Archive for January, 2010
Obama Has Us On The Path To Economic Ruin
In this week’s much anticipated State of the Union address, President Obama again demonstrated his poor understanding of the fundamental problems that confront our nation. By following the advice of the same people who helped guide our economy to the precipice of total collapse, Obama now threatens to push it over the edge.
Notwithstanding his well crafted lip service regarding future spending restraint, the essence of his current program is for more government spending and larger deficits. For all his talk about job creation, his policies will further burden those who might otherwise create those jobs with higher taxes and more regulation. While he did call for tax cuts for the middle class and offered what amounts to bailouts for those struggling to repay student loans, such cuts do nothing to promote growth in the near term and will add to the deficits in the long term.
The President spoke optimistically about the future, but in reality there is little evidence to support such an upbeat outlook. He began his speech by assuring us that the worst of the storm had passed. General Custer may have said something similar when the first wave of Indian attacks ebbed at Little Big Horn.
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GSK to axe 4,000 jobs as it shifts focus
As part of a major restructure, Britain’s largest drugs company GlaxoSmithKline (GSK) is to slash 4,000 positions, according to The Sunday Times.
According to press reports, the job losses are part of plans to shift its focus to emerging markets, such as China which has greater potential to increase sales growth.
The company has a global workforce [...]
Steve Mandel: It’s Game On In The Stock Market
At a time when many hedge fund managers are warning their investors of anemic economic growth, Steve Mandel has a decidedly optimistic view on the future of the stock market and the broader economy.
In Lone Pine’s 4th quarter letter to investors, which Business Insider obtained a copy of, the hedge fund manager says of the current economic climate:
“Global demand is recovering, government actions have stabilized the financial system and market indicators of risk have returned to normal levels. Indeed, most recent economic data point to a synchronized global economy.”
“Hard as it may be to believe, it is game on in the equity market.”
What a refreshing attitude.
Mandel also says the bears are wrong when they say that equity bubbles have formed as a result of the recovery.
(Joseph Stiglitz’s, for example, says there is an equity bubble in emerging markets.)
“Unlike in 2000-2002 (internet, telecom) and 2007-2008 (mortgage-related), we see no major bubbles in the world’s equity markets,” Mandel writes.
Finally, someone who isn’t a buzzkill.
But he is staying short in some equities, like those that have been hurt by “technological obsolescence,” and industries with chronic global overcapacity. Lone Pine lost money on their short positions when the market rallied this past year, but Mandel is still “skeptical of a sustained snapback in demand.”
“The developed world consumer, particularly in the US, will likely suffer an extended hangover from years of credit fueled overconsumption,” he says. “It is hard to envision strong economic growth in the US beyond an inventory rebuild for a few quarters.”
Many hedge fund managers (like Whitney Tilson of T2) and economists (like Dr. Doom, Nouriel Roubini) predict it will take a few years for the US to return to strong growth, while Mandel apparently thinks we’re going to have a strong economy immediately, followed by a a slowdown after that.
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See Also:
- Whitney Tilson: I’m Shorting The Hell Out Of Homebuilders Because America Won’t Need Any Homes For Years
- Here’s The Secret Of How One Hedge Fund Trader Spotted The Housing Bust And Made A Fortune
- Marc Faber Joins Hedge Fund Of Fellow Doomsayer Eric Sprott
Macmillan CEO Takes Out A Full Page Ad To Explain His War With Amazon (AMZN)
Macmillan CEO John Sargent took out a full page ad in Publishers Lunch to explain his side of what’s happening in the battle with Amazon.
Unless Amazon is willing to raise the price of new hardcovers on the Kindle to $15 from $10, it will not receive new books when they hit the market. Amazon faces “extensive and deep windowing of titles” if stays with its current terms.
John delivered this message to Amazon on Thursday in Seattle. Notably, it was the day after the iPad launch, where Steve Jobs highlighted Macmillan as a partner on the iBook launch.
When John returned to New York on Friday, Amazon told him it was retaliating and taking all of Macmillan’s books out of its stores, though books are still available through third party retailers.
To: All Macmillan authors/illustrators and the literary agent community
From: John Sargent
This past Thursday I met with Amazon in Seattle. I gave them our proposal for new terms of sale for e books under the agency model which will become effective in early March. In addition, I told them they could stay with their old terms of sale, but that this would involve extensive and deep windowing of titles. By the time I arrived back in New York late yesterday afternoon they informed me that they were taking all our books off the Kindle site, and off Amazon. The books will continue to be available on Amazon.com through third parties.
I regret that we have reached this impasse. Amazon has been a valuable customer for a long time, and it is my great hope that they will continue to be in the very near future. They have been a great innovator in our industry, and I suspect they will continue to be for decades to come.
It is those decades that concern me now, as I am sure they concern you. In the ink-on-paper world we sell books to retailers far and wide on a business model that provides a level playing field, and allows all retailers the possibility of selling books profitably. Looking to the future and to a growing digital business, we need to establish the same sort of business model, one that encourages new devices and new stores. One that encourages healthy competition. One that is stable and rational. It also needs to insure that intellectual property can be widely available digitally at a price that is both fair to the consumer and allows those who create it and publish it to be fairly compensated.
Under the agency model, we will sell the digital editions of our books to consumers through our retailers. Our retailers will act as our agents and will take a 30% commission (the standard split today for many digital media businesses). The price will be set the price for each book individually. Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99. At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time.
The agency model would allow Amazon to make more money selling our books, not less. We would make less money in our dealings with Amazon under the new model. Our disagreement is not about short-term profitability but rather about the long-term viability and stability of the digital book market.
Amazon and Macmillan both want a healthy and vibrant future for books. We clearly do not agree on how to get there. Meanwhile, the action they chose to take last night clearly defines the importance they attribute to their view. We hold our view equally strongly. I hope you agree with us.
You are a vast and wonderful crew. It is impossible to reach you all in the very limited timeframe we are working under, so I have sent this message in unorthodox form. I hope it reaches you all, and quickly. Monday morning I will fully brief all of our editors, and they will be able to answer your questions. I hope to speak to many of you over the coming days.
Thanks for all the support you have shown in the last few hours; it is much appreciated.
All best,
John
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See Also:
- McGraw-Hill Cut Out Of iPad Announcement After CEO Blabbed About Tablet On CNBC
- Book Wars: Amazon Retaliates Against Publisher Over eBook Pricing, Pulls Books From Shelves
- Amazon Has Sold 3 Million Kindles, About As Many As Expected
First international Bloomingdale’s opens in Dubai
DUBAI, United Arab Emirates (AP) — The city with the world’s tallest building now has one more claim to fame: the only Bloomingdale’s outside the United States.
Dubai’s crown prince inaugurated the first international branch of the Manhattan institution, famous for its “big brown bag” totes, in the Middle East’s biggest shopping mall Sunday.
Bloomie’s Dubai outpost includes a 146,000 square foot (13,600 square meter) clothing and accessories store and a nearby 54,000 square foot (5,000 square meter) home furnishings store. Both stores are in the Dubai Mall, next to the world’s tallest tower, Burj Khalifa.
The Dubai Bloomingdale’s is a 270 million dirham ($73.4 million) joint venture between the department store chain’s Cincinnati-based parent, Macy’s, and Dubai retailer al-Tayer Insignia.
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