2012年9月22日 星期六
2012年6月23日 星期六
Should the Fed Open a Brokerage Account?
It wasn’t so long ago that the Federal Reserve left at least some things to the imagination. Was the central bank going to hike rates? Or ease? Did the addition of an adverb in its outlook statement mean it was about to go hawkish? Alan’s Greenspeak was so painstakingly premeditated that it was sanitized of any specific meaning; financial pundits tracked the size of his briefcase.
One Great Recession later, the Fed has pretty much dispensed with that mystique. Chairman Ben Bernanke has pursued three-plus years of zero-interest rate policy, with repeated telegraphing that drinks will stay this cheap until at least 2014. Then add QE1 and QE2 for an extra $2.3 trillion of stimulus. Not good enough? Throw in Operation Twist. And now, Twist, Rinse, and Repeat, even as interest rates just touched record lows. Bernanke has done everything he can to boost this sickly economy.
Or has he?
What if the Fed were to buy stocks? It already buys mortgages—just one way Bernanke constantly blows kisses to the housing sector. But Tobias Levkovich, a strategist with Citi Investment Research, notes that stock market changes have more correlation to consumer shopping activity than changes in home prices. He calculates that the top 20 percent of income earners (who happen to own 90 percent of stocks) account for nearly 50 percent of discretionary consumer spending in the U.S.
Roger Farmer, chairman of the economics department at the University of California at Los Angeles, has been outspoken on the need for the Fed to get more creative by purchasing equities. He writes (PDF):
The [Fed's] credibility issue arises, because, when the interest rate is zero, there is no way to signal a change of policy to the markets using conventional open market operations. The purchase and sale of treasury bills has no effect on the economy, because, when the interest rate is zero, treasury bills and money become perfect substitutes. Monetary policy becomes like “pushing on a string.” That’s where unconventional monetary policy comes in.
Farmer’s research hones in on what he calls the “transmission mechanism” from Fed actions such as QE to the real economy. He views stock market wealth effects as the most important. As evidence, he notes that the Standard & Poor’s 500-stock index bottomed in March 2009, just as the Fed began purchasing mortgage-backed securities. The ensuing one-year bull run, he adds, sharply U-turned in April 2010—coinciding with the removal of the Fed’s program to buy risky assets. In a recent paper (PDF) entitled The Stock Market Crash of 2008 Caused the Great Recession: Theory and Evidence, Farmer offers evidence that U.S. stock market performance has been linked to employment for 60 years.
The economics professor wants the central bank to cut to the stimulative chase by investing in a broad index of U.S. equities. ”It is not just the size of the Fed’s balance sheet that matters,” he says. “It is the composition.”
Of course, this proposition invites tens of questions. When should the Fed buy? If investors are enjoying a rip-roaring bull market run, should the Fed feel obligated to counter that enthusiasm with well-timed sales? Could mere disclosure of these sales prompt a rush to the exits? (Update: The Fed could only purchase equities if the Federal Reserve Act was changed to allow it to do so.)
Even so, the idea of direct central bank intervention in the stock market is not wholly unprecedented. The Hong Kong Monetary Authority did it in 1998, when shares were melting down amid an emerging markets contagion. The practice is old hat for the Bank of Japan, whose chronic zero-interest policy has hardly been enough to jolt the huge economy out of its prolonged slumber. Farmer’s philosophy got a shout-out by an external member of the Bank of England, who in a recent speech (PDF) called for central banks to more aggressively purchase private-sector securities.
The Federal Reserve buying stocks? As unlikely as it seems, it is impossible to count out. After all, the institution is not even 100 years old. The Fed has experienced a Great Crash, Depression, stagflation and, now, all manner of unprecedented interventions toward a Great Recession that is still not in the country’s rearview mirror.
2012年5月18日 星期五
Nine Things You Should Know About Facebook's IPO
Facebook could be worth nearly $140 billion by today’s market close
The social network priced its shares at $38 apiece, valuing the company at $104 billion. The average first-day “pop” for a technology company is 32 percent; if Facebook follows that trend, it’ll be worth $137 billion by day’s end. But there’s little about Facebook that’s average, including its public offering. This is the technology’s biggest initial public offering and history’s second-biggest IPO, period, and it will raise about $16 billion. Statistics suggests that the first-day pop—if there is one—will be more modest than average.
A lot of the smart money is getting out
Early investors such as the venture capital firm Accel Partners are selling an unusually high number of shares. Nearly 60 percent of the stock sold today comes from insiders, compared to 37 percent for Google (GOOG) when it went public in 2004. Goldman Sachs (GS) is selling about half its stake, far more than the firm initially planned. “If you really thought that 12 months later the stock would be 50 percent higher, you wouldn’t leave that on the table,” Erik Gordon, a professor at the Ross School of Business at the University of Michigan, told Bloomberg News.
To justify its valuation, Facebook will need to annoy its users …
Thanks in large part to General Motors’s (GM) decision to de-friend Facebook, there are a lot of questions about the efficacy and future of Facebook’s ad-dominant revenue model. And it has high expectations to live up to: The $38 price gives Facebook a whopping 107 price-to-earnings ratio. (For comparison, Apple’s (AAPL) is around 13.) To dramatically boost ad revenues, the two best options are either to put more ads on the site—which would annoy users—or find more places to put ads. The latter means creating a network of ad inventory across the Web, much the way Google’s Doubleclick sells ads and places them on sites like that of the New York Times (NYT). This would give Facebook far greater reach, but could also give users the creeps. Imagine updating your Facebook status (“Really loving that new Carly Rae Jepsen song!”) and then seeing ads to buy the track Call Me Maybe at every site you visit.
… or do something besides advertising
Currently Facebook’s only source of non-ad revenue is its digital currency, Facebook Credits, which people use to buy virtual goods, such as tractors in FarmVille (ZNGA). During the first quarter of 2012, payments grew to make up almost 18 percent of Facebook’s revenue—close to $200 million in total. Overall, though, fewer than 2 percent of Facebook’s users have bought virtual goods with their payments option. There’s a lot of potential growth, in other words, along with hints that a big online operator such as Spotify may begin accepting Facebook Credits in the future.
Facebook has plenty of revenue options beyond payments and advertising
Facebook is a force: It accounts for 9 percent of all online visits in the U.S., according to Experian Hitwise, a company that measures website traffic. Hitwise also says that Americans spend an average of 20 minutes per Facebook visit. Worldwide, nearly 1 billion people have a Facebook profile. As investor Chris Dixon puts it, Facebook has real assets—including “a vast number of extremely engaged users, its social graph, Facebook Connect”—and should be able “to monetize through another business model,” apart from advertising. It could create the Social Smartphone, sell data analytics products, charge for higher-res photo and video storage, or perhaps hawk vintage Mark Zuckerberg hoodies.
There’s already a “Facebook Mafia”
Heard of the PayPal Mafia? Former executives from the online-payment provider have gone on to start big-time tech firms, such as LinkedIn (LNKD), Yammer, and Yelp (YELP). (And one member, Peter Thiel, cut the first big check for Facebook.) A Facebook Mafia has already emerged, and members have founded Asana, Path, and Quora. The Facebook Mafia is real, even though the name could use some work, says Dave Morin, Path’s chief executive officer, who previously developed Facebook’s development platform. “I guess we can’t escape from calling it that,” he says.
Facebook goes where Google won’t in photos
Facebook owns one of the largest photo repositories in the world, and its facial-recognition technology is getting a workout scanning them all, with more than 300 million photos uploaded per day. Facebook stores 60 billion images, a whopping 1.5 petabytes of data. For each uploaded photo, Facebook stores four images of different sizes. The site shows as many as 550,000 images per second. This is an area that has upset privacy critics and represents something that Facebook is willing to do that even Google isn’t: Google’s Eric Schmidt said last year that the company had built an app that would let people snap photos of others and identify who they are but decided not to release it, due to privacy concerns. Google and Facebook both have sophisticated facial-recognition technology, but Google requires users to opt into its photo-tagging service. Facebook users are included automatically.
Facebook’s new campus could be cursed
Late last year the social network moved into a 57-acre site in Menlo Park that was previously inhabited by Sun Microsystems. Sun’s fortunes soured shortly after the computer company took up residence there. The same thing has happened, in different times and places, to software-maker Borland, Silicon Graphics, and even Apple (which nearly went bankrupt three years after it moved into its current Cupertino, Calif., headquarters at 1 Infinite Loop). The good news: Companies that move into pre-existing campuses seem to fare better. Google, for instance, took up residence in SGI’s old digs.
Up north, Facebook is the only thing better than hockey
Facebook is one of the top two websites in every country except China. The social-networking site is most loved in Canada, where it wins 12 percent of all online visits.
With Barrett Sheridan, Douglas MacMillan, Jordan Robertson, Mark Milian, Peter Burrows, Karen Weise, and Caroline Winter2012年4月28日 星期六
Why the Amazon Naysayers Should Be Scared
Another quarter, another blowout earnings report for Amazon.com (AMZN). The online retailer and technology juggernaut blew away analysts’ expectations on Thursday, posting $13.18 billion in revenue for the first three months of the year. The stock is up 13 percent. At this rate, the company will easily become the fastest retailer in history to cross $50 billion in sales for the year (it just missed in 2011). “The March quarterly results showed just enough upside in both revenues and margins to make the naysayers run for cover,” Stifel Nicolaus analyst Jordan Rohan wrote in a research note, sticking the shiv into the vociferous Amazon short-sellers.
The earnings report was yet another rousing movement in the entrepreneurial symphony being conducted in Seattle by Chief Executive Officer Jeffrey Bezos. Everything seems to be going right just now: His company is attracting new customers and third-party sellers, getting existing customers to spend more, and increasing profitability on new ventures such as Amazon Web Services and the Kindle. In the context of those improved margins, its expensive investment in its own operations, normally so disconcerting to Wall Street, now looks much less foreboding. Amazon added almost 10,000 employees in the past three months and now employs 65,600 people, up from 37,900 a year ago. It is building at least 13 new fulfillment centers in the U.S. this year, which will allow it to accelerate delivery and perhaps even expand its nascent grocery-delivery business beyond Seattle.
I say “at least” 13 new centers because there’s new news on that front almost every day. This morning, Amazon and Texas officials announced the company will begin collecting sales tax in Texas by this July and that Amazon will invest at least $200 million in new distribution centers in the state. It’s one more example (California was another) where Amazon essentially blinked in its standoff with a state that wanted it to begin collecting sales tax. Yet Amazon still wins, because it builds the new distribution centers it needs to expand its operations. Bezos has perfected the art of architecting the win-win situation.
Amazon’s founder himself was a no-show in yesterday’s earnings ritual. (Tom Szkutak, Amazon’s chief financial officer, runs the earnings call with an amazingly soporific drone. He could have a bright future narrating Audible audiobooks about medieval history.) One of the most interesting aspects to veteran watchers of Amazon’s earnings report is the quote from the CEO that Amazon includes in its earnings release, because it typically shows what the company wants to draw attention to. Amazon’s two-day Prime shipping club used to get most of the attention. Yesterday, Bezos used the opportunity to flog the thousands of e-books that are exclusive to the Kindle.
“You won’t find them anywhere else,” he wrote. “They include many of our top bestsellers—in fact 16 of our top 100 bestselling titles are exclusive to our store.” Amazon is desperate to put a Kindle in people’s hands, not only to dig a competitive moat around its book business, but to bring customers into the Kindle ecosystem at a time when they might consider entering the digital realms of such rivals as Apple (AAPL) or Google (GOOG) instead. That possibility—not profit margin, investment in operations, and expensive new innovation—is what the short-sellers should be worried about.