January 30, 2008 7:45PM
The Fed, Foreign Markets and Phoenix
By Alexis Glick
Hi guys! It’s me. I’m back. Forgive me for the hiatus over the past couple of days. There was a lot to catch up on and prepare for in anticipation of my trip today to Phoenix.
It’s now 5pm and I’m about to lift off. So the good news is the iPod Shuffle is working. This time it should make for a smoother flight. What is it with me and these marathon trips? Davos, Switzerland and now Phoenix, Arizona for the Super Bowl…..pretty awesome to say the least!!!
So today was an interesting day. The Fed finally did what we expected it to do. It cut rates by half a point and talked down inflation. Much to my surprise! I can’t figure that one out, given all the companies that are reporting in line or weaker than expected numbers because of rising commodity prices. Oh well… not for me to worry about at this time. Three percent on the Fed Funds rate… wow…we’ve made a sharp move in a couple of months!
I had brunch today with my good friend Gary Garrabrant. He’s the Chief Executive Officer of Equity International and Sam Zell’s partner. He’s a very smart guy and every time we meet, I learn something new!!
Today we talked about their real estate investments in China and Brazil. I didn’t realize that there were 170 million people in Brazil and how explosive the growth has been. It’s one of the largest distributors or developers of some of the most common products we know and use. Whether it be beef, ethanol or your everyday grocery items. Honestly I was quite surprised.
How about China? One billion people and growing. Even though growth rates are projected to decline to 8% from 11%, it’s still a terrific long term investment according to Gary. He’s building residential living in major cities to keep up with the growing numbers of Chinese moving from rural areas into urban locations. The real estate market there is bizarre. It’s an open auction market. Full transparency. You don’t do a real estate deal quietly like we do here in the U.S between two parties.
Also the Chinese government has many property laws that would make your head spin. First of all, you have to build on what you buy within one year or face a tax of up to 20% of the property value. Second, if you don’t build on it within two years, the government has the right to take it back. Doesn’t that sound crazy? Apparently, they argue it makes sure that speculators don’t participate in the market. It encourages real buyers because they have to build right away. The disadvantage is that it could impel buyers not to invest in China if they feel that they have to follow the laws or risk losing the land. We talked about the difference between offshore and onshore companies — which ones Americans can invest in and which ones the Chinese fully own. It’s a fascinating world. I’ve never been to Brazil or China. Perhaps I’ll make it to one of them some day!
Oh…how could I forget? Last night I saw the movie 27 Dresses. Loved it! Yes, to all the guys out there, it’s a chick flick but that doesn’t mean it wasn’t great. Ever since seeing Katherine Heigl in Knocked Up, I have been obsessed and in love with her. She is so warm, fun and self-deprecating. And for all you music lovers, the movie has some great classics. Who doesn’t love a movie about brides, weddings and the foolish dresses brides make us wear? Once in a while seeing a movie that is light and charming is a much needed relief from all this recession talk. Believe me!
So let’s get down to the real task at hand. One of two things is going to happen this Sunday: (1) the perfect season and history in the making, or (2) arguably the greatest upset in NFL history. Who wouldn’t want to see one of those happen? And what’s all this nonsense about a 12-point spread? Take it! The Giants will cover! Spoken like a true Giants fan. At this point, we’ve come so far despite insurmountable odds. I’m just psyched that we’re in Phoenix and frankly, I like our ground game. Between Jacobs and Bradshaw, we’ll work those aging linebackers. You’ll see!
“Early in the morning, risin’ to the street, light me up that cigarette and I’ll strap shoes on my feet…………..Lovin’ is what I got, Remember that!”
Sublime’s “What I Got” (first song on at liftoff)!
Comment by Burnsie
Jan 31st, 2008 at 9:36 am
Ahh, the BRIC nations, Brazil, Russia, India and China, showing the world what capitalism “was before it was”. The pace and the scale, tremendous and volatile. It will be interesting to see how long the machines can run, how they evolve. We have to see how they weather storms and the reaction. I hope we can learn some things and our wisdom and experience is valued.
Speaking of capitalism, There Will Be Blood, not a chick-flick (unless the chicks like oil, dirt and blood) but maybe a individual microcosm of some of what BRIC nation’s entrepreneurs may experience. Taking advantage of vastness for opportunity and wealth however, seeing the traits that makes one successful as an ultimate undoing if not evolving. One thing I remember Dick Schulze, chairman and founder of BBY, saying is that he had to learn to be humble after what had gotten him there (the horse he rode in on) didn’t allow for success in the same way. Very wise in business and life. Nothing is more powerful than someone changing their mind and the will to act.
Because the Giants were on such a roll I hope the extended break doesn’t disrupt their path. These guys are pros, it shouldn’t cause problems but you never know. Routine, superstitions, and the like. I don’t like dynasties so I usually hope of the underdog. Go Giants!! Can’t wait to watch the coverage and the game.
In my life I known of 2 women who’ve admitted to listening to Sublime. Their box set rocks.