THE ENTERPRISE
This was certainly a good week to NOT be in the stock market. Cash savings and money market accounts earning 1-2% are starting to look like wise investments. Oil prices (read: gas prices and oil-related commodities) are taking their toll on the economy and corporate earnings. The companies who have pricing leverage, and can use availability/scarcity to push increases through fast will do fine. These are the prime/near prime producers (Dow, DuPont, Exxon/Mobil, etc.)
Everybody else will, in varying degrees, take a hit to earnings while they try to raise prices--fast--to cover material and energy cost increases. None of them can do it fast enough. Customers have practiced their stiff-arms and threats too long and too well. Even if a few can get all of their material cost increases back in price increases, they'll probably still lose the margin points on those increases. The net effect: most companies' earnings will be not-so-good, and some will be very disappointing. Inflation will see an uptick, too.
Thus the stock market will not be very happy near term, even though the core US recovery is still chugging along, driven by capital goods and defense spending. The next shock will be a (small) change in the Chinese exchange rate...forced by (guess who) the US government. It won't "rock the world," but it will be another cost increase to be recovered by beleaguered US importer/manufacturers.
Words of Wisdom from Bill Gates
Perhaps a good way to wrap up this edition of THE ENTERPRISE is to quote the richest man in the world. He must know something and have done something right to get there. Here is how he shared it with a bunch of high-schoolers.
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Below is the address Bill Gates gave to MT. Whitney High School in Visalia, CA.
Love him or hate him, he sure hits the nail on the head with this!
Rule 1: Life is not fair - get used to it!
Rule 2: The world won't care about your self-esteem.
The world will expect you to accomplish something BEFORE you feel good about yourself.
Rule 3: You will NOT make $60,000 a year right out of high school. You won't be a vice-president with car phone until you earn both.
Rule 4: If you think your teacher is tough, wait 'til you get a boss.
Rule 5: Flipping burgers is not beneath your dignity. Your Grandparents had a different word for burger flipping - they called it opportunity.
R ule 6: If you mess up, it's not your parents' fault, so don't whine about your mistakes, learn from them.
Rule 7: Before you were born, your parents weren't as boring as they are now. They got that way from paying your bills, cleaning your clothes and listening to you talk about how cool you thought you were. So before you save the rain forest from the parasites of your parent's generation, try de-lousing the closet in your own room.
Rule 8: Your school may have done away with winners and losers, but life HAS NOT. In some schools they have abolished failing grades and they'll give you as MANY TIMES as you want to get the right answer. This doesn't bear the slightest resemblance to ANYTHING in real life.
Rule 9: Life is not divided into semesters. You don't get summers off and very few employers are interested in helping you FIND YOURSELF. Do that on your own time.
Rule 10: Television is NOT real life. In real life people actually have to leave the coffee shop and go to jobs.
Rule 11: Be nice to nerds. Chances are you'll end up working for one.
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I'll add to that--"he...or she... might very well be Asian." If that doesn't rock everyone's world, it should.
Best, John
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