Professor Elam

Accounting & Investing Info for San Antonio A & M

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  • Professor Elam

    A 1930s Stroll Down the Runway

    Picture 5Socionomics holds that popular culture determines what happens in the markets. From my friends at the Socionomics Institute, here is what we mean by that. Ralph Lauren's latest design are strictly Dust Bowl Era.

    Henry Fonda wore such outfits in The Grapes of Wrath about the Depression, here we go again. Fashion trends, music, and even musicals (remember my post on Witches?) all reflect the popular culture. These believes come together and are reflected in the markets. 

    I see that torn jeans are also fashnionable, no wonder, more than the jeans will be torn by the time this bear market is over. ….see our recent post on defaults on NYC apartments.

  • Professor Elam

    News from the Deflation Front

    Colorado will LOWER its minimum wage due to cost of living decreases

    Analysts downgrade grocers and other retailers over developing price war.

    Amazon cuts book prices to match Wal Mart-note to students, how long before this hits the textbok aisle I wonder?

    I have asked many of you to re write your papers on banks and REITs, does this information change your views on the outlook for the ecomomy?  It should, lower prices means lower profits as the battle for market share in a shrinking retail environment heats up, it is clear to the chains that, as I have told you, everyone will not survive this, only the biggest market share which can make it on ever lower margins. 

  • Professor Elam

    The Real NFL

    We have discussed the new Cowboys Stadium in class. I thought you would find these observations from the latest Richard Russell Dow Theory Letter interesting, he is quoting Bloomberg. 

    I've been wondering about professional football and the NFL. How can the NFL continue to pay those HUGE salaries to players? That's going to end. An article in the current Bloomberg magazine is entitled "The NFL's Stadium Binge." The league is loaded down with debt from building revenues filled with luxury skyboxes. With tickets to game still unsold, owners are pushing for a new labor deal with players. The average price of a premium ticket to an NFL game is now an absurd $226 — and owners are having problems filling their stadiums. 

    The NFL has been on a costly borrowing spree to build or renovate 24 stadiums. The NFL and team debt in 1996 was $2.0 billion. In 2009 is was $9.0 billion.

    Russell Conclusion – Ticket price will have to come down, the owner's take in football will be reduced, and a new pact will whack players' salaries. The 2011 season may start and end with an owners' lockout. Fun's over, and the NFL's money fantasy is hitting a brick wall of massive debt and reality.

  • Professor Elam

    More Deflation

    Market watch reports that for the first time, since records were kept apparently, rents have decreased.

    Socical security recipients are not expected to get a cost of living allowance, COLA, for the next two years given the drop in consumer prices.

    this is Bernake's worst nightmare, real deflation, people not spending money. 

  • Professor Elam

    Price Drop for Laptops

    HP will re vive the Compaq name with a new series of larger laptops starting at $399.

    Frankly the smaller laptops wiht the ten inch screen make much more sense as they are so much easier to carry around, the essential point of a laptop. But deflation reigns, prices keep falling as manufacturers pull out all the stops to lure buyers into buyng something.

  • Professor Elam

    CMBS, Huh?

    Picture 1

    THat would be a commercial mortgage backed security. And the photo above is of the 11,000 apartment units apparently going into default for the owners of these CMBS.

    The previous post was of a small strip center in San Antonio, this is the big time. Click on the article and take a look at who is losing on this deal. Yes that would be the California Pension for the State CALPER as well as their California Teacher Retirement, even the Church of England is losing on this one. 

    This is what I meant by the downward spiral. A property defaults, the holders of the debt lose their principal, the property goes to foreclosure, what to do, auction, if so, to who, there is no credit and certainly no more buyers for another CMBS. Note the tenants fought an increase in their rents, so now who will maintain the property, careful what you wish for! 

    This is why I assigned papers on the banks and REITs, you will recall I returned most of those papers for a re write, most of you naively assumed everything would now magically be okay, I suggest you do more macro research!

  • Professor Elam

    Architects Update the New Building

    P1010008

  • Professor Elam

    The Photo Worth the Thousand Words

    P1010015

    This photo says it all about. The former tenant was apparently in the Mortgage Lending Business. The storefront is now vacant and for lease. This is one of four vacancies in a seven unit small strip off 281. Look for more and more commercial vacancies. Now banks are not lending to developers. If the owner is looking for another loan when the loan against this property comes due, well, there will not be anyone to lend. This will only hasten the downward spiral of real estate prices. I have no idea what the financial strength is of this owner but properties with debt against them are in for hard times. 

  • Professor Elam

    Americna Bankers Convention, where’s the Chicago Seven When you Need ’em?

    This article suggests a protest at the ABA convention in Chicago Oct 25, and for good reason.

  • Professor Elam

    Stossel on Michael Moore

    John Stossel will soon have his own show on Fox, he takes a look at M Moore's movie on Capitalism. 

    Ironically Moore got started with a $160,000 home grown film entitled Roger and Me. He attempted to interview then GM CEO Roger Smith about the closed factories in Michigan. That was in the 1980s, things are not better now in Michigan. Is there a pattern here?  This is yet another echo of my comments about the New Civil War. I suspect that Mr. Moore really liked the 1960s when with over 50% of the US market, GM and the other Big Two could indulge the Union fantasies that they could earn above market wages for rather average labor. The arrival of other manufacturers in the Right to Work States made this a hopeless business model, something Michigan has yet to grasp.