Sunday, March 31, 2013

Stock Market: On The Way To New Highs

Finally! Last week the S&P 500, the gauge for the U.S. stock market, climbed on a new all time high. Before that the Dow Jones and the Russel 2000, which represents small caps, had already reached record highs.

But this didn`t cause much applause. Instead the majority stays skeptical. Investors prefer defensive shares such as utilities and healthcare, reports the Wall Street Journal (wsj.com). Those stocks are supposed to drop less if the stock market turns south again, but they usually rise under average in a rally. Bloomberg tells us that "companies in the Standard & Poor’s 500 Index are cheaper than at any record high since 1980 as individual investors shun equities" (bloomberg).

MarketWatch also referred to the fact that S&P climbed again on levels which the gauge had already reached in the year 2000 and then again in 2007 (marketwatch). Both events have been put out just as temporary peaks and have been followed by sharp recessions and stock market crashes. Skeptics call the new highs just triple peak and suggest that a new bear market (stocks falling more than 20%) may follow ("Who’s afraid of an S&P 500 triple dip?" marketwatch).

I believe that this skepticism is ill founded and that the stock market is on the way to new highs. I further claim that we are still at the beginning of a long term bull market that could be comparable to the stock market rally from 1982 till 2000.

My claim is mainly based on three arguments:

1. Company profits will continue their solid growth. During the recessions of the years 2001/02 and in 2008 companies restructured and reduced costs significantly in order to survive. Now they are much fitter and more efficient than before. I believe that this learning process will continue and translates into a long term trend of rising company profits.

2. We are experiencing a new industrial revolution.  Advances in Internet, mobile computing, 3-d-printing, robotics, nano- & biotechnology and other fields are reducing costs, raising efficiency and creating new markets.

3. We also are having strong tailwinds from the emerging markets. The catching-up process in China, India and a lot of other countries translates into high growth in large parts of the global economy that creates continuously rising revenues & profits for global companies like Starbucks, IBM, Caterpillar and other members of the S&P 500.

Enjoy!

Traveling: Austin, Texas - Coolness In The Land Of Cattle & Oil

It looks like Texas is ruled by cattle and oil. If you drive through the vast southern U.S. state you could see for hours just bulls, cows and oil wells. But right in the middle of nowhere there is a jewel: Austin.

The federal capital of Texas is a tiny town (population just around 800.000 wikipedia) if you compare it with New York City. But the place shows some coolness which reminds me a bit of the east coast metropolis. The downtown skyline offers several pieces of modern & beautiful architecture. The skyscrapers display the growing wealth of the region which benefits not just from the new oil boom in Texas. Austin also is a center of science & research thanks to an important university which is the fundament of an expanding technology and defense industry.

Hence a lot of construction is going on, a sign that money is pouring into the city. A statistics of the 10 fastest growing U.S. cities puts the Texan place on No. 4 with an over average growth of GDP & employment (rr.com/finance).

Thanks to the high portion of students and scientists the city also is famous for her rich music scene and a lot of street art. Culture and a variety of pubs, bars and restaurants, many on 6th Street & 4th Street, attract a lot of cool people. The Austin scene reminds me a bit of southern Manhattan. 

A lot of the charm of the city is a gift of nature: The Colorado River that flows through the heart of Austin and is crossed by the Congress Avenue Bridge and other bridges. The Congress Avenue Bridge, which has a lot of traffic, is home to a very special part of Austin´s nightlife: A myriad of bats who sleep during the daytime under the construction. Exactly at sunset the night flyers are setting up to their nightly hunts and are flying eastwards along the river. This spectacle attracts crowds of spectators who are gathering on the bridge and on the meadows nearby. 

Saturday, March 30, 2013

Stock Market: Happy Easter

New York City welcomes Easter with plenty of sunshine and springlike temperatures. A lot people are on the streets enjoying the weather and the extra holidays. Many countries in the Western world celebrate Easter in some way or another. In Germany for examples most people have 4 days off, including Good Friday (called "Karfreitag", a Catholic term) and Easter Monday.

Easter also stands for the begin of spring. The German literature has a lot of Easter poems which are referring to the seasonal issue. The most popular German Easter riddle is "Der Osterspaziergang" (the Easter walk  ostern) from Johann Wolfgang von Goethe. It starts with the line "Vom Eise befreit sind Strom und B├Ąche" ("freed from the ice are rivers and creeks").

It looks like the stock market also celebrates this event. It is a nice coincidence that the last trading day in the Easter week (and of the first quarter) finished with an all-time high for the S&P 500. The gauge for the U.S. stock market gained 10% in the first quarter.

This is is a response to the fact that the U.S. economy is getting better. Last week we learned the in the U.S. consumer spending, personal income, manufacturing & home sales are expanding and that house prices are climbing again.

It seems  that state of the U.S. economy is perfectly described by Goethe´s poem. The economic numbers show that the U.S. economy is far away from the recession that has frozen the country 4 years ago. And the stock market is free for new highs.

Traveling: Port Aransas, Texas - A Place For The Dude

Every place in the U.S. has a Starbucks and a McDonald`s. Right? Wrong. Port Aransas has neither of them. The beach town is vacation destiny on Mustang Island north of Padre Island on the Texan gulf coast (wikipedia).

I was very surprised as I visited the place for a short vacation last week. Grown up in Germany, I am used to the guzzling and bustling at Italian and Spanish beach resorts. CIose to the beach you would find a shore front full of restaurants, bars, shops and more. I had expected that an American beach would be even more commercial.

But Port Aransas doesn`t show the commerciality of a European vacation destiny. The beach front is almost empty there, which can be explained by the high risk of devastating Hurricanes.

But even the rest of the city doesn´t look like the vacation spot of a rich country. Instead Port Aransas is very laid back and on a low budget. Many houses are just huts and shacks, you don´t see solid buildings Europeans are used too.

The ambience reminds me a bit of the movie "The Big Lebowski". The very relaxed and frugal character "The Dude" could live there. It looks like  Port Aransas is a magnet for mostly elderly people who seem to spend their retirement life on a low budget or a destiny for students and other tourists who travel with low costs.

But the place is interesting anyway.  A lot of buildings are pile constructions like the historical crannogs (wikipedia). You are less likely to get your feet wet when the next tropical storm floods your neighborhood.

And there is more to see. There are a lot of pelicans and other birds on the beach. And in the nearby Aransas National Wildlife Refuge (fws.gov/refuge) you could come across alligators who seem to be perfectly adapted to the laid back southern life style of this area.

Friday, March 29, 2013

Economy: Good News On Good Friday

This morning we got an early Easter present. The U.S. consumer department (which didn´t close on this Good Friday) reported that U.S. Consumer spending climbed in February by the most in five months (finance.yahoo). Purchases rose 0.7% after a 0.4% advance the prior month that was bigger than previously estimate, wrote Bloomberg (bloomberg).

Those numbers are highly welcome. They show that the gains in (private) consumer spending are going to replace the shrinking public expenditures as the result of the federal budget cuts in the U.S. (sequester wikipedia). 

The numbers also are another proof that the U.S. economy is gaining strength. Consumer spending covers around 70% of the whole economy. As long as the consumers are increasing their spending revenues & profits of the companies will rise.

As in the months before the consumer spending has been financed by rising hiring by the companies which creates more income and by the positive wealth effects from climbing house prices and the ongoing rally on the stock market.

The climbing consumer spending will translate into further rising company profits which will lead to more hiring and continuing stock market gains. This leads to a virtuous circle which should keep the stock market rally and the economic upswing alive for many months to come.

Sunday, March 24, 2013

Traveling: Dallas Museum Of Art - The Pursuit Of Eclectic

Traveler if you come to Dallas, Texas, you might take a look at the Dallas Museum Of Art (dallasmuseumofart). The house, which is located in the Arts District of downtown Dallas, has a fine eclectic collection. The labyrinths on the 4 floors invite you for a discovery tour through centuries, cultures and continents.

You could find paintings by famous Europeans like Modigliani, Mondrian and Magritte plus pictures by more or less modern Americans. And there is much more. You could see ancient Indian temple art, artifacts from the Roman Empire and their intercessors, the Etruscan. There also are demons and warriors from Asian, African & Polynesian cultures and you could meet samurais and buddhas.

But you can find more than just paintings and sculptures. The section "decorative arts and designs" displays some complete living & bed rooms from the 19th and 20th centuries. You could see fine salons and libraries, designed and assembled by people with taste and wealth.

In addition to the usual collection the museum now offers  2 temporary exhibitions: "Chagall" (through May 26) and photographs of "Cindy Sherman" (through June 9).

The general admission is free. The Chagall and the Sherman shows cost $16 each.

Enjoy.

Friday, March 22, 2013

Culture: Street Art - The Dallas Section

It seems that street art is on the rise. You could find murals, graffiti and sculptures at more and more places. Even the very commercial Dallas, Texas, is open for this manifestation of culture.

The district Deep Ellum (wikipedia), east of Downtown Dallas, reminds me of Williamsburg, a neighborhood in the New York City borough of Brooklyn. There are a lot of old and abandoned factory buildings and storage depots which are now used by artists and are home to restaurants, bars and pubs. As usual lower rents and relaxed regulations are attracting alternative entrepreneurs.

The result is a somewhat flamboyant and bohemian environment in a very busy metropolis.

Wednesday, March 20, 2013

Traveling: Dallas In Spring

Traveling is always an escape. Yesterday I suffered the cold weather in still winterly New York City, today I enjoyed the start of Spring in Dallas, Texas. While the east coast metropolis continues to experience snow and temperatures mostly in the 30s F (below 10 Celsius), the Texan city greeted the vernal equinox with a peak of 69 F (20 Celsius) and plenty of sunshine.

And the vegetation here is much more advanced. While the trees at the US north east coast are still naked, I could see a lot of green and blossoming branches today.

I enjoy my first visit in Dallas not just because of the pleasant climate. The city, which has a population of around 1.2 million, is a modern & wealthy place and shows her importance as a economic, communication and transportation center of Northern Texas.

The Texan metropolis benefits from the new oil boom (rising production and high energy prices) and the rise of her technology companies like the chip giant Texas Instruments. This is reflected from an impressive skyline that displays the power and the future orientation of Dallas. The Omni hotel where I stay now is also a proof for this. The bathroom mirror is partly a TV screen where I can watch 8 TV channels.