Five Things You Need to Know: German Surprise, Energy Consolidation, A Sense of Foreclosure, Five More Years and a .44 Magnum
What you need to know (and what it means).
Five things you need to know to stay ahead of the pack on Wall Street:
1. German Industrial Production: Kant and Hegel in Five Easy Steps!
German Industrial production unexpectedly fell in March, providing market watchers everywhere a chance to learn Kant and Hegel in five easy steps!
First, the Kant:
- 1. Thesis: German Industrial Production will rise about 0.4% in March
- 2. Antithesis: German Industrial Production actually fell in March - by 2.4%, the most in seven years.
- 3. Synthesis: Figures for German gross domestic product - to be released on Thursday - will likely now need to be revised downward for the first quarter.
Now, the Hegel:
- 4. The thesis that "German Industrial Production will rise about 0.4% in March" reveals nothing by itself and is only one part of a process - a dialectic, whereby its contradiction "German Industrial Production fell by 2.4% in March" is implicit in the statement itself - and its resolution, absolute knowledge, is evolving.
- 5. Plotted on a chart, like all things, this plays in the form of the business cycle - even the cycle of life itself - from self-alienation (a market's bottom, an individual's subjugation at the hands of another) to self-unification (the gathering of resources to be deployed in the market, an individual's initial escape from slavery) to realization (the directional payoff, the individual's freedom).
2. Consolidation, or Everything is One: Monism Made Easy!
Consolidation in the energy, metals, and financial space continues to be a major Minyanville theme in the markets, and conveniently provides us an opportunity to look at it through the lens of Monism, the ancient Greek view that "everything is one."
- Teck Cominco Ltd. made an unsolicited $15.35 billion cash-and-stock takeover bid for Canadian mining company Inco Ltd., according to this morning's Wall Street Journal.
- A successful merger would create one of the world's largest miners of zinc, nickel and coal.
- Meanwhile, Shell Canada agreed to acquire BlackRock Ventures for $2.17 billion.
- Yesterday, in addition to the Wachovia - Golden West deal, we noted that BHP Billiton (BHP) and Rio Tinto (RTP), among others, may have an interest in acquiring Alcoa (AA) or Alcan (AL).
- Reduced to its simplest form, the sum total of all mergers and acquisitions, the market's monism, its desire to become one, is a reduction in overall supply of equities.
- That is bullish as long as demand increases perpetually.
- In its Pythagorean form, however, the monad, the one, is simply the first thing - so on one level both Inco and BlackRock Ventures are separate monads, while the very idea of a company, in and of itself, is another monad on a different level.
- Another view, one that is slightly closer to the reality of consolidation in the energy, metals and financial space, is the Leibnizian view that monads, either materially or metaphysically, are atomic - not radioactive, but infinitesimally small - and formed of both appetite, or the desire to consume (another company, for instance, a desire to grow), and perception (the quality that combines with appetite to give us consciousness).
3. Stay Classy San Diego
In San Diego County, the rate at which borrowers are falling into foreclosure on their mortgages has doubled in the past year, according to county records.
- In January 2005 there were 374 mortgage defaults, according to Voice of San Diego.
- This past January, there were 536 foreclosures.
- In 2005, more than 70% of home loans in the county were so-called exotics loans - interest-only or negative-amortization loans - according to Loan Performance LLC.
Foreclosures in San Diego County (County records Service)
4. China's Five-Year Plan
- China introduced its first Five-Year Plan in 1953 modeled after Stalin's Five-Year Plan for the Soviet Union.
- The plan sets out specific targets for heavy industry, energy and other prioritized goals.
- The Chinese government recently released their 11th Five-Year Plan.
- It called for, among other things:
- the building of 30 nuclear reactors.
- a massive restructuring of the coal industry, consolidation into five to seven conglomerates and annual coal output of 2.45 bln tons.
- proven oil reserves of 4.5 - 5 bln tons of oil.
- 20 mln tons of copper.
- 42 new airports.
5. I use both kinds of negotiating tactics: Smith and Wesson
With apologies to EPMD, you like a magician, pulling rabbits out of hats son, I'm pulling more like a .44 Magnum, which, coincidentally, numbers me among the legions of fans that have made that particular model the world's most popular handgun.
- After spending numerous years as the handgun industry's bridesmaid, Smith & Wesson finally caught a bouquet of buckshot and advanced to number one in the industry, according to Slate.
- Under new ownership, Smith & Wesson churned out 235,516 handguns in 2004 (the latest year in which figures are available) compared to former number one, Sturm, Ruger, which manufactured a mere 189,312 handguns.
- Smith & Wesson's dead eye aim is largely attributed to its focus on the "big-bore" revolver category, according to Slate.
- The company's leading handgun was Model 500, a .50-caliber revolver that was advertised as the world's most powerful handgun when it debuted in early 2003.
- It retails for $989 and reportedly causes punks to wonder if they are feeling lucky.
- According to Slate, Los Angeles police Chief William J. Bratton derided the gun, saying its firepower "reinforces the total insanity of gun manufacturers in America."
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