7 Analyst Takes: Where We Are Now

You can take the analyst out of the brokerage, but you can't take the brokerage out of the analyst. What's happening, this Stalwart's take:

1. ...Obama's economic plan could include a large dose of tax cuts, perhaps totalling $300bn, rather than simply pumping out purely government expenditures. Which is probably a good thing and should make many Republicans happy.
2. Still, US steel companies see no reason to sit back and relax. Having seen the success of the automakers, US steelmakers are now clamoring for government support despite recent boom times.
3. As an aftershock from the commodities boom, some shipper groups are clamoring for re-regulation of U.S. railroads, complaining that recent price hikes were unfair. Rail is still probably a better deal than trucks, given customers are taking the price hikes, though lower oil could change this. US railroads were deregulated around 1980 after years of horrible performance. Now they finally have had the ability to modernize and create one of the most efficient rail shipping infrastructures in the world. Hopefully the twisted lesson learned from all this won't be to go back to the way it was.
4. In terms of economic indicators, the US manufacturing index fell to a 28 year low in December, and if the December rate were to persist for a full year, US GDP would drop 2.7%. Lets hope that's not quite the scenario which plays out. China isn't doing so well either, where manufacturing output fell (yes, economic indicators can actually go negative in high growth China) for the third straight month.
5. US auto sales in 2008 fell nearly 20% vs. 2007. And thus oddly enough... Japan could be experiencing a sort of pyrrhic victory since just as autos become the country's #1 export, we hit one of the worst auto slumps in recent memory. Cars seem so 20th century these days.
6. In Semiconductors, semi sales fell 10% YoT in November with memory hit especially hard. Probably related, there are reports of a spreading consumer electronics inventory glut. Music sales fell in 2008 for the 7th time in 8 years. Perhaps the CD will be one of this recession's fatalities.
7. In the deal space, Pfizer's (PFE) CEO has recently said that he is open to acquisitions. Let the speculation commence (continue?). Pharma is one place dealmaking isn't on life support, as buying companies these days is likely cheaper, and faster, than in-house R&D. Also, interesting article in regards to all the stakeholders DOW's CEO is struggling to appease: Rohm & Haas (ROH), to complete the deal; shareholders, banks who are iffy on DOW's financials, post a potential ROH deal; the Kuwaitis, though they might now be out of the picture after canceling their JV.

Please bear with this recovering analyst.

Comments

[damonmcalli...:]

1. For the last 50 years every president has touted tax cuts. The truth is that aggregate taxes have never decreased.
2. US steel has been bust for 20 years, the only reason they exist is because of taxpayer handouts. I visited a modern steel plant in S. Korea a few years back and it puts every plant in the US to shame.
3. The real sad part about the US rail system is that we have lost almost 90% of our laid track, and the infrastructure is just a shell of its former self.
4. We still manufacture in the US? I thought taxes and regulation took care of that sector.
5. At least they are closer, and more in tune with the Asian consumer base.
6. I’m always glad to see antiquated technologies being pushed out of the market. Squeezing every cent out of a product only impedes progress.
7. I’ve never understood why anyone would want to buy a company that never succeeds. The last thing pharmaceuticals cured was small pox.

Jan 05 12:00 PM

[Jason Rines...:]

Big pharma like the other few massive industries are slow to change. I am a Consumer Healthcare marketer by profession and work with big pharma. They are open to a cost-per patient acquisition marketing model, taking advantage of the beat up Digital Advertising space. But getting them to open books and establish firm goals is challenging. The CEO's I now speak with are game for this model but the middle marketing management that would execute are still attempting to do things according to 2007. I assume this scenerio in this sector is playing out in labor all across America from government to the corporate world with government being the last to change.

Jan 05 12:36 PM

[DrJ:]

7. I’ve never understood why anyone would want to buy a company that never succeeds. The last thing pharmaceuticals cured was small pox.

Actually, Smallpox wasn't "cured", but eradicated by an aggressive vaccination program spearheaded by WHO. Polio could also go the same route except for resistance to vaccinations by religious leaders in certain African countries.

Jan 05 01:01 PM

[damonmcalli...:]

Cured: to relieve or rid of something detrimental, as an illness or a bad habit.
The program may have been spearheaded by the WHO, but the vaccine was being produced by pharmaceuticals.

Jan 05 02:52 PM

[Socialism c...:]

I seriously hope rail continues its success. There is more to choice of transport modes than simply raw cost -- the government should take a good, hard look at safety and foster rail to reduce the number of 18-wheelers on the freeways!! Or follow the lead of some European countries which ban large trucks on highways during the day -- they must do the over-the-road portion of their route at night...they are allowed local driving to deliver during day hours when the recipient can take delivery.

Jan 05 03:27 PM

[applesauce:]

What about viagra? Seems the Afgan cheifs want it and are being given viagra for intel on the Taliban. Big pharma doing it's part.

Jan 07 04:03 PM