Thursday, January 31, 2013

Economy: Viva La Longevity

People live longer and they stay healthy for more years. A reason to cheer? Not so for a large group of pessimists. Very often you could read about problems allegedly caused by the "aging" population. Some alarmists are warning of a "demographic time-bomb" which is defined as a "potential crisis situation in most countries caused by an increasing number of older people dependent on pension schemes a direct result of demographic transition" (cnn.com). They claim, that "the income of the working segment (comprising of a declining number of younger people) of a population comes under increasing pressure to provide support for the non-working (older and growing) segment" (cnn.com).

The British credit rating agency Fitch laments about an alleged "age bomb" in developed countries, including the United States, which "will impede long-term fiscal recovery" (wallstcheatsheet.com). Those pessimists further allege that "the aging populations will aggravate government indebtedness and could hurt credit ratings unless labor and pension reforms are enacted" (wallstcheatsheet.com).

Those statements remind me a bit of Pete Townshend`s infamous song line "I hope I die before I get old" (1965, "My Generation" wikipedia). This guy is still around and enjoys his reputation and royalties. I am every morning very happy to awake, to be able to experience another day and to learn new skills.

I reckon that the fears are overblown. The alarmists ignore that human beings are learning organism. They don`t get it that people are continuously adapting to new challenges and that they are getting better in what they do by accumulating knowledge and skills.

The growing longevity doesn´t necessarily lead to a shrinking workforce. Seniors like the Dalai Lama, the Pope and the Rolling Stones are still working in their old age. They don´t complain. And whole economies can adapt to the longer lifespan of their population. For instance Germany raised last year the pension age for males from 65 to 67. It makes sense to retire later when people live longer and stay healthy for more years. The whole society would benefit from the experience and knowledge of the old agers.

And even if the number of retired persons rises in relation to the "working segment" there is a solution: The continuously rising productivity. Since the industrial revolution at the begin of the 19th century the productivity - defined as output (goods & services) produced in 1 working hour - has been climbing. In the last 40 years the productivity of US workers advanced on average 1.9% per year (ritholtz.com). This means you could raise the production yearly by 1.9% without hiring new workers or increasing labor time. Otherwise you reduce the number of workers (or labor time) per year by 1.9% and get the same output. The result: People don´t have to work 7 days and more than 60 hours a week (as they did in the early 19th century) anymore - though the earn much higher incomes. 

I believe that we are now experiencing a new technology boom (money.msn.com). Rapid advances in software & internet (including cloud computing), robotics and other technologies will raise the productivity of the companies significantly. In the coming years robots will overtake many jobs or at least assist as labor-saving tools. Bloomberg reports that even farms are getting automatized: "Older tractors were replaced with models that cultivate more ground and serve as miniature offices, complete with global positioning systems that allow them to steer themselves" (bloomberg).

These efficiency gains should lead to rising company profits and benefits for the whole economy as they did in the past via rising salaries, climbing stock prices and higher dividend payments. Those achievements should translate into higher tax revenues for the governments and climbing incomes for pension funds and other public institutions. And many individuals could finance their retirement by investing now into the stock market.

Sunday, January 27, 2013

Economy: Europe - Bye, Bye Crisis

It seems the Euro crisis is over. Last week the German stock index (DAX) closed on a five-years high. Since last June this gauge climbed around 30%. And the Euro is in rally mode too: Since last July the common currency gained around 14 cents (more than 10%). And the interest rates for Spain, Italy and other struggling members of the European community are dropping thanks to the rising confidence for these countries.

All these developments are signaling that Europe is leaving the crisis behind. I looks like the European economies are now adapting to the severe austerity policy (a sharp reduction of government expenditures which reduces the income of large parts of the populations). Over time the retreat of the governments leads to less bureaucracy and creates more scope for private enterprises.  Hence the austerity policy creates an exchange - more growth in the future for less growth in a short  period in the present.

Now the European companies are responding and do whatever they ever do in a crisis: They are reducing costs and are working more efficiently. For instance they are investing in software and other cutting edge technologies which help them to conduct their business better. This already creates more revenue for the supplier of efficiency tools like the German business software giant SAP.

Companies also are tapping new markets, especially in overseas, to escape the European weakness. They are enjoying a lot of tailwinds from the solid US consumer spending and the strong growth in China and other emerging markets. Companies like Volkswagen and Unilever (consumer products) are exporting more & more to the markets in Asia and the Americas. No wonder that the stock markets in Frankfurt and London are moving northwards instead of the continuous lament in the media.

Saturday, January 26, 2013

Movies: Hansel & Gretel: Witch Hunters

If you are interested in weird & grizzly stories with a lot of mayhem, you might enjoy Brothers Grimm`s fairy tale collection. These professors for German language compiled fables about the dark site of this world written in medieval times.

For decades Hollywood has been diluting and castrating the primarily grim stories. The dream factories cooked over-sugared products like "Snow White and the Seven Dwarfs" and "Cinderella". But recently Tinseltown began discovering the sinister side of the Brothers Grimm. Last year I enjoyed the dark "Snow White and the Huntsman".  This weekend started "Hansel & Gretel: Witch Hunters" in the US cinemas (imdb).

"Hansel" is an acceptable popcorn movie even though the film cannot match "Snow White and the Huntsman". Norwegian Director Tommy Wirkola delivered a very free and modern interpretation of the famous medieval German tale about 2 children who got abandoned in the forest and almost eaten by a witch.

The flick is very violent with a lot of gore, but served with humor - a kind of soft-splatter movie. If you don´t take the witch hunt too seriously it`s a lot of fun to see how a bunch of evil creatures with very bad manners (as kidnapping children for eating their hearts) get butchered.

It´s a pleasure to watch Gemma Arterton as a cool witch hunter in a tight leather outfit. Some of the witches also are eye cookies, especially Famke Janssen. The icing of the cake is spotting the gorgeus Pihla Viitala, a Hollywood import from Finland, taking a bath. At least the witch spectacle shows more pretty skin than you could expect from the usual prudish Hollywood blockbusters.

"Hansel and Gretel", the movie (not the story) will soon be forgotten, but the film manages to entertain within the 88 minutes it lasts.



Tuesday, January 22, 2013

Movies: Broken City

Money and politics are in a close marriage, especially in New York City where cash rules. This is an invitation for Hollywood to knit thrillers about power struggles in the megapolis. A decade ago they delivered "City Hall" (with Al Pacino, John Cusack & Bridget Fonda), now we got "Broken City", directed by Allen Hughes (imdb.com).

Even that the basic story - corruption creates danger & mayhem - has been told more than 1000 times, the film is quite entertaining thanks to it´s excellent cast.

It´s fun to watch Mark Wahlberg and Russell Crowe playing the antagonists and the conflict between good and evil. Catherine Zeta-Jones lends the movie style and elegance. And the Israel born Alona Tal is a discovery whom I wish to see more often.

But the real star of the movie is New York City. Cinematographer Ben Seresin captured her beauty in awesome pictures. Stunning aerial shots, street scenes, stunning rooftops, cool bars and much more fit together to an exquisite kaleidoscope.

"Broken City" is a solid political thriller with a special benefit for those who like New York City.

Monday, January 21, 2013

Stock Market: Better Late Than Never

It looks like the masses are coming back to the stock market. Reuters reports that "investors in U.S.-based mutual funds poured $14.82 billion into stock funds in the week ended January 9, a record according to weekly data that extends back to the start of 2007" (reuters). And the Wall Street Journal writes that "in the last two weeks, investors sank $11.3 billion into global stock mutual funds, excluding exchange-traded funds" (wsj.com).

Something is changing. Since the stock market crashes in the year 2008 and in early 2009 the masses - called "mainstreet" - had avoided the stock market like the devil abstains holy water (an old German saying): Once bitten twice shy. The panic of 2008 generated a climate of distrust and it seems that it needed 4 years of recovery (since spring 2009) that the masses regain their economic confidence.

I appreciate this comeback, if it really happens. Better late than never. Even so Joe Sixpack missed the rally since spring 2009 - which generated already a return of more than 100% - the returnees (and newcomers) should expect solid gains for the future.

In the long run the stock market participates on the perpetual growth of the global economy and the secular rise of the company profits which translates into average yearly returns of around 7%. The coming years and decades could even be better thanks to the high growth in China and other emerging markets (where more than 6 billion people live) and the accelerating technological progress.

Welcome back mainstreet!

Sunday, January 20, 2013

Culture: Birth Of A Skyscraper II

New York City is a living organism and always changing. In spite in a sluggish economical environment you could see a lot of construction going on.

Last August I reported the birth of a skyscraper ( drivebycuriosity) in Manhattan´s financial district. I showed the cranes and other huge engines that were engaged in the preparation of the huge building. Since then a lot has changed and the house "jumped" into the air.

It´s especially fascinating how they managed to fit the skyscraper into the already tight neighborhood. The new tower has been squeezed between the other buildings, increasing the density of the highly dense and cramped area.

Friday, January 18, 2013

Movies: Zero Dark Thirty

There is a perpetual struggle between evil and good. Sometimes one side gains, sometimes the other. In the ongoing fight against terrorism the US had a big victory: The capturing and killing of Osama bin Laden. But they needed 10 years for this.

The movie "Zero Dark Thirty" narrates how they got him against all odds (imdb). Director Kathryn Bigelow delivered a masterpiece of storytelling and visualization. The film is even more impressive than her celebrated "Hurt Locker". The American director reminds me of Leni Riefenstahl. Both are (were) stunning beauties and could (could have) made careers as models and movie stars. Both are imaginative film makers with a lot of talent and ambition.

Bigelow and her script writer Marl Boal condensed the decade-long hunt for bin Laden into a dense thriller (159 minutes). The film shows how intellectual brilliance combined with determination on the border of willfullness plus a lot of moral courage solved an almost insolvable task.

There is a lot of discussion about the movie`s torture scenes which are really challenging to watch. Even that I despise torment I believe that these procedures were absolutely necessary to gain informations which saved the life of many innocents. I think that the critics are hypocrites who follow the device "wash my back but don`t make me wet" or - worse - are ready to sacrifice innocent lives for their "Weltanschauung".

If you can stand the torture scenes you will get highly rewarded. Cinematography (Greig Fraser) and editing (William Goldneberg, Dylan Tichenor) are quite awesome. They create pictures that draw the audience deep into the struggle to solve an almost mission impossible.

Watching the cast doing their job is very delightful. "Zero" benefits a lot from Jessica Chastain. She plays the leading character, a CIA agent who is obsessed with the idea of catching bin Laden and sacrifices a whole decade for this job. The actress, born in Sonoma, California, where the finest Chardonnay grows, deserves her gains of the Golden Globe and the legions of nominations (including for the "Oscar") for other prestigious awards. She looks like an angel, but she plays a kind of death angel for Bin Laden and his tribe. Her combination of fragility and strength reminds me of Jodie Foster in "The Silence of the Lambs".

Even than the other actors are in her shadow they manage to impress too, especially Jason Clarke in his role as Chastain´s CIA colleague. I had especially fun with James Galdofini`s short appearance as the director of the CIA (in the shape of a sumo wrestler).

 I believe that "Zero Dark Thirty" will be sometimes included into the canon of cinematic classics. Anyway: The movie is highly entertaining. Thank you so much Kathryn.

Thursday, January 17, 2013

Stock Market: A Shot In the Arm?

This morning we got economic news which were f….g good. The weekly jobless claims plummet 37k to a five-year low and the American housing starts jumped 12% to a four-year high (bloomberg).

The numbers could be a shot in the arm of the stock market and fuel the continuance of the ongoing rally. They show that the economy is doing better than many believe.

It seems that the healing of both - job market and home market - is getting traction. Both trends are significantly enhancing the wealth of the consumers and are encouraging them to expand their spending. Hence the consumer spending, the engine of the economy (around 70%), could accelerate in the coming months leading to a stronger growth of the global economy (Europe & Asia are participating via their exports to US).

This is also good news for the stock market. Many - including a lot of fund managers - are still underinvested because they don`t believe in the economic recovery. When the economic growth continues they will have to come back. Otherwise they would come under performance pressure for missing the expected gains in the stock prices.

Tuesday, January 15, 2013

Economy: In Consumers We Trust 2013

This morning we got news that U.S. retail sales rose 0.5% in December, more than the experts had expected (marketwatch). Excluding gas stations, where lower fuel prices reduced expenditures,  retail sales increased 0.8%.

The solid retail numbers confirm that the consumer spending, the engine of the economy (around 70%), is still alive and kicking. US consumers are still optimistic in spite of all the fear mongering in the media. They even ignored the fiscal cliff hype which ruled the news channels last month.

The robustness of consumer spending is really impressive and encouraging. It seems that consumers care more about their real economic situation than the - usually gloomy - headlines in the media.

And the real situation of US consumers is getting better thanks to the healing job market, the up-ward trend on the stock market and the recovering housing market. All these trends are raising the wealth of the consumers, allowing them to improve their life standard by spending more money. Hence there is a high probability that the growth of the consumer spending - and therefore the expansion of the whole economy - will continue leading to further gains on the stock market.

Monday, January 14, 2013

Stock Market: Shanghai Surprise?

This morning the stock market in Shanghai jumped 3%. Thus the Chinese Stock market continued the rally which had started last November. As I wrote in my post from November 26 2012 (Shanghai Blues - An Invitation?  drivebycuriosity) Shanghai was due to a recovery. Since then the Chinese stock market gained around 18% (google).

I believe that there are at least 3 reasons for the rally:

1. The Chinese economy reached its bottom in Q3 2013 and has been re-accelerating since Q4.

2. Huge public investment programs into the infrastructure.

3. The Chinese government (which got a new leadership in November 2012) announced extensive reforms to make stock market and economy more efficient.

I believe that the rally will continue because the Chinese economy should strengthen in the coming months. This year the economic recovery, the engine of the rally, should gain momentum helped by infrastructure programs and reforms.

I further believe that Chinese stocks are significantly undervalued. The sentiment is still gloomy and many are still underinvested in China because they followed hedge fund manager Jim Chanos (nytimes.com) and other short sellers who have banging the "china crash drum" for years. The recent economic improvements in China show that these allegations are not more reliable than the Aztec calendar.


Sunday, January 13, 2013

Stock Market: Patience Pays

Last week the US stock market (S&P 500) climbed on a new 5-year high. Since the begin of the recent bull market in the spring 2009 stocks gained more than 100% (google.com/finance). Investors who ignored the daily "Katzenjammer" in the media and the cult of crisis were highly rewarded. Patience pays.

The media is usually ignoring the positive trends. Very often you can read about the lost decade because stock prices today are generally lower than in spring 2000 when the S&P peaked above 1.500 points.

But this comparison is ridiculous. The risk to buy on an all-time-high is very low, like buying on the bottom of a bear market. Sound investing means buying stock continuously, for instance using a certain proportion of the income for stock purchases. In this case investors are buying monthly stocks and achieve an average stock price which lays somewhat between the peaks and lows of the stock market. The average stock price of the last 12 years lays way below the recents stock prices. Hence investors who have been buying stocks consistently made gains even in the sluggish last 12 years.

These gains are even higher if investors started buying before the peak of 2000. In this case they could add ad least partly the huge rally before the year 2000. In the long run - the last 200 years - investments in the stock market generated a yearly average return of around 7% (wikipedia). Patience pays.

Saturday, January 12, 2013

Movies: On the Road

Traveling is one of the kicks life can give you. It seems that the poet Jack Kerouac got a lot of kicks on his 7 years long journey through the USA which he accomplished in the 40s of the last century. His book "On the road" about his travel experiences became a bestseller and later a "leitmotif" for the hippie generation.

Kerouac´s basic ideas - having a very free life on a low budget - are displayed in the movie "On the road", directed by Walter Salles and godfathered by Francis Ford Coppola (imdb). I especially admired the work of cinematographer Eric Gautier. The Frenchman captured the sheer endless row of places visited by Kerouac and his friends on their long travel in awesome pictures. You could fall in love with America because of her beauty. I will have to sometimes discover these places myself.

Wikipedia claims that "On the road" is a Brazilian-French production (wikipedia). This explains that the movie doesn´t show the prudishness which is typical for modern Hollywood productions, not at all. The film very generously displays the sexual libertinage Kerouac and his friends enjoyed on their travels.

"On the road" also shows the innocence of the pre-HIV-era and offers a lot of nudity - male & female - and doesn´t shy away from graphic sex scenes. But this is absolutely necessary because traveling in the sense of Kerouac means also exploring the possibilities of oneself and other like minded people. At least the cast -  including Hollywood`s beauties Kristen Stewart, Kirsten Dunst and Amy Adams  - didn´t seem to have any problem to participate in this freewheeling kaleidoscope.

The libertine approach of the movie could be challenging for a majority who believes the world functions like a Disney movie. But if your mind is open you could have a lot fun traveling the roads with the fine cast.

Friday, January 11, 2013

Economy: Fairness Is Cool

One of my favorite stores in New York is Whole Foods Market. It´s a paradise for food lovers. The huge variety attracts a cool clientele. Watching those stylish customers walking through the ailes is almost as fun as spotting all the delicatessen there.

But there is another issue I find very interesting. It seems that the company believes in fairness.

You can buy there a lot of coffee varieties. Some of the coffee beans are offered in open barrels. You can fill them in a bag and grind the beans in a grinder next to the barrels.

The beans have different prices, relating to the qualities. The cashier doesn`t know what quality is in your bag. Hence you write a code number on the bag defining quality and price of your purchase.

In theory people could confuse the prices by accident or not. In theory they could write the code number of a lower priced coffee brand on the bag and save some bucks.

But this wouldn`t be fair. Neither would that be cool. Therefore people generally write the right price on the bag and pay the right amount. At least Whole Foods Market is trusting their customers,  maybe because they know that their clientele is cool.

Thursday, January 10, 2013

Culture: Sexy Badass Girl Fest At Knitting Factory, Brooklyn, New York

I love girls and I love rock music. Hence I am very happy when both joys come together. This Tuesday I enjoyed the "Sexy Badass Girl Fest" at Knitting Factory, a venue in Brooklyn, New York (knittingfactory).

It was a lot of fun to watch this fine mixture of sole performers and girl groups. Around 8pm an elf in a hippie outfit appeared on the stage: Alyson Greenfield (facebook). The  young musician accompanied her delicate songs by playing on a keyboard. It was a pleasure watching  the young musician singing & dancing and playing her keyboard.

She got replaced by Tori Sparks, an American singer/songwriter, who lives partly in Barcelona (reverbnation). She presented us a mix of songs with influences from Nashville and Spain. I liked her melodic voice and her elegant guitar play.

Then Mancie (3 girls, singing & playing guitar, supported by a male percussionist) delivered a robust rock show (.facebook).

The breaks got bridged by Kara Klenk (newyork.ucbtheatre). The New York stand up comic told us funny stories, including topics like giving or not giving wedding presents and a male who was hunted by the police for driving through Brooklyn while jerking off without an erection.

Well done, girls!.

Tuesday, January 8, 2013

Economy: A Welcome To The Robots

I believe that this century will be the century of the robots, maybe even this decade. The other day I spotted one of them, a cute household device called "Roomba" (wikipedia).

It was fun to watch how this autonomous vacuum cleaner navigated through a small shop room without any visible human interference. The cute machine moved swiftly while avoiding contacts with walls and the many objects in the room. The little robot averted being trapped in the corners, didn´t bother the huge toy bear sitting in a corner and didn`t fall out onto the street even when the door was wide open.

Roomba is a typical cybernetic machine. The word cybernetic comes  from the ancient Greek term kybernētēs, meaning "steersman, governor, pilot" (wikipedia). Your air conditioner, for instance, is a typical simple cybernetic system. You might choose a certain temperature, say 68 F (20 Celsius). Then the sensors of the climate system will constantly check the room temperature, compare the target with the actual situation and respond to deflections. If the temperature climbs higher than 68 F the systems responds and starts cooling, if the temperature falls below 68 F, it stops cooling and might even start heating.

The Roomba and other robots work in a similar way. The processors respond to signals from the sensors about objects which have to be avoided.

Today most of the robots are working for industry. They are saving costs, for instance by assembling car parts or lacquering them. Even farmers are using more and more robots, for instance for harvesting strawberries or milking cows (wikipedia). These machines are reducing the costs of producing something significantly, making things cheaper and more affordable. Hence robots are raising the living standard of everybody. The saved costs also translate into rising company profits even in a sluggish economy and in this way are fueling  the rise of the stock market - generating wealth for millions. 

I reckon that we will see many more robots soon as a result of the technological progress. The necessary processors, sensors and memories are getting smaller and cheaper all the time (thanks to Moore`s law) which causes more affordable and better robots. Robots also could be the answer to the problem that a falling birth rate leads to a shrinking percentage of working people (work force) and a rising number of retired people. More and more things will be produced by robots substituting the missing workers and raising the life standard of the world.