacity utilization, utilities generation, and manufacturing output — were all lower;
• July’s Headline Retail Sales, originally reported as +1.4%
, was revised down to +0.2%; Various subsectors were revised down. Ex-Autos were originally 1.0%, revised down 40% to 0.6. Just about everything but Groceries and clothing had significant, downward revisions. Groceries was revised up in July, and then
again in August. A friend asks: "Do you think we are eating more or
• August Retail Sales — widely touted as surpringly strong — were nothing of the sort. The Census Department includes unit sales of used cars, boats, RVs, parts, etc. We already Daimler’s warning, and we saw the sales data from everyone else. That pretty much leaves used cars as your source of gains;
• In the past 16 Federal Reserve tightening cycles, there has been one true soft landing in 1994. I continue to look at that not as impossible, but as a low probability event;
My largest present concern is Oil and other commodity prices. Its no coincidence that gas, oil, gold, aluminum and copper all have dropped at the same time. I read that as signs of a global slowing in demand.
By the way, this is consistent with what I have previously discussed about Nasdaq and Oil doubling in response to low rates and global expansion. I detailed much of this yesterday in Inconsistent on Oil: heads we win, tails you lose . . .
What do you think of the new Zune?
That question led to fascinating discussion about Microsoft on Thursday. What they do, how they work, brainstorm, etc. It also covered how Microsoft develops new products (notice I didn’t say innovate).
A few quick thoughts on the Zune: The coolest thing is its owners ability to zap songs back and forth via a Wi-Fi
connection — but those songs expire after "three plays or three days, whichever
comes first," which is kinda poor. The 3 inch screen versus the 2.5 inch on the iPod also looks pretty nice. Other than that, its not a particularly compelling piece of hardware.
Brown? How long til that gets cancelled?
We don’t know the price yet, but I expect it to be in the $249 – 349 range, and a function of how much MSFT is willing to lose/subsidize each unit.
What I found most fascinating about "This Week in Microsoft" were the 3 separate products that leaked out over the past few days:
• The Zune iPod challenger (in classic "steal the other guys thunder" following Apple’s event)
Let’s get a few things straight about Mister Softee. First, forget all the chatter coming from Redmond about innovation. They are now and have always been uttery shameless copycats. They do not innovate; They do not create cool products; They are boring code writing cubicle dwelling drones — and that’s what they should be.
The second thing you need to know about Microsoft: They print money like they were a branch of the U.S. Treasury Department.
That is the bottom line for investors, and the cash ain’t coming from all these other products attempting to recapture lighting in a bottle. Its Windows 1st, Office 2nd, and then a big 4 way tie for SQL, Hardware (mouses etc.) Server SW, and then everything else. All these other products — including Xbox, hotmail, MSN, etc. — are what happens when you have more money than God and still want to be one of the cool kids.
And, they’d probably get just as much criticism if they didn’t make all these attempts at imitating other successful innovators. Otherwise, they would just be a mature company milking their monopoly products until the next paradigm shift came along.
Understand my complaint about Redmond: I don’t begudge them these many attempts to stay relevant and hip, to keep pressing buttons until they find the next thing that works. Hey, after you become one of the most successful firms in the history of Capitalism, it becomes hard to repeat that performance every quarter.
I’m just tired of the bullshit about all their terrific innovations (Spare me the techno-babble about multithreading processors or dynamic ram usage).
To understand how Microsoft got to be the "innovator" it is today, you need to have some background into the psychology of its leadership. My favorite example comes via Robert Cringely
If there is a reason, it has to come from the competitive nature of Bill
Gates as Microsoft’s spiritual and ethical leader. Everything is a competition
to Bill, and every competition has a winner and a loser. Microsoft people have
always been encouraged to see the game, not the consequences, and to win the
game even if winning this way makes no sense.
Let me give an example of this behavior. In the early days of Microsoft, one
of the popular games was to see how late the boys could leave work for the
airport and still make their flights. These weren’t people who were habitually
late, they were playing a game. The eventual winner was Bill Gates, of course,
but to win he had to abandon his car [a new Porsche 911] at the departures curb.
Tht pretty much says it all. They are competitive to a fault — its in their DNA. Its also why they have been such a vast money machine. But please: Spare us the sanctimonious garbage about Microsoft the innovator, and keep the focus on Microsoft the moneymaker.
Here’s some more recent ideas out of the innovation factory: