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Pete Kendall's Socio Times: A Socionomic Commentary
- SocioTimes Page Closes, But Updates Continue
- Over the Top: SUV Plunge Marks New Bear Phase
BREAKING NEWS June 4, 2008 SUV Sales Run Out of Gas Demand for the huge autos drops in May U.S. sales results released Tuesday showed cars outselling gas-guzzling trucks and SUVs by almost 200,000 in May -- the biggest margin since 1996. GM in May saw a 37% decline in light truck and SUV sales and its share of the overall US market dropped below 20%, a new low for the automotive giant. General Motors posted a sales drop of about 27% from a year earlier and said it would close four truck plants, prepare its Hummer brand for a possible sale and focus on making smaller cars. Chrysler's 25.4% sales decline put it behind Honda in monthly sales for the first time. And, after 17 years, Ford's F-Series trucks were dethroned from the top sales position, falling to No. 5 behind the Honda Civic, Toyota Corolla, Toyota Camry and Honda Accord. "I think it's a watershed moment," said Jim Farley, head of marketing at Ford. For the month, overall vehicle sales in the U.S. were 1.4 million, down 8.4% from a year earlier, according to Autodata Corp. Based on the May sales rate, the industry is on pace to sell just 14.3 million vehicles this year in the U.S. In 2007, total sales were 16.1 million. For nearly a decade, Americans bought more light trucks -- a segment that includes pickups, SUVs and minivans -- than cars. But starting in March, cars edged ahead. The gap widened in April, and in May, 193,559 more cars than light trucks were sold. Los Angeles Times
- Mastercard Taps Into Credit Angst With Mr. Bill Comeback
BREAKING NEWS June 3, 2008 Mr. Bill Returns to Pitch a Debit Card MasterCard executives have found a new poster boy for the angst-ridden economy: Mr. Bill. The small clay figure that appeared in “Saturday Night Live” short films three decades ago — being dismembered, pulverized and humiliated to his falsetto cries of “Oh, nooooo!” — will be the latest star of MasterCard’s “Priceless” campaign. He is being revived as a debit-card holder who gets roughed up but keeps on going. The 30-second spot, to start airing next Monday, casts Mr. Bill as an urban professional on his daily routine: Mr. Hands pours hot coffee on him (“coffee: $2”), a personal trainer launches him off a treadmill (“gym: $59/mo.”), and an opened briefcase flips him onto the windshield of a city bus (“briefcase: $120”). Mr. Bill, rolling with endless punches, just enjoys the ride home: “Making it through the day: priceless.” A voice-over adds, “For whatever comes your way, there’s debit MasterCard.”The spot is meant to tap into the current “unsureness about what’s going to happen next,” said [the] executive vice president and chief creative officer at McCann-Erickson. “We wanted to make him a character who can handle things beyond his control and stay optimistic.”
McCann-Erickson said that Mr. Bill tested well with viewers of all ages. Mr. Bill made his debut on “Saturday Night Live” on NBC in 1976 ”I think it’s the times, like how Charlie Chaplin flourished in the Depression,” said creator Walter Williams . The New York Times
- From Rust to Dust: Reversal Lands On 11th Ave. Development
BREAKING NEWS May 9, 2008 Deal to Build at Railyards on West Side Collapses Six weeks after the Metropolitan Transportation Authority selected Tishman Speyer Properties to build a vast complex of office towers, apartment buildings and parks over the railyards on the West Side of Manhattan, the deal has fallen apart.
Gary Dellaverson, the authority’s chief financial officer, said the negotiations foundered Thursday afternoon after Tishman Speyer insisted on changing the terms of the $1 billion development, which both parties had agreed to on March 26.
The change would have substantially slowed the flow of millions of dollars in annual rent and fees to the authority and introduced a note of uncertainty about the pace of construction at the 26-acre site, which straddles 11th Avenue between 30th and 33rd Streets, he said.
Tishman Speyer had developed a plan calling for four or five major office towers and seven apartment buildings with a total of 3,053 apartments, as well as 13 acres of open space, a school and a cultural institution. But shortly before the transportation authority selected Tishman Speyer, it lost its financial partner and its anchor tenant, Morgan Stanley.
The developer also jettisoned its designs by the architect Helmut Jahn of Chicago, the executives said. The New York Times
- Reality of Private Equity Has Only Just Begun to Appear
BREAKING NEWS March 31, 2008 Private Equity: Nothing More Than Clumsy Trick So now we know. The boom in private equity, which was promoted as the superior business model, based on patient capital, superior management and an alignment of interests, was nothing more than a trick of financial engineering – and a clumsy one at that. The magic of leverage works both ways, as we are discovering.
As investors are increasingly bruised by the recognition that reality has once again triumphed over hope, the private equity barons are having to confess that the benefits of superior management, alignment of interest and, of course, the superior reward structure counted for very little. Many of the private equity deals look no different from Yell and other highly leveraged public companies. Sometimes a simple observation can prove an important point. In November 2006 Citibank published a research report that highlighted how private equity returns could be achieved by just leveraging basic stock market indices. It is a seminal note. “How do they do that?” asked the report, and then went on to provide the answer. By leveraging the basic stock market indices by three to one, Citibank pointed out, returns could exceed even the best historical private equity returns. Never mind that as they were spellchecking the final version of the note, leverage on that season’s deals was reaching four to one and even five or six to one. As Citibank pointed out, the private equity barons would always emphasise alpha over beta – their ability to outperform a market rather than merely ride the market wave – but it showed clearly that leveraged beta was where the returns were being generated. Private equity as we have come to know it is all about debt – lock, stock and sinking barrel. There may have been better management and better incentive structures in the deals of recent years. But they really contribute nothing to the overall return when compared with the impact of the leverage in the capital structure. Financial Times
- Winds of Reform Are Way Too Strong for a Short-Term Top
BREAKING NEWS March 31, 2008 Paulson Plan Begins Battle Over How to Police Market Amid Crisis, a Bid To Shuffle Powers In a sweeping proposal circulated over the weekend, Treasury Secretary Henry Paulson slaughtered a number of Washington's sacred cows, proposing to merge or eliminate institutions of long standing including the Securities and Exchange Commission, and to create a controversial new role of supercop for the Federal Reserve. In an interview, Mr. Paulson said the regulatory system is broken, a growing sentiment in recent months in Washington as each of the nation's financial watchdogs failed in a different way to prevent the foreclosure crisis and credit-market turmoil from spreading. "We need regulation, but if we have it, it should be just structured in a way that it has some way of being more effective," he said. "Everywhere I look, I see the plumbing hasn't changed to meet the realities." Big crises, from the Panic of 1907 to the Great Depression to the 1987 stock-market crash, tend to give impetus to perennial efforts to reform U.S. financial oversight. The current system has developed over more than a century, and critics have long complained that too many agencies have overlapping jurisdictions and leave too many areas exposed. Even if only parts of the Treasury plan see t