Wednesday, 25 April 2012

Trickle-down innovation & your Apple iPad / iPhone...

Very rarely companies 'beat-the-street' (ie: profits exceed expectations) significantly on the upside. Last night Apple Inc. did just that. It's testament to brand strength and the dedication of the 'post-Jobs' management team. What does this mean for the price of Apple stock?

Market participants have been less inclined to hold onto their Apple investments lately which isn't surprising given the stock's astronomical price-rise in the last few years. Additionally, the untimely passing of Steve Jobs, Apple's innovation-genius, adds some credence to the 'sell-your-Apple' call. Has Apple reached its zenith in terms of product-development / product-innovation?

It doesn't take too much digging to reveal a sales-strategy so diabolically clever that, if true, consigns the premise that 'the iPod was Steve Jobs' greatest achievement' to the trash-bin. It's a sales-strategy so ephemeral, so revolutionary that it rewrites marketing theory. 'Those in the know' will tell you Apple's future is bright, very bright and it's Jobs' real legacy. It's a legacy not necessarily beneficial for Apple-users but it certainly will be for Apple shareholders, at large, around the globe.

'Those in the know', if pushed, will tell you that long before the release of the iPad2, Apple's engineers had already developed the iPad 5, 6 and 7. (similarly the iPod & the iPhone). In a perfect world we'd believe the truth of 'what they've said'. We'd accept that Apple spared us the iPad10 because we were, quite frankly. not quite ready for it. We'd admire Apple's redefinition of reverse-engineering or trickle-down innovation and accept, at face-value, Apple's strategy to reveal it's revelation to us 1 version at a time, each version 'advancing' a small step or two. We'd understand that brand-push pressure would have us reaching for our wallets at each 'new release'. We'd understand, accept and admire! We'd also be mesmerised by the brand; we'd buy; we'd replace; we'd replace again and we'd spend some more. It's a lasting, innovative and admirable legacy built to drive Apple's profits well into the future.

Then again, this is the real world and 'what they say' is hardly ever based in reality.

Tuesday, 24 April 2012

Europe's next World War is one of ECONOMIC relevance

Speak to an educated, politically astute European and don't be surprised when he / she tells you that Europe is embroiled in a war so bitter that subsequent social divides will take generations to bridge. 

An influential colleague contends that Europe is in a fight to the death and the enemy is none other than Britain and the United States! 

Why have the Europeans been so slow to respond to the EU crisis?  It’s a function of an outdated institutional structure and cumbersome Legislative, Judicial & Administrative bodies.

These are just a few of the institutional bodies / individuals responsible for the well-being of the European Union:

  1. Ministers and parliamentary secretary generals.
  2. Commissions / Committee of regions, economic and social council-BEI (European Bank of Investments)
  3. FEOGA-(European Agricultural Guidance and Guarantee Funds).
  4. (EMCF) -European Monetary Cooperation Funds.
  5. Secretary General of the Council of Europe
  6. Parliament
  7. W.E.U (Western European Union)
  9. E.C.B (European Central Bank)
  10. O.E.E.C (Organisation for Economic Co-operation and Development)
  11. The Council of Europe
  12. NATO (North Atlantic Treaty Organisation)
  13. CSCE (Commission on Security and Cooperation in Europe)
  14. The legislative council has powers.
  15. The commissions and the legislature and the executive for the E.C.S.C. 
  16. E.I.B (European Investment Bank)
  17. E.B.R.D (European Bank for Reconstruction And Development) 
It’s understandable why Europe has responded so slowly to a deliberate, well-coordinated economic attack and why the consequences have been devastating. Germany has alluded to this fact and is demanding structural reforms.

Britain is the enemy… 

(A simple example) - Britain proposed the purchase of significantly subsidised New Zealand sheep in exchange for British-made vehicles offered cheaply. The sheep are sold to France at excessively inflated prices and the commission shared…It's open to scrutiny and is a tangible and deliberate attempt by Britain to collapse the EAGGF. 

The United States is the enemy… 

(A simple example) - European banks have been driven to the cusp of bankruptcy by a co-ordinated attack by US banks intent on creating problems where there are none in an effort to destroy the Euro. Interbank rates are open to scrutiny and confirm the intent.

Whichever way you look at it it's certainly a refreshing take on the European Crisis and perhaps an opinion we should not dismiss too lightly. 

Monday, 23 April 2012

Your country doesn't need you!

At it's core Globalisation feeds on Cheap Labour. It's undeniable and it's entrenched..

Read the History of the United States and it’s obvious that the early days were indeed the ‘land-of-the-free’ not in freedom of spirit but rather a catch-all phrase for the going hourly wage of the average labourer. Cry foul and say it isn’t so but whichever way you want it ‘Free’ (cheap) migrant labour from Ireland, Italy, China and others built what is, today, the world’s largest economy. Today’s shift in ‘economic strength’ away from the West is based ONLY on the glut of cheap labour offered in China, South East Asia and India and is the ONLY advantage the 'East' has over the 'West'.

Paradoxically the proposed move to the political right in both France and Germany suggests, now more than ever, that The Citizens, in their demands for a decent living from the countries of their birth, have little grasp of the economic side-effects of globalisation. Unless the citizens concede the point and join the masses in the eastern sweatshops, their economic days are numbered. Social instability is here to stay. By extrapolation, politicians who promise 'work for our people' will become more popular in mature economies but the promises are nothing more than an economic dream in countries which face economic obsolescence.

Where material wealth defines the person why should we care that the people-of-the-west are accelerating towards a state of beggared poverty? Perhaps in a fuzzy sort of way and somewhere embedded in our warped sense of right & wrong we can’t help but feel sorry for the ‘strugglers’; a sentiment which, perversely, led to globalisation in the first place. 

Friday, 20 April 2012

Sarkozy - egg's on your face

It's the perfect example of a conflict of interest so diabolical that until we remunerate our politicians on a performance-based basis only, we'd be damned fools to expect any change.

Political self-preservation, of which France's Sarkozy is reliably the world's foremost exponent, is so deeply entrenched in the system that we accept, subconsciously, a lesser standard of 'good leadership' originally a measure of progress, now merely an imposition of noise by the most vocal individual, regardless of substance. It's symptomatic of faltering checks & balances in a world materially distracted. We've become on-demand cyborgs of consumption. Today's Apple is tomorrow's fruitcake... The US too is no different. The same nepotistic flaw is a character-trait nurtured in self-indulgent praise heaped on Members of Congress from within Washington itself. Paradoxically there are MANY politicians who do, in fact, possess the capacity to take us forward but why should they? 

In the end our bouffon's many words and fewer deeds have seemingly served him none at all. He's met his Hollande and now's the time to set the record straight... Pay the incumbent less than nothing until performance goals are met.

Thursday, 19 April 2012

Investing in the 21st century

Ours is a world of make-believe and whilst we do our best to earn an honest living we’re lulled into a false sense of security believing our accumulated wealth has some real bearing in the future. Currency is just an exchange of paper with an assigned value. That value is ephemeral at most. A house is just its bricks and mortar. Condensing the premise a little further it’s fairly easy to conclude that PEs of 20 and more are just convoluted conjuring tricks offered to the uninitiated by profit-driven spin-doctors in Armani suits. Gold too is just a malleable metal with some industrial use and an added dose of bling. Its allure, if you like, is mostly based in history. It too has an artificial value. Natural demand versus supply would yield a gold price a great deal lower; perhaps even as low as $900 if the pendulum swung back to equilibrium. Is Gold a hedge? Against what, hunger or even, perhaps, as a foil against a failed financial system? Time will tell and that too is very much a guestimate at best. Logically, if the pawpaw hits the fan gold will have little value in exchange. Yes, sure, between the more affluent the allure holds true but amongst the other 99.9%; I think not. It would be better to store one or two bushels of grain.

As for the markets it’s only a matter of time before our very real problems become unmanageable and when it does I would hazard that ALL investments will quickly dissolve into meaningless. Nevertheless, Armageddon is not in our immediate future so we’ll continue to live in the here and now exploiting discrepancies and or inefficiencies for self-promotion and a little profit. If that’s AAPL then so be it. If it’s an AU etf then that too is fine.

Just don't take yourself too seriously, time is the only legacy. 

Wednesday, 18 April 2012

Emerging markets - NEUTRAL?

It's quite clear that Europe's economy is currently non-sustaining ie: more liquidity is required, especially in the short to medium term. With the systematic transfer of private-sector debt to the public sector there's not too much doubt that the ECB will inject liquidity into the system. That being the case Europe's impact on the global market should be fairly muted in the second half of this year.

More interesting is the debate on China's economy and the commensurate market reaction on the price of commodities. BHP Billiton projects a rosy outlook for commodities, generally and iron-ore specifically. Even so, housing data released this morning suggests that China may be headed for a 'less-soft' landing than initially expected. In addition, one or two developing political nuances in South America and Southern Africa adds fuel to the emerging-market-neutral debate.

Given the global- market aberration and the historically low equity-ratings in the US, it's no surprise that recent global equity-investment flows are US positive. Even so, the currency of the land of the free is only for the brave.

Monday, 16 April 2012

This is the future...

China's GDP is approximately a third the size of US GDP and within the decade China's GDP will be the largest by anyone's definition.

Within the same decade China will boast more than 25000 individuals with wealth in excess of $100 million.

If Spain, Portugal, Greece and Ireland are 'key' economies sending global equities to highs and lows depending on the latest sovereign bond yields why is it that when China relaxes the yuan markets reverse intra-day declines immediately?

Should we really care about next week's hat-in-hand 'EU-posse' to the IMF or should we dismiss the escapade as just another Brussels-engineered 'storm-in-your-wallet' pantomime played out by silk-clad beggars?