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February 24th, 2010

The dollar remained steady today. The dollar was the safe haven after some tough economic news hit the streets. A lack of buying interest for other currencies helped the dollar to stay steady against the euro and sterling.

The Commerce Department’s home sales report had unexpectedly reported new home sales falling 11.2% in January. Germany’s economic recovery came to a halt. Ben Bernanke told lawmakers that flat oil prices will keep inflation in check. He went on to say that an increase in goods and services in the private sector only can aid further sustained  growth in the U.S. economy.

The dollar is looking better technically against the euro.

February 23rd, 2010

Crude oil prices went up for two weeks in a row as the April contract hit just over $80 for the week. A strong Euro against the Dollar helped as a boost in manufacturing aided the rally. The U.S. Department of Energy reported figures that added to oil and gasoline inventories, but refineries reported running just shy of 80% capacity. This lent support to the bullish underlying tone and helped the market go up.

Consumer optimism is improving according to the oil traders and they brought that into play. Expect a pullback before prices continue higher.  The key is $76.70 as a price below could spark a sell-off as the bears would pay attention again.

February 17th, 2010

Harvard Business School’s Ranjay Gulati has studied customer relations in business and has found that putting customers first hasn’t always been a priority. A big surprise though true. This customer aspect is known as the “outside-in” approach. Customers are put first in all decisions made. The products and services created brings value to customers.

One example is bagged salad. Customers just didn’t want the packaging of their lettuce changed. They wanted the salad made for them. What started out as a novelty is now a mainstay business in most areas of the United States. This might be simple, but I can hear you (and me) say, “Why didn’t I think of that?”

The goal is to bridge gaps rather than create them. One store that brought in this concept was Best Buy. They did some customer research and found that 55 percent of their shoppers were men. The research went another step and asked women why they didn’t shop at Best Buy more. The answer was that Best Buy was a store for men designed by men and manned by men. When the women shoppers were asked what a big turn-off was, they responded that they were given too much technical information about a product rather than how to operate a product and its function.

Best Buy had to shrink the core customer base rather than expand it. Store were redesigned and store floor employees were trained more on the function and operation of store products. This allowed for a new connection with the customer. Align the tasks and information around the customer.

Excerpt from Reorganize for Resilience by Ranjay Gulati

Most important, they must also guarantee precisely the reverse: that the line of sight from the customer into the organization is equally unimpeded, and in a final twist that the companies see themselves from the outside, with their customers, so that they can help wherever their customers are, in their hours of greatest need.

February 17th, 2010

President Obama announced that an 8.3 billion dollar loan guarantee would go toward the building of twin nuclear reactors in Burke County, Georgia. This is the first nuclear project in the U.S. since the 1970’s. This was announced as part of the broad energy plan from the Obama Administration. The announcement is expected to garner some congressional Republican support, but just how much remains to be seen.

The news wasn’t exactly a surprise, but President Obama’s timing is interesting in that he seems to be putting forth an effort of reconciliation with the Republicans. Will this work? The President will most likely want more clean energy tax credits and he could use Republican help, even if it only looks good.

February 9th, 2010

A U.S. Treasury report warns that the U.S. government may have become the housing market by boosting spending (1.25 trillion dollars by the Federal Reserve) to lower mortgage rates. Once the money has dried up, the housing market could take a turn for the worse. The government has stepped in where the private players used to be.

Neil Barofsky, the special inspector general for the trouble asset relief program (TARP) sent the quarterly report to Congress that was released Sunday. He said banks still have incentive to take on risk because the mindset is that the government will bail us out if we get into trouble. About 90% of home loans are backed by government controlled entities like Fannie Mae and Freddie Mac. He said the two entities need to be reformed soon and loan underwriting needs to be improved.

February 9th, 2010

Businesses needs customers and customers have to have work. Robert Reich, former Secretary of Labor in Clinton’s first term, says government has to prime the pump. His suggestion is a second stimulus package aimed at states and locales.  Local governments especially need the boost because many are laying off people and are raising taxes and fees at the same time. The raise in taxes isn’t popular and the lay-offs aren’t usually making local government more efficient because several offices in local government are understaffed to begin with.

The President hasn’t proposed anything to boost overall demand. Reich wrote that The President needs to get the second stimulus going and explain why.

February 8th, 2010

The U.S. is still bleeding jobs which isn’t going to turn things around soon. The deep recession is still here as major employers scramble to take a serious look at their employee numbers.  Four million jobs have been lost and another two million could be gone before this is all over. Employment COULD hit 10%.

Economic growth numbers for Q4 of 2009 went way up. However inventory reductions are still underway by major corporations. The GDP growth number to watch for 2010 is 3.6%, as the “growth baton” will be passed from the government stimulus package. The big question is if the U.S. government plan will stimulate the economy as President Obama and the mostly Democrat U.S. House has said it will. Watch for numbers in March. If numbers are improving the 3.6% growth in GDP could happen. But this would be tough if unemployment gets to 8.5% in March.

The stock market took another hit today as the Dow fell below 10,000. Seems Wall Street wants results instead of words. Go figure!

February 8th, 2010

China announced the creation of the National Energy Commission to oversee government energy policy. Energy is a top priority now. China’s domestic demand for electricity rises 15% per year. China will need to add nine times as many power generating facilities as the U.S. will.

China now leads the world in solar panel manufacturing, taking that spot two years ago. China now leads the world in wind turbine manufacturing. The U.S. is offering incentives for more energy production. China is moving fast with the market and the increase in wind turbine production has not been sen before according to Vestas China. Renewable energy jobs are increasing in China by 100,000 per year. China seeks to become the world’s leading exporter of energy equipment. Banks in China are offering generous financing to help companies improve the power grid.

February 7th, 2010

The Four-Step Formula for Success:
1. You must know EXACTLY what you want.
2. You must want it SINCERELY.
3. You must firmly BELIEVE that you will get it.
4. You must exert every possible EFFORT to obtain it.

February 7th, 2010

There are three areas of analysis that business intelligence need to be focused on.

  1. Risk modeling to determine value-at-risk.
  2. Quantitative analytics for modeling investment strategies.
  3. High frequency trading strategies.

Business intelligence is moving forward with more on-the-fly decision making tools. The determination of risk exposures in open trades will give operations a boost. This also enables the better allocation of operational revenues.

First customized real-time data must be available so reaction to changing market dynamics is fast. If  financing organizations is at the apex of the strategy, hedging risk is a must. This means the ability to capture data is vital to success.