Professor Elam

Avatar Top Grossing Christmas Film

James Cameron's $300 M Avatar epic is a box office smash, world wide. Interestingly the number two film, Sherlock Holmes!  No doubt this introduces a whole generation of younger folk who certainly do not read, so seeing Sherlock is the introduction. I have not seen Sherlock but find the description of martial arts stuff (obviously tailored for the younger viewer) to be a departure from the original series. And Nick Cage would be a lot closer physically to the original than shorter Robert Downey Jr. But  I still applaud the idea. 

So what is going on in a down economy? Avatar uses new 3 D technology.  Tickets to Avatar are more expensive because of the technology  and that is helping the box office gross.  IN fact the movie industry did well in the 1930s. For a few cents on could escape the doldrums of the Depression in the movie theater. Movies catered to the whims of the public with both dark side fantasies, Dracula and Frankenstein, gangster movies like Public Enemy, as well as Fred Astaire Ginger Rogers musicals. The latter provided a glittering glamour world to take the public mind off the dreary economy With digital technology to make simple films and the internet available to spread them (think pjtv.com) look for lots of alternative entertainment. This helps explain why video games are such a hit. Once again studying socionomics gives us insight as to what is going on in the popular culture.  

Presidential Dissatisfaction

Wednesday Dec 23, 2009

Barack Obama's disapproval ratings are up to 46%, and this is just his first year. This is no surprise to a student of socionomics, the trend and mood are down!  Remember out template is the period from 1966-1982. We are now well into the 1970s. If Bush was Nixon, Obama is Carter. While Carter embraced different policies than Ford and Nixon, he finally suffered one of the worst defeats ever. The same scenario is being repeated. The only surprise is that political observers are, well, surprised. Note by the way that this is Not necessarily driving voters to Republicans, lest you think I am cheering for Republicans. They too are suffering low approval, the reason is the negative perception of all in office. 

A public enamored with mobsters (the Sopranos won tv show of the decade as reported here yesterday) and vampires (everywhere!) is not enamored with politicians. Indeed, Congress rates lower than the President, and did so during the Bush presidency, nothing has changed!  The claims that housing and the economy are improving which is not the case, will only drive his numbers lower, as they did Carter. 

The parallel of the New York City economic crisis of 1976 is now multiplied, read about Detroit and bankruptcy here. Detroit Mayor Bing admits the actual unemployment rate may be close to 50%.

We suspect a big issue this next year will be city state and university pension funds seeking Federal bailouts. Is a pension fund a bank worthy of TARP money?  Do pensioners vote?  Do taxpayers asked to support pensioners vote? 

2010 is shaping up to be an interesting year to say the least. 

Mediaweek

Tuesday Dec 22 2009

Rush Limbaugh has been named Radio Personality of the Decade by Mediaweek, a leading industry magazine and Web site.  Mediaweek also named Apple’s Steve Jobs as Marketer of the Decade, “The Sopranos” the TV Show of the Decade, Rupert Murdoch the Media Executive of the Decade, YouTube the Web Site of the Decade, Wired the Magazine of the Decade, Apple the Brand of the Decade, Larry Page and Sergey Brin of Google the Media Entrepreneurs of the Decade, and Google the Media Company of the Decade.

This sort of thing is interesting in terms of emerging social trends, a popular topic for this blog. It matters not what you think of Rush Limbaugh, or Keith Oberman for that matter, what does matter is the opinion that large segments of the population have of them. 

For example, there have been numerous attempts to run someone liberal as a popular radio talk show host, Mario Cuomo, Jim Hightower, many try, most like Air America fail. Why?  The assumption is that Rush just talks conservative and that if the other side just talks liberal they will find an audience. Obviously this is not the case. Indeed there are many conservative talk show hosts but Mediaweek notes none of the others come close to Limbaugh in terms of audience. Limbaugh points out that he is a professional broadcaster, it is the content of his show that makes it different. So what is the difference, any thoughts?

At any rate, consider the others in the list. 

Jobs has made Mike Dell eat his words about liquidating Apple as Dell stock cannot rise above $20 and is in Wal Mart selling computers . The i Empire will no doubt spur lots of sales of the upcoming iTablet or whatever Apple will call its reader. The Sopranos tv show foretold the turn to the dark side and the popularity of gangster shows ala our previous template, 1966-82 for the period we are in now. Notably it was followed by True Blood, one show about contemporary gangsters, another about contemporary vampires. Conventional media still does not want to take Murdoch seriously but he did buy the Wall Street Journal, and his Fox News continues to attract and star ex CNN talent. O Reiley is up again this year. You Tube has made every video cam a potential tv studio, can Jay Leno rescue NBC?  I think I will subscribe to Wired, we did post a story about quants from Wired. Apple has created Apple devotees, something that escapes their commodity based competitors that are essentially selling television sets. I view today's personal computer as the new television set of another generation. Interestingly Apple has shown no interest in going down market to compete on price. Wall Street dismissed the Dutch Auction of Google shares, and then it went to $400 a share. Google continues to set the pace.  

A key component of success here is Design. We previously mentioned this with Apple, its elegant designs cascade right down to the packaging. Limbaugh has designed his program his way, it is right there for everyone to hear, why can't they duplicate it?  Note to younger readers, others tried to do the same when Johnny Carson and Ed McMahon were on the Tonite Show, they tried all sorts of guy combinations, none were successful. Letterman, O Brien, and Leno are shadows of that team. Google also has a clean uncluttered design interface. Conclusion, Good Design Works. 

Meanwhile Time Warner threatens to drop Fox, gee does that mean 24?  Time Warner proved its incompetence over paying for AOL resulting in the biggest impairment write off in history, perhaps they can do it again!

Texas Universities Offer Vampire Courses

 Well so much for cowboys and where the west begins, Texas tops the list of US universities offering courses on vampires. Literature, sociology, you name it. UT Austin, the class is now at 250 and growing, TCU, and gads, Texas Tech now offer courses on our they live by night friends. 

You heard it on my blog first. Fascination with the occult goes with the dark side of the downturn in the economy. The fact that interest in vampires is growing tells us we are nowhere near the end of this down cycle. For the time being there are no plans that I know of to offer a credit course on vampires at SA A & M. We will however keep you posted on the blog, well I am tempted to post a vampire analogy but....

Pelham 123

Instead of the latest Tony Scott version, rent the original with Robert Shaw (Jaws, From Russia with Love) and Walter Mathau (yes that Walter Mathau, Out to Sea, The Odd Couple). The newer version has lots of camera motion and even more bad language whether needed or not. Interestingly the original was released in 1974, at the bottom of the stock market.  New York City indeed, was held hostage by its garbage worker union. Less than two years later, the City was broke.  The famous headline as Mayor Abe Beame begged for Federal help, President Ford to CIty, Drop Dead.  Those same scenes are now being played out all over the country and the world, no wonder this movie was re made.

The film has John Travolta making a bet that stocks will plunge and gold soar on the hi jacking of a subway car and threats to kill the passengers. However, it was more than a stretch that the stock market would plunge 450 points or that gold would go to, did I see $87,000?  surely not but again the Director was moving the camera more than necessary. I did mention in class that someone did buy near $2 M of puts on Bear Stearns nine days and $30 out of the money before Bear went broke, the bet paid 159x to one. Now that's a heist.

 It is not however a stretch to suppose that the planners of the 9/11 WTC attack did in fact buy puts on stocks, all over the world, in fact, I simply cannot imagine that someone as shrewd as bin Laden did not do that, financing his schemes for years into the future.

A Trip to the Video Store

Drag Me to Hell is down 23% in popularity this week, well hat's the good news. And the movie, reading the review, does not live up to its name but that is besides the point. The current titles at any video store reflect just this sort of popular genre. In a recent presentation on socionomics, I noted that Public Enemy was a hit in 1930 and that Johnny Depp had just made Public Enemies. All 56 copies of Depp's film were checked out at my neighborhood store. 

But the truth is that the move back up in markets has lifted spirits enough to sell those JPM warrants in the previous post. So we have the mood improved but still rather dark, expect the dark tone to dominate in 2010.

US Treasury Sells Warrants on J P Morgan

THE TREASURY COULD NET $1 billion to $1.2 billion from the sale today of warrants on shares of JPMorgan Chase (ticker: JPM) that it received as part of the government's TARP investment in the New York bank, derivative traders tell Barron's.

The 88.4 million warrants, which carry a strike price of $42.42 and a maturity date in nine years on Oct. 29, 2018, could fetch about $11 to $14 per warrant depending on the assumptions that investors plug into their Black/Scholes option pricing models.

As a matter of fact the warrants fetched $10.75 each for a total of $936.1 Million.  I included the above quote as it mentions the expiration date, ten years it the future, good thing I would say. 

 

Our experience is that selling warrants is usually a sign of a distressed seller, for once though the US Government may have caught the top of a market. Even the monthly chart reveals the highest price ever at DOW 14,000 when markets were giddy for banks was $50 for JPM. Option students will recognize that the $10.75 premium on a strike price of $42.42 means the stock has to rise to , ahem, a never before seen $53.17. Notably J P Morgan declined to purchase these warrants.  The 88 M warrants will trade in the market like any option as a proxy for the future of the stock price. 

But the weekly chart shows JPM turning down, not up. Indeed all the banks have weakened with the XLF weaker and CITI dropping below $4. Volume has been smaller at bottom. It is a real sociomomic feat for the fears of last fall to turn to delight. Are investors saliv;ating over the  prospect of buying options on a business in the most troubled sector of America at a never before seen price?  Apparently so....
 

Goldman Armed and Dangerous

A former managing partner at Morgan remarks on the tend of Goldman partners buying pistols.

I distributed the article about Goldman in class written by Bob Prechter's EWT group. Gee look like he called that one right. As the public mood sours on Wall Street, they will look for the villains behind the curtain, With so many other Wall Street firms gone, Goldman will be at the top of the list. 

Tigergate Update

This is a SERIOUS  post.. Now those of you only interested in the tawdry, salacious rumor sort of thing might miss the serious significance of this post but I will try anyway. Socionomics holds that public figures tend to show their clay feet at the top of markets. Now this has been going on for some time, the market topped in 2000 after all,  and it is frankly all we can do to teach accounting, track the markets, and keep up with various indiscretions. When we last counted let's see

Elliott Spitzer

Kobe Bryant

John Edwards

 and now, Tiger Woods, well wait a minute, all we have are rumors, no wait, as I write Fox TV (we report you decide) is broadcasting taped telephone calls to a woman from Tiger regarding, uh, possible calls from his wife, well we are not TMZ, oh by the way to the left that is Rachel Uchitel with her new attorney to the stars, Gloria Allred, seeking to retain her untarnished reputation via the media......but our point is 

on the way up in markets individuals are idolized. At the top positive mood turns negative, and that mood looks for outlets. No doubt many of you can add to this list but as one of the highest paid athletes of all time, it is interesting that this did not break until the Dow recovered 50% of its loss, and stopped. 

Speaking of figures losing their shine, the President's speech at West Point seems to be the classic compromise, we commit and we are retreating all in the same breath. Read what German Spiegel had to say. Our analog is 1968-1982, a tough time for Presidents of both parties. And that is the way it is working out for this and the last President as well. 

And speaking of heading for the exits, Oprah announces she is exiting her tv show after 25 years. 

That would be an interesting time, 25 years means a 1984 start, right at the bottom of the post 1982 lift off. More on this in another post. 

Prof Elam In USA Today

Okay it's not the Cover of the Rolling Stone but my comments on socionomics quoted in a USA Today article.