Well Contained

Kevin Depew of Minyanville sees the usage of "Well Contained" spilling over into other areas:

Every day we fire up the Bloomberg to find yet another
story about someone saying something is "well contained."  Every day. 

You might think this is an exaggeration, but it’s not:

  • Merrill Lynch & Co. Chief Executive
    Officer Stanley O’Neal said rising foreclosures on subprime mortgages in the
    U.S. aren’t affecting other parts of the bond market.
    reasonably WELL CONTAINED," O’Neal said, according to Bloomberg.
  • Things are looking good at the Caribou Hills wildfire
    near Ninilchik, where fire officials report the blaze that burned 88 cabins is
    roughly 43 percent CONTAINED.  "Some of the most troublesome
    areas are pretty WELL CONTAINED now," Fire information officer
    Gary Lehnhausen said, according to KTUU.com.
  • Every year, the Environment Agency spends thousands of
    pounds trying to eradicate the Japanese knotweed, one of the most invasive and
    unwanted species in the UK.  But according to the latest copy of John Lewis’s
    in-house magazine, Gazette, a partner has spotted the plant flourishing in the
    garden at Brownsea, the Telegraph (UK) says.  The Brownsea gardener promises the plant
    is WELL CONTAINED by "heavy flagstone and cannot
  • Chicago Federal Reserve President Michael Moskow said on
    Friday that the Fed still sees inflation as the dominant risk to the U.S.
    economy, but that inflation expectations currently seem WELL
    , according to Reuters.
  • Malaysia has CONTAINED the deadly bird
    flu virus and no new cases have been reported, Reuters reported.  "Based on our monitoring of the surrounding
    areas and nationwide, there is no evidence of infection so far and we can say
    that it is WELL CONTAINED," Mohamad Isa, head of disease
    control at Malaysia’s veterinary services department said.
  • "Subprime mortgage market woes seen WELL
    " – Reuters
  • Assistant Treasury Secretary Anthony Ryan told Reuters
    that subprime problems appear "fairly WELL CONTAINED." Reuters
  • "For now though, the mess in the subprime market remains fairly WELL
    ." – NPR 

  • "Still, with the impact of defaults on subprime mortgages "WELL
    ,” the (FOMC) minutes said that "downside risks were judged
    to have diminished slightly." – Bloomberg
  • "So far, the real estate and construction slowdown seems to be fairly
    WELL CONTAINED to those industries."

    - The Bend, Oregon Bulletin


Well Contained, part II:

Look at it!  Here’s the word from the Containers… and this is just in the
past 30 days.

- The market shrugged off comments by U.S.
Treasury Secretary Henry Paulson, who said on CNBC television on Monday that
problems in the subprime mortgage loan sector could be
CONTAINED. – Reuters, Khaleej Times, July 24, 2007

- Lehman Brothers
Holdings Chief Financial Officer Christopher O’Meara told investors on a June 12
conference call that "we continue to believe that subprime market challenges are
and will continue to be reasonably CONTAINED." – Charlotte Observer, Bloomberg News, July 24, 2007

- The
U.S. Treasury Department Friday said the recent woes in the subprime mortgage
market appear to be CONTAINED. – Reuters, July 20,

- Fed’s Poole: "Subprime woes look CONTAINED."
- Yahoo News, Reuters, July 20, 2007

- "The subprime problem
appears to be CONTAINED,” said Richard Franulovich, a
senior currency strategist at Westpac Banking Corp. in New York. – Bloomberg, July 17, 2007

Chicago Fed study sees subprime woes CONTAINED. – Reuters, June 28, 2007

- Freddie Mac says subprime rout
"severe but CONTAINED." – Bloomberg, June 26, 2007

Category: Uncategorized

CDO Hedge Funds = Enron ?

Category: Credit, Data Analysis, Derivatives, Finance, Hedge Funds, Markets, Psychology

Blade Runner’s 25th Anniversary

Category: Digital Media, Film

Media Appearance: Kudlow & Company (6/27/07)

Category: Media

Fun with Subprime Debt

Category: Derivatives, Fixed Income/Interest Rates, Hedge Funds, Psychology

What Does the iPhone Teach Us About Technology & Commerce?

Iphone The reviews for the iPhone are coming in, and they are breathless (see below).

Rather than add to the over-the-top-hype about the gorgeous little thing, I would rather think about what lessons can be drawn from its mere existence.

I believe there are quite a few practical things to be taken away from the development and marketing of this. An education is available to those companies, corporate mangements, engineers, inventors and investors who are paying attention:

1. Committees Suck: The old joke is that a Camel is a Horse designed by a committee. As we have seen all too often, what comes out of large corporations are bland-to-ugly items that (while functional and reliable) do not excite consumers.

When a company decides to break the committee mindset and give a great designer the reins, you get terrific products that sell well. The Chrysler 300 does not looks like it was designed by a corporate committee. Think of Chris Bangle’s vision for BMW — and its huge sales spike — and you can see what the upside is in having a visionary in charge of design.

Better pick a damned good one, though . . .

2. Present Interfaces Stink: How bad is the present Human Interface of most consumer items? Leaving the improving, but still too hard to use Windows aside for a moment, let’s consider the mobile phone market: It was so kludgy and ugly that the entire 100 million unit, multi-billion dollar industry now finds itself at risk of being completely bypassed, all because some geek from California wanted a cooler and easier to use phone.

What other industries may be at risk? 

3. Industrial Design Matters:  We have entered a period where industrial design is a significant element in consumer items. From the VW Bug to the iPod, good design can take a ho-hum ordinary product and turn it into a sales winner.

4. R&D is Paramount: While most of corporate America is slashing
R&D budgets (and buying back stock), the handful of companies who
have plowed cash back into R&D are the clear market leaders this
cycle: Think
Apple, Google (Maps, Search), Toyota (Hybrid), Nintendo (Wii). A well designed, innovative product can create — or upend — an entire market. Even Microsoft did it with the X-box;

What other companies have the ability to disrupt an entire market?

5. Disdain for the Consumer can be Fatal: As we have seen with Dell, Home Depot, The Gap, Sears, etc., the consumer experience is more important than most corporate management seem to realize. Ignore the public at your peril.

What other lessons are there for companies in the business of designing products for consumers to use?

For the moment, let’s put the iPhone aside and answer the questions above:  What markets, companies, products , segments are at risk due to their poor designs?  (Use the comments to answer).


Note:  Some of the commenters are missing the point of the post — this is about the business of creativity and innovation.

We are not looking for a discussion of Apple in general; Off topic comments will be unpublished.



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Category: Digital Media, Film, Music, Technology, Web/Tech

Sub-Prime Housing Problems Limited to Just 7 States

Category: Data Analysis, Psychology, Real Estate

Who Owns Troublesome CDO/CMOs?

Category: Data Analysis, Derivatives, Financial Press, Hedge Funds, Real Estate

Housing Deterioration Continues

"The housing market
has continued to deteriorate throughout the second quarter" and "the
supply of new and existing homes has continued to increase, resulting
in declining home prices across our markets.

As Lennar looks into the third quarter and the
rest of the year, it continues to see weak, and perhaps deteriorating,
market conditions’ and expects a third-quarter loss."

-Lennar President/CEO Stuart Miller



Case Shiller Home Price Index, Year-over-year price changes
Source: S&P


As the chart above shows, the S&P/Case-Shiller House Price Index fell the most it has in 6 years. Dropping 2.1% y/o/y, this is the index’ 4th consecutive down month. Home prices are still up 26.5% from 3 years ago, and 8.8% from 2 yrs ago.

CNN/Money reports that "While sales picked up from the early part of the year, they tumbled
15.8 percent from May 2006 – marking the 18th straight month of
year-over-year declines."

This index differs from the pricing data from the Office of Fed’l Housing Enterprise Oversight (OFHEO) in that it includes the homes in all price ranges — OFHEO pricing data only covers "conforming mortgages" which doesn’t include most of the upper end of the housing market.

Meanwhile, Home Inventory continues to rise: The WSJ reported the number of homes on the market "increased 5% in May, adding to a glut
in many parts of the country and threatening to push prices lower as
the housing market keeps tumbling."

This amounts to a 15 year high of home inventory. And, all this inventory is not going away anytime soon. At current sales levels, the annualized housing sales rate has slipped below 6 million — 5.99 — a four-year low.


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Category: Data Analysis, Economy, Real Estate

Connectivity problems this morning!

Category: Weblogs