I Was Wrong?

Let me start with a quick commercial (I’m going to have one more within the next week).  A student of mine that just graduated with his MBA (from Texas) is looking for a position in the northeast.  He has a B.S. in computer science from Columbia University (2004), and worked as software engineer at a hedge fund prior to business school. (He is proficient in a number of programming languages and data analysis tools such as C# and SQL.)  At UT he was a member of the Investment Fund where he analyzed, modeled and pitched stocks in the financial sector. He is looking for a role that will allow him to leverage his computer science background, but focus more on his financial analysis skills as an investment or data analyst in the New York/New Jersey/Connecticut area.  I oversaw his work on the Fund and also selected him as my TA (so I hired him!).  He’s a great guy and he was the person who all of the other Fund managers would describe as the guy who always did tremendous amounts of work without ever seeking any credit.  I highly recommend him.  If you want his resume, please email me.

Now, on to today’s blog…

Here are some quick stats and thoughts (including thoughts about the nomination of Rep. Ryan as Gov. Romney’s running mate):

First, I have to start by saying something that I don’t like to say…I was wrong.  I know – you don’t want to believe that.  But, it’s true.  I was wrong when I said that NBC’s Olympic coverage could only improve once beach volleyball was over.  I have to believe that NBC was trying to prove me wrong.  They replaced beach volleyball with rhythmic gymnastics.  Truly unbelievable.  For those of you who are fortunate enough to not know what rhythmic gymnastics is, I’m hoping to post a youtube video of me prancing around with a ribbon.  If you can picture that, you get the idea.

China’s exports only rose 1% YOY (down from an 11.3% increase in June).  Exports to the EU fell 16% YOY.  This lowers expectations that China can solve the world’s growth problems.

In addition, China’s industrial production in July weakened to its slowest pace in more than three years.  Of course, it still increased 9.2% YOY.

New loans by China’s bank dropped from 919.8 billion yuan in June to 540.1 billion yuan in July.  This is the lowest level since September 2011.

Japan’s outstanding debt now equals 214% of its gross domestic product, according to the Organization for Economic Cooperation and Development.

In 1995, 14% of Japan’s population was at least 65 years old and social security and related expenses accounted for 17% of the budget.  In 2010, 23% of the population was 65+ and seniors accounted for 29.5% of the budget.

The Agriculture Dep’t predicted the lowest corn yield in 15 years.  The forecast is down 17% from just last month.  But, farmers planted a huge crop this year.  It’s estimated that this year’s production will only be 13% lower (compared to last year).

Ethanol consumes 40% of corn production.

The USDA predicts that overall food prices will increase 3% – 4% because of the drought.

Annual pension payments by states and local plans were 15.7% of payroll in 2011.  A decade earlier, these payments were only 6.4%.

State aid is the biggest source of revenue (34%) for municipalities.  Property tax receipts are second with 29% of revenue. Wage, sales and other taxes provide 10%.  All three pieces are struggling.

A survey by the National Retail Federation found that the average family with children in kindergarten through high school expects to spend $688.62 for back-to-school.  This is up from $603.63 last year.

Twenty-three percent of all public and private schools in the U.S. now have a uniform policy.

The number of jobs available in the U.S rose to its highest level in four years – 3.8 million.  This is up 105K since June and the highest level since July 2008.  It’s 1.6 million higher than July 2009.

My Thoughts on the Vice-Presidential Nominee

It’s a fascinating to see Governor Romney select Rep. Paul Ryan as his running mate.  To start, the conventional wisdom is that the VP candidate doesn’t have a big impact on the election.  But, it’s hard to argue with the idea that Sarah Palin had a negative impact on the undecided independent vote in the last campaign.

On the positive side for Governor Romney, he has picked one of the very few elected politicians that can talk about the budget with clarity and specificity.  (Governor Romney has been chided for his lack of specifics about the budget.)  Representative Ryan is ready for the “big stage” (unlike Sarah Palin four years ago).  This will also energize the conservative part of the Republican party (that has not been overly excited about Romney).  (Of course, regardless of what people say, the conservative voters were not going to stay home – they’re not huge fans of President Obama.)

On the negative side for Governor Romney, this selection is going to be interpreted as an endorsement of Representative Ryan’s budget.  Rep. Ryan’s plan to fix the budget involves changing Medicare to a voucher system.  Regardless of the fact that Medicare is a huge piece of the long-term budget problem, seniors don’t want it changed (and they vote).  In addition, this choice may scare some independents away from Romney since this selection pushes him much more to the conservative side.  The final negative is that it’s going to be much easier for the Democrats to cast Romney as the private equity guy who closes companies for personal gain – now he wants to “close Medicare.”

Overall, my personal view is simply that this selection makes the campaign much more interesting.  I think that Representative Ryan will do extremely well in the VP debate.  In addition, I think some of the other choices being considered would have been total disasters.  I think Rubio is too young (not ready for the big stage).  I think that Governor Pawlenty would have not brought any excitement to the Republican ticket.  Now, you have two polarizing figures in the campaign (President Obama and Rep. Ryan) and two relatively vanilla figures (Governor Romney and Vice-President Biden).  If nothing else, this has the possibility of pushing the discussion to our long-term economic issues (not just our short-term problems).

Finally, I may be overestimating what will happen.  A CNN poll showed that nearly 40% of voters had never heard of Representative Ryan!

Have a great week.

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