Investors in the USA have become a skittish bunch. Of course, the little guy, the "Mom and Pops" have long abandoned stocks, going back to 2008 when many stocks went south taking the small investor down with them. And we know about the middle class: it's shrinking day after day. Wages are stagnant; have been for 20+ years. Institutional investors are the heavy weights now. And they've gotten a little nervous of late. Actually, over 2014, institutional investors have made some changes, big changes.
A Case In Point
PIMCO, the California investment firm, had been riding high for years. And then, new management, and a big change. Mr. Bill Gross, one of the founding fathers, decided he had had enough. He quit; then he went to the Janus Funds. What happened next? It's called outflow. Funds move in and out of a mutual funds all the time. A fund is on a roll when funds are flowing in. Managers work overtime to place those funds to advantage. For all of 2014, investors have been running from PIMCO and its funds. Over the last year, a mutual fund record amount was withdrawn from PIMCO. More than $150 billions. Yes, Billions with a "B". How sad. Maybe the big German company, Allianz, can come up with a plan to stem the outflow, maybe not. Maybe they'll decide it's no longer worth the headache. We didn't like Bill Gross and his big ego anyway. So, Allianz gets stung again in the good ol' US of A. Gee, can't a guy make profit anymore? Back to the drawing board.
And Allianz, more executive meetings; more decisions, more economic pain.
Monday, February 9, 2015
Gas Prices: Down, Now Up Again
If you blinked your eyes, you missed the bounce of gas prices. Seems just last week they were under $2/gals. Then I started to read that big oil and gas producers were not happy: their stock prices were dropping. Tsk,tsk. They started to send messages to their friends in Washington that they didn't anticipate the drop. They must now lay off workers, close drilling operations, slash R&D budgets. Woe, woe, woe is me.
So, in the course of 5 days, we've been witness to a rebound. Prices at the pump soared over the weekend. They went up as much as 20% in some Bay Area locations. Pundits and Pols say consumers don't understand economics. That's right. We don't. When prices go down, they trickle down. When they go up, they leap up overnight. Whose economics don't we understand? Monopoly economics. Maybe Washington needed some action in the Middle East, or maybe they're sending a message to Mad Vlad that we now control oil prices, not OPEC, or Russya, or Dubai, or Venezuela. It seems that once stable pricing is cast adrift, it's hard for governments to predict the future. That's not good for the people; it creates difficulties; causes anxieties and fear.
So, if you just bought an SUV or a new 3/4 ton pickup truck, take it back. All the money you thought you would save on gas just evaporated. Tsk, tsk.
So, in the course of 5 days, we've been witness to a rebound. Prices at the pump soared over the weekend. They went up as much as 20% in some Bay Area locations. Pundits and Pols say consumers don't understand economics. That's right. We don't. When prices go down, they trickle down. When they go up, they leap up overnight. Whose economics don't we understand? Monopoly economics. Maybe Washington needed some action in the Middle East, or maybe they're sending a message to Mad Vlad that we now control oil prices, not OPEC, or Russya, or Dubai, or Venezuela. It seems that once stable pricing is cast adrift, it's hard for governments to predict the future. That's not good for the people; it creates difficulties; causes anxieties and fear.
So, if you just bought an SUV or a new 3/4 ton pickup truck, take it back. All the money you thought you would save on gas just evaporated. Tsk, tsk.
Sunday, February 8, 2015
Flying Circus: US Airlines
For passengers on domestic flights in the US, the experience of flying has become an "experience". Full flights, extra fees for about everything, security checkpoint hassles, baggage problems, no food service, tight seats (and getting tighter), no leg room, no movies, surly cabin staff, long waits on the tarmac, and insult of insults: no tickets avail. for all those miles.
Well, it's not enough. The recent drop in fuel prices/ oil has gone right to the bottom line of all the majors(and minors,too). So, what are the airlines doing now? They want to block access to the US market by foreign carriers, eg. Emirates Airlines. So, they want as little competition as possible. They buy up other companies here(United absorbed Continental recently), American emerged from bankruptcy and is now flourishing, and growing. New aircraft ordered will be configured with extra seats in economy, reducing width from 18 1/2" to 17" to accommodate the increase. Lovely.
And 1st Class? Those seats are even roomier than before, loaded with extra amenities. There's no equality in the air; only inequality. Thank you very much.
The oligopoly starts here: knock out the competition until you are the only game in town. Lobby Congress and regulators(deregulated in 70's), force out the weak sisters by conspiring to freeze markets, and pay as little dividend as possible to the sheep who are dumb enough to invest in your company stock(you hold only preferred shares and you control the board and set your own salary). Lovely. Our ministers fly about the country regularly and we often hear of their trials and tribulations. The Mayor flies occasionally, but not for business. European airlines seem to do a better job, but they have their own financial worries.(see Alitalia). Don't forget Ryanair, the low cost carrier out of Ireland. A most disgusting operation, filled with cheap seats, and no service. You want cheap, fly Ryanair. Most Europeans with a salary will choose another carrier. Students and large families are stuck with these cattle cars.
Write your Congressman-Oh, don't bother. Their mail is screened and ends up in the dumpster. Send an email, which goes to trash. But you'll feel better afterward.
Well, it's not enough. The recent drop in fuel prices/ oil has gone right to the bottom line of all the majors(and minors,too). So, what are the airlines doing now? They want to block access to the US market by foreign carriers, eg. Emirates Airlines. So, they want as little competition as possible. They buy up other companies here(United absorbed Continental recently), American emerged from bankruptcy and is now flourishing, and growing. New aircraft ordered will be configured with extra seats in economy, reducing width from 18 1/2" to 17" to accommodate the increase. Lovely.
And 1st Class? Those seats are even roomier than before, loaded with extra amenities. There's no equality in the air; only inequality. Thank you very much.
The oligopoly starts here: knock out the competition until you are the only game in town. Lobby Congress and regulators(deregulated in 70's), force out the weak sisters by conspiring to freeze markets, and pay as little dividend as possible to the sheep who are dumb enough to invest in your company stock(you hold only preferred shares and you control the board and set your own salary). Lovely. Our ministers fly about the country regularly and we often hear of their trials and tribulations. The Mayor flies occasionally, but not for business. European airlines seem to do a better job, but they have their own financial worries.(see Alitalia). Don't forget Ryanair, the low cost carrier out of Ireland. A most disgusting operation, filled with cheap seats, and no service. You want cheap, fly Ryanair. Most Europeans with a salary will choose another carrier. Students and large families are stuck with these cattle cars.
Write your Congressman-Oh, don't bother. Their mail is screened and ends up in the dumpster. Send an email, which goes to trash. But you'll feel better afterward.
Saturday, February 7, 2015
Minister Departs CONUS
Well, Sports fans, our world traveling Minister is currently airborne on a United Air Flt winging his merry way to East Asia(or Far East if one gives the term a bit of English). He'll touch down in Taipei, then get a connection direct to Bangkok. Of course, there will be a requisite lay-over: 6 hours, or 4, depending. He'll find a bench or a curb at the airport. He told the Mayor that authorities in Taipei require the airport to close-yes, to close, from about midnight to sun up. Close, that is, for passengers in the airport terminal. How ridiculous is that? No doubt the locals want more rooms occupied in local hotels: the better to tax you and sell you stuff.
Tomorrow, or Monday in East Asia, he'll board a flight to his final destination where he'll join a fellow traveler and they'll get a local hop to the southern beaches, actually, an offshore island resort.
After that, he'll play it by ear: on to Myanmar, maybe Cambodia, maybe Vietnam, and maybe even Laos.. He's been granted about 3 weeks to recharge his batteries before he heads back to Washington, DC where he'll begin a new career path. More on that later.
The Mayor had lunch with the Minister of Aviation yesterday who gave an update on the plane crash in Taiwan. It seems, according to sources w/i the aviation community, that the pilot of the French-made aircraft cut power to the one engine that was keeping the plane in the air. Looking at that photo that everybody has seen, the pilot is unable to control the stall that has gripped the entire aircraft. At least there were a few survivors.
Tomorrow, or Monday in East Asia, he'll board a flight to his final destination where he'll join a fellow traveler and they'll get a local hop to the southern beaches, actually, an offshore island resort.
After that, he'll play it by ear: on to Myanmar, maybe Cambodia, maybe Vietnam, and maybe even Laos.. He's been granted about 3 weeks to recharge his batteries before he heads back to Washington, DC where he'll begin a new career path. More on that later.
The Mayor had lunch with the Minister of Aviation yesterday who gave an update on the plane crash in Taiwan. It seems, according to sources w/i the aviation community, that the pilot of the French-made aircraft cut power to the one engine that was keeping the plane in the air. Looking at that photo that everybody has seen, the pilot is unable to control the stall that has gripped the entire aircraft. At least there were a few survivors.
Friday, February 6, 2015
Germans Know Business: Si o No?
Firemans Fund Insurance has been around since 1853. Founded on the West Coast, San Francisco, it offered full lines of protection for business and individuals. When it relocated to Marin County, north of SF, it transferred most of its 7000 employees to several sites, becoming the largest employer by far. Its success attracted potential takeover offers, but never sold out. Until a large German firm came calling in the 1990's. Allianz was that company: big and looking to get bigger. It completed the takeover and before long, things changed, gradually.
Executives came and went. In house training programs were shut down. Goals were set and changed frequently: raised to lofty heights. Personnel were required to do more with less. Then the IT Dept. was relocated to Arizona. Then the parent compnay began to sell corporate components, reducing various segments of the company, all with a goal of satisfying corporate profits. By the early 2000's, the Marin County campus had been reduced by 75% and profits were nowhere to be found. Pension plans were scrapped; dubious schemes replaced them. One in particular was run by local scoundrels who eventually went to prison, but not before losing millions of future retirees pension funds.
This past week, Allianz announced that it is selling the final piece of the company, the personal insurance line for a few hundred million. Then the lights go out after 161 years of business.
The new train station installed to provide the company employees a convenient mode of transportation to work lies unused, waiting for trains that will never come.
Executives came and went. In house training programs were shut down. Goals were set and changed frequently: raised to lofty heights. Personnel were required to do more with less. Then the IT Dept. was relocated to Arizona. Then the parent compnay began to sell corporate components, reducing various segments of the company, all with a goal of satisfying corporate profits. By the early 2000's, the Marin County campus had been reduced by 75% and profits were nowhere to be found. Pension plans were scrapped; dubious schemes replaced them. One in particular was run by local scoundrels who eventually went to prison, but not before losing millions of future retirees pension funds.
This past week, Allianz announced that it is selling the final piece of the company, the personal insurance line for a few hundred million. Then the lights go out after 161 years of business.
The new train station installed to provide the company employees a convenient mode of transportation to work lies unused, waiting for trains that will never come.
Your New Neighbors: Brazilians
Who is that man and where did he get all that money? These are some of the questions being asked around Miami, FL. Yes, many moneyed elites are looking at real estate in Miami, Florida, citing the moribund economy and Brazil's high crime rate. In addition, many claim that the instability of government is also driving them to the US market. Other locations being looked at include New York, Boston, and Orlando, FL.
Cristiano Piquet, former race car champion, is now selling real estate in Florida, said he cannot keep up with the demand from Brasilians seeking to move to Florida. many perceive Florida as a safe bet for their $$$$. There are about 1 million Brazilian citizens living currently in the USA, of approx. 3 millions living abroad. many Brazilian ex-pats cite Ms. Roussef"s re-election as the fact that drove their decision to leave. In Florida alone, about 2-300,000 Brazilians live in the Sunshine State.
Cristiano Piquet, former race car champion, is now selling real estate in Florida, said he cannot keep up with the demand from Brasilians seeking to move to Florida. many perceive Florida as a safe bet for their $$$$. There are about 1 million Brazilian citizens living currently in the USA, of approx. 3 millions living abroad. many Brazilian ex-pats cite Ms. Roussef"s re-election as the fact that drove their decision to leave. In Florida alone, about 2-300,000 Brazilians live in the Sunshine State.
Trouble in Brasile: Another Scandal Moment
Government Leader Dilma Roussef has a headache this morning. The Supreme Court has opened a legal inquiry into Petrobas, the state-owned oil company, and the kickback schemes involved with the awarding of construction contracts. Federal police arrived at the front door of the home of Workers' Party Joao Vaccari Neto, treasurer, who is accused of receiving between $150 and $200 millions of dollars on behalf of the Party. Some 90 contracts are alleged to be involved. He was not arrested or charged, only questioned. Some members of Congress are asking that President Roussef resign.
Documents that brought light to the allegations were part of federal investigators plea deal with Pedro Barusco, a former Petrobras manager. Part of his plea deal included admission that he received $97 millions himself, and agreed to pay back all of it excepting $1 millions that he spent on trips and medical treatments. The Petrobras case, known as "Operation car wash" because it started as an investigation into money laundering at a car wash in Brasilia. Dozens of arrests have been made, including executives of some of Brasile's largest construction companies.
None of this bodes well for the former Brasilian president, "Lula" Luz De Silva, who has long supported his appointed successor, Wilma R. The Squid, as he is known among his people, has kept a low profile, but has stayed involved in politics since leaving office a few years ago. Wait until the feds start looking at the Olympic construction contracts. Hmmmm.
The Workers' Party will have to answer some serious questions about its activities. Opposition parties will raise considerable concerns about the ruling party and how it got to the presidency.
Documents that brought light to the allegations were part of federal investigators plea deal with Pedro Barusco, a former Petrobras manager. Part of his plea deal included admission that he received $97 millions himself, and agreed to pay back all of it excepting $1 millions that he spent on trips and medical treatments. The Petrobras case, known as "Operation car wash" because it started as an investigation into money laundering at a car wash in Brasilia. Dozens of arrests have been made, including executives of some of Brasile's largest construction companies.
None of this bodes well for the former Brasilian president, "Lula" Luz De Silva, who has long supported his appointed successor, Wilma R. The Squid, as he is known among his people, has kept a low profile, but has stayed involved in politics since leaving office a few years ago. Wait until the feds start looking at the Olympic construction contracts. Hmmmm.
The Workers' Party will have to answer some serious questions about its activities. Opposition parties will raise considerable concerns about the ruling party and how it got to the presidency.
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