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Important year end reveiw of the oil price forecasting work of so many anlaysts and where they failed . The IEA and the US Enery Dpt forecast have year after year underestimated this pirce by over 20%. Analysts change the price forecasts within a couple of weeks based on changing information and assumptions. Of all this the Saudi Arabian forecasts have ben within 12 % of what has actually ocurred according to a study by Ronald Berger Strategy Consultants of Muich, Germany. And whats their forecast for 2008. By extrapolating from the Saudi budget and the assumptions, used such as giving a wide margin to avoid a deficit in the budget if oil prices undershot by a wide margin, one gets $75 for US benchmark crude. Forecast by experts are in the neighborhood of $80 average for the whole year 2008. Goldman recently revised theirs upwards from $85 average for 2008 to $95 within a 4 week period. How good is the Goldman forecast. No one really knows. Lehman has a forecast of $84 average for 2008 and bases it on the opacity of the market because no one knows what OPEC will do with supply and China does not provide good information on demand. So basically anlysts are adding an uncertainty premium to the price of oil. And this is especially so because as the Chief Economist at IEA says global space capacity is so thin and any event can influence price. Last year the rhetoric about Irans nuclear intentions was enough to stir up the price, as were other smaller events disrupting supplies. But the Iranian situation has since cooled down and diplomatic solutions are in the works. So what to expect in 2008 in the way of political uncertainty. Iraq, Iran, Palestine, Lebanon have all seen a cool off in the ast couple of years and the Bush administration rhetoric has become outmoded as has other rhetoric from Iran so that does'nt look like it will stir up oil prices in 2008. Still there will be some uncertainty premium about supply from OPEC and demand from China and India. And demand from the Middle Eastern oil producing countries themselves as well as the increasing demand in India and China will mean that lower demand in the US because of a recession will still mean an increase in global demand over 2007 of 1.5 million barrrels a day over 2007's 85 million barrels a day. What will change the dynamics of this situation is the government mandated fuel economy for all vehicles on the road with Europe more aggressive in this area under the pressures of global warming. If this impacts India, China and Russia as these fuel saving technologies are transferrred there overall consumption should see an impact. Europe's targets are only 4 years away for 2012. And the environment may cause China to bring in newer technologies that both contribute to improving environment and conserving energy. Because China's environmental record is almost catastrophic one could see some of this happen much sooner than expected after the Olympics in 2008. All that might change the way the world looks at oil and its use, and all energy sources and their use. ...

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Gerard Baker in the WSJ points to issues of transgender, illegal migrants in US cities, and race in politics as issues on which the "correct" views were causing anxiety for the American public. Parental anxiety on transgender at school for their children, public anxiety on illegal migrants in American cities, and anxiety about race as a defining factor in political life. The illegal flow of fentanyl and loss of life in the US is a basic issue- how could the US as the largest advanced economy in the world become so feeble that it cannot stop illegal flows of fentanyl and human smuggling. Baker also says that he doubts that the new Department of Government Efficiency will work and eliminate waste, that he thinks imposing tariffs will depress domestic productivity and reduce living standards of the people. And that installing what he calls "oddballs" will work except to create chaos. On the issues of infrastructure, cost of  manufacturing revival in the US which were issues in 2016 and turned into the agenda of the Biden years little is said, and on cost of living nothing tangible about reversing the 20-30 percent of price increases in housing and groceries that have happened in the pandemic years 2019-2023. ...

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The poor performance of GM shares since its IPO offering. GM shares in July 2012 were 41% below the November 2010 initial offering price. Ford was at its lowest level in 2 years. One problem facing both automakers is the weakness in European sales. A second is the uncertainty for U.S. sales in a weak economy.

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Cook and Olson look at how U.S. shale oil firms have handled the slump in oil prices. Their report in WSJ says the shale firms have weathered the oil slump well, with production declines in 2016 of only 535,000 barrels a day compared to 2015. The Saudi decision to not cut production and let oil prices drop has affected mostly higher cost less flexible production for mega projects such as deep water projects and oil sands in Canada. Oil shale firms are expected to snap back, according to experts, as demand increases. U.S. production is expected to increase by about 700,000 barrels a day by end of of 2017, say experts.

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What does fast growth in the world's fastest growing economy, that is a key part of America's and the European Union's and Japan's supply chain look like. It is based on people inclusive development called Sab Ka Vikas Sab ke Saath, Gandhiji's idea of the last person in the line ever present and watchful of the task at hand. This Powerpoint of the blueprint of the Indian Budget  for 2024-25 from Nirmala Sitharaman and the Finance Ministry shows a visual of what the growth looks like for the farm, industrial, housing, health, education and other sectors of the economy. It is a journey just beginning under Vikshit Bharat with a target date of the 100th  anniversary of independence 2047. Here one can see the target of increasing capital expenditures for infrastructure and various development schemes by 11.1%. GST (one tax one country) tax revenues are expected to increase by around 12% which support this budget. Strengthening financial sector to bring investment back on track after the pandemic is one of the support pillars, so is deepening and widening tax base through the GST a uniform federal tax for the whole country. Another pillar is proactive inflation management- the story of how India tackled the cost of energy by accessing from different suppliers at the best price is told this week in Feb 2024 in the WSJ. Foreign Minister Jaishankar told the Munich Security Conference with Blinken and Baerbock in the panel that India with 1.4 billion people's future at stake should be seen as done the right thing, the smart thing. Inflation has been kept at about 5%, and key economic growth projected at 7-8% over the next decade with goal of becoming the third largest economy in the world. ...

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Chinese president Xi's determination to make good on the slogan "Housing is for living, not for speculation," by imposing a property tax on homes in 30 cities, is facing resistance within the Communist party and from local governments. Mr Xi hopes to squeeze out the excesses of the adoption of capitalist market systems in China since 2000. China's government opted to get feedback on this idea and the feedback is largely negative forcing the government to scale it back and look at other alternatives such as affordable housing to make home purchases accessible.  Some reasons for the pushback are that it is becoming a social stability issue and risks alienating officials within the ruling party and homeowners. The fact is that 90% of urban Chinese families own their homes and housing related industry makes up about a third of China's output. Also significant is that 80% of China's wealth is tied up in real estate. What could happen is that if housing prices drop in China urban consumers might cut back on spending because they feel poorer. Party officlals advised against introducing property tax in 30 cities. Now it is scaled back to ten cities, and a new law could take till 2025 to introduce property taxes in the whole of China. Cities that are likely to be used for the property tax now are Shanghai, Chongqing, where an annual charge is levied on second homes since 2011. Cities added to the list would be Shenzen, Hangzhou, China has financed much of its industrialization through land sales by the Communist local governments in a country where land ownership was with the national Communist government after the revolution in 1949.  Mr. Xi wrote in Qiushi party journal that "we should actively and steadily promote the legislation and reform of real estate tax, and do a good job in the pilot work." Local communist governments get about one third of their revenues from selling land to property developers, and they are anxious that a tax on real estate would make demand and price for the land they sell to drop drastically. To get some idea of this- the local governments had $1 trillion in revenues last year. ...

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Denning provides a reminder of the growth but also real risk in emerging markets. The weighted average score in Transparency International's 2010 Corruption Perceptions Index for BRICs countries is 3.3 out of 10, compared to 6.7 for the Eurozone, and 7.1 for the U.S. Russia needs an oil price of $120 in 2012 to balance its finances, and the consensus is for oil price to be $103. China has a bad loan problem at its banks. Brazil and India have inflation problems and growth constraints from poor infrastructure. There is aneed to be grounded in realities when it comes to emerging markets. The IMF underscored this weakness in its recent report. Sudden capital outflows could reveal serious weakness in some countries.

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In his farewell speech Boris Johnson, with true British resilient spirit,  says "I will be giving fervent support to Liz Truss and her government every step of the way." Johnson likened his transfer of power to Ms Truss to a relay race. "The baton will be handed over," saying it "unexpectedly turned into a relay race, they changed the rules halfway through." But he expressed no feelings of regret, having come to terms with the arrangement in his own way. More likely Johnson is without saying it still determining the policies and direction of the government, perhaps more so now with Liz Truss and his loyalists the only persons in the cabinet and running the British government. Johnson addressed people's fears about the energy price increases- "the UK would continue to have the strength to give people cash they need to get through this energy crisis that is caused by Putin's vicious war."  He listed his government's achievements- the response to Covid. Some of this is forgotten as the UK not the EU leadership was first to move forward with vaccination plans. Johnson put his government's faith in the vaccine invented at Oxford University and committed early while the EU languished under Merkel and her protege Ursula Von der Leyen. The EU fell behind in providing vaccine leadership as Britain forged ahead early, giving hope to the rest of the world's population including India that adopted the Oxford vaccine. Johnson likened his role to the missions to the planets- "Let me say I am now like one of those booster rockets that has fulfilled its function and I will be re-entering the atmosphere and splashing down invisibly into some remote and obscure corner of the Pacific." Johnson has taken the situation in a truly British way without any rancor and gracefully. With Liz Truss in charge he even gets a break after the difficult period handling the once in a century pandemic, handing over to a younger member of his group, and yet deciding on many of the policies and guiding the government for the term it was elected for to 2024. History will look at him favorably for his handling of the pandemic and vaccination, and for his instincts about the Ukraine war and Britain's unwavering support, and now in guiding Truss to provide Britain with strong support for the cost of living crisis caused by the war. His failings stem partly from his exuberance and optimistic spirit, but nowhere near detract from these achievements. ...

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Lego A/S CEO, Jorgen Vig Knudstrop, talks to the WSJ's Jens Hansegard. Lego is based in a small town in central Denmark. Lego's sales revenue has tripled since 2007, and net profit increased by 35% to about $1 billion for 2012. The building block segment in the toy business is growing rapidly with growth of about 20% in the last year. The overall global toy business is stagnant, with declining prices, difficult economic conditions and competition from the consumer electronics products. Lego is not affected by this because it is able to price products for sets of bricks and figures at a premium, and stays ahead by coming up with innovative products. Lego has 85% share of the U.S. building-block market. Lego is a family owned company started in 1947 which faced difficulty in 2004 with a fall in sales. Under Knudstrop's direction it has recovered and shown strong sales growth, especially in the U.S. with 26% growth in 2012. His approach was to focus on nostalgia themes, Hollywood themes, and come up with innovative products for girls. This includes the Lego City, Lego Star Wars, Lego Friends themes. Lego invests heavily on R&D and plants. About 60% of revenue in 2012 was from launches of new products. The new Lego Friends theme for girls tripled sales to girls, creating a remarkable sales opportunity. Knudstrop's philosophy is to remain humble and aggressvely pursue new opportunities....

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Ariel Mckenzie is the daughter of  Boeing machinist who told his daughter to join Boeing as generations of Boeing workers in the Seattle area have done. Not anymore. Airel says she can't tell her 15 year old daughter that it can provide a good life today with wages falling behind soaring costs in the Seattle area. Note that the new contract states the 437 billion dollars of planes backlog Boeing has will not be made in non union plants in the South, most will be made in the Seattle area home to Boeing since it's founding. How does Boeing see this happening without a wage deal that workers are not happy with, when since 1997 the workers were being treated as a transaction and losing out. Boeing workers say the new contract has no bonus program and does not restore fixed benefit pensions which were replaced by 401 K's . The housing prices index in the Seattle area for last decade rose 128% and average price of a home in Seattle is $835,000. Average worker pay in 2024 is $75,000 and fallen far behind costs of living. It's all been downhill say veteran Boeing workers after the 1997 merger with McDonnell Douglas and the shift of corporate offices to Chicago. ...

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With the decline of its hardware business making iPhones Apple is looking at other fields. It is launching cheap online TV subscriptions in streaming wars in competition with Netflix and others. Apple is launching a new TV streaming service Apple TV+ in 100 countries for 4.99 British pounds a month undercutting Netflix's price of 5.99 pounds. The new service will be started November 1, 2019. Disney plans a streaming service for 7 pounds a month starting November 12. This service is alongside iPhone 11 launch and anew iPad, a new iWatch. Buy any new Apple device and you get a 1 year streaming service free.  Sales of iPhones fell 14% in the April to June 2019 quarter to 39 million units. Samsung's business is growing by 4% to 75 million units and Huawei by 16% to 58 million units. Apple sees the need to increases its services business with a target of $50 billion in 2020. Apple sees itself more as a media and cloud services company as it makes this change. In markets such as India Apple's growth is limited by its failure to lower prices on new iPhones. In China it faces strong competition from Huawei. The trade tensions are increasing the strength of Chinese brands in the Chinese market. The market in U.S. and Europe is saturated after years of expansion. New iPhone models are costly and bring peripheral advantages such as more and better cameras and features such as screens that are not breakable- for the iPhone 11- not dimensions that are critical for making a costly purchase. After years of growth tech companies such as Apple, Google, Alibaba, Amazon are reaching a point where incremental growth is not what it used to be and most of the rapid growth behind them. Trade tensions are also limiting the outlook in the Chinese market, and pricing remains a major factor in the Indian market. Western markets are saturated. There are fewer and fewer substantial new ideas from these tech companies. ...

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The Case-Shiller Index shows a decline in housing prices of 4.2% in the first quarter of 2011. This follows a drop of 3.6% in the fourth quarter of 2010. Of the 20 cities in the index, 12 were at a post-bubble low in March 2011. The yearly drop for Minneapolis was 10%. Only Washington D.C. showed a rise in March and over the year. Housing prices are at 2002 levels. The Center for Economic and Policy Research estimates a decline of 6-8% for the rest of 2011. The excess supply of housing was estimated at 1.8 million units in April 2010 by the financial Blog Calculated Risk, which used 2010 census data for the estimate calculations. The Conference Board consumer confidence index fell to 60.8 from a revised 66 in April 2011.

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China's EV market is very competitive and price cuts by Tesla have led to falling prices. BYD sold 900,000 electric vehicles in the first 5 months of 2023, Tesla 200,000, and Li Motors 100,000. NIO is struggling and some companies have closed operations. Ford failed in this market and VW is still to make a dent in the market. Most of the top ten companies are local. With the slowing economy, consumers resisting purchases, price drops are needed to keep up sales of EV's.

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Elvira Nabiullina, head of Russia's central bank, is a think tank economist who was Economy minister before becoming chief economic advisor to Russian president Putin in 2012. She is one of the liberal economists in Russia who see the years of economic growth following ruble devaluation in 1998 as an example of how devaluation can actually help the economy. The devaluation lowers costs for manufacturing and agriculture, and is seen by some economists as having done more than oil price increases to help the Russian economy grow during president Putin's first term from 1999 to 2004. Nabiullina's position to support a free float after the sharp decline in the value of the ruble following the plunge in oil prices, is based on the need she sees to use the crisis to reduce Russian overdependence on imports. This policy had other advantages by reducing the need to tap Russia's foreign currency reserves to defend the ruble. Russia's gold and foreign currency reserves are at $385 billion. In Jan 2015 the central bank cut interest rates. A policy of increasing rates would trigger a sharper recesssion. Russia faces a unique situation in that the oil price decline and the decline in the value of the ruble occurred at about the same time of about 50%, so that the budget continues to be balanced. The number of rubles coming in from oil exports remains the same after the crisis. Nabiullina told Russia 24 television- "We have to live in a different zone, Russians should orient ourselves more toward our own sources of financing projects, and to give a chance to import substitution."...

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The U.S. Treasury plans to sell off its whole stake in General Motors in 15 months. Treasury will sell about 200 millon shares to GM for $5.5 billion by Dec. 2013. The buying price for GM of $27.50 is about 8% higher than GM's closing price on Dec. 18, 2012. Treasury plans to sell the remaining 300.1 million shares within in the next 12-15 months depending on market conditions. Treasury's breakeven point is about $53 a share, and the government will lose money on the bailout compared to the AIG rescue. The government invested about $49.5 billion to help take GM through a planned Chapter 11 bankruptcy filing and reduce a huge debt load. The key in the auto bailout was preserving over 1 million jobs in the U.S. auto industry during an economc crisis.

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Half of the 109 economists and housing analysts polled in October 2010 by MacroMarkets LLC, expect home prices to bottom in 2011, and half don't expect home prices to bottom till 2012. Backing this up is growing inventory in many markets. The Wall Street Journal's latest quarterly survey of housing market conditions in 28 major metropolitan areas showed inventories of unsold homes were up in 19 markets at the end of 3rd quarter 2010, compared to the prior year. The largest increases were in California- in Los Angeles, Sacramento and San Diego. Only parts of Texas, and Washington D.C, and some other areas which have shown decent job growth are an exception. In the Realtor's Report, median home price fell 2.4% to $171,700 in September 2010 from a year earlier. This data does not include the suspension of foreclosures due to title defects, which will further dampen prospects of a recovery in housing. This will affect New Jersey, Florida and other "judicial" states, where the banks must complete foreclosures through court. At the current sales pace it would take 10.7 months to sell the 4.04 million home inventory of unsold homes, according to the recent NAR report. Six to eight months is considered normal. This does not reflect the "shadow" inventory of homes in some stage of foreclosure, which is estimated at around 4 million, creating a problem that even current low rates for a fixed rate mortgage of 4.21% cannot solve....

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Vernon Smith, Professor of Economics and Law at Chapman University, 2002 Nobel prize winner, makes an effort to explain in simple language what has happened in the housing bubble, the various aspects of this crisis, and what might help and what might be difficult to accomplish in the rescue plan. He thinks that a reverse auction is awfully hard to do with some success especially as Treasury has no experience with this, and thinks its better to inject capital in banks and companies in return for equity stakes, which incidentally is what Gordon Brown's plan in the UK intends to do. With that Chapman believes Treasury has experience having recently demonstrated that several times including the way Treasury and the FDIC assisted JP Morgan takeover Washington Mutual. He asks readers to look at the Shiller price index graph from 1987 and asks do they think the home prices which only in 2006 and 2007 gradually turned downward and plumetted in 2008, has it run its course. The answer from the graph looks like a no after such a long runup in prices since 1987 and there is a ways to go in 2009 and into 2010. In this context and the context of a declining economy wiith higher unemployment what are the prospects of stabilizing home prices anytime soon? Which suggests injection of capital in return for equity by the government to recapitalize them and get lending back up, as well as act a a clearinghouse to take some of the fear risk out of transactions, as some of the more sensible solutions. And at the same time putting in a comprehensive homeowner relief program with taxpayer money and lender participation to have the lenders modify mortgages, or something like the Hubbard or Feldstein plans, to keep homeowners in their homes. And there is one bit of good news in all this oil prices have already hit $80 a barrel and are headed downward, and so are the prices of all commodities including steel, and the prices of soybeans, corn wheat and so on. ...

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Auto sales for 2010 are expected to come in at 11.5 million, a significant drop from the 17.5 million in 2000. A better job market expected to push the unemployment rate down a bit to 9.7% from 9.8% in November will help, but not by enough. Credit Suisse analyst Christopher Ceraso says each percentage point that the rate is above normal ( about 5%) keeps sales back by about a million auto sales on an annual basis. To get sales back to a 16 million range this would require an unemployment rate of 6%. Economists expect a better US economy in 2011 but the prospects remain uncertain for 2012, bringing unemployment down to about 8-9% if hiring picks up. The other concerns are high consumer debt and a rise in gasoline prices. If gas prices rise and buyers shift back to smaller vehicles, as they did in 2008, this would squeeze margins and profits. This is especially a concern as automobile companies have increased profits with a larger truck and large size vehicle component of sales, in a reverse shift after the shift to smaller cars in 2008-2009. Ford Motor is one example of this. It helps Ford use the extra profits to reduce its debt load but automakers have to be prepared for a sales shift to smaller cars in the face of higher gas prices....

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Verizon's deal to buy Hughes Telematics, a maker of wireless systems for vehicles, for $612 million in cash. Verizon paid $12 a share, a huge premium over the Hughes closing price of $4.35 on May 30, 2012.

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This merger is part of a process that happened after 1970 when Penguin Books a national institution in Britain in the war years 1939-1945 was acquired by Pearson Plc, and later sold in 2013  to German publisher Bertelsmann. Penguin became a part of British culture because it sold a million cheap paperbacks at 6 pence in 1939 and continued to provide low cost access to books to all parts of the English speaking world from UK to Asia till the 1960's. The astonishing period of creativity and design of founder Allen Lane ended in 1970 after Pearson Plc focused on profitability and acquisitions. Under this new deal in 2021 a large part of the world publishing industry would come under the control of German publishing house Bertelsmann. Penguin Random House is owned by Bertelsmann and the deal would bring its rival Simon and Schuster under its control. The US Justice Department filed a lawsuit to block it. Attorney General Merrick Garland says- "American authors and consumers will pay the price of this anticompetitive merger- lower advances for authors, and ultimately fewer books and less variety for consumers." Penguin Random House already controls 22% of titles published in the US. The US publishing industry has already seen mergers leading to reduced competition. News Corp. acquired Houghton Mifflin Harcourt in May and merged it into Harper Collins. Largadere Hachette acquired Workman in September. ...

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Adidas took a one time charge of 125 million euros for irregularities in its Reebok India Company, and expects an additional charge of 70 million euros. Adidas expects net profit to increase by 12-17% in 2012. Net profit for the first quarter of 2012 increased by 38% to 289 million euros, mainly on higher sales in China and Japan and its TaylorMade-Adidas Golf sales. Revenue increased by 14% to 3.8 billion euros on a constant currency basis. Profit results reflected lower financial expenses and a lower tax rate. The 2012 Olympics and Euro 2012 soccer will offer additional marketing opportunities for Adidas. Adidas is increasing its distribution in China and plans to have 2500 stores in 1400 cities by 2015. It will use its NEO brand at lower price points for entry customers in the smaller cities of China.

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The main lines of the Message to Congress by the US president in 2025 related to flood of illegal immigration, and illegal fentanyl flows with deaths of Americans in the most vulnerable neighborhoods across 51 states over 12 years, 490,000 deaths, more than Vietnam. "The media and our friends in the Democrat Party kept saying we needed new legislation to secure the border—but it turned out that all we really needed was a new president.” As it turns out the legislation Biden with Republicans led by Senator Lankford negotiated in Feb 2024 did not have the strong action taken in the first 100 days to deter illegal immigration and remove illegal immigrants endangering safety in American neighborhoods. That legislation did not have provisions to bring illegal fentanyl flows into the US to an end with strong action including tariffs on CMC countries Canada, Mexico and China responsible for the fentanyl flows into the US. Transgender was another issue addressed in the speech with DJT clearly stating that their only two genders and against mutilation of bodies, with trust in God about the gender God placed us in as best for us. Other issues were about tariffs action going into effect on reciprocal tariffs on April 2 with all nations including India, Europe, China, Japan, South Korea. DJT cited India for high tariffs, South Korea with 4 times American tariffs, and European nations. The goal was to ensure a level playing field for the US to compete- "what they charge us, we charge them." As explained in an earlier article in the WSJ reciprocal tariffs in the world context mean commodities products would not have price increases for the US consumer, smartphones autos would increase but this would be temporary as these nations play fairly and create a level playing field, and these products manufacturing is shifted to the US. This would mean growth for US auto industry and smartphones coming from inside the US and from India offsetting concentration of production in China. Apple has told the president it will start making inside America investing hundreds of billions in the US from now on. ...

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Toyota introduces the Aqua hybrid model in Japan with advance orders of 60,000. This model will be introduced wordwide as the Prius c. Toyota plans to introduce 11 hybrid models in the two years till the end of 2012. The Aqua is the 6th hybrid of the 11 models. The Aqua has fuel efficiency of 35.4 kilometres per liter, higher than the 32.6 of the larger Prius model. Its starting price is 1.69 million yen or $22,000. A lot depends on the hybrid models, as Toyota has set an ambitious target of increasing sales by 20% in 2012, after a 6% drop in sales in 2011.

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As drops in price of steel could lead to imports into the US with paying lower tariff Trump increases tariffs on steel to 50% on May 30, 2025. Nippon Steel says it will increase its investments in US steel mills at US Steel including older mills, $7.7 billion in modernization of plants, and $2.2 billion at Mon Valley plant. Ownership of US Steel based in Pittsburgh with 14,000 workers will stay in American hands. DJT intervened to make these investments possible. Investments will keep furnaces open 10 years and give every worker a $5000 bonus. It is this type of action that has helped DJT win in Pennsylvania and win worker support.