Tuesday, June 28, 2011

Stock Market: What Nike Wants To Tell Us

Don`t believe the fear mongers who see  the next recession behind every corner. The world economy functions much better than many believe.

The proof comes from Nike. Yesterday they reported strong numbers, quoting higher demand for their goods in markets from the U.S. to China. Their earnings jumped 14% in the last quarter, and their revenue climbed also 14%. The producer of athletic shoes and other up market sporting accessories  also sees a bright near future. Their orders for further sales jumped 15%.

These numbers show that consumers worldwide are still in spending mode. Therefore the consumer expenses, the motor of the whole economy, are still growing rapidly, feeding the global upswing.

The Nike number confirm also the strong signal that FedEx already delivered last week.
http://drivebycuriosity.blogspot.com/2011/06/stock-market-signal-of-fedex.htmlBoth bellwethers are seismographs of the world economy. They are growing fast, a sign that the upswing of the world economy continues.

The Nike & FedEx numbers are a good omen for the earnings season (companies reporting numbers for the second quarter) which starts in around 2 weeks. Maybe this is the real reason for the stock market rally we see today.

Monday, June 27, 2011

Economy: Better Times Ahead?

As many experts expected, last month consumer spending cooled. Today the U.S Commerce Department reported that personal spending (expenditures by consumers) stagnated in May, dropping 0.1% adjusted for inflation.

This is mostly a reaction to the rising oil prices. In the first months of the year hedge funds and other speculators pushed up the oil price on the financial markets to $114. The gas price on the pumps followed and climbed to nearly $4 per gallon. Many consumer with small budgets had to react. And they did so by reducing their expenditures on consumer goods to pay for the rising gas prices.

But in the recent weeks the situation turned. Now it seems that the bubble on the oil market is bursting. The oil price dropped around 20% on financial markets to almost $90. The price for gas fell also.

The winners are the consumer who have now more money in their wallets. The probability is high that they react again and return to similar spending behavior prior to the oil price rally this spring. The return of the consumer could restart the now stuttering US economy.

The current situation shows a huge difference to the year 2008. Then a recession had already begun when the oil price on the financial markets climbed to $147. And speculators followed manipulators like Goldman Sachs, who predicted oil pricec would reach $200. The oil price rally was typical herding behavior. Hedge funds and other speculators bought the important commodity just because the price of oil was rising. Therefore they hoped they could sell oil for a higher price. This speculation drove the price of oil even higher and caused a snowball effect, a self-fulfilling prophecy.

In 2008 this oil speculation caused an economic disaster. The high energy costs siphoned too much money out of the economy, which aggravated the recession. Companies & consumers had to cut their budgets because of the rising expenses for oil. Commuters couldn`t pay their mortgages because they spent their money at the gas station, which resulted in the financial crisis.

This year the market for oil reacted much sooner. There is now a high chance that the weak oil price cools the speculation and avoids the dangerous snowball effect we saw in 2008.

History never repeats itself.

Thursday, June 23, 2011

Stock Market: Good News From FedEx

The stock markets are in the limbo again. The market temper is miserable because the world economy hit a weak a spot and the crisis in Greece makes many investors nervous.  But these fears are overblown.

Yesterday we got a new sign that global companies are coping well with the global hiccup and are still flourishing. FedEx, a bellwether for the whole world economy, posted a 33% jump in its latest quarterly earnings, their revenue rising 12%. Both earnings per share and revenue beat analyst expectations. More: They expect a robust fiscal year 2012 (which started June 1st), citing an improving global economy that has increased shipping volumes across all its transport segments.

This is a proof that the world economy functions better than many believe. FedEx is a seismograph for the economic activity because their business depends on global trade streams and reacts very sensibly to the ups and downs of the world economy. The message is that FedEx continues its strong growth of revenue & profits which is a good sign for the stock market, at least for big companies with global markets.

Wednesday, June 22, 2011

Traveling: Zeche Zollverein, Essen

Beauty lies in the eye of the beholder. But the relationship is changing. Now we discover the beauty of old industrial structures that were originally build just for their function. One of the finest examples is "Zeche Zollverein" in Essen, Germany, now part of the UNESCO World Heritage Sites.

"Zeche Zollverein" is a forsaken coal mine and a huge industrial complex which has been transformed into a cultural & commercial center, attraction for tourists. One landmark is the winding tower ("Förderturm") of shaft 12, which is now regarded as a symbol of the whole Ruhr area (a collection of many industrial cities along the river Ruhr in north-west Germany). The boiler house of shaft 12 is also interesting. As the winding tower, this building was constructed in the style of "Bauhaus", an art form that thrived in Germany around 1920.

My favorite structure in this area is the coking plant ("Kokerei"). It is a large industrial complex which was used to transform coal in coke. You can see a long row of big ovens and lot of tubes that were used to transport the exhaust gases which were set free in the cooking & cleaning process of the coal.

It is amazing that the construction, which was originally built for banal purposes like transporting coal, coke, exhaust gases, water and energy, now looks like pieces of (modern) art. Was it done on purpose? Did the builders clandestinely put their pride into it? Did they deliberately shape the construction as modern art? Anyway now we can admire the aesthetics of the geometric structures.

The pleasure is greater now because parts of the industrial complex have been reconquered by nature. In some parts of the area fresh growing grass, weeds, flowers, bushes and trees add to the beauty of "Zeche Zollverein".  And at night the structures are illuminated with blue and red lights giving the buildings a new character.
You can further indulge by visiting the cafés & restaurants there. Their official website lists 5 places for eating & drinking. My girlfriend and I enjoyed a delicious dinner at the patio of "Casino Zollverein" an up market place for lunch, dinner & parties. The ambitious place fits well into the now artsy area. Bon appétit!

Friday, June 17, 2011

Books: A Journey Into The Mind Of Philip K. Dick - Revisited

If we believe publishers, bookstores and libraries, biographies are non-fiction. Are they? How could someone know the life of another person, especially when their subject is dead? But anyway, Emmanuel Carrère did a great job.

His Philip K. Dick biography "I  Am Alive And You Are Dead. A Journey Into The Mind Of Philip K. Dick" is a fascinating read. The book, written in French, is also available in English.

The author based his elaborate guessing not just on the known facts about the life of the great Science Fiction author. Carrère also used a lot of analytics, logics, psychology and common sense to construct a fascinating novel about a real life.

His book is like a mathematical derivation. The author used the ideas of Dick`s novels and stories, thus the printed thoughts of Philip K. Dick,  and then deduced how the science fiction genius may have thought in a special situation. The plot of the book is a kind of a second derivation of Dick´s published ideas ensnared with known facts of the science fiction author´s live.

The main issue of Dick´s tales is the question of identity: "Who am I". You may know the movie "Blade Runner", based on Dick´s novel "Do Androids Dream of Electric Sheep?" The film ends with the question: Who is the android-hunter Rick Deckard (played by Harrison Ford)? Is he really human or is he another android, without knowing it?

Another film, "Total Recall" (based on Dick`s story: "We Can Remember It for You Wholesale"), deals with a similar question: Is the memory of the character Doug Quaid (played by Arnold Schwarzenegger) real or just implemented like a software.

Both questions, which are very philosophical and maybe theological, seemed to have a great influence on Dick´s thinking and life. It seems the great Science Fiction writer had to fight in his life with similar questions, at least Carrère is suggesting it.

Carrère used his talent to interweave episodes of Dick`s life with analytical deductions. His journey shows - or at least lets us imagine - how Dick dealt with his wives, friends and daughters. How he struggled with his foes, especially the internal revenue service, with publishers, drugs and also with himself. Dick was almost as eccentric as the characters in his books. He used a lot of drugs, experimented with religion and East-Asian philosophies and in his lifetime became more and more bizarre and paranoid.

Carrère displays a lot of humor and narrative talent - both make the book a funny read. Following this journey "into the mind of Philip K. Dick" is a great intellectual pleasure.

Thursday, June 16, 2011

Greece: Lusting On The Tragedy

I cannot stand the word "Greece" anymore. Almost every day the stock markets stick in the doldrums because of the crisis in Greece and the media are focusing on the malaise of the south-eastern European nation.

The current situation reminds me of the year 2009. Then crisis in "Dubai" dominated the news and  stocks were under pressure. The British newspaper "The Guardian" wrote in November 2009: "Share prices suffered their biggest fall since March 2009 today amid fears that a debt crisis in the millionaires' playground of Dubai heralded a new phase in the global financial meltdown and a double-dip recession in 2010".

Now the panic over the Dubai crisis is almost forgotten, it didn´t initiate the end of the world, or even the end of the economic upswing. The stock market (S&P 500) gained more than 20% since then. With the benefit of hindsight we can say the Dubai crisis was a chance for investors to get into the stock market cheap.

I guess the Greek crisis is just another opportunity for buying stocks. Again the media is lusting for a crisis and they exaggerate the perils in the global economy by far.

The Greeks don´t determine the world economy. The Hellenic Republic is just an underdeveloped little country on the periphery of Europe (with only 11 million people in a world  with around 7 billion). It´s food is unedible, it´s music is unbearable, it´s politicians are untrustworthy.  Even when this small peripheral country goes bust, the world economy will continue its upswing - driven by the dynamic in China & India and in other countries.

Wednesday, June 15, 2011

Stock Markets: The Power Of The Emerging Markets

Yesterday the stock markets bounced a bit. This was a reaction to the strong economic numbers from China: Their industrial output gained 13.3 percent compared to a year earlier, and retail sales rose 16.9 percent after a 17.1 percent gain. This is a clear signal that the rapid growth in China continues and supports the whole world economy.

But I guess, generally the stock markets underestimate the power of the emerging markets. In the gloomy sentiment of the recent days many investors ignore that large parts of the world are still in a rapid growth mode. Not only is China a high growth country, many other countries are too - like India, Russia, Brazil and Turkey. I guess we can expect some decades of high growth in a majority of world markets which will also benefit the USA & Europe and their stock markets.

There are at least 3 reasons for this:

1. Catch Up: China & Co. have a tremendous backlog demand because income & fortune are much lower than in the western world. But they have billions of talented & diligent people who want to reach the US and European standard. Therefore these people are working hard and investing to be able to expand their consumer expenditures in the near future.

2. Economic Liberalization: Many countries have learned their economic lessons well. Even communist countries such as China are now relying upon the power of free markets and encourage their entrepreneurs to invest.

3. Technical Progress: Moore´s law, which predicts rapidly falling costs for computers and other electronic devices, along with the brisk evolution in software, help these emerging markets to quickly modernize their economies. http://en.wikipedia.org/wiki/Moore%27s_law

Monday, June 13, 2011

Traveling: Mediaharbour, Düsseldorf

American travelers in Germany like to visit "Schloss Neuschwanstein", the "Lorelei" or the "Hofbräuhaus". But this country is changing and has more to offer. When my American girlfriend was here for her second visit I showed her some parts of the new, the evolving Germany.

We had much fun at the new media harbour in Düsseldorf, which we visited on a sunny Friday afternoon. This is a remarkable place. The idea for the media harbour sprouted in the late 80s of the last century. At that time, the city decided to restructure their old harbour area (a big inland harbour on the Rhine) and to develop a modern structure close to heart of the city. With the help of a private entrepreneur, the owner of an advertising company, a blend of modern & surprising architecture was created within the old harbour infrastructure (cranes) and is spiced with this fancy gastronomy. In the last years many new places opened there, and now you can find an interesting & modern place to work, live and spend leisure time.

The icing on the cake are the "living" or "dancing" office towers, created by Frank O. Gehry. The magazine Vanity Fair labels the Canadian American architect as "the most important architect of our age". Many people know him by his Guggenheim Museum in Bilbao, Spain.

The "dancing office towers" are three buildings named after their facades: The so-called "white house" ("weißes Haus"), the "red house" ("rotes Haus") and the house with the metal facade. My girlfriend and I enjoyed a late lunch in the centre of the ensemble, the patio at "Gehry´s".
This fine restaurant is located at the "white house". They advertise as an upmarket steak restaurant but they have a lot more on their ambitious menu. We choose for example their "Curry-Kokossuppe mit Belugalinsen" (curry-coconut soup with beluga-lentils), "Bärlauchrisotto mit geschmolzenen Tomaten und Parmesanchips" (bear`s garlic risotto with melted tomatoes and parmesan-chips) and "Schokoladenbrownie mit Marsalaeiscreme" (chocolate-brownie with marsala-icecream).

They are proud of their high-tech tap system which allows them to offer more than 20 red wines by the glass without endangering the quality of the drinks by oxidation. But we choose a bottle of Italian Chardonay (DOC S. Osvaldo Ostvenetien 2009) which they also serve by the glass.

Around the Gehry houses are more other interesting places. The official website of the harbour claims there are now more than 60 restaurants, cafes, bars & pubs in this area. Some of them look very ritzy, others are more conventional. Part of the harbour is a tower with a spinning restaurant 172 meters above the ground. There you can also find a stylish new hotel, the luxury Hyatt Regency, whose shiny architecture fits in well with the artsy area.

Forget old Neuschwanstein, enjoy modern Düsseldorf!