Rare to feel good about an investment bank these days, even more rare to have so much to celebrate on the news that bankers are once again making money – but that is exactly what took place yesterday following the (much) better than expected release of earnings from JP Morgan, pushing markets higher than even the more optimistic out there had anticipated, bringing a return to the 10,000 level for the Dow Jones for the first time since 10,000 BLC (Before Lehman Crash) back in late-September ‘08. We’re waiting for Goldman Sachs (not too worried about those business men, ahem I mean investment bankers, making money) and Citigroup (no comment) to announce later today. Confidence spreading as money continues to flow into the system. How else would a Hong Kong property development set a record price of $9,200/sqft so soon after the apparent-end-of-the-good-times?
On the geopolitical front, more unfortunate attacks in Pakistan despite continued government calls that the fight will be taken to the Taliban, rather than vice-versa and as is actually happening – reports that the Taliban’s finances are in strong shape (outdoing “dwindling” cash belonging to Al Qaeda, ironically they must have gotten caught-out on those CDOs as well) suggests there must be growing US concern that the fight is shifting away from their sphere of immediate “influence” (whatever that may actually mean considering the mess in the region) in a nuclear-armed nation. Endless headaches in Afghanistan and a still less than satisfactory result in Iraq a good eight years after the start of the muddled Middle East initiative, now inherited by and hindering a rapidly demoralised administration belonging to a once-bright-eyed President. Hitting the basketball court ain’t gonna solve all of these problems. Some respite and a sign people do actually listen to world-leaders? Some of the greediest and most cut-throat of investment banks have signed up to the bonus and payment guidelines recommended by the G20, severely restricting pay as it used to be. As if poetically called upon in a momentous allegory of the crashing-of-the-ice, experts predict the Arctic will no longer have any significant ice-formations during its infamous winters within 10yrs – will bankers still exist in 10yrs though?
Numbers game…
How much significance is in a number? Apparently, it takes 10,000 hours of experience before someone can be deemed an expert in a particular field – it took Bill Gates 10,000 hours of programming before he stumbled upon his world-conquering operating system in 1980, and the Beatles put in an astonishing 10,000 hours of practice on street-corners in Hamburg before returning to Liverpool and leaving the rest to history. We’ve had 10,000 years of the human species (if sitting around grunting and playing with sticks counts for the first few thousand), but certainly there we’re a long way from being regarded as anything near masters in our own social plight for perfection – and no, Giselle Bundchen appearance “perfection” is not what I’m going for here – although she does come pretty close I have to say.
So what’s the big deal when markets hit 10,000? The Dow Jones last night returned to a level only last seen around the time of the Lehman crash. With Gold and Oil still trading at 2yr highs ($1,055/oz and $75.6/brl), currencies moving around more than a Dubai-driver’s lane preference (1 Euro now buying just-about $1.50, having appreciated 3% this week alone) and still overhanging talk of disappointing fundamentals in the near-future, the opportunity for markets to take refuge in the (albeit manipulated) earnings recovery working its way through the latest results is being taken full advantage of. Those fund managers and investors are simply not giving in to the bears right now. Why should they, many will say, what with key industries and blue-chips smashing home-runs with analyst beating forecasts. Beware the art of manipulation others would warn. All is not as it seems, not matter how much you are enjoying it now. But that is talk for another time, a good mood is prevailing at present, and no one likes a party-pooper I’ve been told (you know who you are out there!).
Considering the 10,000 hour rule again, we’ve had 385 days since the last time we saw the Dow at the 10,000 level – that’s almost 9,300 hours of practice-to-get-perfect and dealing with the shock of the fall of many aspects of capitalism in one fell swoop – investors are likely to be reaching that magic level of experience (only another 700 hours to get through now) whereby they become comfortably versed in the skill of negotiating the quagmire of political destruction and national debt levels soaring higher than that ugly building in North Korea that never seems to get fully built.
Not-so-square-feet
How did that Hong Kong property manager, as reported above, rake in such an incredible price per square foot? Has it been 10,000 hours since the bottom of the Hong Kong property market (maybe), but another aspect of numbers and more notably “playing-with-numbers” was instrumental in facilitating the eye-popping figure. The property is on the “68th floor” of a 40-storey building in the Mid-levels district – a marketing trick made possible by the developer’s decision to omit 47 floor numbers. Traditionally, only floor numbers considered extremely unlucky in Cantonese culture, such as “4” and “14”, are skipped. The US does it too, although it hasn’t seemed to work for Enron, WorldCom or Bear Stearns - all of whom had no 13th Floors in their buildings. The 68th floor carried a very positive “good-luck” symbol for the Hong Kong buyer, and many are hoping that this marketing-numbers-trick will be replicated for some time on the markets as the 10,000 sinks in.
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