Movies: Arbitrage

 

(Drivebycuriosity) - For years Hollywood has been showing a fascination with  Wall Street. Usually the billionaire finance moguls are shown as villains, as you could see in movies like "Wall Street","American Psycho and "Cosmopolis". "Arbitrage", which is now running in US theaters, is the newest example (imdb).

The flick tells some days in the life of an asset manager who's streak of luck has ended and his professional and personal life has turned into a mess. The producers engaged two Hollywood brand names, Richard Gere & Susan Sarandon. Both delivered solid performances. Gere used his familiar charm to play the sued but manipulative & scrupulous billionaire and Sarandon performed as his adequate wife, a calculating charitable society woman who doesn`t mind to cover a crime if it pays for her.  But my favorites are Tim Roth as a (bit too) street smart detective and the way underrated Stuart Margolin, who plays a lawyer you would wish to know if you were really in trouble.

The flick was shot mostly in the now popular cool colors and reminded me a bit of the legion of serial TV-thrillers you can see these  days, but lacking the thrill. "Arbitrage" doesn´t convincingly show the shameless wealth of the mega-rich, maybe this was beyond the budged or the fantasy of the makers.  But anyway: The flick is more accessible than "Cosmopolis" and less gruesome than "American Psycho".  "Arbitrage" is somewhat entertaining and could serve as an unambitious family TV entertainment (no sex & violence) in a cinema theater.

Economy/Internet: The New Technological Revolution

 

 (Drivebycuriosity) - We are witness of a new technological revolution: The mobilizing of the Internet. There is a flood of new mobil devices for accessing the World Wide Web. Last week Apple introduced the iPhone 5, which got ravish reviews in the media and had a furious start in the shops. The week before Amazon.com announced a whole new family of tablet computers and e-book-readers starting with a price tag of $69. The growing number of competitors, including Samsung, Microsoft and Google, will soon follow with similar devices, say the experts. 

In China already more people access the web on mobile phones than PCs, North America and Europe are not far behind in making that digital switchover, writes the Financial Times (ft.com). This mobil revolution will significantly expand the number of Internet users because it reaches people who don`t have the need and the money for a traditional PC. 

The quick access to the Internet wherever you go will induce people to use the web much more often, longer and more intensely. The emergence of an ubiquitous internet could change the behavior of companies and consumers and boost the global economy. 

If you have a sudden appetite for a pizza, a quick internet search could show you the closest places, maybe their menus, prices, even customer reviews.  Mobil Internet also could guide you to the next Starbucks cafe, the next vegetarian eatery, the next pharmacy. It could help you to find hotels, electronic shops, fashion boutiques and more. If you want to be entertained, you could detect the closest cinema theaters and the movies they show, you could find rock venues, bars and more. 

The omnipresent internet therefore can help you to organize shopping, leisure time, eating out and more. This could save you a lot of time (the most valuable asset of your life). It also reduces the cost of acquiring information, the so-called information costs, significantly and could show you opportunities you want have found otherwise.

The falling information costs will create more markets and expand existing ones.  Restaurants, shops, movie theaters and a lot of other companies will gain more customers because they can be more easily found and can advertise better for their products. Applications and recommendations from friends or unknown reviewers on Amazon.com, Facebook and other website can gain interest for many products & companies which would have stayed unknown without this help.

Therefore the mobilization of the Internet induces efficiency & productivity gains (saved time, reduced costs) and expand & create markets. Both should boost globally many incomes and animate the whole world economy in the coming years.


Disclosure: I am an investor in Apple & Amazon.com

Economy: Applemania - The iPhone Effect

This morning you could see long lines in Manhattan and other places in the US (I shot these pics on Spring Street, New York City). Did these people wait for a free lunch? Did they hope to get a soup from Salvation Army? Were they standing in line to get free clothing and other help? Are we now in a new depression?

Nope. These people were waiting for the new iPhone (marketwatch). The iPhone 5 costs more than $500, without the expenses for the network services. These lines aren`t a sign of poverty , quite the contrary, they are signaling wealth and the believe in a better future. These lines are more evidence that the economy is stronger than many think.

Being an investor in Apple (Disclosure!) I love these people and their displayed optimism. And I love Apple CEO Tim Cook and his team for developing products the masses are craving for.

Everybody should love them, because the new smartphone could boost the whole US economy.  Economists expect that the iPhone boom  could contribute as much as one-half a percentage point to U.S. economic growth in the fourth quarter (bloomberg). Maybe the iPhone effect will be more important than QE3.

Movies: Lawless

 

(Drivebycuriosity) - There was a time when you could easily make money, when you could literally grow and cook it at home. This time was the US prohibition era around 1930 at the begin of the Great Depression. The legal ban on producing and distributing liquor made booze very expensive and its producers and sellers shamelessly rich.

The movie "Lawless" tells an allegedly true episode of this period in Virginia, USA (imdb). The alternative Australian rockstar Nick Cave wrote the screenplay based on a novel by Matt Bondurant. The author told the story of his ancestors who fought as liquor bootleggers against corrupt law enforcers. This war escalated into menace, torture and murdering.

"Lawless" is brutal and bloody, but also honest, intense and convincing. It shows how stubbornness and overconfidence could lead into a bloody mess.  The plot develops slowly, leaving the viewers time to dive into this period and to learn to know the involved characters.

The roughness of the plot is counterbalanced by the beauty of the pictures created by director John Hillcoat and cinematographer Benoît Delhomme. They let you participate in a time travel to the epoch around 1930. It`s worth watching the film more than once to detect the plenty of gorgeous visual ideas including the lush forests of Georgia where the flick was shot - an invitation to visit this state. The congenial soundtrack made the film more intense.

The actors are a defining part of the movies`pleasure. Tom Hardy, as the unofficial leader of the bootleggers, delivered one of the finest performances I have seen recently. His character radiates an almost indestructible self-confidence which made him to a kind a buddha of the prohibition period. His deep voice underlines his calmness and also contributes some goofiness to the character.

Guy Pearce as a vicious and sadistic law enforcer gives a remarkable counterpart. His eloquence and his elaborate manners gains him a lot of attraction instead of his cruelty.

Mia Wasikowska, playing the innocent daughter of a fundamentalistic preacher, showed the freshness of apeach ready to be plugged and Jessica Chastain glazed as a erotical flower in a desert of dirt. Gary Oldman, who had just a short appearance, proved one again his Oscar-nominated qualities. The rest of the cast, including Shia LaBeouf, Jason Clarke and Chris McGarry as parts of the bootleggers gang, complimented the high standard.

"Lawless" waked my appetite for the fall cinema season, when usually the alleged Oscar contenders make their way to the screens. They better be gorgeous to overtrump this fine movie.

   

Oil: The Mother Of All Bubbles?

The media are clueless and the pundits are vexed: The price of oil is falling. Yesterday the oil price suddenly dropped $3 on the financial markets - "for no immediately obvious reason", wrote Barrons (blogs.barrons.com). The European type oil Brent Crude plummetted 2.5% (bloomberg).  

Oil costs now less on the financial markets than it did Thursday afternoon minutes before QE3 was announced. How could that be? The experts tell us that OE3 should spark inflation and push the price of oil higher.

I reckon that the sudden price drop is another sign that oil market is the mother of bubbles. This is why:

Minutes before the oil price drop, Bloomberg reported that "hedge funds raised bullish bets on oil to a four-month high before futures surged on the Fed’s plan to buy $40 billion a month in mortgage bonds in an effort to accelerate the U.S. recovery".. (bloomberg). Furthermore: "Money managers increased net-long positions, or wagers on rising prices, by 5% in the seven days ended Sept. 11, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Sept. 14. They were at the highest level since the week ended May 1".

Oil futures are traded on the financial markets like stocks, bonds and other assets. The oil price therefore is in the hands of hedge funds and other speculators who are betting huge amounts on expected price changes. The result: The price of oil doesn`t reflect fundamental factors any more. The market ignores supply and demand, and instead focuses on theories and speculation which are used as  excuses for high and rising oil prices.

I reckon that at least in the last 2 years hedge funds and other speculators have been massively buying oil futures which inflated the price of oil into a huge bubble. For years oil speculation has been driven basically by 2 arguments: The peak oil theory and possible supply disruptions from the Middle East.

The peak oil theory claims that we are soon running out of oil. It ignores technical progress like fracking and deep sea exploration which allows exploration of more and more oil reserves. 

For years the continuous wars and unrests in Middle East (Iraq, Libya, Syria, Palestine, Egypt et. al) and heated speculation about Iran´s nuclear policy have been abused to poke fears about sudden supply disruptions.

The speculatively excited oil price rise induced 2 developments:
 1. The sharp rise of oil production in the USA thanks to the fracking boom. I reckon that other countries will follow. Fracking and more deep sea exploration could flood the oil markets in the coming years.
2. A shrinking demand for oil in industrialized nations because companies and consumers are getting more energy conscious and more efficient.  Helpful is the technological progress again which brings us more energy efficient cars, refrigerators, air conditioners and other devices. The sluggish global economy has also been curbing the hunger for energy.

I suppose that both developments have been leading to growing over-supplies which could squeeze the oil price down.  

The history shows that a price bubble can grow over years - fueled just by the beliefo in rising prices. But at a certain point the bubble gets to big and it pops. Maybe we reached this point again.  

Stock Market: Election Year? So What?

There is much ado about the U.S. presidential election in November. But, being a long term investor, I don`t care.

One of the reasons that I stay calm and invested in the stock market is Bill Clinton. I cannot stand him, but during his presidency one of the greatest bull markets in history happened. And the left-wing president Franklin D. Roosevelt had an even stronger stock market rally (bespokeinvest.com). I wouldn`t vote for the current U.S. president (I`m not a US citizen), but as an investor I cannot complain about him. Since his inauguration the Dow Jones gained more than 70%.

I don´t believe that these politicians fathered the huge stock market gains. Instead I think that they just had good luck and benefitted from a strong and/or reviving global economy during their presidencies.

Anyway, the power of any president is limited by the highly complicated political structure in the U.S., called "checks and balances " (wikipedia this is described for instance in this book: "The American Presidency: A Very Short Introduction", by Charles O. Jones amazon.com ). Whatever a  president intends, he has to deal with the Congress and the Senate. The political process gives the opposition a lot of possibilities to intervene and weaken his policy. 

But even if a president can enforce his plans, his political weapons, meaning taxes, government expenses, international trade policy & competition policing, are just part of the game. In the short run - which could be only 4 years, as long as an election period - monetary policy has more impact.

These days you can witness again the power of Ben Bernanke and the Federal Open Market Committee, who don`t have to follow orders from the president. The global recovery since the spring of 2009 wouldn`t have happened without the aggressive expansionary monetary policy in the US and Europe.

Furthermore. Being a long term investor I`m calculating with a time horizon which is longer than a possible second regency:

1. In the long run, stock prices rise which the advance of the Dow Jones has shown since its start  (wikipedia) 

2. We are experiencing now an exciting era with a lot of technological revolutions including robotics, 3-D-printers, mobile internet, tablet computers, bioengineering and much more which should create a lot of wealth in the ongoing decade and could rekindle the sluggish growth of the global economy. 

3. A company strategy needs time and usually plays out over many years as we can see with market leaders like IBM, Apple, Amazon and other successful companies.

The power of any president also is dwarfed by globalization. The U.S. is just a part of a world which is increasingly influenced by emerging markets.  U.S. companies which are part of the S&P 500 are mostly global (multinationals) and gain a large and increasing part of their revenues and profits from foreign markets.

I am therefore prepared to get through the temporary turbulences the approaching election may cause.

Culture: "Burning Bronzes" At Angel Orensanz Center, Lower East Side, New York City

 

(Drivebycuriosity) - New York is full of wonders. One of them is the Orensanz Center  on the Lower East Side of New York  (orensanz.org). 

It is housed in a Gothic Revival synagogue, built in 1849 for Congregation Ansche Chesed (wikipedia). This astonishing place is owned by the Spanish artist Angel Orensanz.

Yesterday I was there to attend the opening for an exhibition of Orensanz`s sculptures called "Burning Bronzes" (running until October 25th). Entering the former synagogue I was wowed by the sheer beauty of this building (pictures were taken with an iPhone 4). It is a gorgeous place which invites to meditate. But the place also could be booked for events to finance the non-profit organization.  

The gallery in the upper floor of the former synagogue, where the exhibition was happening,  displayed the artist’s sculpture works in bronze, as well as many of his paintings and drawings. 

I perceived the combination of different exquisite forms of art as perfectly harmonious and fitting to the awesome place.  An installation at the end of one of the rooms was the icing of the cake.   

I also have to thank the host for his generosity. The wine he served during the reception was quite fine. Sometimes I want to come back to this place, maybe at one of the frequent public events there.

Movies: The Bourne Legacy

 

(Drivebycuriosity) - Can you trust your government? Hollywood says: No! For years the dream factory has been making movies about people who`s life is threatened by their own government.  Take for instance  "Three Days of the Condor " (wikipedia) from 1975. This famous movie tells the story of a CIA employee who has to fight against his murderous colleagues.

The "Bourne" movies, which defined the action cinema of the last decade, have been advancing the "fear your government" topic. In these flicks a member of a clandestine US government organization, named Jason Bourne, played by Matt Damon, was hunted down by assassins employed by his own government. Remarkable is the use of satellites and other advanced technologies for an almost global video surveillance. It seems nothing can escape the eyes of "Big Brother".

"The Bourne Legacy", which is now running in the US cinemas (imdb), doesn`t have Bourne/Damon anymore, instead in this film the U.S. government is killing and hunting down a lot of other employees. Considering that there are hundreds of thousands of public employees in the US, the franchise could have a lot more forthcoming movies.

The hunt runs at different places in the US and goes even as far as to the Phillipines, with the massive help of local forces. This might sound a bit  implausible, but Washington DC has indeed a long and strong arm and has been using it.  For instance in 2009 Roman Polanski, a citizen of France, was temporarily  imprisoned in Switzerland  (!) at the request of U.S. authorities (wikipedia). The allegedly neutral government in Bern followed US instructions and the movie director has been hunted by US authorities for more than 30 years because of a sexual relationship with an underaged American girl in the 70s.

Anyway, the man hunt is entertaining and has at least one breathtaking scene. In particular the editors did a great job by cutting the furious action scenes, especially in crowded Manila. The cinematography also delivers some insights into the boiling life of a mega metropolis in an Asian emerging country.

The cast was well chosen. Even though I prefer Matt Damon I accept Jeremy Renner as the new hero of the "Bourne" franchise.  The actor plays a convincing game who is apt to defend himself. Edward Norton, whom I have been admiring for years, personifies a convincing vicious strategist. The sheer beauty of Rachel Weisz gives the movie more spice.

I`m looking forward to more Bourne thrillers and other well made political man hunt movies.

Stock Markets: Why The Fireworks?

Today the Dow Jones closed on the highest level since December 2007, continuing the rally which started last June. The German stock index DAX and other European stock markets did the same. Some stocks like Apple, Amazon.com and Google reached recently all-time highs or at least a 52-weeks peaks.

The fireworks on the stock markets seem to be surprising considering all the pessimistic headlines in the media. If we believe Bloomberg and other commentators the rally is only fueled by speculations on more monetary stimulus (including more bond buying by the US Federal Reserve, the so-called QE3).

The monetary policy in the US and in Europe is indeed accommodating because of the extremely low interest rates and the abundant liquidity. But the rally has many more fathers:

Since the start of this bull market in March 2009 the majority has been too pessimistic. The bulk of the small investors (retail investors) has been dumping stocks and many professionals, including fund managers, did the same. Many have been betting on a global economic disaster.

But the world economy is better than the majority thinks and the media want us to believe. Last week we got more evidence that the economic upswing is continuing (ritholtz.com). The US service sector, which contains around two-thirds of the economy, accelerated its growth in August and the US retailers & car producers reported strong sales for the same months. Furthermore, the US housing market is improving and therefore strengthening the economic upswing. Even from ailing Europe came good news. Germany, the leading economy on the old continent, reported rising exports, imports and industrial production for July (reuters).

I reckon that the positive surprises will continue in the coming weeks and months and will fuel further gains on the stock market.

Economy: What The U.S. Could Learn From China

Last Friday the Shanghai Stock Index jumped more than 3%, the biggest stock market rally in almost eight months. The trigger was a bold step by the Chinese government. Bejing announced a huge investment program into the country`s infrastructure (bloomberg):

Bloomberg reported, that the Chinese officials approved plans to build 2,018 kilometers (1,254 miles) of roads. They also also backed  plans for subway projects in 18 cities, nine sewage-treatment plants, five port and warehouse projects, and two waterway upgrades.

I believe these investment plans are highly appropriate and necessary:

- China is still a developing country and has to build up a gigantic infrastructure to support the further growth of her economy.

- The program will pump a lot of money into the Chinese economy and create there a lot of new jobs and income. This should work as a stimulus to revive economic growth which has been slowing down recently.

- These investments should strengthen the domestic  economy and reduce China`s actual over-dependence from exports and foreign markets.

I reckon that the U.S. could learn from China - for similar reasons:

- The infrastructure in the U.S. is a mess. Very often streets, railways, airports, subway systems, steam pipes and bridges are old and rotten. The U.S. infrastructure reminds more of a developing country and doesn`t suit to the alleged leader of the world.

- Bold investments could rekindle the sluggish job market and create a lot of new incomes for many thousands of Americans.

I realize that this would be extremely costly and therefore unpopular. Rising taxes for financing the huge infrastructure program should be taboo, because taxes are barricades for the entrepreneurial initiative.  I would recommend using credits instead of the actual debt problems. F….k the debts!

I reckon that these infrastructure investments will create enough jobs and income in the coming years that they will amortize the costs in a reasonable time and everyone will be better of.

Movies: The Cold Light Of Day

The Spanish economy is in a mess. Everyone there seems to try desperately to earn some money. Some even attempt to produce movies in the American style for selling them on the U.S. market.

The result is "The Cold Light Of Day" (imdb). The producers hired two American brand names, Sigourney Weaver and Bruce Willis, and put them in a wild action story. You can see a lot of shooting, messy car chases and even torture. But nothing made any sense. The flick is confusing and boring.

The strategy seems not to function. As I watched the movie in South Manhattan the cinema was unusually empty. I guess the smart Spanish producers have to try something new.