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Posts Tagged ‘US economic outlook’

After slow start, U.S. deal making set to rise

Posted in Board Of Intellectual Capital, tagged , , , , , , , , on September 3, 2009| Leave a Comment »

Here is a good analysis on the business outlook from Reuters.

“BOSTON/NEW YORK (Reuters) – The next few months could see more mergers and acquisitions in the U.S. manufacturing sector as memories of recent market highs fade and some smaller companies find they need financial backing.

Executives at top manufacturers, including United Technologies Corp (UTX.N), had hoped the recession would provide ample opportunities to scoop up bargains this year, but were stymied when potential targets balked at selling when stock prices were testing 13-year lows.

But all of that may be changing, particularly if small manufacturers find themselves scrambling for cash when demand recovers and they need to restart production lines and bring back staff.

“As volume comes back for many suppliers, many companies, this may actually be the stress point for them relative to their financing needs,” Patrick Campbell, chief financial officer of 3M Co (MMM.N), told investors on Wednesday.

“This could actually be the point where we start to see some companies that maybe become a little more distressed … We’ve got our eyes wide open on that.”

Industrial conglomerate Danaher Corp (DHR.N) said on Wednesday it plans to buy two makers of scientific instruments for a total of $1.1 billion in cash, including a unit of Canada’s MDS Inc (MDS.TO) and Life Technologies Corp’s (LIFE.O) stake in a joint venture with MDS.

FIXATED ON THE PAST

So far this year, U.S. companies have announced $516.3 billion in deals, according to Thomson Reuters data. That is down 49.1 percent from the same period in 2008.

As potential buyers see it, the biggest roadblock to getting deals done this year has been that sellers are fixated on the past value of their shares. The Standard & Poor’s capital goods index .GSPIC is down about 34 percent over the past year.

“A lot of players are still hung up with their 52-week high,” United Tech Chief Executive Louis Chenevert told an investor meeting this week.”

Read the full article here.

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Get Ready for Inflation and Higher Interest Rates

Posted in Board Of Intellectual Capital, boic, Business models, Distressed IP, Economy, Gerbsman Partners, Investments, Market research, Strategy, Venture Capital, tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , on June 12, 2009| Leave a Comment »

Here is an interesting post by Arhtur Laffer at Wall Street Journal.

“The unprecedented expansion of the money supply could make the ’70s look benign.

Rahm Emanuel was only giving voice to widespread political wisdom when he said that a crisis should never be “wasted.” Crises enable vastly accelerated political agendas and initiatives scarcely conceivable under calmer circumstances. So it goes now.

Here we stand more than a year into a grave economic crisis with a projected budget deficit of 13% of GDP. That’s more than twice the size of the next largest deficit since World War II. And this projected deficit is the culmination of a year when the federal government, at taxpayers’ expense, acquired enormous stakes in the banking, auto, mortgage, health-care and insurance industries.

With the crisis, the ill-conceived government reactions, and the ensuing economic downturn, the unfunded liabilities of federal programs — such as Social Security, civil-service and military pensions, the Pension Benefit Guarantee Corporation, Medicare and Medicaid — are over the $100 trillion mark. With U.S. GDP and federal tax receipts at about $14 trillion and $2.4 trillion respectively, such a debt all but guarantees higher interest rates, massive tax increases, and partial default on government promises.”

The story concludes…

“Alas, I doubt very much that the Fed will do what is necessary to guard against future inflation and higher interest rates. If the Fed were to reduce the monetary base by $1 trillion, it would need to sell a net $1 trillion in bonds. This would put the Fed in direct competition with Treasury’s planned issuance of about $2 trillion worth of bonds over the coming 12 months. Failed auctions would become the norm and bond prices would tumble, reflecting a massive oversupply of government bonds.

In addition, a rapid contraction of the monetary base as I propose would cause a contraction in bank lending, or at best limited expansion. This is exactly what happened in 2000 and 2001 when the Fed contracted the monetary base the last time. The economy quickly dipped into recession. While the short-term pain of a deepened recession is quite sharp, the long-term consequences of double-digit inflation are devastating. For Fed Chairman Ben Bernanke it’s a Hobson’s choice. For me the issue is how to protect assets for my grandchildren.”

Read the full article here.

Others covering this story include: NCPA, Market Guardian, Bully Pulpit.

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