It is difficult for an old, economic fundamentals dog like me to let go of the bone I’ve had in my mouth for so long. Every day, I feel the grip my teeth have on the bone and I want to chew. So, without gnawing crazily, let me just point out a couple of important economic data points that, well, need to be pointed out so one can have a better picture of what is coming, economically speaking, that is.
- Three years after going cap in hand to international lenders, Ireland is set to step out on its own again, becoming the first euro zone country to exit its bailout program.
- Spain continues to experience green shoots of recovery, with industrial output beating consensus for a drop of 1.5%, rising 1.4% on the year in September after falling 2.1% in August.
Europe has come a long way, baby. Ireland and Spain, two of the original five bad apples in the European basket, are finding their way back from economic depression. Portugal founds it positive path some time ago, Italy, the country with the least amount of economic problems, relatively speaking, is still treading water, and, Greece, well, it is Greece, a basket case to say the least. Oh! Speaking of Europe …
- French technology consultancy Capgemini kept its full-year sales and profitability goals on Thursday as revenue returned to growth in the third quarter amid improving demand in Europe, notably in its core French market.
The thing to know about Capgemini is Europe’s largest IT services group by market value. This is one big enterprise serving a host of businesses across the continent. True, its return to growth is important, but more important to the market is an expansion in European IT means and expansion in European R&D, which means an expansion in European product development. This means more competition at all levels, particularly, at the technological level.
- Look more closely at Bezos’s company [Amazon], though, and its strategy becomes clear. Amazon is constantly plowing cash back into its business. Its secretive advanced-research division, Lab 126, works on next-generation Kindles and other mobile devices.
Amazon is an amazing creature. It rarely makes money, but its market cap is huge. More importantly, the fact that it keeps plowing money back into R&D means the rest of the technology sector has to keep up, which pushes the whole transformation forward faster.
Of course, all this completion and product development leads to battles in the industry. Apple has made enemies of Google and Microsoft, and now it has another giant coming after it.
- Samsung Electronics Co Ltd vowed to double its dividend yield, invest in new technology and boost marketing as it sought to topple Apple in the mobile devices segment.
Again, the topic is mobile devices, as it should be. Mobile devices are the epicenter of computer technology evolution right now. There is “gold in them thar” mobile device hills, and where there is gold, there is ambition, and where there is ambition, there is greed, which means someone will probably make some money.
- Samsung Electronics Co believes the high-end smartphone market may grow stronger than expectations, defying concerns that growth in the upper-end of the market will taper off sharply due to near saturation in many advanced countries.
Technology is creating opportunity, but so is the energy sector as well. The natural gas revolution is leading the way (right now), so, as long as it is, keep looking for opportunity there.
- Despite natural gas reserves estimated at more than 41 trillion cubic feet, Tanzania experiences frequent power outages, as it is heavily reliant on hydropower capacity and fuel-run generators. China is financing a $1.2 billion 532km natural gas pipeline from the southeast of the country to the commercial capital Dar es Salaam.
Again, who is making and selling all the equipment and supplies needed to build this billion- dollar pipeline?
Finally, one more small gnaw on the economic bone …
- Government spending grew for the first time in a year, even though federal spending continued to decline. Economists say this fading fiscal drag would have set up the economy on a stronger growth path in the fourth quarter, were it not for the government shutdown.
- The housing market appeared to weather a spike in mortgage rates, with spending on residential construction increasing strongly.
It is hard, really hard, to let go, but even so, the fact remains that, ultimately, economic fundamentals drive the market. Given this, no matter what excursions I take to find opportunity, I will always keep one eye on the source, just in case a storm is brewing.
Trade in the day; Invest in your life …
