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| 2010-08-26 09:26 |
USA WAVING BYE-BYE BIG THINGS
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Even on
lackluster summer volume, yesterday's session is what investors need from time to time as they grin and bear it through the gyrations. I can handle
the market gyrating right now, but at some point it will make a big move. The good thing now is the market has taken some of the worst blows possible
on economic readings that feel like the backdrop of a Dickens novel.
In the tug-o-war between value and emotion, the latter wins battles and
day- to- day skirmishes all the time, while over time the former wins the war. But, investors are battle weary at this point. I'm really hoping merger
activity picks up as it could spark a rally, but there has to be help because trying to rally the market against the worst housing news ever is really
like spitting into the wind.
Glad buyers showed up, but the needle on angst and anger didn't move an inch. But, there is a silver lining
brewing.
On that note, at the end of July, technology M&A deals hit 1,021, up from 877 year over year. Most of the deals have been focused on
software, and there seems to be much room for more deals.
> Software 57%
> Hardware 20%
> IT 14%
> Telecom 9%
The cloud
computing space is buzzing the most as Dell (DELL) is trying to hang with Hewlett Packard (HPQ), but doesn't have the firepower and should look
immediately for new targets.
Robert F. Kennedy
An American hero who will never be forgotten, Robert F. Kennedy has been honored
with an assortment of monuments, buildings, streets, and schools. The newest school, however, seems more like an embarrassment than honor. The K-12
school in Los Angeles is a monstrosity, going up for $578.0 million or 130,000 per student. The district is laying off 3,000 teachers over the next
two years to help cover a $640.0 million budget shortfall.
The 23 acres of land will have much space for the 50% of students currently
dropping out of Los Angeles high schools to hang out.
Talk about spending gone wild, in 1961 construction was completed for RFK Stadium
in Washington, DC which hosted Redskin games for the next 36 years. The stadium also was home for the baseball team before it left for Texas
(Rangers), and recently the Nationals. Currently, professional soccer team DC United calls the stadium home. The stadium holds 45,596 fans, and the
entire park complex sits on 190 acres of land.
RFK Stadium cost $20.0 million in 1961, or $145.8 million in inflation adjusted dollars. That's
a lot less than the school in Los Angeles. When I told my son about the school he replied: "they must have a lot of Macs." (He was talking about the
Apple (AAPL) product, just making sure in case you thought he and I were thinking on the same wavelength, because my first reaction is if it's the
sandwich they better have nutrition labels.) Computers on every desk or not, there is no way to justify the cost even when the state is de facto
bankrupt. It is amazing how stupid the elected leaders in California are, and how tin-eared they've been.
The Next Big
Thing
While the R.F. Kennedy school in Los Angeles looks like a marvel, for those patting themselves on the back the fact is the real
next big thing will probably NOT happen in America, according to Intel (INTC) CEO, Paul Otellini.
Speaking at the Aspen Forum, Otellini made
very pointed and sobering remarks that served more as a plea than a warning or criticism.
On the Administration and business backdrop:
"I think they're flummoxed by their experiment in Keynesian economics not working."
Unless government policies are altered, "the next
big thing will not be invented here ... jobs will not be created here."
Legal environment so hostile to business there will be "an inevitable
erosion and shift of wealth, much like we're seeing today in Europe ... this is the bitter truth."
Not long ago "our research centers were
without peer, no country was more attractive for start-up capital, we seemed a generation ahead of the rest of the world in information technology-
that is no longer the case."
The Phone Call
Yesterday, President Obama interrupted his vacation for a call with
economic advisors as it seems they believe something must be done to help the economy. It's obvious something big is brewing, but what I'm not sure.
It will revolve around housing and buying votes. I think it will also involve some kind of executive order, and be phrased in a way that is
divisive.
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Disclaimer: Securities Operations Forum is providing this research to assist investors in determining when to buy and when to sell. All investment decisions are yours and as a result you could make or lose money. Securities Operations Forum, its employees and/or its affiliates and family members may from time to time take positions in the open market or otherwise with respect to the securities discussed, but not have stock ownership equal to or greater than 1% of the outstanding stock of the covered company nor does any employee of Securities Operations Forum sit on the Board of Directors of any covered company. The statements made herein include information obtained from sources believed to be reliable, but no independent verification has been made and we do not guarantee its accuracy or completeness. The statements made herein contain general information and do not constitute an offer to buy or sell any security. |
