Daily Intent

“Located in the failing heart of Seattle’s financial district, the Bull & Bear restaurant and lounge is an old-school, masculinized establishment, with pressed zinc ceilings, dark wood paneling, and passages of velvety maroon wallpaper dotted with rows of spiky gold fleurs-de-lis, which some patrons, after a few cocktails, habitually perceive as mutating dollar signs, money symbols grown lush, radiant, and, they hope, prophetic.  On any Friday afternoon, its bar is crowded with noisy ‘bookies,’ as they call themselves, winding down at the end of a stressful week in a stressful occupation, but on this ‘Friday,’ which is actually a Thursday, the population of drinkers has nearly doubled–and it gives no indication of thinning out.  Indeed, many of the brokers will remain in the Bull & Bear until it evicts them at two in the morning.  It isn’t simply a matter of pouring alcohol on their wounds or of a reluctance to go home and look the family in the eye.  There are practical reasons.  Everyone is on pins and needles (or fleurs-de-lis) waiting to learn how the foreign markets will react.  Then and only then will it become clear whether or not this plunge is the Big One, the Death Crash, the financial apocalypse that will put the ‘broke’ back in ‘broker’ once and for all and leave the United States of America’s standing in the international economic community somewhere between that of Portugal and Mongolia.”
-Tom Robbins Half Asleep in Frog Pajamas. Written in1994

Wow!  I read this passage a few weeks ago.  How spot on a fictional book could be.  He later goes on to mention the stock market had dropped 900 points in a single day.  This seemed outlandish at the time.  No longer.  Go back one more time and reread it.  For anyone in finance it’s shocking how eloquently he describes this experience many have felt as of late.

That said, there is opportunity for the visionaries, those with capital, the one’s willing to take a bit of risk.  (Check out the latest market review by a local financial adviser, Caleb Overton.  Attached herein.)

Buzzword: Vintage Year…fund your project in ‘09.
“The year in which the first influx of investment capital is delivered to a project or company. This marks when capital is contributed by venture capital, private equity fund or a partnership drawing down from its investors.

Investors can use the vintage year of an investment to further explain its returns. Having a vintage year occur at the peak or bottom of a business cycle can affect the later returns on the initial investment. During peaks in the market, new companies are more likely to be overvalued based on the current economic outlook. This increases the expectations on an investments’ return because more money is initially contributed. Inversely, companies are typically undervalued during low points in the market; because less capital is initially contributed, these companies or projects have less pressure to generate big returns.”  -Investopedia

Six Points to Ponder:
1. In the shadows of the next bailout wave, JPMorgan Chase surprises many with a profitable quarter, BofA seeks billions to ensure Merrill transaction continues smoothly, and Steve Jobs takes 6 month leave.
2. Grim week on Wall Street.  The Dow tampering with 8000 again.  S&P 500 at 822. Nasdaq at 1462.  Oil at $35.
3. Goldman - Estimates of $2.1 trillion in bad credit write downs.  Only half of which has been realized.
4. Barack Obama’s Inauguration is next Tuesday the 20th.  DC readies itself for the masses and CHANGE.
5. The European Central Bank dropped their lending rate by a half percent to 2%.
6. Santa Clara basketball is going to dominate Gonzaga tonight!

Positives:
* Obama, according to one poll, has a 70% approval rating in how he is dealing with the crisis.  Will the bailout work?  Will people begin spending because of their belief in Obama?
* Lowering ECB rates should mean a stronger dollar for those traveling abroad.
* Santa Clara has the opportunity to prove all is not lost on a disappointing season…we lost to Harvard of all teams.  As Lucas our sport’s guy notes:  “now they aren’t just smarter than us, they are better at sports!”

Negatives:
* Low oil prices hender green investments.  There needs to be a healthy balance from what I’m told.  Might $60 be a nice balance?
* The Europeans continue to struggle.  Lowering their rate is the result of two main crisis, intensely slowing economy and inflation is down below its minimum levels.  As one friend put it, “I can buy a TV use it for three months until the end of a return policy, return it, then buy the same exact TV at a lower price.”  This is the problem with deflation.

Local:
The Business of Sports and Entertainment
Where: UCSB
When: Friday at noon
Cost: Free
Why: A intriguing world of business.

Live and Be Well,

Jeff Bochsler