Thursday, March 31, 2011

Stock Market: All Wheels On Fire

The stock market finished this quarter with a gain of almost 6%. This was the best first quarter since 1998 reported Bloomberg. While the media focused on the bad news, especially on Japan and Libya, the Wall Street and other stock markets rallied.

The reason for the rising stock prices is the continuing upswing in the world economy - despite disaster and crises: The profits of the companies are rising swift, the job market is recovering, the consumers are spending more money and the CEOs of the companies are showing more confidence and invest more in mergers & acquisitions.

The stock market rally in Q1 proves again, that disasters don`t have a lasting impact on the world economy. The nature, and the humans and their economy are just a part of it, is always recovering swift.  Any forest will quickly recapture the space, which it lost in a fire, and grass will reclaim ground, even when covered by concrete.

The humankind survived a lot of plagues, catastrophes and world wars and got even stronger. The wealth of the western world (Europe and later the Americas) is rising since the 15th century, with an accelerating speed.

The rising global wealth is reflected in the stock prices, which rose in the last 100 years on average with a 10% gain annually. There is no reason that this positive long run trend comes soon to an end. Since we are now recovering from a severe recession the pace of the stock market gains could be even higher in the next months. Good perspectives for investors.

New Orleans: Hot Days, Hot Nights

New Orleans is a magnet for tourists, especially in spring time. And every touristy place also has a lush nightlife. The very young like to party on Bourbon Street, a long line of bars, pubs & restaurants in the French Quarter. There you can see many juveniles drinking on the streets, some of them seem to have had a lot of booze.

The more ambitious find their pleasure on Decatur Street (also in the French Quarter), especially at the east end of the touristy road. Many clubs offer bands playing Jazz, Blues & Rock`n` Roll. If you go further east you come to Frenchman Street. The beginning reminds me of Manhattan`s Bowery, a center of local punk and goth subculture. There you will find an agglomeration of pubs with nightly gigs. People who like to gamble will also find a casino (Harrah`s) in the center of the city (Girrod Street).

Movies: Kill The Irishman

The Irish are nice people. They like to party and you become fast friend with them. But don`t mess with the Irish! The history of the IRA, one of the deadliest terrorist organizations of the world, proves that they can fight adamantly if they see their rights threatened.

You will find both sides of the Irish soul in the movie "Kill The Irishman". The flick is based on a real story about the career of Danny Greene, an Irish-American longshoreman who rose to become a 1970s crime boss in Cleveland.

Greene (Ray Stevenson) is both, nice, literate & friendly, but he is also violent & brutal, when he wants to defend himself and his plans. The flick displays his tough fights against the Mafia, with a lot of explosions, but it takes also time to describe the complex character of its hero.

I had also much fun watching the rest of the cast, talented actors like Val Kilmer, Vincent D'Onofrio and especially Christopher Walken. In sum: An entertaining and intelligent gangster movie.

Tuesday, March 29, 2011

New Orleans: Southern Belle

Tired of the long cold winter? Many people are fleeing to the south. Some days ago I followed them and visited New Orleans. I was greeted by plenty of sunshine and almost summery temperatures (78 F, 26 C).

The Big Easy is the nickname of the city, and it is a real beauty, a southern belle. It`s a city full of light with a beautiful architecture and good food. The center reminds me a bit of Venice. Just like the aged Italian city, the streets and places are dominated by tourists, and you will see a lot of them. The inhabitants there are a minority, mostly working in restaurants and hotels.

There is plenty to see, with a lot of motivation for photographers. The center of New Orleans looks like a big outdoor museum.  The place is famous for her antebellum architecture, houses constructed in the pre-civil war aera.

Wikipedia writes, "New Orleans is world famous for its plethora of unique architectural styles, from Creole cottages to the grand mansions on St. Charles, from the balconies of the French Quarter to an Egyptian Revival Customs House and a rare example of a Moorish revival church. The city boasts fine examples of almost every architectural style, from the Baroque Cabildo to the modernist skyscrapers of the Central Business District". 

Anyway. There are many old houses to see in the (like Anne Rice describes, the author of "Interview With The Vampire" and "The Witching Hour") built in the "Greek revival style" which was popular in many colonial areas. Very funny also are the almost prehistoric streetcars. There is no subway.

Restaurants: Jin, New York

The eyes of the world are now on the disaster in Japan. But the crises will find an end and the fascinating culture of this far east nation will persist. The nightmare news don´t abate my admiration and ambition for Japanese food, therefore I continue going to Japanese restaurants. Anyway, these places still need there customers in dark times.

One of my favorite Japanese restaurants is Jin in Manhattan. This cozy place is located between Chinatown and the trendy Lower East Side (252 Broome Street, New York). I like the atmosphere of this tiny place which is a bit familial. One big advantage: They serve delicious food for very reasonable prices and they are therefore also interesting for budget conscious customers. But, be prepared to wait, in the evening the place fills up very fast!

My favorite dish there is the Sashimi Regular, which contains 18 pieces of delicate raw fish, a feast for the palate. The different kind of fishes are soft & tasty. For a few dollars more you will get Sashimi Super Deluxe (21 pieces). You can find also a lot of other traditional Japanese dishes like Teriyaki (marinated & grilled meat or fish).

Sunday, March 27, 2011

Stock Market: Waiting For The Q1 Earnings Season

Last week the stock market swung back to its rally mode. The S&P 500, the barometer of the Wall Street, gained 2,7%, the biggest weekly rally in almost two months.

Helpful was the fact that the news about the Japan nightmare and the crises in Middle East & North Africa were cooling. Helpful also were some mergers (AT&T is buying T-Mobile USA) and further positive signals from the economy (like sinking weekly jobless claims).

But it seems the most positive impulses came again from some big companies, which reported strong profit and revenue numbers for the last quarter. For example the business software giant Oracle reported more profit & revenue growth than the analysts had predicted. Good numbers came also from other technology bellwethers like Red Hut (a specialist for Linux software),  Micron Technology, the biggest U.S. producer of computer-memory chips, and the electronic manufacturer Jabil Circuit. The luxury retailer Tiffany & Co. also reported an impressive profit gain. This week’s earnings reports were “very, very positive, and a lot of the commentary coming out of the companies was also positive", commented a fund manager quoted by Bloomberg.

The numbers show that the companies didn`t lose their ability to report impressive profit numbers, which has been the motor of the rally since March 2009. The company results from this week also kindle the hope, that the Q1 earning season will be as good as the last one. In around 2 weeks, companies will begin releasing their reports on the first quarter of the year.

It seems that the rally this week was partly a bet on a strong Q1 earnings season. We would say in German that the stock market conceded some "Vorschußlorbeeren",  which means to give advance praise.

Saturday, March 26, 2011

Movies: Interview With The Vampire - Revisited

Coming back from a short visit to beautiful New Orleans I revisited the movie: "Interview With The Vampire" on DVD. Many parts of the basic book ("Interview With The Vampire" by Anne Rice) are occurring in this charming southern city and therefore a lot of the scenes were shot there.

Watching the DVD gave me the opportunity to enjoy again the beautiful houses and streets of the southern belle. Big Easy, the nickname for New Orleans, has a charming atmosphere which is reflected in the settings of the movie.

The story is about immortality: You never grow old, you never die. But it is also about boredom. You don´t change, you don´t develop, you have to stay what you are over many centuries.

The flick isn`t boring. Even if you are not interested in a vampire story you might enjoy viewing the decadent life of the rich in the early 19.th century in New Orleans and Paris and the gaudy scenery's Neil Jordan, the director, created.

The flick has one of my favorite film openings: "Terpsichore and Harp Concerto in B Flat" by Georg Friedrich Händel before the nightly skyline of modern San Francisco. The blend of a solemn baroque music and the lights of a metropolis of the presence creates a lot of anticipation. And the finish, with a very different kind of music, is worth waiting for.

Wednesday, March 23, 2011

Stock Market: Cheerful Consumers, Hesitant Investors

The stock markets are hovering in the red again. As usual the media - and many investors - are focusing on the bad news: Japan, violence in Middle & North Africa, bad debts of the Eurozone. But the economic situation is getting better and the consumers are way more cheerful.

The proof: consumer focused companies, which concentrate on upscale markets, reported strong numbers this week . Today Inditex posted a 32% jump in profits (revenue plus 13%). This Spanish holding company owns the retail chain Zara, which sells upscale fashion worldwide. Especially in emerging markets such as China & India, the growth rates are very high.

On Monday Tiffany & Co. reported, that profit climbed in the last quarter 29%! They expect that their worldwide sales will rise this year 12% to 14%.

The consumer is the motor of the world economy. It seems that the weak stock market doesn`t reflect the strength of the economy. Maybe they point to a chance for clear-sighted investors.

Tuesday, March 22, 2011

Traveling: The Standby Game

Traveling is a lot of fun, but sometimes it goes differently than expected. Last weekend a planned 3-day trip from New York to New Orleans changed to an unintended 4-day  journey and included an unplanned side trip to Texas. The change was caused by a game which the airlines (in this case Continental Airlines) are playing with their customers. If this game has any rules, they are not known by the passengers.

My cost conscious girlfriend had booked 2 Continental Airlines discount return tickets from Newark (just around 30 bus minutes from midtown Manhattan) to New Orleans. She paid just around $400 for them. The flight to the south went without problems. But not so the return flight.

We had a ticket for Sunday morning 6.20 am at the Louis Armstrong Airport. When we arrived there was already a long line before the security gate, which - we learned later - needed around 20 minutes. Because the airline didn`t give us the boarding passes online we had to go to the Continental desk, but we were refused! The airline person claimed, that we were already too late for the 6.20 flight.

All the later direct flights to Newark were already overbooked and we were offered tickets first to Houston and from then to Newark, and we were set on a standby list for the next Houston-flight. We had to wait until the end of the boarding, hoping some passengers don´t show up, to get their seats.

We didn`t get on the first 2 flights to the Texan metropolis. But we were upgraded on the standby list from fligh to flight and finally boarded the third plane which arrived around 1 pm at George Bush Intercontinental/Houston Airport, but there the standby game started in a new round. As newcomers with a high number in the waiting list we missed the first Newark flight,  and set our hopes on the flight 2 hours later, at 3.00 pm.

Shortly before the scheduled take off time, the desk people asked some of the standby candidates to form a line, which contained 6 of the want-to-be passengers. My girlfriend got place 3 and I was set as number 4. Some minutes later the first standby candidate won his seat. Shortly after that we were told that the number of possible seats melted to 2. The then first candidate waived his right because we wanted to travel together with candidate No. 4, who now had no chance for a seat. Therefore we advanced to place 1 and 2, but we had to wait some more minutes.

It seemed that we had luck. The desk staff accepted our tickets and sent us to the cabin. But because the cabin was still blocked with passengers trying to load their stuff, we had to wait for the free seats.

Then the big disappointment came. The attendat showed up in the cabin with a very late owner of a boarding pass - and therefore a seat. Now there was just one seat available - not enough for both of us. So we had to leave the airplane and were sent to the customer information desk for a placement for the next flight. (If the staff in New Orleans had also been so generous to late boarding card owners we would have gotten our 6.20 flight in New Orleans easily!)

Anyway. This time at the customer information desk we learned that the airline had updated the standby list. My girlfriend stayed first in line, but I was demoted to 6th place!  The system ignored the fact that our tickets were both bought at the same time and that we showed up together at the Houston desks. The chance that we got the reamining seats in the last  2 planes which flew to Newark on Sunday was now very low.

So we traded our tickets to the earliest flight on the next day and got boarding passes (with seat numbers) for Monday at 6.00. To be sure to get the seats we showed up at 4.40 am at the airport and travelled without any problem.

The flipside: We enjoyed the extra-time in the warm (near 80 F/27 C) and sunny south before we went back to rainy and chilly New York City (40 F/4C). The flight interruption made us eligible for a hotel-discount, which we used for solid place near the airport. We spent the early evening hours in a nice Tex-Mex Restaurant and in a multiplex cinema, both in a vast shopping mall, some taxi-minutes away from the hotel.

Monday, March 21, 2011

Airline Stocks: The Traveller`s Pain, The Investor`s Gain

Just back from a short visit to New Orleans, with a side trip to Texas. Being a long time economist and a stock market investor, the journey brought some new ideas. The reason: The airports (Newark, New Orleans & Houston) are very crowded and in the airplanes every seat is taken. 

This situation should be good for the airlines, which suffered a lot in the last recession.  The Broker Maxim Group declared today that they expect a spring rally in airline stocks, with the worst of the harsh winter weather behind us. Strong demand is going to allow carriers to pass through much of increased fuel costs to consumers.



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Wednesday, March 16, 2011

Movies: The Adjustment Bureau

Do we have free will? Can we decide what we will do? Or is our life driven by chance or by fate? These questions have been keeping the philosophers busy for centuries. It is also the basic story of a recent movie: "The Adjustment Bureau".

The flick focuses on a politician (Matt Damon), who is running for the US Senate. His plans are crisscrossed (at least in the beginning) by a bunch of ominous people, who belong to a mysterious "adjustment bureau". These people have maps with elaborate plans that show how the lives of everybody on earth should go. The politician, of course, tries to fight them and to achieve his own plans - although they diverge from the map.

The interactions between the politician and the agents (or whatever) of the "adjustment bureau" generate a lot of surprises and are therefore entertaining. But, like most Hollywood products, the plot is also heavy constructed.

Whether the story seems reasonable or over constructed is a matter of taste. While dealing with the "bureau" the politician has to move between many places in Manhattan. Friends of New York City get  therefore a lot of sights to enjoy. This applies also for Emily Blunt, who is cast second in  the flick. "The Adjustment Bureau" was not the worst way to spend a chilly Sunday afternoon.

Lifestyle: Brunch at Pulino`s, Manhattan

One of the best parts of life are lazy Sunday mornings, one of the best parts of them is brunch, and one of my favorite places for that is Pulino`s (282 Bowery New York). http://www.pulinosny.com/

Pulino`s is a stylish cozy Bar & Pizzeria. The big windows allow a view on the intersection of Houston Street and the Bowery, one of the coolest streets in southeast Manhattan, and they let in a lot of light on a bright day.

If you don´t want to watch the scenery, you can find a lot to read there, not just the Sunday edition of the New York Times, there is also a nice variety of magazines, including "The Economist". If you are not interested in reading, the walls of the cool structured place display a library of wine bottles. But on lazy Sunday mornings it´s a bit too early for that. It´s brunch time.

On my last visit I choose their "American Breakfast" and got 2 scrambled eggs with sausage plus potatoes. My girlfriend decided for her sweet tooth and ordered the "Buttermilk Pancake". It was skillet-baked with blueberries & ricotta. YUM.

A very pleasant way to start the day in an exciting city.

Tuesday, March 15, 2011

Stock Market: Bettings Against The Vultures?

The stock market is under pressure. Stocks in Europe & USA are tanking, following the catastrophe and resulting market crash in Tokyo. Fears about economic fallout from the endangered Japanese nuclear plants are spooking investors.

As usual in such situations vultures are circling above the market. Many hedge funds and other market participants are shorting now massively. This means that they are borrowing lots of stocks and other risky assets (like oil) and throwing them on the market. They are betting on much lower market prices, which would enable them to buy those assets back at significantly cheaper price, therefore gaining a huge profit.

The massive selling of the "shorts" enhances the stock market fall. The experience from the past (for example 9/11 and the panic of March 2008) shows that the short sellers very often overdo it, because too many are making pessimistic bets. History also proves that the global markets are much more robust than the way pessimists think. The current stock market slide could therefore be an overreaction which generates way undervalued stock prices. Is this is a big occasion to buy?

Thursday, March 10, 2011

Book Comments: Cities

Do you like cities? Are you fascinated by metropolises like New York, London, Singapore, Shanghai or Dubai? Then you might also enjoy "Cities", by John Reader.

The author knows a lot about cities, "the defining artefacts of civilisation". "We shape the city, then it shapes us", he claims.
Reader describes why cities were founded, why they grow or sometimes shrink and what kind of challenges they generate.

"The advent of the city as a centre of human activity freed ever increasing numbers of people from the burden of finding food and shelter for themselves, directly from the land". Cities provided "food, security and cultural environment". Naturally the book starts with the beginning of the cities, the first known settlements and their growth to regional metropolises, especially in Mesopotamia (today: Iraq and parts of Syria, Turkey and Iran) which were known as Ur, Uruq and Babylon.

Readers discusses intensely the influences of politics & the economy for founding and expansion of cities, that is: a Prince`s capital and a merchant´s place. Cities like Berlin owe their growth to the politics (Prussian kings) but many other grew because they become important centers for merchandise, such as London, New York and Singapore.

The Author describes further the snowball effect which leads some cities to grow into metropolises and global centres: "Financiers liked to congregate in regional and national cities, close to the ear of governments that controlled public finance, where legislative control of economic social affairs was exercised and might be lobbied". Along with the banks and the insurance companies came the headquarters of large industrial companies, the media and marketing agencies. He concludes that the driving forces are banking, accounting, management, law, journalism and advertisement.

We learn also about the immense tasks the growth of cities generate, especially for feeding the inhabitants of ancient Rome (at it`s peak one million!) with grain. Despite his ardor for cities Reader finishes his book with a slightly pessimistic undertone. He sometimes describes them also as "dangerous parasites, with a capacity to harm regions far beyond their own boundaries".

Monday, March 7, 2011

Investing: Spotting the Fund Manager

Many people invest their savings in stock funds. It´s much easier to invest in funds than to pick certain stocks, and in most cases less risky. But, the problem is, how to find the right fund? Nobody knows how a fund will perform in the future. Gains & losses depend on the development of the stock market, the skill of the fund manager and other things. But it`s very helpful, to know what the fund manager does.

The Internet is an excellent source of information when an investor tries to spot the behavior of the fund`s  manager. Take for example the Goldman Sachs Capital Growth Fund A. The fund manager invests in promising stocks and tries to beat the stock market as many of his colleagues do.

You can find the fund on Yahoo Finance, a site which has a lot of information. You have just to write the name of the fund in the column "get quotes". You then get a page with shows many facts on this fund.

Interesting is a chart on the right side of the page, which displays the performance of the fund in the past. For example, the performance for the last 3 months, but you can also see other periods. Likewise, you can also compare the performance of this fund with alternative investments, like the S&P 500, which represents the whole stock market. This comparison shows you, whether the fund manager did better or worse than the whole stock market (or another chosen investment) in a certain period.

Yahoo Finance gives you a lot more helpful information. Very important is the strategy of the fund, which you find on the "Profile" page . Also helpful is the page "Holdings", which lays out in which kind of stocks the fund manager invests. Recently, the top holding of the Fund were Apple (which is very popular with funds managers), Schlumberger (which offers infrastructure for the oil and gas industry worldwide), Qualcomm (a maker of chips for mobile devices as smart phones)  and PepsiCo.

In addition to your own research you can also build a virtual fund portfolio on Yahoo Finance just by clicking the link "Add to Portfolio". This portfolio can contain any chosen imaginary investment. It delivers comparisons within a group of chosen funds and allows you to get some experience in dealing with investments like funds.

Of course there are many other valuable sources for information on Internet, including the site of the fund company, in this case Goldman Sachs Asset Management (www.goldmansachsfund.com), which shows you even more information.

Tuesday, March 1, 2011

Financial Markets: Like Cattle in a Thunderstorm

The financial market is a mirror of the economy, the guidebooks tell us. They may be right, at least in the long term. But in the short term other influences may rule, especially politics & psychology.

In recent days the markets are suffering again under a phenomena we see very often, the herding behavior of the market participants. Especially the managers of the hedge funds (big funds which follow no rule and are not controlled by any state agency) behave as a herd that gets in panic and runs in a stampede when lightning strikes.

Now a lot of hedge funds are buying oil just because the oil price is climbing and other hedge funds are buying it. The Australian newspaper "The Sydney Morning Herald" reports on its Internet site that "hedge funds oil bets soar to a record". The investments of the funds and other larger speculators  in oil on the financial markets have risen by 30 percent in the last seven days.

These speculators are betting that the unrest in Libya will spread to other countries and endangers the world supply of oil. This behavior sharply raises the oil price on the financial market. Other funds and speculators jump on the bandwagon just because they bet on oil prices further rising. This herding behavior is spiralling the price of the commodity even higher, a self-fulfilling prophecy.

We saw the same herding behavior in the year 2008. Instead of a sharp recession oil prices were rising steeply. Many hedge funds bought oil in the summer of 2008, because they were betting on further oil price ricess, and that increased the commodity price further.

Now the hedge fund managers, who are often called "smart money", act like a herd again. They react like cattle in a thunderstorm.

Restaurants: Perbacco, Manhattan

Manhattan is full of surprises. One of the nicest surprises is Perbacco. This tiny restaurant & wine bar (Enoteca e Cucina) in Manhattan`s East Village (234 East 4th Street, between Ave A and B) is a hidden gem. They serve Italian cuisine on a high level. http://www.perbacconyc.com/

Usually I prefer fish, but the menu allured me to try something else, the "Pancia di Maiale, Castagne e Formaggio Fritto". Its honey glazed pork belly served with chestnuts purée, grilled mushrooms, roasted shallots, dry porcini and garlic crusted deep fried Bitto cheese. I was well rewarded. I adored the slightly sweet taste of the crispy pork in combination with the other ingredients which fit quite well.

My girlfriend enjoyed the "Salmone Poché con Porcini", which was poached large salmon slice, cauliflower sauce, seared with porcini mushrooms and endive.

The Appetizers were also delicate. I choose the "Roast Tuna", it was thinly sliced seared fresh tuna loin over sautéed endive served with hot aromatic olive oil. My girlfriend voted for the speciality of the day, called "Parmigiana di Melanze". She got eggplant with a sauce of whipped up buffalo mozzarella.

The meal was perfected by the dessert, called "Strudel". We got "puff pastry cylinder filled with white chocolate, apple and cinnamon mousse, toasted walnuts and pine nuts gelato, golden raisin and rum sauce... with a liquid strudel shot".  One reason more to go back.

The long list of wines was also impressive. Besides the list of wines by the glass and the carafes there was a large assortment of bottles. The wine menu displays the geographical structure of Italy. The bottled wines are sorted according the regions of the Italian boot: north, middle & south plus the islands. My girlfriend choose a bottle a Chianti Classico from Toscana, a good choice.

There was just one negative point. We arrived on a cold winter evening and were seated next to the wall. My girlfriend was placed almost on top of the radiator. The seat was a bit too hot for her taste. Next time when we visit in Winter we will choose a place not too near to the heating.