Ed’s Daily Notes for February 5th   5 comments

Bloomberg: Goldman to Fidelity Call for Calm After Global Stock Wipeout

Panic is making an enemy of telephones for Catherine Yeung, the director for equities at Fidelity Investment Management Ltd. in Hong Kong.

“My children hate that BlackBerry,” said Yeung, whose clients have been calling amid two weeks of declines that erased $3 trillion from global stocks. She’s advising calm, noting that profits are rising and shares just got a lot less expensive.

“Being a contrarian and getting in when things seem bad is often a good thing,” she said in an interview today. “The companies we are looking into can still deliver attractive margins. Things are getting cheap.”

Cheap is relative. According to trailing valuations, there are some bargains out there. But what does the future hold?

In the U.S. economy, the number of work force participants as a percentage of the population keeps falling, even as the Federal Reserve thinks the economy is healthy enough to taper QE. I won’t say that QE was helping the economy, but I think it did have an effect like giving steroids to a cancer patient: QE masked a lot of the symptoms of the failing economy.

Bloomberg: Obamacare to Cut Hours of Work by 2017, CBO Estimates

More bad economic news:

Obamacare will reduce the hours Americans work by the equivalent of 2 million full-time jobs in 2017, the Congressional Budget Office said, sparking renewed Republican criticism of the law and a fresh defense from the White House.

The total number of hours worked will fall about 1.5 percent to 2 percent from 2017 to 2024 as a result of the health-care overhaul, the CBO said yesterday in a report. The reduction, about twice the agency’s estimates in 2010, is due “almost entirely” to low-wage employees who may choose to give up extra hours of work to avoid losing subsidies or tax advantages under the law, the report said.

Only 1,080 days remaining in President Obama’s term…

Bloomberg: Microsoft Gets Style Shift With Nadella Replacing Ballmer

There is one quote from new Microsoft CEO Satya Nadella that gets to the heart of the matter, and makes me feel a little better about him:

“Our industry does not respect tradition — it only respects innovation.”

While this doesn’t mean he will be successful, the first step for any CEO is to recognize what needs to be done. Nadella is on the right track.

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Posted February 5, 2014 by edmcgon in Economy, Federal Reserve, Market Analysis, News, Politics

5 responses to “Ed’s Daily Notes for February 5th

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  1. I like Microsoft in some ways. I hope they will finally concentrate on what they are good and profitable at: corporate software. If they do that, I might buy, but if they don’t, I’ll never buy. Now they ar fighting a war at Google, Linux, IBM, Apple, Samsung and many others at the same time – they can’t win the war Balmer put them in. I hope the new CEO switches course drastically.

    • plas,
      I wouldn’t be so quick to count out MSFT in the mobile internet wars. They still own the pc space, which isn’t going away, contrary to a lot of silly predictions (like I’ll give up my 24 inch monitor for a little 4 or 5 inch screen!). If MSFT can figure out a better way to leverage it’s pc systems with a smartphone, they could easily be back in the game.

      • Ed, I agree with you. I don’t count them out. But I do think they should put more focus on the corporate software. Why they have made an OS ‘that fits all’ is still a mystery to me – and I’m not the only one who doesn’t like windows 8. Speaking about mobile internet: why don’t they make an OS that the corporations like most? And then it might come to consumers as well – that is how they “pushed” windows in the first place. The corporations are still their door to success to me. You can’t beat google/linux for the consumers, to them, you can’t beat “free”. Their leverage is the corporation.
        They haven’t done it before because Balmer didn’t want “to become obsolete like IBM” – as if IBM is just a little store around the corner …

      • Well from what I have seen he said he would focus on mobile and cloud services.
        Unlike most “mobile users” think that second one is a lot more than some mobile apps.
        It is also the virtualization of corporate data centers, and Microsoft has a big piece of this market.

        On Window 8, in fact I currently don’t think it is that big of an issue for the corporation side, except for getting past the bad press and really looking at what is currently offered, especially with Windows 8.1.

        Now they can mess this up, but so far it far from the problem people think.
        1) Corporate players don’t usually switch about every other version, and they pretty much just changed to Windows 7.
        2) In Windows 8.1 you can go directly to the desktop and frankly it is little better desktop than Windows 7. I spend 99% of my time here and expect corporate people to do the same. Also with each new release they seem to be adding things that make it a bit better for people that aren’t using touch screens. On top of this Windows 8 is a slight faster operating system than Windows 7.
        3) As for “one operating system for all”. Well whether this is a good idea or not really doesn’t depend on the users, as long as they do not force the “modern UI” on everyone. And it could save Microsoft quite a bit of duplication of work if they don’t have to do the same things on several different operating systems.

      • “Corporate players don’t usually switch about every other version” should have been:
        Corporate players usually switch about every other version

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