Friday Finance Weekly 38TH Edition

Greetings folks and a warm welcome to the 38TH Edition of Friday Finance weekly. I may take a Friday Finance sabbatical for the next two weeks so if you don’t hear from me have a Merry Christmas and a Happy New Year.

Zynga started trading under the ticker symbol (ZNGA) on Friday and its IPO has been interesting to say the least. In August 2011 consultants valued the company at $14B which suggested at $17.20 per share price. The IPO was at $10/share this morning and skyrocketed to $11.50/share before dropping to $9.53/share by the end of the day. Despite the 14.26% one day drop in share price the company was able to raise $1B and is therefore the largest internet IPO since Google in 2004.The company is much stronger than Groupon as its actually profitable with net profits of $30.7M for the first 9 months of 2011 on $829M in sales. With a heavy reliance on Facebook revenues (Zynga generates most of its revenues by creating virtual ecosystems and charging customers to interact in this space); Zynga was able to secure a long-term contract with Facebook until 2015, where Facebook will get 30% of all revenues. In the long-term I believe that Zyngas’ future will include allowing companies to create virtual malls and other online structures within the Zynga worlds. They have already started to move in this direction as Starbucks paid to have a virtual coffee shop on City-Ville. As parents discover that their children are paying $1 every time they milk a virtual cow on Farmville, the business model will definitely have to shift towards providing free services. In addition China is entering the social gaming space and there are no rules on having a virtual “knock off” Starbucks or Gucci store. (Source: CNN Money)

TELUS made an amazing holiday announcement stating they are raising their dividend by 10% in fiscal 2012 which amounts to $2.55 per share. Substantial growth in their Smartphone sales and TV services have increased revenues and their bottom line. There is however some sentiment in the market that Telus is able to have above average profits as competition is lighter in Western Canada as opposed to Eastern Canada. While this is true to a certain extent, TELUS has been very pragmatic and economical in developing its GSM network by partnering with Bell and focusing on selling premium TV services for consumers. Shaw which is dominant on the West Coast has been lagging in innovation and doesn’t have common features such as the ability to control your PVR from a Smartphone. Wireless revenues alone contribute to 53% of TELUS’s income and this is expected to grow by another 5.5% to $5.8B. Overall sales are expected to increase by 6.5% when digital T.V. services are considered. The share price is presently at $51.41 and the market cap is $16.68B. In other news the Koodo Man (also owned by TELUS) has announced plans to increase profits by posing for a swim suit calendar for 2012. (Source: Bloomberg, Financial Post)

This is for pure entertainment, but since it is Holiday Season, I thought I should help you with shopping list. These are the top 5 must have gifts for 2011:

  • Pre-Need Cremation Plan – Will cost $1,189 on Amazon and provides you or your loved one with an urn, transportation and cremation. Even Costco can’t beat this deal!
  • Fresh whole rabbit – $46 plus $19 for shipping. Tasty bunny meat that according to the seller is “lightly flavored with a nutty aftertaste”.
  • Uranium Ore – Pricing was tough to obtain but it comes with a Caution Sign…perhaps this may be bundled with the Pre-Need Cremation Plan kit.
  • Wolf Urine – Used to keep away deer from your property. Don’t worry its 100% all-natural, but no comments on what it smells like.
  • Milk from Tuscan Cattle – Yes seriously this exists. Comes at a cost of $45 a gallon on Amazon. But for a wicked deal of $10,000 the milk will be hand delivered by a real Tuscan cattle herdsman. I bet we can buy a Tuscan cow for under $10,000.

I would like some of these items under my Christmas tree, so if you are looking for a way to say thank you…anything from the list will do. Except maybe the Uranium Ore. (Source: CNN)

Have a fantastic weekend. Please visit: https://fridayfinance.wordpress.com to sign up. Don’t hesitate to forward this newsletter as you see fit. Many thanks,

Sam

Friday Finance Weekly 37TH Edition

Greetings folks and a warm welcome to the 37TH Edition of Friday Finance Weekly. Yes, its actually coming to you on a Friday, imagine that.

Facebook and Twitter is now where we go to study social trends. With a combined user base of almost a billion people, this is a good indication of what we are interested in. Some key social statistics include:

  • 2011 Facebook Memology (this is now an actual word) – (1) Death of Osama bin Laden, (2) Packers win the Super Bowl, (3) Casey Anthony found not guilty, (4) Charlie Sheen, (5) Death of Steve Jobs, (6) The Royal Wedding, (7) Death of Amy Winehouse, (8) Call of Duty: Modern Warfare 3, (9) Military Operations being in Libya and (10) Hurricane Irene. Conclusion: Charlie Sheen is actually more popular than Steve Jobs and that we as a people are more interested in violence than any other topic. I find anything financial related isn’t even mentioned.
  • Twitter’s 2011 trends include – (1) Justin Bieber, (2) Soccer/Football, (3) Lady Gaga, (4) NBA, (5) Jonas Brothers, (6) Christmas, (7) Super Junior (9 member South Korean Boy Band), (8) Britney Spears, (9) Japan Earthquake and (10) One Direction (British-Irish boy band). Conclusion: Twitter users are mostly young teenage women with a limited appreciation of things happening outside the entertainment world.

In other Facebook news it appears that there was a glitch once you reported a picture as being ‘inappropriate’ it allowed users to see all private photos of that particular user. The breach did not have an impact on the estimated value of Facebook ($77.7B). Twitter‘s estimated value has remained at the $9.2B mark. Looks like Mark Zuckerberg was a victim of this breach.  The world was finally able to see shocking pictures of Zuckerberg doing nasty things like cooking, shopping and hanging out with his girlfriend. Pictures of him swimming in billions of dollars were restricted to his dating profile on eharmony.com. (Source: Globe and Mail)

Now for more serious news as it looks like options traders have made a big bet on oil topping $150/barrel within a year. This is due to increasing sanctions on and limits of crude oil from Iran. For its part Iran is claiming that if oil exports are banned from its country the price will increase to over $250/barrel. This is obvious propaganda as there is significant underutilized capacity from Russia. That being said Russia will have an incentive to drive up oil prices and may restrict supplies. In addition, Putin was upset by comments made by the Whitehouse in relation to the recently concluded Russian elections. In my opinion I don’t think oil will hit $150/barrel with a year as the Whitehouse is making a deliberate attempt to curb prices. The US Senate approved a measure on Dec. 1 that would increase sanctions against Iran’s central bank, which would increase obstacles to buying Iranian crude oil. Obama’s administration opposed the legislation for fear of a rapid increase in oil prices. I am sure conspiracy theorists are going to have a field day with this. That being said it’s impractical for the global economy to completely cut Iran from the worlds’ oil supply. Presently Iran constitutes 50% of Turkey’s oil imports, 11% of China’s, 11% of India’s and 10% of Japan’s. If the concern is that Iran is developing Nuclear weapons, why don’t we just restrict their ability to obtain uranium? That seems like the most practical solution to this problem. 31% of the world’s known uranium comes from Australia and that seems a like a good place to start. (Source: Bloomberg, World Nuclear Organization)

Had a few extra drinks during the holiday season? Then stay AWAY from your computer as studies indicate that online shopping increases with intoxication. Almost half of UK consumers have shopped online while being buzzed and they spend more than they normally do. 14% of the 4,200 of the surveyed consumers stated that they made purchases that they wouldn’t have if they were sober. Popular items include shoes, DVD’s (wonder what type), books (not the educational type), video games, technology and lingerie. I know what they mean! Last time I was tipsy I purchased a leopard print male …(never mind). Now I am too embarrassed to phone the returns department. (Source: Orange News, MV)

Have a fantastic weekend folks and please don’t hesitate to forward this newsletter. Many thanks,
Sam

Friday Finance Weekly 36TH Edition

Greetings folks and a warm welcome to the 36TH Edition of Friday Finance Weekly.  The US jobless rate fell to 8.6% as the US economy added 120,000 jobs. Hopefully there won’t be a post-Christmas hangover as retailers start to lay off their seasonal staff.

Its looks like economic World War II as England, France, and Germany are at odds on how to proceed. The only difference this time is that France and Germany are on the same team. Given the economic issues facing the EU, France and Germany have teamed up to push for broader powers in Brussels. The new proposal will give Brussels the ability to punish spendthrift Euro states. The idea is to allow a central organization to set the ground rules when it comes to economic issues, especially bond issues. Presently states such as Greece and Italy are issuing Euro bonds; since they have weak fiscal discipline when compared to the rest of EU, it drives up interest rates. On a macroeconomic basis these increasing interest rates puts pressure on the Euro. Cameron (UK’s prime minster) is against the idea and favors the European Central Bank taking a role in stabilizing a currency. There is already pressure from the UK Conservatives to break UK’s ties with the EU and an economic union will certainly make that a reality. It does however seem that the break up or drastic change in the Euro may be likely, despite Germany’s unwavering support for it. Business leaders in Europe are seriously discussing post-Euro contingency plans. The new treaty drafted by Germany and France will be put for a vote next Friday and most economist view this as a do-or-die situation. My prediction is that the Euro will not exist in its current form. It will either be abolished, or continue to operate in countries that are fiscally similar. In my opinion the EU should continue to operate in Austria, Belgium, Finland, France, Germany, Luxembourg, Monaco and Netherlands only. The world needs a second reserve currency, so abolishing the EU will not bode well for the global economy. Historian Timothy Garton Ash has summed up his feelings about the EU by stating “If the EU applied to join the EU it would not be admitted.” I believe the same can be said for most US investment banks, they probably wouldn’t lend to themselves. The US Federal Reserve has proven that you can fix the problem by running the printer non-stop. Looking for even more graphical representation of money in our economy, check out http://xkcd.com/980/ .(Source: Reuters)

RIM has once again plunged to its lowest point in the last 11 weeks. This is amid reports that they have missed forecasts and have continued to lose market share to Apple. There was an unscheduled statement from RIM and they simply stated that Q3 revenues were ‘slightly lower [and] at the low to mid-point’ of its forecast. Originally the company had forecasted $5.3B – $5.6B in revenues. It’s worrisome when a company is not specific; give us the actual numbers already! This is the 4TH straight miss-target in terms of sales and it will put additional pressure on RIM co-CEO’s (seriously why do they still have co-CEO’s?). RIM dropped 9.2% on Friday and presently is trading at $17.08/share. The company is still a giant in terms of technology companies as they command an $8.95B market cap. Let’s face it the BB PlayBook has been a failure by all accounts. In the last quarter RIM sold 150,000 PlayBooks compared with 11.12M Apple iPad’s. In fact BB is taking a $485M pre-tax inventory markdown to reflect all the rebates they are giving to consumers. The service interruptions have resulted in a further $50M loss. Let’s hope that the new BB operating system, dubbed BBX is a savior, but with reports of delays due to the next generation of BB’s, there is little light at the end of the tunnel. What’s next you ask? Simple, Blackberry should just admit that the service interruptions are the result of Skynet (you will need to be familiar to Terminator to get this) assuming control and that if we don’t buy their shares the world will come to an end. All jokes aside we all know that Blackberry service outage was a tribute to the late Steve Jobs. (Source: Bloomberg)

There are 270,000 additional Honda’s in the US that may have faulty airbags, according to reports on the company website. The total recall is now over 876,000 cars. “Affected driver’s airbag inflators may deploy with too much pressure, which can cause the inflator casing to rupture and could result in injury or fatality,” this is according to the company. Yikes! Recalled models include the Accord, Civic, Odyssey, CR-V, Pilot, Acura TL and Acura CL. The market however does not seem to think this is a big deal as their stock price is up 11% for the week and is presently at $31.48/share and the market cap is $56.74B. Wondering how this is possible? It’s simple, with the purchase of any new Honda you will automatically qualify for a 50% discount on life insurance provided by Honda Life. That does beg the question, should insurance companies have higher premiums for individuals that drive Honda’s? (Source: MSNBC)

In what a cement company executive said is “one of those bureaucratic things that doesn’t make any sense,” the city of Detroit recently built wheelchair ramps at 13 intersections along Grandy Street. The issue, those ramps are either not connected to the sidewalks or connected to seldom-used, badly crumbling sidewalks. The ramps were required by a 2006 lawsuit settlement in which Detroit pledged to build ramps on any street that gets re-paved. No one in city government thought, apparently, to attempt a trade of these 13 intersections for paving 13 more-widely used ones in the city. One thing is certain; paving the ramps to nowhere have resulted in jobs, so who cares right? Obama’s economic action plan is in full swing!

Have a great weekend and my apologies for the late issue. Please don’t hesitate to forward this email. Many thanks,

Sam

Friday Finance Weekly 35TH Edition

Greetings folks and a warm welcome to the 35TH Edition of Friday Finance Weekly. If you are in theUS I hope the Black Friday sales are treating you well.

George Soros is probably the second most famous investor after Buffet. So when he makes a trade and reduces his positions in companies the market should take note. This week the Soros fund was bearish on the following stocks:

  • Liberty Media Interactive (NASDAQ: LINTA) – The fund reduced their holdings from 1,819,900 shares to a mere 14,000 shares. The company is a stock issued to track the performance of the Interactive Group of companies. The company focuses on distributing content in the video, online commerce, media, communication and entertainment industries. The share price is down around 4.29% for the week and is presently at $15.16/share and the market cap is $9.12B. I agree with the shorting Liberty Media, as despite my research and I can’t seem to find anything useful with them.
  • Time Warner Cable Inc (NYSE:TWC) – Soros fund reduced their holdings by 98.95%, or 735,245 shares. Time Warner is primarily a cable operator in theUSand has service inNew YorkState,Carolinas,Ohio, Southern California andTexas. Presently they have over 14.5M subscribers. Shares are down around 5.55% for the week and the market cap is $18.39B. Time Warner is probably the company with the highest level of uncertainly. With Dish Network making an aggressive push into the market with their cut rate pricing and recent acquisition of Blockbuster, traditional cable companies should be concerned.
  • Etrade Financial Corporation (NASDAQ: ETFC) – Total reduction of 97.29% in terms of net holdings. The company is primarily an online trading platform for major stock indexes. Over the course of the week the shares have seen a reduction of around 10.35% and the share price is presently $8.14/share with a market cap of $2.32B. There is a lot of competition in this space, especially from large financial institutions and with the market at its current state there isn’t much individual trading. In my opinion this will be a long-term buy.
  • Wabash National Corp (NYSE:WNC) – The fund reduced their holdings by a 97.29% or 729,700 shares. Wabash is a semi-trailer manufacturer inNorth Americaand products include dry freight vans, refrigerated vans, flatbed trailers, drop deck trailers and dump trucks. This week the shares have dropped a total of 17.16% and share price is presently at $6.13 with a market cap of $420M. This is a clear sign that Soros is bearish on the economy in general as the first sector to be impacted by recession is transportation. The economy will pick up and with a low share price this may be a good long-term addition to your portfolio,
  • Sprint Nextel Corp (NYSE:S) – Total reduction in holdings is around 97.08% or 1,068,989 shares. Sprint Nextel is a cellular provider in theUS. They recently gave a large deposit to Apple in order to carry the iPhone 4S, but its coverage and services has often been questionable. Share prices have reduced a total of 18.21% over the course of the week and presently it is trading at $2.38/share, but it has a market cap of over $7B. In my opinion this may be a good buy, especially with such depressed prices. The company itself is highly leveraged, but the AT&T – T-Mobile merger seems to be on the rocks and Sprint will be the next natural target. Anti-Trust issues probably won’t be a huge factor in a AT&T – Sprint deal, as Sprint’s market share is fairly limited.

Ouch…looks like Soros’s exit has a significant impact on share prices, ranging from a drop of 5% on the low end to a drop of over 18% on the high end. Soros, obviously a fan of Lindsay Lohan, has dropped the Etrade baby just like she did. Hey wait a minute, is there any way we can short Lindsay Lohan’s future earnings? That would be a sure bet. I may have used that joke before, but it’s still relevant. (Source: Wall St Cheat Sheet, Google Finance)

A British manufacturer, BCB International, is flourishing, buoyed by sales of its Kevlar underwear, at $65 a pair, toU.S.military personnel inAfghanistanandIraq. However, soldiers and Marines must buy them directly; the “Bomb Boxers” are not supplied by the Pentagon even though nearly 10 percent of battlefield explosive-device injuries result in sometimes-catastrophic damage to this area. According to an October report in Talking Points Memo, the Pentagons protection is inferior to BCB’s but is less expensive. Although the Pentagon fully funds post-injury prostheses and colostomies, it could purchase 7,700 Bomb Boxers for the price of a single Tomahawk missile. Go figure. Next time you are watching the US military shock and awe you, please think about all the private parts that could have been saved. (Source: Talking Points Memo).

Have a fantastic weekend and please don’t hesitate to forward this email. Many thanks,

Sam

This is for information purposes only and is merely an opinion not an investment recommendation.

Friday Finance Weekly 34TH Edition

Greetings folks and a warm welcome to the 34TH Edition of Friday Finance Weekly. If you live in the Greater Vancouver Area I hope the commute into work wasn’t too bad. Especially considering we got a whole 5 centimeters of snow!

Olympus (the company known for making optical devices including camera lenses and medical devices such as endoscopes) is in trouble after Japanese officials claim at least $4.9B is unaccounted for. And you thought only American companies were scandalous. A memo prepared by Japan’s Exchange Surveillance Commission and Tokyo Metropolitan Police Department claim that Olympus worked with organized crime syndicates to hide billions of dollars of losses and then paid excessive amounts of money for their services. Investigators believe that the company used a series of money losing acquisitions to hide investment losses in to the 1990’s. In case you are wondering how it works, when a company is in trouble they will sell a division to an organized crime family and at a later date repurchase a related company (ie related to the organized crime family) at an inflated price. Authorities claim that half of the $4.9B in fees was paid to the Yakuza. On a side note organized crime in Japan is referred to as anti-social forces. When asked about these anti-social forces, Olympus president, Shuichi Takayama, said, “I absolutely do not recognize this.” What does that even mean? Well if he doesn’t recognize it, why did three Olympus directors ‘step down’? Now it all makes sense, those Olympus colon-scopes are actually Yakuza torture devices!  Why else would they have a diameter of a quarter? In case you are wondering, I am speaking from experience. (Source: New York Times)

Warren Buffett is front and center and quasi supports by the Occupy Movement by stating that he should be paying higher taxes. Well then why is his private jet company NetJets suing the Internal Revenue Service (IRS) for $643M in tax payments. The irony is that this is a private jet company. Presently there is a ‘ticket tax’ that is applied to passengers that take commercial aviation. Well since those snobs taking private jets are not like you and me, private aviation doesn’t fall under ‘taxable transportation’. I was never one to buy into the hoopla about the poor paying more taxes than the rich, but come on! The case has been filed in Columbus, OH. Berkshire Hathaway (the company that owns NetJets and is the investment company through which Buffet invests) lost over $500 a share in value over the course of the week. No need to panic though, with the current share price at $111,700 a share, the loss represents 0.46%. One would think that with a market cap of $185B and $34B in cash, Buffett would cut Uncle Sam some slack. In addition to the $643M NetJets is seeking penalties and interest. Buffett is starting to sound a lot of Michael Moore. Attacks capitalism, makes a movie about it, then uses Buena Vista to distribute it and make millions. (Source: Reuters)

Google’s universe continues to expand as they launched a new service called ‘Google Supplier Directory Beta’. It is a new service that connects North American companies with manufacturers in China. I thought they already did this. I checked out the new service and I have a feeling its going to be a huge hit. Companies can be searched on factors such as industries, revenues, audited financial information, export markets, employees and location.  Presently they have only 26 suppliers on the site and the latest audited financial statements are up to date as of 2009, so the service isn’t very practical at the moment. If I was an international sourcing brokerage company this would be a viable threat. The service is expected to expand to other Asian countries in the near future thus making the lives of procurement managers infinitely easier. The stock market hasn’t really paid much attention to this service as the share price barely budged over the week (loss of 0.31%). I am however not sure as to how Google will monetize this asset. Presently it is linked to Adwords, but with company names such as Dongguan Dazhong Electronic Corp it may be intimidating for a North American manager to pick up the phone and call. Perhaps I can sell my branding services back to Chinese companies? I would rename the above mentioned company to Dong Daz E Corp. What do you think? (Source: Techcrunch)

There was a recent photography auction at Christie’s in New York. This auction resulted in the sale of the world’s most expensive photograph. A beautiful picture of a river, some grass and blueish sky was auctioned for a staggering $4.4M. An unknown, partially crazy, customer purchased the coveted picture. The picture is a massive 6ft x 11ft and is only one picture in a series of 6. Others are in museums around the world. If you simply must see this picture it can be viewed at: http://bit.ly/520TcJ I finally figured out why Kim Kardashian got a divorce. She was only paid $2.5M for her wedding pictures. If a picture of a motionless river got $4.4M, she totally got gypped! (Source: Freakonomics, People Magazine)

Have a fantastic weekend and please don’t hesitate to forward this newsletter. Many thanks,

Sam

Friday Finance Weekly 33RD Edition

Greetings folks and a warm welcome to the 33RD Edition of Friday Finance Weekly. Let me start by thanking all our active service men and women as well as our veterans for their sacrifice. You are an inspiration to all of us and thank you for protecting the future for our children.

It is apparent that election fever has gripped the US as many important decisions are being made with 2012 on the radar. The controversial Keystone XL pipeline that would start in Alberta and end in the Gulf of Mexico has been postponed until after the 2012 election. In total the proposed pipeline will be 1,661 miles (2,673 kilometers) in length and crosses Alberta, Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas. If the pipeline goes as planned, it is expected to pump 700,000 barrels of crude oil on a daily basis. In addition to the environmental concerns in the US, there has been backlash on the Canadian side as well. Opposition has stated that pumping crude oil out of the province will eliminate potential revenues that would have resulted from value added services (such as refining). The Whitehouse has stated that politics played no part in announcing delays on the approval of the pipeline…yes; they said this with a straight face. Given the dependence of oil in the US, the proposed $7B pipeline appears to be an eventuality and I am confident that it will gain traction after the US presidential election. Obama needs to walk a tightrope between satisfying environmentalists and unions. It is estimated that the pipeline will create at least 20,000 jobs in the US. Interestingly every single state mentioned is a red state with a very low probability of an Obama win in 2012. On a side note during the 2008 Presidential election bid, Obama raised $533M and spent $7.39 per vote. McCain on the other hand raised $379M and spent $5.78 per vote. Guess money talks and it sure is loud. 2012 is expected to be an even bigger year for Obama in terms of fundraising. For 2012, Obama should change his slogan from Yes We Can to Yes We Can Pay You. All jokes aside however, given that the Keystone XL Project only impacts the Red States, why would he bother even trying to push for it? The answer is simple; Obama wants to do the right thing…what a novel concept. It will however be interesting to see if the Tea Party Hobbits (McCain’s words) will bite the bullet and now side with the environmentalists simply to oppose Obama. (Source: Bloomberg, Wikipedia)

Move over Jamba Juice, here comes Starbucks. This is not a joke. Starbucks Corp is starting a chain of juice bars in 2012. Recently Starbucks announced a $30M purchase of Evolution Fresh a company that presently sells fruit and vegetable juices to high end retailers such as Whole Foods. The company is known for using heat-free, high-pressure pasteurization processes to retain more nutrients than traditional juice making methods. Jamba shares dipped marginally, while Starbuck shares were also relatively flat. This is a highly competitive space, but the market itself is over $50B. Starbucks has mastered the art of selling highly process driven drinks in a timely fashion while maintaining healthy profit margins. Therefore the step into juices seems like a natural progression. I am however curious as to why they don’t just include it as part of their regular product offering as opposed to a whole new brand. No announcements have been made in terms of Canadian availability.  Starbucks is experiencing a renaissance as they returned to profitability in 2010 after 2 painful years of losses. Over the course of the last 6 months share prices have increased by over 20% and the market cap is presently at $32B. Bet you can’t wait to walk into a Starbucks Juice bar and say “I would like a Venti, double squeezed, no pulp, unsweetened, skinny Orangina with filtered water” Also known as a large orange juice. (Source: National Post)

Facebook has been deemed by conspiracy theorists to be a CIA spying machine. There is new ammunition to this theory as the Associated Press reports that the CIA tracks the mood of the world through social media. According to the news agency the CIA has set up a social media research centre in an anonymous industrial building in Virginia. The analysts affectionately refer to themselves as “ninja librarians”. Who says librarians aren’t interesting?  This group tracks Facebook status updates, Tweets, TV news channels, internet chat rooms and local radio stations. On average they analyze over 5 million tweets a day. The President personally gets an update at his daily security briefing. Apparently they were able to accurately predict the Arab Spring uprisings earlier this year. To ensure message authenticity all feeds are analyzed in their local languages. In case you are wondering, yes Big Brother is watching.  SharesPost is an interesting site where large privately held companies trade their stock. According to this site, Facebook is valued at $73B and Twitter is $9.8B. It will be interesting to see how the valuations of Facebook and Twitter will be impacted by this news, but judging by the content already on social media sites I don’t think the users really care. But I am sure people will think twice before dressing up as Osama or Gaddaffi for next Halloween. (Source: AP, SharesPost)

Although the world’s real economy may be flagging, it is not necessarily the case in the make-believe economy of online multiplayer games. This is according to reports by The Wall Street Journal (July) and the website Singularity Hub (August). For example, entrepreneur Ailin Graef’s, Anshe Chung Studios is worth “millions” of real U.S. dollars, earned mostly by managing rentals of make-believe real estate and brokering make-believe money transactions in the game Second Life. Graef also commands top (real) dollar for her designs of make-believe fashions for players’ game characters (avatars). In case you are wondering yes they will make a virtual girlfriend to go along with your fake friends and life. Ahh…the wonders of the internet. Be careful though, the CIA spies are real! (Source: Singularity Hub)

Have a fantastic long weekend folks and don’t hesitate to forward this newsletter. Many thanks,

Sam

Friday Finance Weekly 32ND Edition

Greetings folks and a warm welcome to the 32ND Edition of Friday Finance weekly. In case you are wondering, yes its Sunday. I had technical problems on Friday and since its already Sunday I decided to redo the whole thing. Rest assured you will be received the 33RD Edition on Friday Nov 11.

The yield on 10-year Italian bonds surpassed Spanish debt yields and reached 6.35% on Friday. Now that Greece has reached a short-term solution the focus is moving to other European countries and Italy looks like its next on the hit-list. After the 7% mark, interest rates seem to increase at uncontrollable rates and therefore European financiers are looking at ways to providing some stability. At the end of October Italy issued 3B Euros of debt at a rate of more than 6%, which is a whole 1.5% higher than the rate they paid earlier in the summer. The increased debt costs translate to over 3B Euros in annual costs. It doesn’t take an economist to figure out that when you borrow money just to cover interest things are getting ugly. Wait, we’ve seen this somewhere. Oh yes, it was called the American Credit Crisis. Whew I thought I was in uncharted territory for a second. The most worrying sign is that there is a clearly a reduced demand for European debt instruments as the European Central Bank has more than doubled its holdings of European Sovereign Debt. In my opinion the yields may have been higher as there may be mispricing’s due to reduced private market demand. So what’s next? Well Obama’s bailout culture has spread to Europe and a new $1.4T (yes that’s trillion) European Financial Stability Facility is expected to ease markets. Berlusconi for his part is leading from the front by womanizing, fraternizing with mobsters and drinking lots of red wine. Once he gets voted out of office he can start writing for the next Casino movie. (Source: New York Times)

Sarah Palin finally gave her 2 cents on the Occupy Wall Street movement and if she has her way, Obama’s front lawns is going to be packed. To paraphrase, she stated that the Occupy Wall Street movement is looking for a bailout; instead they should join the Tea Party. Palin wants the protestors to head south and camp outside 1600 Pennsylvania Avenue (the Whitehouse). Yes I am as confused as you are, but its comical. On other US news, the month of October added 80,000 jobs in the US. While this is a meager number, it was enough to reduce the unemployment rate from 9.1% to 9.0%. Also previous employment figures were revised upwards and this is a clear indication that the economy is recovering faster than expected. All things being considered however, the US economy has 6 million jobs less than it did before the 2007-2009 meltdown. The US economy will have to add at least 250,000 jobs a month for the next 2 years in order to reach pre-recession levels. There has been a growing consensus that we are in for a period of long slow growth and these numbers seem to be adding fuel to the fire. At these levels job levels the economy will take 7 years to recover. Yikes! How long can they Occupy Wall Street at this rate? Artic weather conditions may however, convince the Occupiers to go their Soho apartments and crank up the heat.

In August, a state court in Frankfurt, Germany, awarded 3,000 euros (about $4,200) to Magnus Gaefgen, 36, on his claim that during a 2002 police interrogation, officers “threated … violence” against him if he did not disclose what he knew about a missing 11-year-old boy who was later found dead. In 2003, Gaefgen was convicted of the boy’s murder and is serving a life sentence, but the court nevertheless thought he should be compensated for his “pain and suffering.” I must admit that lawyers officially have the best business model ever. Not only do they get paid if their clients loose, they also can make money when their clients lie. (Source: Yahoo News)

Have a great week folks and my apologies that this edition is late. Many thanks,

Sam

Friday Finance Weekly 31ST Edition (Oct 28, 2011)

Greetings folks and a warm welcome to the 31ST Edition of Friday Finance weekly. Looks like Europe finally has a debt solution and Greece maybe out of the woods for the time being. This has resulted in the Canadian dollar closing above parity and no doubt the lines at the border will be frustrating.

Remember HP saying that they were getting out of the PC business? Looks like they changed their mind on that one. Meg Whitman (former CEO of eBay) announced “HP objectively evaluated the strategic, financial and operational impact of spinning off” and determined that it was in their best interest to back away from the divorce. Does that mean that the previous CEO didn’t impact the operation and financial impact of the split? Maybe he was just kidding around of bored. The plan to leave the PC market was approved only 69 days ago. PC’s bring in approximately $9.59B in revenues for the company and market punished HP when they announced plans to move away from the PC market. The uncertainty has caused serious concerns in the market place and the share is down 36% for the year compared with a net 3% gain for the NASDAQ composite. Initially it was estimated that the cost of leaving the PC would cost between $300M – $400M, but after the impacts of reduced purchasing power was factored that cost increased to $1B. As Whitman put it, for the average person “the math just wasn’t going to work”. I would never have figured it out by just looking at the numbers. Mr. Apotheker (former CEO) announced his retirement last week and during the Meg Whitman’s review he was doing much more important things like taking an African Safari vacation. I know Halloween is around the corner, but the TouchPad won’t be resurrected. But you can take comfort in the fact that you aren’t Meg Whitman having to deal with complicated math problems and recovering from not winning the Governorship of California. Come on Meg even a bodybuilding, foreign actor won in that state. (Source: Wall St Journal)

Usually I am all doom and gloom, but 24/7 Wall Street had given us a summary of 10 indicators predicting that we won’t have a double dip recession. Here are the top 5 in my opinion:

  • GDP – The third quarter GDP for the US is up 2.5% and this is a growing trend as Q1 had a growth of 0.4% and Q2 had a growth of 1.3%. Economist commented on that fact that celebrating 2.5% GDP growth is akin to a 2 year celebrating the fact that he can have anything at a dollar store on his birthday, but it’s a start.
  • Stocks – After a roller coaster year October 2011 has been stellar by all accounts. Some even calling it legendary. Dow is back over 12,000 after the EU bailed out Greece yet again. Especially positive is the fact that Caterpillar Inc is up 37% this month. Obviously constructing is gearing up and that will have broad implications throughout the economy.
  • China & India – Often referred to ask Chindia, also known as Vancouver. With a combined population of 2.5B people a slowdown in growth has cascading impacts on everything from commodities to heavy equipment. There are signs that these economies are picking up and China 9.1% Q3 growth rate.
  • Interest Rates – Uncle Ben has publicly stated that interest rates will be ‘exceptionally’ low through mid-2013. Not a 100% convinced that this is an indication of success; we may just end up being over leveraged again.
  • Europe – With amazing economies like Portugal, Ireland, Italy, Greece and Spain that could go wrong? These countries have been collectively referred to the PIIGS group. I personally do not support that acronym but it’s a good indication of what economists are thinking. While Greece has a short-term fix Italy is a ticking time bomb. The good news is that despite the slowdown in this group, Germany has continued to expand at an exceptional level.

In other good news, it looks like American’s homelessness problems are fast disappearing. Previously homeless people have been able to get full-time jobs and even find shelter. How is this possible? They are all becoming full-time Occupy Wall Street Professionals! (Source: 24/7 Wall Street)

Death is big business in Japan, with 1.2 million people a year passing away and overtaxing the country’s cemeteries and crematoriums. With the average wait for disposal at least several days, and space running short in funeral homes, “corpse hotels” have opened in many cities, with climate-controlled “guest rooms” renting for the equivalent of about $155 a night, with viewing rooms where relatives can visit the bodies daily until cremation is available. I know where I will be filming my remake of Thriller on Halloween. (Source: National Post)

Have a fantastic weekend and don’t hesitate to forward this newsletter. Many thanks,

Sam

Friday Finance Weekly 30TH Edition (Oct 21, 2011)

Greetings folks and a warm welcome to the 30TH Edition of Friday Finance weekly.

Looks like Groupon is finally ready to file its’ IPO. Initially the company had planned an IPO in the spring, but the SEC read the prospectus and determined that the financial metrics used to value the company were misleading. In the spring, Groupon was valued at $30B, but after a serious look at their financial health, figures were revised to $11.4B; a sobering reality check indeed. The company is still not profitable but has narrowed its operating losses to $1.7M. Several amendments were required to the prospectus filed with the SEC which included restating its revenues and the removal of inappropriate financial metrics. One has to wonder how the existing ownership at Groupon wasn’t indicted for fraud. All criticisms aside however, Groupon has done well in a very challenging industry with low barriers to entry. Online marketing cost has decreased to $181M from $432M, the number of coupons sold per customer has increased 22% (4.2 coupons) and the revenue per deal has increased by 31%. Unfortunately, the revenue per subscriber fell 15% to $3.30. Not sure how to interpret these figures, but I would have to assume that customers are making smaller purchases and Groupon has increased its billings to the end client…Obviously not a good long-term strategy. Curious as to what the most successful Groupon in history was? In 2010 Nordstrom Rack offered a $25 coupon for a $50 pair of shoes. A total of 623,000 people purchased this deal which represented 2.6% of Groupon’s total revenues for 2010. I think they should use the ticker symbol ENE so that we are all clear on what kind of business this really is….ENE stands for, Enron. (Source: NY Times Deal Book)

Both McDonalds and Microsoft beat analyst estimates. Microsoft, Apples’ boring older brother, increased their earnings by 6% on a year over year basis. Windows 7 sales were higher than expected and with Windows 8 currently under development the future looks bright for Microsoft.  The market however initially reacted with enthusiasm, but the shares ended up relatively flat for the week. McDonald’s did very well last quarter as they are adapting to consumer tastes by modernizing and expanding menu options with a  focus on quality (yeah they are serious about this). Existing store sales increased by 5% and total revenues increased by 9%. Interesting most of the sales were as a result of the expansion of the dollar menu. Also, they just launched a new TV Channel, call McTv and in case you were wondering yes it is in high definition. This is not a joke. The channel will feature local school sports, movie previews and heartwarming human interest stories (more like heart stopping).  McDonald shares have increased marginally by 2% over the course of the week and is presently at $91.73/share. They should however cut the act and just admit that McDonalds is doing well due to the recession. Adjusting to changing consumer tastes is code word for adjusting to consumer wallets. All things being said, I am still loving it. I wonder if they will show Super Size Me, on McTv? (Source: LA Times, Google Finance)

Ottawa made its big announcement this week and Vancouver and Halifax are the biggest winners. In total about 15,000 new jobs will be created as a result of this contract. There were 3 main bidders and in typical Canadian fashion, there were no losers. The largest contract was worth $25B and awarded to Halifax based shipbuilder Irving. Another large contract worth $8B was awarded to Vancouver based Seaspan. The procurement project was deemed to be one of the fairest processes in history. I am not sure about what all the fanfare is about, because in the end everybody was positioned to win. There were 3 main bidders and 2 contracts, or so it seems. Once the first contract was awarded,Irvingwas ineligible to bid for the second contract. This left Seaspan andQuebecbasedDaviein the running. Seaspan won the second contract for $8B and this really should have left Davie in the dust. Not so quick, as there is another $2B contract for which Seaspan and Irving are both illegible to bid on. So basically there were 3 bidders and 3 contracts. This should have been called the Halifax economic revival plan as the Federal Government has virtually assured full employment for the next 30 years (a typical generation). No wonder they were partying like it was 1999. NDP PM slammed the decision as the reasons for not picking the Quebec based shipyard were not disclosed. Its simple Nycole Turmel, the bid sucked and not to mention that your bid involved partnering with another Quebec based shipyard that recently declared bankruptcy. (Source: Globe and Mail)

In August, the Securities and Exchange Commission’s inspector general revealed that a $1,200 cash award was paid by the agency in 2010 to one of the employees who had been singled out for allowing Bernard Madoff to talk his way out of the SEC inquiries in 2005 and 2006. This was well before his epic Ponzi scheme was exposed in 2008. (The IG helpfully recommended that, in the future, awards are not given to employees who have recently faced potential disciplinary action for poor performance.) (Source: Legal Times)

Have a great weekend folks and please do not hesitate to forward this newsletter. Many thanks,

Sam

Friday Finance Weekly 29TH Edition (Oct 14, 2011)

Greetings folks and a warm welcome to the 29TH Edition of Friday Finance Weekly. If you are standing in line for the new iPhone 4S, I hope this newsletter provides you with some entertainment. You will be happy to know that now you will be able to talk to your phone as opposed to talking at your phone. Apple’s next secret weapon is the iFriend app, which will put an end to all your earthly bonds. All jokes aside, Apple iPhone sales are expected to break all records and this morning shares are up 2.2%

Waiting for an all-expenses paid vacation from your employer? Think again. In China 300 employees of Aimo Fluid equipment were delighted when the owner offered to pay for a 2-day trip to a nearby mountain resort. In fact if you didn’t go, there was a fine of $30. Looks like everybody, but the owner made the trip. When employees returned from a well-deserved vacation they found that the factory had been stripped of all its equipment and that the ownership had vanished. Turns out that Aimo owed millions of dollars to loan sharks. In China most banks only lend to big corporations and this has resulted in a huge underground loan sharking establishment. Presently it is estimated that illegal lending is a $630B market in China, this according to the investment bank UBS. Interest rates can run up to 70%, so it’s no surprise that most businesses aren’t able to service their obligations. In Wenzhou (about an hours’ flight away from Shanghai) around 90 senior level executives have disappeared due to pressure placed by loan sharks. Capital for loan sharks is actually being fueled by local households that have opted to pool resources together. In fact 90% of all Chinese households have ‘invested’ in the unregulated private loan market. The owner of Aimo had however borrowed money from loan sharks and reinvested some of that capital to make high interest loans to other companies. You don’t have to be a finance major to realize that borrowing money to lend money is best handled by large banks, wait that didn’t work either. All I know is that next time my boss offers to pay for a vacation, I will have to start brushing up my resume. (Source: New York Times)

Reuters conducted a poll of 350 well known economists from around the world and the word on the street is stagnation. A fancy word for, we think things will stay the same or go up slowly, but we aren’t sure. This is similar to aviation experts stating that ‘something seriously went wrong’ immediately after a plane crash. 2011 started off with a lot of promise, but persistent fears over Europe eroded all excitement and action from the market. The world economy is expected to grow by 3.8% in 2011 and 3.6% in 2012. This is in stark contrast to previous predictions of 4.1% for 2011 and 4.3% for 2012. Politics seems to be playing a big part in the financial health of the world. In the US, Obama’s job creation plan was defeated in Congress. Greece is on the edge of bankruptcy and Germany isn’t enthusiastic about bailing them out yet again. Canada is a bright spot among all G7 countries with growth of about 2.2% for 2011 and 2.4% for 2012. The Eurozone isn’t looking very bright as economists predict growth of 1.6% for 2011 and only 0.9% for 2012. Looking for a good news? Purchase a Blackberry and with service delays all information will be at least week old. After a week information is too late to act upon anyways. Hey I just came up with a tagline for Blackberry “connecting people, when we feel like it, but hey you won’t hear about bad news until it’s too late”. (Source: Reuters)

Steve Jobs, must be turning in his grave, or defrosting if he was cryogenically frozen, as Google is planning to launch a competitor to iTunes. Reports indicate that Google has spoken with all 4 major record labels, but only Citigroup (why does a bank own a record label anyways?) owned EMI is close to a deal. Cloud computing is one of Google’s strengths and their infrastructure was essentially built around it. They already have a service called Google Music that in its Beta stage. However unlike iTunes, users must upload their own content as opposed to accessing it from a central server. Only time will tell if this will work, but given the success of Android one can assume that Google Music will integrate directly into the operating system. Google itself beat market estimates this week as their share price jumped by 7% on Friday. This has been fuelled by growth in its mobile operating platform that has over 190 million users. In addition online ad revenues topped analysts’ forecasts. In spite of its recent success, Google’s attempt to get into social media has hit a stumbling block. Today they announced an end to Google Buzz and a Google programmer inadvertently stated that Google Plus ‘was a pathetic afterthought’. Ouch! Unfortunately for the programmer the statement itself was made on Google Plus (he obviously wasn’t thinking about job security). Seriously couldn’t he use Facebook, Twitter, Hootsuite, Foursquare, MySpace or LinkedIn to make his views known? (Source: Wall Street Journal)

Among the aftershocks of the 9-11 attacks on America was the colossal budget-busting on “homeland security” — a spending binge that, additionally, was thought to require something approaching uniform disbursement of funds throughout the 50 states. (Endless “what if” possibilities left no legislator willing to forsake maximum security.) Among the questionable projects described in a Los Angeles Times August review were the purchase of an inflatable Zodiac boat with wide-scan sonar — in case terrorists were eyeing Lake McConaughy in Keith County, Neb.; cattle nose leads, halters and electric prods (to protect against biological attacks on cows, awarded to Cherry County, Neb.); a terrorist-proof iron fence around a Veterans Affairs hospital near Asheville, N.C.; and $557,400 in communications and rescue gear in case North Pole, Alaska, got hit. If only Obama was around during the uncontrolled budget increases. He could pass other useless pieces of legislation including the Jobs Creation Act. (Source: LA Times)

Have a fantastic weekend and please do not hesitate to forward this email. Many thanks,

Sam