By Alex Salomon
Another week punctuated by my increasingly random thoughts! But come on, it’s always fun! This weeks thoughts range from more European political and financial woes to negative yields to “Apple” families. Enjoy.
1. Only in France… Did you know, and I am not making this up and invite you to check for yourself, but out of the entire Government in France, including President Hollande’s Cabinet and the Executive group of Ministers, not one member has ever been salaried by a private company (outside of youth internships). 30 members, from the Prime Minister to the Budget Minister to the Industry Minister to the Labor Minister to some 25+ other Ministers & Secretaries, and not one of them has ever worked for a private company. SERIOUSLY? Not one stint with a private company!! The Prime Minister is… the Prime example.
How do you fix a country’s economy, how do you create and promote jobs and economic growth without having ever worked outside of civil service? This ineptitude is currently illustrated by the total collapse of France’s Peugeot Group (one of Europe’s largest car-making companies)… be ready for General Motors (GM) to scoop up the dead French Peugeot brand by 2013.
PIIGS (Portugal, Ireland, Italy, Greece and Spain)? Try FIGS! (France, Italy, Greece and Spain)…
Just so we’re clear, we’re talking about a country in which its leading stock indicator, the CAC40, is stuck at -50 to -60% off its highs… If the stock market is indeed a forward-looking mechanism, the CAC40 is spelling something ugly.
2. Negative yields… Currently, if you lend money to the EFSF, Switzerland, Denmark, Germany, Austria, Finland, the Netherlands and the US via TIPS, you will kindly be rewarded by being returned less money!!
I am not a pro and do not know enough about the topic, yet I cannot help pointing out that (1) the first negative yields paid in November 2011 marked a durable rebound in global equities, as a sign that things in the bond markets had gone too far. So, is the current state another sign of a new fresh leg higher for equities? And (2) let us be clear that yields at current levels are NOT a reflection of the current “health” of governments, but rather the shortage of premium debt being issued.
Thus, here is an idea: could current low yields just a reflection of market realism & pragmatism and a sign that most governments CANNOT pay a higher rate, because yields cannot be paid? Seriously, do France, Japan or even the USA generate enough revenues to “sustain” a 5% payment on their coupons for a prolonged period?
3. If you are keeping track and score on my past thoughts (see July 1st column), oil has been “the easiest trade” of the month… and (citing my 4th thought from June 10), the Euro fight is still going on.
I am starting to wonder whether the ECB’s Draghi is being slow in helping Spain out of its borrowing nightmare perhaps as a means of keeping the Euro low and depressed. This is the high-stakes poker game I spoke of: Draghi’s depressed Euro vs. Bernanke’s devalued Dollar.
I just wanted to point these factors out because there is a lot of geopolitical noise coming from Iran that is likely to keep the oil market buoyant and the Euro-Dollar fight front and center for a while.
4. What is newsworthy? Totally random, and may qualify as a mini- “rant of the week”… I am very, very, sorry for the 24-year old Australian, Benjamin Linden, killed by a great white shark and especially for his family and friends’ loss, but I cannot help being puzzled that a shark attack makes worldwide headlines? By what criteria does a shark attack justify worldwide coverage? I know nothing about Linden’s life, so maybe this is a bit unfair, but if he were a volunteer at a local shelter or had given pro bono time to a local orphanage or served his country, why wasn’t he famous for that instead of a fatal shark attack?
Again, I have sympathy and empathy for his family’s loss, but I must confess that I ended up wrestling all week with the concept of “newsworthiness.”
On a bigger level, I also wonder what it says about current societies and mankind, that we constantly focus so much time and energy on “bearish” news (ie., Greece) and good news is often dismissed.
Personally, I cannot wait until we experience (or return?) to a state of generalized euphoria!
5. OK, full disclosure, I have a bullish position in Apple (AAPL) stock and I have been adding to it. But I must say, living in a household with countless ipods, itouches, ipads, a time machine, a couple macbooks, 2 iphones, and a small iTV box, I am still jonesing for “my precious” upcoming iPhone 5!!! I know, call me names. But, really, I am just crazy about Apple. And frankly, I cannot wait any longer for “my” iPhone5 to be released!! With nanocard orders going through the roof, the iPhone5 is likely to come to a store near you very soon… But not soon enough. This geek-writer cannot wait to get a new toy.
So, what is the “real” thought of the week in there? Well, two of them, really.
First and foremost, I keep on wondering whether my household is representative of a “normal” household? If so, Apple is going to keep on posting blockbuster results for a long time. I had been a PC guy for 20+ years and I recently converted to a Retina MacBook and it is easily my favorite “PC” ever.
Second, what will it take to bloat “normal” households so much that Apple products will no longer be needed? Or will the everlasting cycle of upgrades provide Apple with another 10 or 20 golden years?
Thank you for reading and have a great weekend!
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Twitter: @alex__salomon @seeitmarket Facebook: See It Market
Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of his employer or any other person or entity.
Position in Apple (AAPL) at the time of publication.
