Monday, January 23, 2006

Press comments read on the train

Washington Post---1/20---The Laissez-Fairest of them all---by Steven Pearlstein---point of view is both indicated by the title and by the publication. It does have a quote from a Greenspan 2002 speech that is worth repeating, " The extent of government intervention in markets to control risk-taking is a trade-off between economic growth and its associated potential instablility, and a more civil but less stressful way of life with a lower standard of living". Good question.

New Yorker---1/23---The Financial Page, Morales's Mistake---James Surowieki---I was shocked to read anything but the most meaningless commentary from this writer of anything that fits some strange aspect of the New Yorker constituency(Long term sub, I guess I'm not part of the club). Anyway, this unexpected comment notes that "Ultimately, however, utopian rhetoric and utopian strategies are the last thing a country like Bolivia needs, because they foster the illusion that prosperity is easy to achieve". It's a balanced review of the coming train wreck, well meaning but ....

Thursday, January 19, 2006

Manhattan Retail Banking---Adventures with the Goliaths

Everybody knows it. Service at the newer small banks invading Manhattan can't possibly be worse than what the big banks offer, and is by most accounts much better. This comment is anecdotal and not a suggestion on which stock to buy or sell, or who makes more money. It's just first hand documentation of a widely observable and inexorable trend. But let's get to it.

This morning I was rushing around Manhattan doing errands that needed to be done before heading to Virginia tomorrow. I needed to transfer money from a Citi account to a Chase account. To start, I went into a Citi ATM center at 7th Ave. and 34th St. to move funds into checking. I did the deal on an ATM, but it shut off on me before confirming or giving me a receipt. I couldn't log back into that machine for some unknown but disconcerting reason, so I moved to the next one, logged in, and was informed that it couldn't access my account and I had to use the handy phone and give them a code the machine gave me to go forward. I did so(sorry, I know this is tedious, but that's part of the point). The service line picked up, put me on hold for awhile, and when they actually picked up they had no interest in my problem or my code number. They needed my ATM card number, they needed my name and the spelling of my last name, they needed my wife's name, and then they asked if I was a Gold account member. Get this---I'm in a hurry, I want to know where my blinkin' money went and why I can't get to my account, so to the last question I said "Please just tell me...", but she interrupted me and said, "You are a Gold account member". I have to transfer you to Gold service. Ahhh, "NO" came out of my mouth in a uncontrolled burst and I hung up. I have a service problem and they want to translate it into a marketing opportunity. CROSS SELLING GONE MAD equals CUSTOMER GONE MAD. I regained my composure, logged into a third ATM, got into my account this time, reentered the transaction hoping it wasn't a duplication, and got a receipt with ink so imperceptible that I had to squeeze lemon juice on to read it. Perhaps it was done.

I walked to Chase at 34th and 5th Ave. to deposit several checks including one drawn on Citi that I hoped would work. I am fourth or fifth in line. Three tellers are working, and three supervisory types are roaming around behind, probably discussing where to go for lunch, and just more or less getting in the way. How many Chase bankers does it take to...?

After about ten minutes I reached a teller window, and the teller proceeded to look at her screen and not glance up at me for about two minutes. I finally asked if I should leave. Looking clearly annoyed, she said "in a minute". Soon she slowly dealt with the deposit and then gave me a receipt without the appropriate information. I pointed that out and she said that I should have asked for it beforehand, but she would do it. I said "don't trouble yourself" and walked away. Two obvious bankers, a man and a woman both in nice business attire, were standing in the middle of the lobby. I walked up to them and said "The service is terrible here". The man, apparently senior, said "that's what I've been trying to tell her" and walked away. She apologized, and I felt like I'd larrydavided this woman who was probably trying to implement a hopeless strategy designed by those above her, and got the added bonus of my inopportune comment. I got bad service, and I left feeling guilty.

So two simple transactions at the two biggest retail banks in Manhattan, two transactions completed without full documentation, two transactions that aggravated me, two anti-service transactions, BUT I am afraid that I am what they count on. I am a customer who is sticky. Unless they club me with a baseball bat in the lobby or steal my money outright, I probably won't deal with the paperwork of moving the accounts, with the direct debits and direct deposits attached, primarily because of the annoyance of the transfers but partially because of the fear that something would get screwed up.

But Commerce, North Fork, others, they will slowly but surely take away market share that is very meaningful to them and, in the short term, not especially painful to the big ones.

I must add that my suburban Chase and Citi branches are totally different. My Chase branch is exceptional with excellent service, almost no waiting because they are staffed with enough efficient people, not because the branch is not busy. The branch manager will even step behind a teller window if need be, and she's at the customer service desk running the show half the time and not back hiding in an office. And an added bonus is that, even though I'm in there just twice a quarter at most, they greet me as if they know me, or do a great job pretending they do. The Citi branch is definitely not so stacked with intelligence and it seems a little shabby but they get the basics done pleasantly and the number 2 banker there always greets me by my first name on my occasional visits.

Tuesday, January 17, 2006

Ten Projections for 2006

Late at this point, but perhaps there's still time to join the 2006 projections bandwagon.

1. Charles Schwab will be acquired by Citigroup. With Citi's approx. market cap of $250 billion versus Schwab's of $20 billion, a little overpayment can be risked to add to Citi's U.S. market presense. While Schwab is a strong brand with an extensive customer base, their internet trading and reporting technology remains second tier and the goal of building a high net worth business has not come close to being reached. And Citi follows the path of its Legg Mason trade leading to direct access to another tier of the U.S. retail investor market.

2. Unfortunately a continuation of the status quo will continue in Iraq with some gains in stability offset by primarily foreign insurgent actions and minimal if any economic revival.

3. A failure of at least one large and well known hedge fund will occur as a leveraged search for yield in the fixed income markets backfires. Everyone is scared briefly as the new Fed chairman gets his first big test of calming global markets, but Bush and Snow stay quiet and markets calm quickly. Bernanke is no Brownie.

4. Dictator Musharraf of Pakistan finally does not escape an assassination attempt. A vicious retaliation by the military creates greater unrest. The old corrupt ruling families vie for uncertain control while the tension increases. The U.S. sends in Marines to protect the U.S. embassy and consulates, and India's military is put on high alert.

5. A highly volatile U.S. equity market tests investors' stomachs and trading room trash baskets serve a dual purpose. For the full year, however, the U.S. market, after many significant zigs and zags, is up 5%, carried by natural resources, technology, and a 25% rebound in big pharma.

6. European equity markets trudge upward with less severe swings and less volume than the U.S., Asian markets move10% higher but with volatility at times like the U.S. market, and Latin American equities give back half of their 2005 gains, falling almost 20%.

7. A clandestine anti-pornography hacker organization launches a highly effective global internet viral assault on paid subscribers to pornographic websites. The damage is massive, with as many as 200 million personal computers disabled globally. Estimates put the U.S. loss at 15% of all personal computers, while Germany is hardest hit and the government declares a technology disaster relief plan. The DAX plunges, offset slightly by a significant rise in the stock of Dr. Mueller, the company whose sex shops are ubiquitous in train depots, airline terminals, and upscale seedy districts of the country.

8. Shortly thereafter, Dictator for Life Kim Jong Il's dictatorship ends in North Korea, as he dies of a reported heart attack. Rumors also attribute internet stress, a drug overdose, or poisoning as possible causes. China quickly establishes heightened diplomatic, economic, and security relations with North Korea and takes advantage of the opportunity to propel its leadership in the region and also have the opportunity to exploit deeply impoverished but talented labor.

9. Argentina takes a dramatic leftward turn, having finally become prosperous enough to destroy itself again. This leads to a summit of the leaders Venezuela, Bolivia, Cuba, and Argentina that attracts global attention. Mexico is widely viewed to be most vulnerable to the rhetoric of the summit, and its endlessly corrupt government and corporate leaders move money to Switzerland, Caymans, anywhere else, at a much faster pace than usual.

10. Vintage clothing becomes a national obsession among the nation's youth. Goodwill opens its first Madison Ave. store, Goldman Sachs is engaged to advise on an IPO of the Salvation Army's clothing operations, and young entrepreneurs around the country team with local Starbucks to offer $5 slightly worn 1950's handbags with $3.75 green tea frappuccinos.

Saturday, January 14, 2006

What is this rally about?

The U.S. equity market rally in 2006 is a little troubling, but of course I'll take it. Why troubling? Well, what's changed? It's just a new year, with portfolios to adjust without regard to tax issues and year end reporting. Japan, emerging markets, and intl. small cap funds have continued to move up dramatically to offset the few days of softness on the NYSE. But some of this strength could be counterintuitive. Could it be that the U.S. market is reflecting what the fixed income market is saying. A mild recession is coming. Hmm, what's that. U.S. equities are global financial instruments and players, with much of their revenues and influence judged on a global scale. They can be valued on this global scale, be it Google, JPMorganChase, or Proctor and Gamble. Perhaps there is still significant value right here among these global firms. Could be, but I sure hope that this is not a fool's rally. Anyway, I wouldn't spend the last week's gains. Returns from non U.S. investments in 2005 and now have made a big difference in any portfolio lucky enough to have them, and that may continue to be a balance this year.

Friday, January 06, 2006

Follow up--New Orleans and old Sherlock Holmes

Follow up from books mentioned in a 12/31 post:

"My New Orleans, Ballads to the Big Easy by Her Sons, Daughters, and Lovers" --- this short book of essays was worthwhile, but for the most part it would only work for people who have some experience with New Orleans. The cause is good(benefit for New Orleans writers) but most who wrote these short pieces were probably too shell- shocked to do much. The opening essay by the editor, Rosemary James, catches the allure of New Orleans, and the pieces by restauranteurs Ella Brennan and Leah Chase are worth the overall short read and get at the bigger issues, but many of the notes are obligatory sighs, or cries.

"A Story of Detection", by Michael Chabon--- This novella is a story of redemption at many stages, from a supposed Sherlock Holmes near life's end, to a mid-life marriage almost lost, to a vicar without faith at all, a young boy victimized by war, and a parrot seeking a purpose to life. The writing is distinct, and challenging in an understated and good way.

Thursday, January 05, 2006

"the Onion" lives

Picked up a copy of "the Onion" today for the first time in a long while. The lead story, "Plan To Straighten Out Entire Life During Weeklong Vacation Yields Mixed Results", felt a little too familiar. "This was the week all the shit that I'd been putting off for years-big and small-was going to get done", said the subject Derek Olson. "I did pay my gas bill, but then I lost the envelope somewhere on the way to the mailbox". Derek's photo is perfect.

And then my 18 year old daughter saw the paper folded on the kitchen table revealing one of those non story headlines and photos with the headline, "Cosmopolitan Offers 15 Tips For Fattening Up For Winter". It got her for a minute, before she realized that it was "the Onion". She says that one of her college classmates in St. Louis actually has a paid subscription.

It's all goofs and ads here, except that the multiple brief reviews in the Cinema and Music sections are straightforward and spot on for my buck(well it's free).

Wednesday, January 04, 2006

Culture of Corruption, Criminalization of Politics, ETC

With the Abramoff thieving on the front page, the Democrats, according to the New York Times, see this as "good political news, as they are trying to build their 2006 campaign around the Republican's 'culture of corruption' ". Several pages back in the editorial section Maureen Dowd states that "lawmakers can work on ways to game the system and wallow in the GOP's culture of corruption". Just a month ago on the same op-ed page Dowd or one of her fellow Times writers spent an entire column pointing out the onslaught of the phrase "criminalization of politics" among Republicans around the news of the Cheney aide's indictment. There is a lot to comment on here.

First, the language. When I was in the corporate world, the company I worked for had an unabashed Democrat as head of marketing and communications. They had to put one somewhere I guess. He brought in consultants who had worked with President Clinton and his administration to help us communicate to the media, shareholders, and employees(not an uninformed audience). The lesson these expensive consultants brought was that communication had to be distilled to three messages, and everyone was kept busy drawing triangles with a concise message on each point. The approach was to start any interview or speech with those three messages, then elaborate on those three points(the middle of the triangle had elaboration points), and then close with the three points. Any questions asked were to be answered by getting back to the three points as soon as possible or, better yet, immediately. Some may view this approach as condescending, patronizing, naive, etc. but it was put forth as cutting edge communications by some pretty well known names. But NOW, in the 21st century, we no longer have three points---we have three words. "Weapons of mass destruction" was of course four words, and now this communications science is down to three. One, two, three, everyone say the exact same thing depending on your team. Go culture of corruption. Go criminalization of politics. Who will win. It stinks.

Second, the Abramoff news is, well, if ever a picture did say a thousand words that of his lid and trench coat sure do. But is this guy a Republican, or is he simply a con man and a crook. Even the Times says he gave "campaign donations to hundreds of elected officials, more than half of them Republican". More than half, 51%?, or maybe equal to the split between Democrats and Republicans in Congress?, surely if the word "most" were defensible the Times would have used it. The one thing that seems very clear is that Abramoff stole extraordinary sums from clients. Was he able to do this because he wielded significant power, or because he created the illusion of significant power. It is a classic approach of legit consultants to promise to introduce clients to important people(my friend...), to have a resume of the best contacts and clients, to drop names, to put in a good word for, etc. Abramoff is a sleaze who took it the next step and didn't just bill clients very high fees, he bilked them. He's guilty. Did he illegally influence public policy? Did he explicitly trade money for congressmen's votes? He may have, but that's not clear from the reporting so far. No one likes the politicos involvement with this guy, or the advancement that some of these guys were getting or thought they were getting by associating with him. But did he have some real political agenda, or just an Abramoff power and money agenda that sought to take advantage of the weakest marks and fellow con-men.

Third, can the Democrats please make things interesting by not hiding behind some three word phrase for the 2006 campaign. Are they going to offer anything new and coherent, or are they going to let the Hollywood folks easy and self righteous ways of
making fun of Bush and Cheney be the centerpiece of their campaign. If they have any faith at all that there is intelligent life in America(and if not they should start if they want to win), then there is a lot of substantive and tough stuff to work with, and it doesn't all fit neatly within the old paradigm(see Thomas Friedman's NYT column today for a thought that doesn't quite fit between the chalk lines of the current policital debate).

Sunday, January 01, 2006

Match Point

Just saw Match Point. What a thoughtful film. Any further comment could be harmful to others' viewing enjoyment.