PMI, ISM, ADP and jobs, 99 cents, Your Private Jet, Bits & Pieces, and who was Shigeichi Negishi?
Economic Talking Points
There is the economy, and then there is the stock market. In the long term, they generally go in sync. In the short term, it depends.
The economic news this week was pretty good.
While the PMI – Purchasing Managers Index – was down slightly indicating a slight negative trend, the ISM Manufacturing index passed 50% for the first time in 17 months.
The ISM is a measure of confidence and for the first time in a while, confidence is positive among manufacturers. This is a good sign for the economy. So of course, the stock market dropped. Good grief.
While this is good news for the economy, it could mean that the Fed delays lowering interest rates. And the stock market doesn’t like that.
High interest rates mean two things for businesses:
Higher interest expense which eats into earnings.
Competition for investments. Higher interest rates mean that folks keep money out of the stock market and put it into 5% certificate of deposits in the bank.
So any sign that rates won’t be going down impacts the stock market negatively unless the economic news is so good that it can’t be ignored.
So the good news that manufacturers are optimistic drove down the stock market, and by extension, your 401k.
Other highlights include:
Factory orders were up 1.4%, higher than expected.
ADP jobs report exceeded expectations significantly, coming in at 184,000 vs. 155,000.
That was also good news for the economy and that kept the stock market down for the second and third straight day.
Initial jobless claims came in higher than expected, helping the market slightly, but on Friday, the kicker was the jobs report.
303,000 people found employment, the highest number in almost a year.
Oh, and unemployment went down from 3.9% to 3.8%.
Strong economy. The news even drove the stock market up, in spite of itself.
Good news is good news, even if interest rates could stay up.
99 Cents Only
Not any more.
In 1982, David Gold started the 99 Cent Only stores.
At the time, dollar stores were dumping grounds for ‘stuff’, but the Gold family organized and brightened up the stores with good quality merchandise.
In 2008, they couldn’t stay at 99 cents only and had to do a price bump on some items. That did not stop them from selling the chain in 2011 for… wait for it… $1.6 billion.
The Gold family completely exited the company in 2013.
11 years later… 99 Cent Only stores is closing all 371 stores, citing the impact of covid, inflation, rising wages and shrinking inventory.
That’s not to say that the inventory is coming in smaller sizes; it means that it is disappearing off of store shelves.
It is California after all.
“99 Cent Only Stores: Prices born here and raised elsewhere.” That was their slogan.
The liquidation sales started last Friday .
It’s Tax Time! If you were thinking of getting a corporate jet (and who isn’t!?)
This piqued my interest if only to hear about more 1st world problems.
The IRS has started a program to audit the personal use of business aircraft owned by large firms and individuals.
It seems that some folks use them for personal use. Shocking.
Among the items they will target:
Proper allocation between business and personal use.
Executive reimbursement to the company for personal use.
In other words, just like any other asset, such as a home office or your car.
Except it’s probably a bigger red flag.
Things they are looking for:
Flight logs, passenger manifests, miles flown, and the purpose of the trip.
Just in case you were thinking of getting a corporate jet.
I’m thinking they will also target the owners of the single prop Beechcraft Bonanza.
After all, a plane is a plane. I just imagine it’s more fun in a G5.
Bits and Pieces
What’s in your wallet? Pretty soon, maybe a Discover Card.
Capital One has proposed a $35.3 billion acquisition of Discover Financial. If approved, the new company would have $630 billion in assets.
The keywords are ‘if approved.’ No one in Congress is excited about it.
Existing home sales rose 9.5% in February, the highest in a year.
Commercial Real Estate delinquencies hit 1.68% in Q4, up from 1.5% in Q3. They have been rising since 2022.
That has to be making some banks nervous.
March Madness – men and women – will generate $2.7 billion in bets. That’s double the handle on this year’s Superbowl.
The beneficiaries are DraftKings, FanDuel and BetMGM, available in 38 states.
Just not California. Just ask Shohei Otani. Or his interpreter.
… I’m sorry, too soon?
Who was Shigeichi Negishi?
The short answer: a professional salesman with what he thought was a good voice. And proud of it.
The long answer:
Born in 1923 to a bureaucrat father and a tobacco-selling mother
As a child, he was known to build cityscapes out of cardboard and, at age 11, won a nationwide competition for his brush and ink calligraphy.
That’s a big deal.
While at Hosei University, he was conscripted into the military.
He became a prisoner of war, and upon his release in 1947, he went home and began selling Olympus cameras.
He started his own company in 1956 that assembled consumer electronics.
Commonly singing at the office, he was ribbed for being a lousy singer. He thought, “If only they could hear me with a background track!”.
The eureka moment.
He instructed one of his engineers to wire together a microphone, speaker, and an 8-track tape deck and then popped in an instrumental recording of a current Japanese crooner.
It worked, and they put flashing lights on the front of the machine and called it the Sparko Box. Thus was born the very first karaoke machine.
He partnered with a friend and went door to door to hotels, bars, party rooms, and other venues, ultimately selling 8,000 Sparko Boxes.
By 1975, he was burned out by the sales and the maintenance of the machines, and exited the business. There is only one Sparko Box left.
Mr. Negishi passed away in January at the age of 100.
I’m guessing he knows all the lyrics where he is now.
Many people have great ideas and even go so far as to design and manufacture the product. But many fail at the last step: selling the product. One of the impressive things about Mr. Negishi is that he went door-to-door, cold calling for prospects and then converting them into customers. Sales professionals call that “wearing out shoe leather.” I’m guessing he went through a LOT of shoes.
