Bloomberg TV

97,000 New Jobs Now Good Enough

2007-03-09T21:59:00.000-05:00

150,000 used to be the baseline for jobs that needed to be created each month in America to keep up with new labor force entrants. Talking heads in the Bush administration and elsewhere have since pushed down this figure first to 125,000 or so...and now...100,000. Talk about diminishing expectations. At this rate, a net non-farm payroll number of zero should suffice before Dubya exits stage (far) right. Perhaps they'll explain that more and more people are choosing that ever-popular "life-of-leisure" category. Nevermind that, in February, Uncle Sam did a heck of a lot of hiring:

A 39,000 increase in government hiring boosted the payroll figures. The gain in private employment, 58,000 workers, was the smallest since October 2005.

So there you have it. Be happy with 97,000. We might soon be longing for these glory days.

3.8% GDP Growth Diddly Squat to Consumers

2005-10-29T12:59:00.000-04:00

The Associated Press's Ron Fournier writes,

The economy has been a baffling issue to Bush and his team. They have not figured out how to convince the public that the economy is doing as well as experts say. It's a hard sell when pension funds are going bankrupt, health care costs and gasoline prices are soaring and jobs are being shipped overseas.

That is, policymakers wonder why even with 3.8% GDP growth are consumers still rather glum. The US economy isn't doing nearly as well as the GDP figure indicates, and consumers should be worried:

(1) Wealth redistribution is going the wrong way - primarily because of misguided income tax, estate tax and capital gains policies, money is going from the pockets of those with less to those with more. Add in surging energy costs which have similar redistribution effects and you can see why Joe Consumer isn't happy.

(2) Consumers are getting squeezed no matter what - do the math...falling incomes and greater expenditures doesn't sound like a recipe for cheerful consumers. Now, the happy talk people might say that the evidence shows consumers are still spending like crazy, so don't worry,

I'll offer two counterarguments, though I suspect there are many more. First, consumers might be loading up on debt now in anticipation of higher interest rates. If the Fed has telegraphed this point clearly, then it would seem to be a "logical" thing to do now to buy flat screen TVs and take out mortgages on dream homes before interest rates head north. The principle is the same as the ridiculous "Employee Discount" promotion that automakers used to shoot themselves in the feet. Consumers are bringing expenditures forward to take advantage of current favorable conditions, so why buy tomorrow when things aren't as favorable? We'll see.

Second, consumers have no real choice in many instances. At the end of the day, you still need to put food on the table, put gas in the car and all that stuff. Sure, they're able to stomach higher prices for a while, but just how much consumer dissavings can they sustain? The tougher bankruptcy laws (passed at the behest of the finance industry) have definitely lowered the pain threshold for consumers, and we're likely to see fallout in the coming months.

(3) Debt needs to be paid - this might be ridiculously obvious, but the free lunch economists seem to ignore this point altogether. Sure you can borrow a lot now at historically low interest rates, but where will you get the money to pay it off in the future while wages are stagnant and prices are rising? Dissavings can only get you so far, and that margin of safety is rapidly shrinking.

(4) GDP is an imperfect measure of economic progress - it hides the deleterious effects of debt in many instances. So, you can induce spending to the high heavens in vain pursuits like housing and unlimited consumerism, but of course it misses the earlier point. You can have your cake and eat it too at the moment, but all debts must be paid in full when tomorrow comes, and GDP doesn't account for that.

Bernanke Hanky Panky

2005-10-24T13:26:00.000-04:00

Markets seem to be rather overjoyed that the Greenspan-lite choice to replace "The Maestro" is none other than Ben Bernanke. The main difference between him and Greenspan is that he has a more favorable view of inflation targeting. (The much-maligned EU does pretty much the same.) What is more worrisome is what the markets seem to like--that he is much alike Greenspan. The soon-t0-be retired Fed Chairman has, in recent years, barely raised objections as budget and current account deficits have spiraled out of control while belatedly acknowledging the presence of froth in parts of the housing market.

So, what matters most will be his ability to get these "twin deficits" under control, and particularly to induce a "soft landing" from the "Bretton Woods II" system of American debt lust. If he sticks to a Greenspanesque course without demanding concrete improvements on these fronts, the folly of Greenspan's actions in the Dubya era will come to fore during his term.

As The Who once sang, "Meet the new boss--same as the old boss!"

Dumb Enough to Buy Stocks?

2005-10-20T18:49:00.000-04:00

Today's 133 point drop in the Dow Jones Industrial Average (DJIA) is no surprise to hardcore bears like myself. What's more surprising is that the DJIA rose 128 points the day before. Now, explanations for this (deviant) behavior can be offered:

(1) Bottom-picking: Those bargain-hunters who were looking for bargains seem to have reversed their (inscrutable) logic the day after. Honestly, the bottom hasn't fallen out of the sky just yet. A sustained drive below 10,000 or worse on the Dow looks quite likely, given that maybe only true believers of Cheneynomics are still under the illusion that this is the best economy of our lifetimes. Hallucinogens are such wonderful investment aids--as long as you're not interested in making money.

(2) False expectations: Again, some people are prone to taking a few positive signals and concluding that everything's going to be alright. So what if GM had another round of miserable earnings. They were coming to terms with the UAW, dammit. So what if Intel didn't see things looking so profitable going forward. Oil prices were falling, dammit. People have an almost endless capacity for self-delusion. Too bad that the next day, Ford decided to do a GM and report losses together with additional layoffs. On top of that, Pfizer got Mercked into reporting underwhelming sales. Even the rather useless and inaccurate Conference Board leading economic indicator index fell by 0.7%. All is not well in Greenspan's Bubbleland, and things are bound to get worse once he abdicates his throne and the lemmings start worrying.

(3) Faith-based investing: Don't worry, Mr. Investor. The "Chosen One" Bush will pump prime the economy after Wilma naturally juices all the oranges in Florida. Don't be so damn negative; spend all you've got and everything will be alright. You can have your cake and eat it too. To paraphrase Kennedy, why save for tomorrow what you can spend today? It's no pain, all gain in this rosy Bushworld. Reality is such a nuisance.

Go Consumer, Go!

2005-10-14T14:04:00.000-04:00

With apologies to Chuck Berry:

Out here in Arizona close to New Mexico
In the barren desert near the Navajo
There stood a McMansion made of steel and wood
Where lived a city slicker named Johnny B. Lewd
Who never learned to save or budget so well
But he could splurge on credit really damn swell

Years from now, the US consumer of the early 21st century will be studied by anthropologists, and they will laugh oh-so-hard at his manically illogical behavior. His spending accounted for nearly 70% of the US economy, buying up everything with little regard for anything else. He took particular delight in selling houses to his peers with money borrowed from the Chinese, and this unproductive behavior accounted for about 40% of all job creation after the semi-apocalyptic events of September 11, 2001. In addition to houses, he bought far more than he needed, and even borrowed against the value of his home(s) to get more money to spend himself silly.

These anthropologists will perhaps note October 14, 2005 as a pivotal moment in the devolution of Spendthriftus Americanus. He spent well beyond his means, pretty much oblivious to everything going on around him including global fundamentalist religious conflict, twin deficits, major calamities, corporate malfeasance, and US-led wars of convenience. On this day, though, his limited capacity for understanding the world around him was awakened to a greater degree than usual. His weekly take-home pay fell 1.2% while consumer price inflation rose 1.2% (the biggest advance in half a century), meaning that he had less money to spend on essentials like iPod Videos and Paris Hilton home movies.

In a semi-climatic episode, he began to shout at the devil: "Why the #$@% am I running out of money? I am the consumer--the King of America!" The reply was quick in coming. The devil said, "Well, sonny, it's the end of free money. The Demon-Fed needs to cut down on the nonsense they've created in the first place, and it doesn't particularly care that personal bankrupties and consumer dissavings are at an all-time high." Spendthriftus Americanus was horrified as the devil let out a demented laugh and said he had to go collect Karl Rove's black heart or something to that effect then vanished in a great ball of fire. Bemoaning his lot, the consumer's confidence hit its lowest point in 13 years at 75.4. In his heart of hearts, he knew that the party was very nearly over and cried himself to a fitful sleep.

Good Job on Those Employee Discounts

2005-10-14T13:22:00.000-04:00

I've been railing for months now about the twin phenomena of dementia in the US auto industry known as "Employee Discounts" and overreliance on SUVs in an age of consumer price inflation led by gasoline. The problems with these insane giveaways are manifold. I recount them briefly here:

(1) Automakers depress resale values by offering discounts piled on top of incentives piled on top of discounts. As long-term ownership propositions, the money "saved" by buying these cars at fire-sale prices is lost because their resale values are markedly diminished.

(2) Brand equity is lost. What kind of pride of ownership is there in owning makes that are enthusiastically being hawked like fake Rolexes on Main Street? Shame is the name of the game.

(3) Sales were moved ahead by these discounts. Now that the promotions are gone, the bargain-seekers are too.

(4) By offering these discounts, consumers are conditioned to look forward to more giveaways. If US automakers treat sticker prices like a running gag, then consumers will too.

The end result is rather terrible for domestic automakers:

Retail new-vehicle sales were down 33 percent across the industry in the first nine days of October compared with the same period a year ago, the Power Information Network said.
It said results were down at nine major automakers, but GM led the pack with a 57 percent decline followed by Ford, which saw its retail sales drop 45 percent over the first nine days of the month.

The Chrysler arm of Germany's DaimlerChrysler posted a 32 percent drop over the same nine-day period compared with year-ago results.

Meanwhile, those not dumb enough to follow suit are suffering less, as expected:

The U.S. arm of Honda Motor Co. Ltd. posted the smallest drop, with retail sales down just 8 percent, followed by Toyota Motor Corp., with sales down 14 percent.

The long-predicted demise of GM, like that of its Delphi affiliate, will not be too far away if it can't come up with products more in tune with the times, like really usable hybrid vehicles. Ford is in somewhat better shape, but isn't turning the ship around by any means. Why they stick to a strategy of lowballing massive SUVs few really want is beyond all reason.

Crusader Advertising, Anyone?

2005-10-09T18:10:00.000-04:00

Sometimes, defense contractors simply bilk the government, a la Halliburton. Other times, they both bilk the government and manage to create offensive advertising at the same time. The recent case of Boeing and Bell provides such a double whammy. The gestation of the V-22 Osprey tilt-rotor aircraft has been long and troubled. 23 Marines have been killed in its development. Also, its history is not marked by cost effectiveness either, to no one's surprise.

It's understandable then that Boeing and Bell were rather ecstatic when the Osprey finally completed its tests successfully and was cleared for full production. Boeing and Bell initially caught flak with running the pictured ad a month ago in the Armed Forces Journal. Not wising up, they then ran the very same ad just last week in the National Journal--by mistake, or so they claim. The Council on American-Islamic Relations (CAIR) was offended by the image of "hell" being a mosque coming under siege, presumably by American troops from "heaven". Of course, this sort of thing is excellent fodder for jihadists--American companies reaping profits by blowing up mosques appears to be the perfect recruitment tool. Will the tilt-rotor aircraft revolutionize fighting as its proponents claim? Well, it may be the case that it first manages to revolutionize young Islamic men into becoming fighters.

"You're Doing a Good Job, Greenie"

2005-10-05T15:46:00.000-04:00

With the Fed putting the pedal to the metal, damn everything else, the stock markets aren't exactly prospering at the moment. The DJIA is down over 210 points over the past two days, and the Nasdaq isn't doing any better. I noted a while back that the Fed would continue on its "measured pace" of 25 bp hikes if it was serious about controlling asset price bubbles, regardless of the consequences. Indeed, it's a bitter pill to swallow courtesy of Greenspan and friends, but it's necessary in order to regain a measure of sanity. That is, it's better to reduce consumer dissavings and speculation in property markets than risk possibilities like a one trillion dollar current account deficit in 2006 and mass personal bankruptcies reminiscent of the S&L debacle. (On second thought, scratch the latter: it's likely to happen anyhow.)

What's evident now is the flimsiness of the so-called recovery post-9/11, fuelled as it is by relatively unproductive pursuits such as consumerism gone wild and housing mania. As the Fed ratchets up rates, consumers have hit a wall, and housing has suffered from the prospect of consumers facing significantly bigger monthly payments and stagnant to falling house prices. As many have pointed out, consumption and construction are pursuits that basically do nothing to narrow the current account deficit and are instead drivers of further widening. Why Greenspan waited this long to douse everything with cold water is beyond me. So much for"The Wizard of Bubbleland" retiring on a high note. This tightening cycle should have begun long ago, and if it did, the results wouldn't have been as spectacularly explosive as we're likely to see.

The Big Bad Wolf Economy

2005-09-30T11:33:00.000-04:00

Lafferite supply-side "deficits don't matter" voodoo Reaganomics is having its comeuppance right about now, no matter what lead cheerleader Ben Bernanke has to say. For a second consecutive month (after saving basically nothing before that), American consumers dipped into their microscopic savings to spend themselves silly. A troika of bad news then: personal income and personal spending went down while personal savings "improved" to -0.7% from a revised -1.1%. Calculated Risk hit the nail on the head when he said that Hurricanes Rita and Katrina are not responsible for the most part for this slowdown; rather, it seems that a perfect storm was already gathering in the form of "soaring gas prices, nightmarish home-heating costs this winter, plunging consumer confidence, rising interest rates and falling new-home sales".

How much lower can Bush's little girlie man approval ratings get if a full-blown slowdown takes hold? Will the Fed start cutting interest rates again till they reach one percent? Will the dollar finally become toilet paper as the pundits have predicted for so long? As the Chinese curse says, "May you live in interesting times".

Chrysler Contracts GMitis

2005-09-26T16:40:00.000-04:00

No sooner had the ink dried on my previous post lambasting GM's questionable decision to stake its future on more blubberly SUVs did Chrysler decide to do the same. For someone who's already said to himself that his next car will probably run on alternative fuel, I cannot fathom this decision at all. Chrysler has done pretty well lately on the strength of traditionally configured, ahem, automobiles like the Chrysler 300C, Dodge Magnum, and Dodge Charger. I think they are deriving the wrong conclusions from this success. Instead of thinking, "You know what, we need to provide more non-SUVs that appeal to consumers", they've gone down the path of "Yeah, these current vehicles are successful because of their huge engines, so let's stuff more of those into new SUVs."

Chrysler's sales pitch is that these new models are more fuel efficient compared to full-sized (-fat?) SUVs, of which it is only introducing one among (count 'em!) five various models. The problem, of course, is that their mileage is, in turn, not as good as that of sedans or station wagons. One hopes that Chrysler will have a good outcome here, but they're definitely not filling a demand for more frugal vehicles, no matter how they try to spin the matter. If even gas lubber extraordinare Bush Jr. calls for fuel conservation, why can't automakers wean themselves off SUVs?

GM Stares Into the Abyss

2005-09-21T13:56:00.000-04:00

I don't know what parallel universe GM is living in, but from where I'm at, I see high oil prices, a backlash against big SUVs, and a clamor for vehicles using alterative energy. In such an environment, GM apparently sees its salvation in, er, introducing new big SUVs. Despite automakers ladling on ridiculous "Employee Discounts" that do nothing but damage brand equity and depress resale prices, they've suffered a 10% decline in big SUV sales this year. Now, these new trucks may be vastly improved as GM says, but there's still that truckness to them. I'll spare everyone from a philosophical discourse on the metaphysical properties of these hulking behemoths and instead state the obvious: These aren't vehicles for the times. No matter how good they may be, the factors that fuelled this madness in the first place--low fuel prices, fad and fashion--have gone away.

On top of everything, domestic automakers have trained SUV buyers to expect sizeable discounts and consider sticker prices as a running gag. Vastly improved they may be, but I doubt whether GM's belief in these vehicles' superiority will be so pronounced as to warrant holding back from more "Employee Discounts". Once you frame expectations among consumers, they are difficult to remove. What's the score, then? GM's market value is less than that of its cash holdings, its bonds are garbage, and its parts supplier, Delphi, is on the brink of bankruptcy. The US government bailed out Chrysler long ago, but it might not have the wherewithal of doing so for GM since it's incredibly strapped already from activities like keeping afloat the airline industry and its sundry underfunded pensions. GM would break the public finances for good.

For all the similar difficulties it's facing, Ford is at least making a concerted effort to reorient its product line towards alternative energy vehicles. Unless GM comes up with better ideas than "saving" itself with a new line of hulking SUVs, this General might soon be consigned to the trash bin of history.

Halliburton Perversion and Reconstruction

2005-09-18T12:44:00.000-04:00

The beauties of being a heavily-favored contractor include getting loads of dough without unreasonable demands such as fulfilling contracts and being accountable. I have neglected to follow the path of Halliburton's stock price in the past few months until compelled to do so by the folks over at the Angry Bear blog. Well surprise, surprise. At this same time a year ago Halliburton stock wasn't doing as well despite oil prices starting their ascent, perhaps because of the constant unfavorable attention being shed on its connections with Vice-President Dick Cheney. Yet the election focus wore off as November 2 came and went and the good times rolled on.

Bilking the government to the tune of $212 million with little penalty surely helped it when the election spotlight was removed. Plus, in recent times, it has been aided by the quickening pace of oil price increases, which in turn has made demand for oilfield services provided by the company rather high. With the recent cooling down of oil prices, though, some believe that Halliburton won't have it so good. I'm inclined to believe that Halliburton doesn't take such liberties with its private clients, which are less willing to go along with being ripped off as the US government is.

We come full circle to Halliburton circa September 2005. Despite some cooling off in oil prices, which may crimp private sector business, Halliburton is still powering ahead courtesy of taxpayer dollars. Because of its excellent, cost-effective reconstruction work in Iraq, the US government now sees fit to award its favored contractor with more reconstruction work in affected gulf coast areas. The moral of the story: there is none. The opportunist that I am, I thought, "Hey, maybe it's time to get on the Cheney Gravy Train", but no. Sure the stock has doubled in price over the past 12 months, but it appears that the natives are restless. With the spotlight back on Halliburton taking liberties with public funds, Election 2004-style negative press probably will remove some of the stock's buoyancy. It was a good ride for those who bought HAL a year ago at something like $32 while it's now $65. With a business model this good--results are optional in the public sector--the stock was bound to come up.

Mercedes in Hades

2005-09-16T12:10:00.000-04:00

A few days back, I got a brochure from the local Mercedes dealer notifying that the latest iteration of Benz’s flagship model, the S-Class, was to be unveiled soon. Whereas in the past such an announcement would have brought great excitement, I approach the current one with trepidation. Simply put, Mercedes doesn’t make them like they used to. M-B is making some pretty big claims about its new car. However, the recent history of M-B’s products has been troubled, making many loyal customers second guess the make. Basically, Mercedes-Benz is now more marketing-led (in the pejorative sense) than engineering-driven. Back in the day, it was said that M-B’s engineers designed the best car they could, then had the bean counters determine its price afterwards. Nowadays, it can be said that the brand has been diluted by a proliferation of too many models as dictated by marketing-led whims, leading to resources spread too thin to ensure uniformly good products. Keeping these thoughts in mind, here are the resulting gripes, all of which are common and valid in my experience:

(1) Mercedes-Benzes break down all the time – Once upon a time, Mercedes was a paragon of engineering excellence and product reliability. It used to be among those makes that garnered the fewest defects in the JD Power survey. Nowadays, its models are nowhere near that level, and many M-B models are now among the most recalcitrant luxury cars according to Forbes. If you ask me, it’s due to overloading the cars with electronics which are more prone to technical glitches. Mechanical solutions seem to have elegance often absent in electronic ones. Instead of designing cars right that have desirable characteristics—predictable handling, moderate weight, good front-rear weight distribution, etc.—Mercedes now tries to correct fundamental design weaknesses by festooning their cars with an alphabet soup of electronic aids. The end result is that they pile on more electronics that have the unfortunate tendency to initiate electro-Chernobyl.

(2) Mercedes-Benzes look kind of funny – A Mercedes used to look like the business, as in “Don’t bother me, I’m a third-world despot who’ll dispossess your entire family at a whim” or “Out of my way, little man, I need to engineer mega-deals that keep the world running”. Nowadays, the messages it sends are more along the lines of “Hey mister, do you want to play miniature golf?” and “The Liberace was a style pioneer”. Tasteful conservative styling has been thrown out the window in favor of faddish styling that probably won’t age well. The main offender is the CLS, a.k.a. “The Banana Car” and the “Venga-Benz”. Despite its size, this big-ass car has virtually no rear headroom because its back windshield slopes down at an extreme angle in the name of style. Even the aforementioned S-Class looks ugly according to CAR Magazine, with its exaggerated Hummer-inspired fenders and BMW-inspired bubble butt. Such offenses would have been grounds for excommunication in the not-so-distant past.

(3) Mercedes-Benzes have cheap interiors – M-B cars aren’t cheap, but their interiors often are. I swear, the passenger compartment of my previous-generation Volkswagen Passat was noticeably better furnished than that of the last generation S-Class. Hard, shiny plastics, leatherette-like leather, and squeaks and rattles aplenty marred the Benz’s interior. The first iteration of the ML class marked the nadir of M-B interiors. The car magazines I’ve read say that the newer models have nicer interiors, but are by no means on par with those of VW-Audi products. Mercedes has some way to go before it regains more respect in this area.

So, it’s good to know that Mercedes-Benz’ top brass is well aware of this sorry situation by making CEO Dieter Zetsche, formerly the caretaker of better-running Chrysler, the overseer of Mercedes-Benz. Will more buyers still flock to the three-pointed star despite its faded glory? I hope to get a better indication as the newly launched models become available for testing. Until then, it might be advisable to let the German engineers iron out their quality control issues before taking the plunge again.

Blogging Hardware Update

2005-09-16T11:39:00.000-04:00

I’m back to my occasional hobby of blogging Bloomberg after a short sabbatical. I’m moving from my after-hours workstation pictured here, where I monitor Bloomberg like a hawk, to more northerly climes. So, it’s ta-ta for now to my usual equipment, an Acer laptop and a TCL television. The Acer is well-equipped but heavy, while the TCL—made by the world’s largest television maker—has a big screen but so-so picture quality. Still, it had a good price, well under half that of a Sony CRT unit.

I’m going back to my usual travel companion, my Lenovo, er, IBM ThinkPad A22M. I bought this unit in 2001 and its Pentium III 1.0 GHz is still going strong. Its battery life isn’t what it used to be, and it wasn’t all that great to begin with. Still, the unit’s light weight and top-class keyboard still make it a joy to use. A problem arises in that I have only one USB 1.1 (old standard) port for an iPod Mini, Viper internet phone, PQI USB drive and Okion Mobix mouse. I’ve partly solved the problem with the mouse by using a PS2 adapter, leaving me with “only” three USB devices vying for one port! I feel that I’ll manage, though. In particular, the mouse is really cute, about ¼ the size of a regular Logitech model (see picture). There are even smaller ones available, but those have touch surfaces when I prefer the tactility of buttons. It only took a minute or two for me to get used to its tiny controls, and it feels like a quality product with its rubberized surface and retractable cord. The accessories are new but the processor’s the same as it was so long ago. I feel blessed to have such hardware available for my blogging activities.

Does Everyone (heart) the Canadian Dollar?

2005-09-10T15:13:00.000-04:00

Let me get this out of the way: I very much admire the economic performance of Canada. In an age when dysfunctional economic performance is thick on the ground, Canada manages that rarest double for a developed economy--trade and budget surpluses. As a result, the Canadian dollar has performed very well as of late, even if it suffers from a negative yield differential compared to the US dollar. Some skeptics said the loonie (Canadian dollar or CAD) would depreciate as the US dollar's yield surpassed that of the loonie, but that hasn't happened. In fact, the currency has just reached a 13-year high this past week.

In a related matter, what exactly do they mean when they say that the loonie is a "commodity currency"? I'm grabbing the following charts from a Canadian government site. The printers were remiss in omitting the x-axis labels, but each vertical line represents a year starting with 2000 and ending with 2004 (these are the latest numbers I could find):

Two observations: (1) The Canadian dollar tracks changes in commodity prices quite well. I did a study once back in graduate school correlating the movements of gold and the loonie with those of some commodity indices and found that CAD wasn't far off the pace of gold--a commodity itself! I'd kill to have a Bloomberg machine in front of me right about now to run an update. (2) Roughly 80% of Canada's exports are US bound. The correlation of that country's exports to the US and overall exports is simply breathtaking.

What can we learn here? The Canadian dollar's strength appears to be backed by strong fundamentals. The Canadian economy is running quite well, and commodity prices are skyrocketing. Some danger is on the horizon, though. MG Forex warns that because Canada is heavily dependent on the US as an export market, the CAD could be hurt if Hurricane Katrina slows demand from the US. One could argue the opposite by saying that Canada stands to gain from meeting post-Hurricane Katrina reconstruction material needs such as lumber and steel. However, The Big Picture offers a hilarious caution to those who automatically swallow the notion that reconstruction is a net boost to the US economy.

Nvertheless, I'd wager that the other two commodity currencies--the Australian (AUD) and New Zealand (NZD) dollars--have more to gain against the US dollar at this point, especially after you factor in their higher O/N yields of 5.50 and 6.75% respectively. The loonie is rightly strong, but it's been wandering in overbought territory for quite some time now, particularly if you look at AUD/CAD and NZD/CAD cross-currency pairs.

Draconian Hovnanian

2005-09-08T15:59:00.000-04:00

The US housing market is overripe and bound for a considerable slowdown. Witness one Hovnanian Enterprises, which has lots of activity in New Jersey and more in superhot California and Arizona. Today it sent the whole housing sector kaboodle reeling after announcing lackadaisical earnings and forecasts. Sooner or later, some sense was bound to creep into the real estate market which has owner/renter and income/house price disparities that are nearly beyond belief. Is this the start of rationalization? I think so; current events seem to have put the fear of God into people who spend well beyond their means. I Pulte da fools who Toll all day just to make ends meet paying off loans that KB adjustable rate or interest-only mortgages.

To reiterate, housing-related jobs have accounted for 40% of jobs created post-recession. If the housing sector stagnates, there's a good chance that more jobs aren't needed in an industry that's just treading water. Hence, even if housing prices don't diminish significantly a la the housing bubble scenario, considerable economic fallout will befall the US economy as a big part of it increasingly dependent on the housing craze peters out. For those who made a killing these past few years, I congratulate you, but all things must come to an end. (PS: Hovnanian common stock's ticker is HOV, so the Yahoo Finance! graphic is a bit misleading.)

iBlasphemy

2005-09-07T07:30:00.000-04:00

As an owner of an iPod Mini and a 1st generation iMac, I was mightily disappointed when Apple announced that it was abandoning PowerPC chips for (gasp!) Intel processors. All this time, I was duped, I mean, convinced by Apple that Motorola processors were superior to the Wintel empire's. Dvorak was clairvoyant. First came the Mac Mini which was cobbled together with PC parts, and now Apple has gone whole hog and embraced the wretched Pentium peddlers. Don't they have any decency to at least go for AMD chips? [The author feigns righteous indignation by gesticulating wildly.]

All this begs the question, "If Apple uses PC parts and PC processors, isn't it basically an operating system provider?" Yes and no; Apple will still attach proprietary doodads to its machines, yet deep down, Mac and PC hardware will converge. Read this passage from Think Secret about the upcoming bastard machines and weep:

Along with running Mac OS X, Windows XP installs without hitch on the Intel-based Mac, just as it would on any other PC, and booted without issue when installed on an NTFS-formatted partition.

I bring this up as Apple's ticker symbol scrolls by and mocks me by signaling that it's reached an all-time high. So Apple stock is doing well now, but what will happen when consumers learn the truth that newer Apples are nothing but tarted up PCs? Like Pixar and its slump in DVD sales, Apple is likely to be Jobs' next comeuppance if he doesn't figure out how to differentiate his machines better, perhaps by running Itanium chips as Dvorak suggested. My point all along has been, yes, the iPod is a great product, but AAPL is a computer company, not a music company. Treating the computer side like a lesser business might lead to loyal customers fleeing the brand, leaving fickle sorts for whom the iPod is only a passing fancy. And, oh yeah--real Macs use Motorola chips.

South Korea Powers Ahead

2005-09-07T06:42:00.000-04:00

The power of branding is something that Korea can teach the world. Just a few years ago, Korean products were el cheapo substitutes for Japanese makes. The Asian financial crisis almost forced Korea's hand, and it took the country a long time to recover. Well, guess what? Korea's most widely watched stock index, the KOSPI, has just reached an all-time high. At a time when the Dow Jones is more like the Down Jones (which I actually saw as a typo on CNN), Korean stocks are powering ahead.

What lies behind this resurgence? The emergence of Korean brands as global ones is definitely a factor. For instance, Samsung's image has been burnished by its range of cool phones, LCD displays, and other state-of-the-art consumer electronics. Nowadays, I and many others regard Samsung as a premium brand and not another also-ran. (LG Electronics isn't far off the pace.) Hyundai is also becoming renowned as a value-for-money make, featuring a range of desirable cars. You would've been considered a cheapskate for buying a Hyundai in the past, yet it's now a perfectly good substitute for Japanese makes. Check out the Hyundai Sonata now and back when it was lumped with the Yugo and tell me that there's no difference.

Also strong are steelmaker POSCO (just in time for China's commodities boom) and Daewoo Shipbuilding (which has benefited from growth in shipping). What do all these companies have in common? They've established brand equity whether they're B2B or B2C firms. Taiwanese firms, many of which make electronics approaching commodity status, would be well-advised to follow the Korean example. Indeed, BenQ is their first major attempt at branding. The future is always uncertain, yet building a good reputation with customers helps in any situation. Let South Korea show us the way.

John Berry Riles Markets

2005-09-06T03:48:00.000-04:00

Veteran Fed watcher and Bloomberg columnist John Berry has given pause to those expecting Greenspan and Co. to refrain from making an eleventh straight 25 basis point hike in the Fed funds rate. Just as forex and bond traders were pricing in no changes for the month of September and perhaps the rest of the year, Berry's column hit the wires. The market response was immediate. According to Reuters:

Dollar buying perked up late in the Tokyo session on comments by Fed watcher John Berry. His column, in Bloomberg News, said the odds were slightly in favour of the Federal Reserve raising rates by 25 basis points when it meets on Sept. 20.

The Euro subsequently dropped a full cent, while the 10-year US Treasury's yield rebounded to 4.06%. We know that Bloomberg covers markets well, but this is an instance when Bloomberg actually moved markets. Whether Berry is right, though, I'm not certain of yet.

Hurricane Katrina, FEMA, and Clinton

2005-09-04T05:40:00.000-04:00

I've tried to avoid posting about Katrina, but something just struck me as I watch constant coverage of it on Bloomberg TV. Much has been made of FEMA director Michael Brown's lack of disaster response qualifications. That is by now well-documented and the ineptitude it resulted in is constantly being shown on TV sets worldwide. Why is it that the Clinton administration had an ace FEMA man, James Lee Witt, while the Bush 43 administration has someone so widely castigated?

The answer is on page 428 of "My Life", Bill Clinton's autobiography. Speaking about his 1992 campaign in the wake of Hurricane Andrew:

Traditionally, the job of FEMA director was given to a political supporter of the President who wanted some plum position but who had no experience with emergencies. I made a mental note to avoid that mistake if I won. Voters don't choose a President based on how he'll handle disasters, but if they're faced with one, it quickly becomes the most important issue in their lives.

The rest is history. Clinton "reformed FEMA so that it was no longer the least popular government agency but the most admired one, thanks to James Lee Witt" (p. 614). "My Life" has been criticized as overlong and under-organized. Maybe so, but every now and again you come across wisdom like this that makes you want to slap your 45 RPM copy of "Glory Days" on the turntable. Make no mistake; despite his failings, Clinton saved a lot of lives by hiring Witt instead of one of his golfing buddies or political donors. Let's hope that Witt's appointment by Governor Blanco helps. It's time to set political favoritism aside and let the best qualified persons do what can be done to save lives.

It's Worse Than Zero Savings

2005-09-01T10:29:00.000-04:00

Sometime ago, I complained that Bloomberg TV omits to mention the incredible plunging household savings rate. Today's most recent report sheds more light on the so-called Goldilocks economy: the savings rate is now at -0.6%. In its inimitable way, MarketWatch publishes top stories in something like 30-point type. Today's headliner--as eye-catchingly distressing as it is--actually understates the manic superconsumption in the US right now. Mark my words: if sanity doesn't take hold among US consumers, a $1 trillion current account deficit in 2006 is a distinct possibility. Bloomberg, please take note and report this figure.

WHAT'S THE MATTER WITH YOU? DON'T READ BLOGS! BUY STUFF ONLINE! AFTER THAT, HEAD TO THE SHOPPING MALL/AUTO DEALER/LOCAL EATERY AND spend, spend, SPEND! (Just kidding; I'll support the manic overconsumption by buying lots of medication.)

Fleckenstein Kicks Greenspan Booty

2005-08-30T11:05:00.000-04:00

Now that's more like it! Suzy Assaad is currently interviewing Bill Fleckenstein, who thinks core inflation is a misnomer for there's nothing more core than food and energy. Thus, inflation for him is often understated. Plus, he opines that Alan Greenspan isn't doing anywhere near a good job. Housing, stocks, and bonds are far from promising. For him, basic investments hold little favor. Go for currencies and commodities especially if you're familiar with them. Cool! Like the inimitable Jim Rogers, the iconoclastic Bill Fleckenstein tells it like it is, warts and all. He's not beholden to big business, the government, or anyone else who makes him toe the party line; he goes his own way.

Traditional portfolios are typically proposed as a tradeoff between stocks and bonds. However, in this day and age when stocks drop because of corporations' limited investment opportunities while bonds are likewise unattractive due to geopolitical shenanigans, there must be somewhere else to go. Likely, that isn't hedge funds, which frequently charge fees incommensurate with their returns (sorry, Bill). Study on your own and make your own decisions. Only you can set you free.

A "Fake" OPEC Member?

2005-08-29T23:39:00.000-04:00

OPEC stands for Organization of Petroleum Exporting Countries. To me, that means OPEC's members not only produce oil for export, but are net exporters of oil who rake in the money when oil prices are high such as now. Meanwhile, Bloomberg TV is reminding me every half hour that Indonesia--an OPEC member--is suffering from high oil prices as evidenced by near-Asian crisis like rupiah devaluation. Indonesia has been a net importer of oil for a few months now. What is particularly head-scratching is why, in this short space of time, oil has turned from friend to foe with such force.

Political reasons may be part of why Indonesia hasn't been kicked out of OPEC. It's been suggested that OPEC doesn't want to lose the nation for risk of being seen as an "Arab cartel." Even suggestions that Indonesia is playing off OPEC against the US (which dislikes the cartel) in hopes that the former might decide to invest in boosting Indonesia's output again have been mooted in the said article. Nevertheless, given the potential for large-scale turmoil to envelop Indonesia, it'd be wise for their government to consider the long-term implications of its oil policies. Should Indonesia seek to recapitalize the oil industry and become a net exporter of the black stuff again? Are oil subsidies economically feasible, or are they contributing to the current rupiah devaluation? Time is ticking away.

UPDATE: The central bank of Indonesia has upped its O/N rate by 75 basis points to 9.5% and is selling off dollar reserves to defend the rupiah's value. Shades of 1997: it's flashback time. I just might start playing some "Savage Garden" records. Truly, madly, deeply do.

Bonds Guy With a Bowtie

2005-08-29T21:17:00.000-04:00

Take a look at Don Gimbel here of Carret & Co. Subconsciously, you probably said to yourself, "This is a bonds guy." If you did, well, you were largely right. The stereotype of bond dealers is that they wear bowties. To be sure, bond dealers mostly don't, but when businessmen do, there's a good chance that they dabble in bonds. Why is this so? Well, I'm unable to find a definitive answer, so I'll venture one here. Feel free to pitch in with your own.

Just as some doctors prefer bowties to ties since ties tend to get tangled up while performing their tasks, so did bond traders as a practicality in the days of yore. Before the calculator, they had to perform calculations manually. The tedious operations involved--discounting coupon payments one by one--demanded more vigorous busywork than leaving it to the Bloomberg machine. Hence, bonds guys preferred bowties to ties for bowties were rather less likely to get tangled up. In this day and age, there's no comfort advantage for a bowtie wearer. But, as a tradition, the bonds guy with a bowtie lives on. The search for yield leads us to strange places.

$70 a Barrel...BUUURP!

2005-08-29T03:46:00.000-04:00

It seems that after every two minutes of watching Bloomberg TV, I am reminded that crude futures have hit $70 a barrel and are hovering thereabouts. Although this is a staggering price, I really can't say whether it'll dent America's great petroleum addiction. (See the Economist cover.) Now, Americans have many things going for them, but common sense isn't always one of these. At a time when health care costs are going through the roof, they decide to become lardier than all get out. At a time when an entire (baby boomer) generation is set to retire, they decide to whittle down their savings rate to zero. At a time when oil supplies are pinched, they decide to roil markets with a war of convenience that so far has actually dented oil supplies.

Will the real-estate led consumption binge fed by mountains of debt and boundless unwarranted optimism continue? It's really the country's choice. With a net international investment position of -$2.5 trillion and counting with no end in sight, painful adjustments are on the horizon. $70 a barrel might trigger a bout of sanity, but evidence so far suggests the party may go on. Delaying the onset of less consumer spending and more saving, as well as investment in things that actually help roll back the trade deficit instead of real-estate, will only make the eventual bitter pill that much worse.

Dow Jones 36,000 Revisited

2005-08-17T08:49:00.000-04:00

One of the funniest books of all time is Jim Glassman and Kevin Haslett's Dow Jones 36,000. Practically every page of this irrationally exuberant magnum opus generates more laughs than anything Jay Leno or David Letterman ever thought of. Of course, the humor mostly comes from the fact that the authors were earnest in writing such drivel. Things look quite different in 2005 from what they did in 1999.

So why is it that I open my TV today and see someone trying to sell stocks as superior to bonds for investing one's nest egg? For starters, it won't surprise anyone that this guest was from Oppenheimer Funds, so he's basically promoting his company's products. However, the way it's being marketed--stocks instead of bonds for one's nest egg--smacks of irrational exuberance. Stocks that pay out higher dividends can mimic bonds to an extent, but the trouble remains the same. From the time Dow Jones 36,000 came out to now, stock markets have gone precisely nowhere. Throw in the depreciation of the dollar and inflation, and US stocks have been a losing proposition. What guarantee is there that stocks will do better than they did for the remainder of the decade, during which boomers will start to retire? In the age of mass terror, soaring energy prices, corporate malfeasance, and housing bubbles, I'll stay on the safe side and stick with bonds. So far, the evidence suggests that most people are doing the same.

"Mr. Hou$ing Bubble"

2005-08-17T07:47:00.000-04:00

I am by now vary wary of the endless parade of housing market boosters on Bloomberg TV, most of whom apparently take great offense to our pink friend who's selling a bucketload of shirts. Frankly, I wish that coverage weren't so one-sided. Paul Krugman said in his New York Times column that Americans make a living selling each other houses with money borrowed from the Chinese. That, of course, is a bit of an exaggeration, but the truth is close. 40% of the jobs spawned after the recession are housing-related. American foreign indebtedness, particularly to the Chinese, is at an all-time high and is showing no signs of stopping. If the $hirt fit$...

Bring It, the Ringgit

2005-08-12T05:58:00.000-04:00

Since Bloomberg TV Asia deems it proper to monitor the exchange rate for USD/HKD, why doesn't it do the same for USD/MYR? After all, the Malaysian ringgit is back to its free-floating self after so long. The same could be said for the Chinese yuan, although it's nowhere near being a widely-traded currency. In time, perhaps, but for now, it would be highly informative if the ringgit could be monitored as it's the currency of a Southeast Asian economic power. In fact, it seems to be gaining strength even with the implied threat of Malaysian central bank intervention which has so far limited revaluation to 1.3%. Which, of course, is less than the yuan's 2.1% revaluation.

More On Bloomberg's New Set

2005-08-08T05:19:00.000-04:00

Behold Bloomberg's fabulous spiral escalator, one of only three in the world. The others can be seen at Caesar's Palace and Wynn Las Vegas. The Big Picture also has camera phone photos of the new set that its writer took while visiting as a guest. Needless to say, the jazzed-up broadcast facilities fit the profile of Mike's jazzed-up building.

Market Mover: Ayman al-Zawahiri

2005-08-08T04:56:00.000-04:00

Traditional market movers include Alan Greenspan, Mervyn King, Warren Buffett, and Bill Gates. A reflection of our times is that Dr. Zawahiri and his boss appear to be in a similar mold. I once stated that the US markets' response to the London bombings was muted for they even ended higher on the day due to a "didn't happen here" mentality. But, when al-Zawahiri explicitly warned America about forthcoming attacks there, the markets promptly fell out of the sky. Sure there was other negative news last Thursday when the video was aired, but his appearance was the coup de grace. It's plain sad that US markets need brutal reminders about their insularity, and it would do a world of good for them to understand that the US is not an island unto itself.

How About the 0.0% Savings Rate?

2005-08-03T06:28:00.000-04:00

Personal income and personal saving were up 0.5% and 0.8% respectively in June. That was promptly reported by Bloomberg. However, the big news--the downer that never seems to get reported--is that the US personal savings rate fell to 0.0%. Nada, zip, zilch. That this bit escapes mention is inexcusable. Households bereft of savings will be hard hit by economic shocks that are readily conceivable--terror attacks stateside, oil at $80 a barrel or more, foreigners stop funding the gaping current account deficit, etc. Already, the forthcoming retirement of the baby-boom generation threatens to further decimate marginal savings. Message to Bloomberg: More air time for disappearing savings, please.

The Final Countdown

2005-07-28T06:18:00.000-04:00

Another day features yet another guest from the housing industry. This time, someone from Tarragon Realty believes that the housing market is strong because of supply and demand. That's great, but if a healthy portion of the demand is from speculators, then how will the binge continue? Already, superheated markets like Las Vegas and the DC area are showing signs of trouble. An endless supply of real-estate boosters can only signal one thing: the lady backstage is getting ready.

Ashraf Laidi, Man of FX

2005-07-27T12:51:00.000-04:00

Through the years, one of my favorite sites for forex news has been, appropriately enough, Forex News. The main reason I visit the site is the strong guiding hand of Ashraf Laidi. He too operates an online trading firm, MG Forex, though I'd suggest that you read the recent Wall Street Journal article (pay site) about the forex day trading fad before plunging in.

Although Laidi's forex projections are sometimes rather off, he more often than not is closer than the rest, and his firm has already been cited as having among the most accurate forecasts. He's become something of a luminary on business news channels, and he is now a regular on Bloomberg. Once you get used to his somewhat unorthodox speaking style, you'll come to appreciate the general soundness of his views. His "big picture" regarding forex is quite difficult to fault. The Forex News website features frequently updated audio commentary as well.

News Flash From the Clash: Yuan Revalues

2005-07-21T07:23:00.000-04:00

I was watching Bloomberg at around 7:00 AM ET when Brian Sullivan of Bloomberg broke the news: China finally let the yuan revalue. Furthermore, Xinhua, the official government news agency, said the country was adopting a managed floating exchange rate. Granted, the preliminary move is relatively small at +2.1%: from 8.28 yuan to the dollar, it's now 8.11 yuan to the dollar. I've got to hand it to the Chinese officials. When they said that they'd perform this feat at an unexpected moment, they sure meant it. Commentators on Bloomberg suggest that this move is just a precursor to more moves. Rest assured that it's a whole new ball game.

Credit should be given where credit is due. Around the 22nd of June, I noted that the Hong Kong dollar--which was (is?) often used as a proxy for the yuan--started to be monitored on Bloomberg TV's Asia edition. This listing was strange for, like the yuan, the Hong Kong dollar wasn't exactly a flexible currency. I said that this portended a yuan revaluation, and sure enough, it was. Folks, watch Bloomberg. If it can offer more hints like this one, it's as good as gold. This just in: Malaysia has followed suit in ditching its fixed currency regime.

Da Boss Seeks Re-Election...

2005-07-21T06:10:00.000-04:00

The chances are good that Mike Bloomberg will win re-election. He's peaking at the right time. During his term, never have his approval ratings been as high. According to the most recent Quinnipiac poll, 60% of voters approve of his performance. Unsurprisingly, his support manages to cut across party lines. Remember, he was a registered Democrat before his late conversion to the Republican party just before the New York mayoral elections in 2001. Alike his predecessor, he's a "Republican-lite" who takes tough stances on crime and finances, but is basically permissive socially.

Ironically, the Economist (pay site) believes that Mike's defeats in garnering support for building a new $2.2 billion sports complex on the West Side and wooing the 2012 Olympic games make him more palatable to the populace. Stripped of grandiose projects and bolstered by a strong local financial services industry, Bloomberg looks hard to beat, pot-smoking or not.

...But What's Become of the Biz?

2005-07-21T05:34:00.000-04:00

Make no mistake: Bloomberg L.P. never had a reputation as an easygoing workplace. The Economist (pay site) pointed out last year that morale has been suffering with Mike Bloomberg's leave of absence to run the city of New York. Whereas he used to be able to command loyalty and long hours of work from his employees through charisma and a sense of caring, his successors seem to have lost the winning touch. The signs of trouble are evident: low morale, infighting, and frequent resignations. What's worse, it's been played out on a public stage. As an example, the New York Newspaper Guild, in its efforts to unionize the firm's employees, has set up a gripe site. Also largely unfavorable are comments made by posters on the career info site, Vault.

For us viewers, this pattern is clearly worrying. While Bloomberg TV has lost some people I could care less about, they've also lost the likes of Edie Lush and that suspender-and-bowtie bonds guy who I thought were quite good. Hopefully, Mayor Mike's political ambitions do not cause further neglect of his business interests. After all, they're instrumental in filling his campaign coffers, and are what he'll return to after his days in politics are done.

Soon Gone: Greenspan Testifies to Congress

2005-07-20T14:56:00.000-04:00

We can discuss the merits of Alan Greenspan as Federal Reserve Chairman--perhaps even if he ought to continue in that capacity after his term expires--but one thing's for certain: Greenspan is the polar opposite of a good public speaker.

The picture is familiar to millions: Sir Alan sits impassively in front of his lawmaking interlocutors wearing his customary red tie, and reads his prepared statement for a couple of minutes in his patented drone. He almost never looks at his listeners until the Q & A session begins. To me, some animation would be welcome. As repetitive as his statements are, they undoubtedly weigh heavy on the state of world markets. They don't call him the second most powerful man in America for nothing. I know it's getting late for him to change, but can't Greenspan make it at least sound interesting?

The Q & A session that follows is equally predictable. Republicans laud their man, and give him attaboys, except when Ron Paul (R-Texas) has the mic. Meanwhile, the Democrats employ their usual guerilla tactics by peppering him with questions regarding the lowered participation of labor; the decline of manufacturing; the ever-widening wealth gap; the Chinese buying up the world; the mind-boggling current account deficit; the housing bubble; etc. While predictable, I pay more attention to the Q & A session. There, Greenspan often lets on that there is more trouble in store than he does in his prepared remarks. I, for one, find that refreshing. We can only hope that his successor is livelier and less obtuse.

Bloomberg Not Rated by Nielsen

2005-07-13T09:12:00.000-04:00

Here's a surprising factoid I picked up from Variety (pay site), the entertainment industry rag: Bloomberg TV's household audience is so tiny that America's foremost TV ratings firm, Nielsen, doesn't even provide data for the channel. Being a business student, teacher, and practitioner for so long, it befuddles me to think that this is the case. I guess Bloomberg TV has a specialized (read: "educated" and "wealthy") audience, as I noted a while back. The few. The proud. The Bloomberg TV audience.

I Ain't This Mean to CNBC

2005-07-08T15:44:00.000-04:00

Here's a show-stopping graphic from a recent article by the insightful Texas Hedge folks:

Bloomberg's Coverage of the London Bombings

2005-07-07T14:24:00.000-04:00

Bloomberg's coverage of the London bombings has been mixed. To my surprise, only the local BBC did a better job of covering the events as they unfolded. Unsurprisingly, Bloomberg did alright in relaying the goings-on in European financial markets. However, Bloomberg's coverage of the events as they pertain to America leaves much to be desired.

While major European markets slumped as evidenced by 1 percent-plus falls in indices such as the DAX, CAC, and FTSE, American indices have hardly been affected. At the outbreak of these events, the DJIA futures indicated a massive -210 change, while gold rallied by five dollars. Yet, as I write, the Dow Jones and gold are virtually unchanged for the day. Certainly, much of this change of heart can be attributed to a "thank goodness it didn't happen here" mentality, which was all too prevalent before the message that terrorists can strike practically anytime, anywhere was brought home by September 11, 2001. This mentality has seemingly been adopted again. Brought on board Bloomberg's American edition were guests who suggested that markets have become inured to attacks, basking in the bravery of being out of range. Yet, I would be more circumspect in this regard if I were them.

Instead of implying that this was a minor blip on the American radar, it would've been better if they more thoroughly discussed the typical ramifications of these occurences. Will oil prices go higher because of additional geopolitical instability, or will they go lower because demand will weaken in the wake of the attacks? What will happen to transportation and tourism stocks? How will the prospects of the 2012 London Olympic Games be affected? Are markets worried about follow-on attacks in the United States? These are all topics that are more pertinent and timely to investors instead of portraying the attacks as isolated from America. It's a small world, after all.

Lock Up Your Daughters! $80 a Barrel Soon!

2005-07-05T04:06:00.000-04:00

I've worked as a journalist before. The pressure and urge to sell stories are omnipresent. The people from Bloomberg are hardly immune from these influences. Just yesterday, the headliner at the top of every hour for the Asian, European, and American editions was that options at $80 a barrel for crude were trading on the NYMEX. The headline certainly looked spectacular, but it's no guarantee whatsoever that we will see $80 by year end. Unless major supply disruptions occur, that figure is rather difficult to achieve. Bloomberg's producers need a slap on a wrist for this one. Repetition lends an air of inevitability to the current hysteria over a new oil crisis. Prudent reporting would've confined this news to discussions of oil prices instead of being highlighted so much.

Profile#3: Nigel Stevenson

2005-07-04T04:33:00.000-04:00

You'd think that reading from a TelePrompTer is easy; well, it probably isn't so difficult once you get used to it. Still, making the news interesting is a skill that only the most gifted hosts have. Nigel Stevenson (Bloomberg Europe) is one of those few hosts. Although he is impeccably well-groomed, Stevenson is nondescript in appearance. His ability lies not in leveraging his visage. Rather, his delivery is well-nigh perfect. If there ever was a fellow who ought to teach public speaking, Stevenson's your man. Things you can learn from him include how to place emphasis on key words; modulate one's voice to be neither unintelligibly soft nor unnecessarily pointed; identify a proper pace of speaking; and use proper business etiquette.

Knowledgeable about business and nearly flawless as a news reader, he is the ne plus ultra among Bloomberg hosts. Stephen King critics say that the author could publish his grocery list and make it a bestseller. Well, Nigel Stevenson could probably read your laundry list and make it sound interesting.

Fearless Viewer's Grade: A

Profile#2: Jeremy Naylor

2005-07-04T04:29:00.000-04:00

Naylor is your quintessential English host. Unless you frequently tune in to the hopelessly Amerocentric Fox News which doesn't even bother to remove its constantly waving American flag for international viewers (?!), you'll find that English hosts are thick on the ground when it comes to international TV news. This is for a good reason: English presenters like Jeremy Naylor of the UK edition are highly intelligible. Speakers of the King's English have an unmistakable cachet. As far as hosts go, Naylor is largely unfaultable whether presenting the news or questioning guests. While he is a proficient host, the evenness of his presentation style can lead to inattention on the viewer's part on occasion.

Fearless Viewer's Grade: A-

Profile#1: Guy "I Don't Need a Steenkin' Suit" Collins

2005-07-04T03:18:00.000-04:00

For some reason, the "stocks guy" on financial news programs usually gets a special dispensation to do away with a business suit, and Guy Collins always appears in a long-sleeved shirt and tie. In any case, I don't follow European stocks that much, if at all. For me, the performance of European markets reflects that of the US market the day before instead of presaging same-day US market movements. From what I can gather, though, this Guy is quick to pick up on stocks and sectors on the move. His delivery is not state-of-the-art for he sometimes appears more focused on his Bloomberg monitor than in relaying information to a TV audience. Nonetheless, he's quite intelligible. Although he's not as polished as the hosts he plays opposite (or perhaps because), he makes an admirable foil--especially when interviewing guests. If anything, Guy Collins poses excellent questions.

Fearless Viewer's Grade: A-/B+

Behold...the Death Star

2005-06-27T13:02:00.000-04:00

One of the worrying aspects of watching Bloomberg as of late has been the dearth of commentators who espouse cautionary views about the state of the US economy, like Stephen Roach's "endgame" or Nouriel Roubini's "hard landing."

It's understandable that a business news channel would find it more appealing ratings-wise to have guests with sanguine outlooks, but it's getting rather late in the game with prospects not looking terribly good all the time. Housing bubbles, newly-elected Iranian hardliners, skyrocketing oil prices, and the continuing dismemberment of American automotive and airline industries are but a few of the many concerns right now. Reality is grim, and the Death Star is in plain sight.

I do hope that Michael Bloomberg's political affiliations do not skew Bloomberg TV's editorial stance. We don't need a TV version of the Wall Street Journal's editorial pages. Instead of having John Snow and Elaine Chao for the umpteenth time, why not have more guests with grimmer but less self-interested viewpoints? If the overwhelming tide of "don't worry, be happy" guests doesn't fade, then there will be little difference left between Bloomberg TV and CNBC. Real news is about reality good and bad; if you don't agree, there's always Fox News.

"We're Not Suckers Here"

2005-06-27T07:22:00.000-04:00

I was watching commodities guru Jim Rogers being interviewed on Bloomberg Voices this morning. He hit the nail on the head when he mentioned that cable business news channels tend to be incorrigible trend followers. Whether it's the Japan bubble, the dot-com bubble, or the current housing bubble, these channels like to stoke the flames of whatever is hot. Of course, the party ends sooner or later, and the mess left behind is never pretty.

Bloomberg host Bernie Lo countered Rogers' criticism by saying that his channel avoided most of CNBC's excessive boosterism, and Rogers kind of agreed. When Bloomberg was mentioned in the same breath as CNBC, Bernie Lo made my day by comically retorting, "We're not suckers here." Maybe so. Bloomberg is not such a blatant rah-rah for its audience is, as I've mentioned before, composed more of finance professionals and less of casual investors who piled in during the go-go days of the Clinton era. I was reminded of CNBC's rose-tinted bias just last Friday when the data on durable goods orders was released. These CNBC hosts were yakking about how great the 5.5% reported increase was when it was made up largely of one-time orders by Boeing; net of transportation, the figure was actually -0.2%. Sure enough, the Dow Jones promptly fell 123.60 points, and even Boeing went down $1.29.

Yet, you can't get away from the fact that Bloomberg features a lot of guests nowadays from the homebuilding industry. Whether it's Pulte Homes, Toll Brothers, or Fannie Mae, the song remains the same: the housing market is great, no "bubble" worries here. Their certitude is worrying, and Jim Rogers' advice about commodities should definitely be considered. The "flippers" who try to make a quick buck by buying houses just to sell them again should heed Burt Bacharach's wisdom pronto:

A house is not a home when there's no one there to hold you tight
And no one there you can kiss goodnight

In This Corner...the Merciless Cutoff Timer

2005-06-24T06:21:00.000-04:00

I've seen it happen so often: a long-winded guest keeps talking, and the Bloomberg news anchor tries to cut him or her off as a commercial break approaches. To discourage discontinuities in programming, Bloomberg relentlessly enforces its commercial breaks. Now, it may seem rude sometimes, but some time awareness on the part of the guests is in order. If you notice, those who put in regular appearances avoid this pitfall through experience. Like in all good presentations, it's best to get to the point and keep it short and simple, lest the viewers start reaching for the remote in search of Lucha wrestling

Bloomberg Viewer = Smart + Rich ?

2005-06-23T06:47:00.000-04:00

Pat yourself on the back, my friend. Have a cigar, even (as long as you aren't at work). From a survey by Mediamark Research:

Bloomberg Television viewers have the highest median household income of all cable networks measured. More than 34% of Bloomberg Television viewers have a household income of $100,000 or more--nearly twice the national average.

The Bloomberg Television audience is the most highly educated audience of all cable networks measured, with 40.5% having earned a bachelor's degree or higher.

Bloomberg Television delivers the highest concentration of executives making purchasing decisions for their companies, with viewers being 95% above the national average of adults in this category.

Clutter and the Hong Kong Dollar

2005-06-22T07:30:00.000-04:00

Just a few days ago, I noticed the Hong Kong dollar making it to the currencies being monitored on the Bloomberg TV Asia data screen. I understand that the Hong Kong Monetary Authority has widened the band in which the currency can move around a nominal peg of HKD7.80 to one USD. Still, this band of HKD7.75 to HKD7.85 is negligibly small, amounting to less than ±1%. Few people would bother to notice such minuscule movements, I believe.

Still, Bloomberg might know something that I don't. The ungenerous range was conceived as a way to partially control speculators using HKD as a substitute for the Chinese yuan in hopes that the latter would revalue. Are the Bloomberg folks prepping us for the near-term prospect of yuan revaluation? I can only, ahem, speculate.

Who Needs Another Business News Channel?

2005-06-20T08:26:00.000-04:00

I doubt whether I do. The Wall Street Journal (pay site) reports that Rupert Murdoch's News Corp. will soon set up its own business news channel to compete with CNBC. The guy who helped conjure up CNBC in the first place, Roger Ailes, went on to set up Fox News. Now Murdoch has convinced a hesitant Ailes to create a business news channel for Fox.

During the dot-com boom, I occasionally watched CNBC. There was Maria Bartiromo on the NYSE floor holding forth on stock price movements. And for a time, the indices never failed to go up, up, UP! In terms of sheer boosterism during those heady days, CNBC had no equal. Then came the stock market drop, and oddly, CNBC still tried its best to create a sense of excitement among its viewers when the party was clearly over and the caterers were already packing up the silverware. And as the bust moved in, so did a ratings slump that continues to this day; CNBC viewership is less than 40% of what it was in its heyday.

Bloomberg is drier and more straightforward in its approach than CNBC; "businesslike" in the best sense of the word. Although they've tried to enliven their set somewhat (see below), Bloomberg doesn't typically go for roundtable chit-chat and sports commentator-style talk. Casual investors (read: stocks only) are more amenable to CNBC's "Fox Lite" style whereas more serious finance professionals and their ilk who follow more than just stocks prefer Bloomberg. With Ailes at the helm of the upcoming Fox business news channel, expect a more jazzed up CNBC, but not much else.

Streaming Internet Feed Doesn't Display Data

2005-06-20T05:13:00.000-04:00

A nifty feature of Bloomberg TV is that you can view a stream of its programming online for US, European, and Asian editions. In the event that you find yourself without cable but with Internet access, keeping up with the markets in this manner looks like a feasible alternative.

The problem though is that the Internet feed just features a view of the main screen. Omitted are the stock ticker, the stock indices, foreign exchange quotes, and news headlines. Let's say you're watching the US Internet feed of the program while waiting for European economic data to break. If the data is relatively secondary to US markets, chances are that it will be displayed in the news headlines section of the broadcast edition and not be mentioned by the newscasters. That means Internet viewers will miss this data. Hopefully, Bloomberg can find a remedy so that this data can be relayed in a timely manner on its Internet feed.

New York Studio's New Look

2005-06-15T09:02:00.000-04:00

New York-based Bloomberg has just succumbed to the ever-popular "open studio" look, wherein the backdrop of the set is left open to the activity behind it. Thus, those monitoring the newswires, prepping the hosts and guests, collating the presentation data etc. can be glimpsed.

I am indifferent to this change. Some may appreciate the change of scenery, while other might prefer the older, neutral backdrop. I think the new look is positive for variety, though this is counterbalanced by the constant distraction of blinking monitors and people walking around. Your mileage may vary.

Going Live

2005-06-12T09:33:00.000-04:00

They've got this funny ad on Bloomberg TV Asia of a chap who's getting ready for work. Every room in his house is wired to Mike Bloomberg's omnipresent news service. It's an apt analogy for the ubiquity of Bloomberg TV. Several months ago, I visited Hong Kong. Not only did the major banks' trading floors all sport flat-screen monitors depicting the familiar orange Bloomberg logo, but there were also several elevators with LCD panels showing it as well! See for yourself -->

Whether you're a finance professional, a day trader, a casual investor, or a gold miner, there's something of interest on Bloomberg TV. Since you pretty much can't avoid it if you're at all interested in finance, global markets, or the like, you might as well make the best of what's around. This blog is dedicated to getting the most from watching Bloomberg TV--and making suggestions for improving its quality. Topics will include:

Bloomberg hosts
Bloomberg programs
Bloomberg guests
Bloomberg visual presentation...

...and much, much, more! All participants are most welcome as we watch...out of necessity, or awe.