April 15, 2009

Global Market Comments
April 15, 2009
Featured Trades: (GM), (CHINA), (MSO)

1) Thanks, but no thanks! Goldman Sachs (GS) voted with a big thumbs down on the stock market today yesterday by issuing $5 billion in new equity at $123/share. Perhaps not coincidently, this gives the government a $1 profit on its holding in the venerated former investment bank. The move comes on top of the announcement of spectacular earnings of $3.39/share on revenues of $9.4 billion, double expectations, and a 150% rally in the stock since November. The deal was brought to market so fast it made your head spin. The money will be used as a down payment towards their $10 billion TARP repayment. Do you get the impression they are unloading this stock like it is a hot potato? Obviously they don't think the shares are going to rocket back up to last year's high of $200 anytime soon. Is it worth that much to get the Feds out of their hair? Those pay restrictions on senior executives have to be grating. And you can't imagine a greater culture clash than between the Masters of the Universe and the Treasury's white shirted, polyester suit wearing, bean counters. Or maybe GS thinks the market is peaking here and it's time to cash in their chips while they can. Windows these days are vanishingly small. Please pass the Vaseline.

GS-2.png picture  by sbronte

2) Thanks to China's one child only policies of the past 50 years, and a cultural preference for children who grow up to become personal safety nets, there are now 32 million more boys under the age of 20 than girls. Large scale interference with the natural male: female ratio has been tracked with some fascination by demographers for years, and is constantly generating unintended consequences. Until early in this century, starving rural mothers abandoned unwanted female newborns in the hills to be taken away by 'spirits'. Today pregnant women resport to the modern day equivalent by getting ultrasounds and undergoing abortions when they learn they are carrying girls. The resulting shortage of women has led to an epidemic of 'bride kidnapping' in surrounding countries. Stealing of male children is common. Political scientists have long speculated that an excess of young men would lead to more bellicose foreign policies by the Middle Kingdom. But so far the choice has been for commerce, to the detriment of America's trade balance. Economists now wonder if the practice will also shave a few basis points off China's long term growth rate. Parents with boys tend to be bigger savers, so they can help sons with the initial big ticket items in life, like an education, homes, and even cars. It's not nice to fool with mother nature.

3) Martha Stewart picked up 350,000 followers in her first month on Twitter. Just telling her friends in less than 140 characters what she was having for Easter brunch generated a massive response. Too bad no one has yet figured out how to make money from this.

4) Sarah Palin, the possible future Presidential candidate, earned $125,000 last year as the Governor of Alaska. Tiny Fey earned $4.6 million convincingly imitating Sarah Palin on NBC's Saturday Night Live. Whoever thought laughs would be more profitable than campaign promises? Maybe Tina Fey is better at being Sarah Palin than Sarah Palin is? Go figure.