By Alex Salomon
Another week is upon us and this edition is really bordering on total randomness. On with my 5 thoughts!
1. Political Randomness… Although a non-Mormon, I have been exposed to the Mormon culture and faith through living almost one year with a couple of Mormon room mates. As such, while with limited knowledge, I seem to understand that most practicing Mormons avoid addictive substances: no caffeine, no theine, no nicotine, no drugs, no alcohol. Considering this fact, I am between puzzled and shocked, and continuously surprised, that Alcoholism has not made the list of important issues to be addressed in the Presidential Campaign. I do not have the statistics, but my instinct says that alcoholism has caused more problems, issues, broken family ties and relationships, and caused more harm than gay marriage. And yet, the former cannot make the list of important issues while the latter generates constant headlines.
It is a random thought, but considering Romney’s background, I would have thought that the subjects of substance control and support/help programs would have gained more klout on the list of topics covered.
2. Random Kindness… I hope that we have mostly noticed that when the constant reporting of Greek and European disasters fades into the lull of summertime and other past times, things (at least, markets) can actually feel and look better and stronger. So, on that note, I am starting to toy with the fantasy of creating a TV channel that would report 10 or 20% of factual, “bad news” and focus the rest of the 80-90% on good, kind, generous news! OK, I know I am living in fantasy land right now, but it would feel good to at least have the option to turn on a channel reporting less for ratings and sensationalism and more on random acts of goodwill and kindness.
Ah well… it felt good to dream for a few sentences!
3. Important Randomness… So, with my apologies to weekly readers, I would like to randomly highlight two recent, yet important, “eureka” moments that I covered in this weekly column! Here goes: I keep on thinking that the ongoing constant fears and headwinds on the global market, along with talks of double-dip recession, fiscal cliff, and Grexit have actually prepared companies to be leaner, meaner, and more ready to face Doom. In turn, this preparedness has made companies historically cheap on business metrics that traditional and mass media do not cover. As I wrote last week, constant fear has forced companies to be better prepared (even, in some cases, to play game theory on the disappearance of the Euro).
I would just like to point out that 2009 brought a roaring bounce; 2010 brought constant chatter of double-dip recession and we closed higher; 2011 saw constant “fiscal cliff” headwinds and we made several higher highs during the year; 2012 has been all about the end of the European world and yet, we are now higher than 2009, 10, 11 two times for the year already.
So for all the talk of hating equities and QE-only driven markets, maybe, what if, just possibly, could the markets be higher because companies deserve a higher reward for their preparedness?
4. Market Randoms… I totally fumbled my March 28, 2012 call for S&P 1500 (by May 6) but want to give it another go. So, without as many details as before (for now!), here are my current random thoughts on the broader market:
1) Every one is expecting a “chilling Angela Merkel effect” and an eventual gap down 3-5% to S&P 1350. It bothers me that every one expects it, but let’s say it happens soon.
2) From here, I could see catalysts including Apple’s (AAPL) new iPhone, Germany’s Supreme Court ruling on the ESM, continuous strong NFPs (non-farm payrolls), and a touch of Bernanke-Draghi cheer to bring us to new highs around S&P 1450
3) Looking at the steady new highs despite all the gloom, January 2013 season will bring us to S&P 1525.
That is my new road map… so far, I am batting 0 for 1, so I hope to do better, but my new gutsy call is that we will see 1350, 1450, 1400, 1525 on the S&P by February 1, 2013.
5. Sports Randoms… Andrew Nyquist’s February 2012 interview with Adidas Greater China COO is a very entertaining read. The interview covers topics spanning from brand initiatives to the economic and competitive landscape in China. Within that context, they also touched on the Olympics. This got me thinking about the performance of Adidas and Nike at the Olympics. And the results are in: Adidas collected 226 medals to Nike’s 117. I can only imagine the economic fights behind the scenes for these 2 brands… from the money invested to represent athletes and federations (as distinct entities) to macro sponsoring and advertising.
What is less known are the surprising results of 3 other brands:
1) Germany’s Puma may just be the winner for “follow-through potential”: 4 of the 14 medals belong to popular Usain Bolt and 12 total to Jamaica’s delegation. Although concentrated, these results could bring in big money from recognizable follow-through campaigns (especially when compared to money invested on the Games).
2) China’s Li Ning could be the 2008-repeat dark horse ready to take over the world after supplying Chinese athletes and 87 medals: it is reported to be considering big marketing campaigns for US markets. There is an interesting mention about Li Ning in Barron’s (August 11).
3) Japan’s Asics conquered 72 medals and apparently won a medal for most profitable budget per medal won.
As the Olympics momentum dies down, there are some fascinating articles being written about the shadow economic wars between sports companies – this made up a lot of my random fun reads of the week!
Thanks for reading and have a great week.