*** Can you spare a dollar? If so, you could own a magazine with a circulation of nearly a million copies, 4.8 million readers and annual advertising revenues of more than $150 million.
Of course you would also have to take charge of an operation that is on track to lose $10m - $20m in 2009. And that’s why McGraw Hill is willing to divest the 80-year old publication – BusinessWeek – for a nominal dollar.
There is only one way that BusinessWeek can be saved. The new owners must have a plan to quickly scale back the magazine’s print operations and grow the company’s presence on the web. They should probably take a close look at the viability of their advertising supported revenue model, but it’s doubtful they will.
It’s the same hard lesson that hundreds of magazines and newspapers will have to learn in the age of the iPhone and ubiquitous computing – or else face bankruptcy. It’s hard to make a financial case for printing yesterday’s news on dead trees.
*** And speaking of the old-line media, fund managers and media executives are abuzz this week over a research report written by 15-year old Morgan Stanley intern in London, Matthew Robson. In his report, How Teenagers Consume Media, he reveals that teenagers want their information (along with their music) for free. And big surprise here: they find most online advertising to be “extremely annoying and pointless.”
The report is interesting, but it’s not exactly groundbreaking. It’s common knowledge that teenagers (and the rest of the world) are consuming more and more media, and that they will find any way they can to not pay for it.
If you want to invest in the mobile media mega-trend, steer clear of the publishers and content generation companies (movies, television, music, magazines and newspapers). They still haven’t figured out how to adopt their business models to this new world we’re living in. And most of them never will.
Invest instead in the network operators and bandwidth providers (like Verizon), the chip makers (like Intel) and the companies that will make tomorrow’s “must-have” devices (like Apple).
*** At least he was honest about it…
In January of 2008, then-Senator Barack Obama was interviewed by the San Francisco Chronicle. In the course of delivering the “cap-and-trade” talking points his globalist masters had given him, he stated this nugget of truth:
“Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket … whatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money; they will pass that on to consumers.”
The House passed the cap-and-trade legislation at the end of June. The Senate will vote on it later this year. If this bureaucratic monstrosity passes, watch out! Higher production costs will ripple through every sector of the economy. And those who can afford it least, the middle and lower classes, will bear the biggest burden.
Never mind the incredible strain this will place on our already burdened economy. The more important question is whether a potential couple tenths of a degree temperature reduction is worth the $2 trillion cost and the massively expanded federal bureaucracy that will result from it? Not likely.
*** We don’t usually care much for the Marxist musings of Clinton’s Lilliputian former labor secretary, Robert Reich. But he got it right when he recently commented on how the recovery from this recession will look.
It will not be a V-shaped recovery, nor a U. But an X.
“This economy can’t get back on track, because the track we were on for years […] simply cannot be sustained. The X marks a brand new track – a new economy. What will it look like? Nobody knows. All we know is the current economy can’t ‘recover’ because it can’t go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin…”
He’s right. Declining median wages and mounting consumer debt is not a model for a sustainable economy. And with 70% of our economy dependent on consumer spending, where is the recovery going to come from?
Market analyst Jeffrey deGraaf looks at it from a more technical perspective. In a Wall Street Journal interview, he notes that the 34% rebound in the S&P 500 since March “shows few hallmarks of a bull market.” He believes stocks will stagnate for years, with very little net progress and greater risk to the downside.
Our advice? Watch your stops. And learn how to trade the markets safely. With just a small portion of your portfolio you can add to your overall returns and reduce your risk.
*** Time is up for California. The state would be out of cash by the end of July if it were not for an emergency measure to issue more than $3 billion in IOUs to vendors and contractors. But the only benefit the state gets is a little more time. The IOUs mature in October and there are billions more in obligations right behind them.
So why are California municipal bonds performing so well?
As of Wednesday, California munis were up 5.2% year-to-date – better than the stock market and U.S. Treasurys. And since the state began issuing IOUs, California’s bonds have performed better than municipals from other states and investment grade corporate bonds.
So what do bond traders know? First, they understand that California bondholders are second only to the obligation for schools in the state budget, and that the state will bring in $80 billion in tax revenues even under dire circumstances.
But they must also believe that no matter how bad the situation gets, Uncle Sam will have the state’s back. But there is a growing list of states in trouble, and soon Uncle will have his back against the wall.
In one form or another, the bailouts will continue, dear reader. And your children’s future is being mortgaged to fund it. Hyperinflation is a foregone conclusion. The only question is the timing. Here is how to protect your wealth and profit.
