When Mark Zuckerberg started Facebook, he decided that in order to eliminate the technical advantages enjoyed by Amazon, Google and Yahoo (what with their proprietary global computing systems), he would need to take an open-source approach to compete. It seems to have worked, and saved them a lot of money in the process. But here’s the interesting thing: even though Facebook’s profits are soaring, their demographics are getting older. Their original freeloading teenage fan base doesn’t think Grandma being on Facebook is very cool. So now Zuckerberg’s open-source, damn the man, freelove approach is working perfectly for the only growth strategy left: acquisitions. “Facebook is a partnership company,” because it is no longer a “cool” company. Then again, there’s not much to dislike about this.
Life After The Taper: Good GDP Is Actually Good, Investors Flee Emerging Market and Dividend-Paying Equities
GDP: “Gross domestic product — the broadest measure of economic activity — grew at a 3.2% annual pace in the fourth quarter…although it’s not indicative of gangbusters growth, the data seems to show the economy is moving forward modestly…Consumer spending picked up at a 3.3% annual pace, and U.S. exports to other countries outpaced imports.” Furthermore, in a world where the Federal Reserve is tapering away from QE, strong GDP growth is “pretty impressive”: “as the massive fiscal drag diminishes, U.S. economic growth is accelerating.” And? But? Nope. Its just good.
Emerging Markets: “Do not be surprised if the initial, post-FOMC statement slide in emerging-market currencies morphs into another, bigger rout in the days ahead. Don’t be surprised, either, to see a backlash from governments in these countries, stoking international tensions and making everyone’s jobs at managing the current turmoil all the more difficult.”
Dividend-Paying Stock Funds: “Instead of prizing the funds as a complement to bonds as they did when long-term interest rates were flat lining, they are starting to rotate in other directions, in some instances to alternative funds using hybrid stock and fixed-income investment strategies.”
Chinese Consumption, Corruption and Cute Critters
“Moves to encourage consumer spending are part of a marathon effort by the Communist Party to transform China from a low-wage factory into a high-income creator of technology with self-sustaining economic growth.” And yet, as President Xi Jinping cracks down on corruption “and perhaps maintain social stability as the [Chinese] wealth gap widens,” retail sales growth slowed from 14.3% to 12.8% in the first half of 2013; GDP growth may even see a 0.1 to 0.2% drop as politicians wean themselves off of lavish funerals and shark fin soup. Apparently “the campaign could be positive for the economy in the long run” because something about confidence and trust or something. Meanwhile, “in recent years there’s been a noticeable shift in Chinese attitudes…toward the protection of endangered, or just plain cute, species…aided by China’s transformation from an agrarian culture which views animals in utilitarian terms, to one in which a burgeoning middle class embraces pet ownership.”
The Post Office Kinda Wants To Get Into Shadow Banking
The USPS Inspector General has endorsed turning the post office into a micro-lending hub for the “nearly 68 million Americans — over one-quarter of U.S. households — who have limited or no access to financial services…Post offices could deliver the same services at a 90 percent discount, saving the average underserved household $2,000 a year and still providing the USPS with $8.9 billion in new annual profits.”
People Are Really Excited About Mexico These Days
“Mexico boasts free-trade agreements with over 40 countries and a trade-to-GDP ratio — a common measure of economic openness — above 60 percent, surpassing the United States, Brazil, and even China. And whereas oil once represented over 75 percent of Mexico’s exports, today it is manufactured goods that produce three out of every four export dollars.” Furthermore, rising wages and energy costs in China are now competing with Mexico’s high productivity and proximity to the United States. Mexico’s middle class is also growing, and now “comprises anywhere from 40 million to over 60 million [of] a population of 116 million.”
Wall Street’s “Emerging Frontier In Securitization”
“Wall Street’s latest trillion-dollar idea involves slicing and dicing debt tied to single-family homes and selling the bonds to investors around the world.” This article, amazingly, is from yesterday; not 2004.
myRA Already Off To A Great Start
In case you missed it, President Obama mentioned something about a new government sponsored “starter” retirement account called myRA in his State of the Union Address. Turns out there’s also a stock with the ticker symbol MYRA. It trades over-the-counter for $0.0001. Someone bought ~1 million shares on January 17th, almost two weeks before the speech. So.
Windows 8 Is A Flop. What Is Microsoft’s Next Move?
This article spends a really long time hating on Windows 8, mostly for being a radical strategy “to force touch, force Metro, on every customer in the hope that they would see the benefits, then take to new touch-enabled PCs, and — if Microsoft was lucky — gravitate to its tablets as demand pushed developers into quickly creating a massive app market.” That strategy has made some techies angry. Microsoft’s only option at this point may be to abort mission and focus on their next product (Windows 9) which is basically what they did with Vista, but that may be harder to do in a world where Microsoft is competing with Android and iOS.