Wal Mart targets new segment

Wal-Mart built its empire on enormous stores in suburbs and rural towns. But now the company wants to penetrate a new market, the nations dense cities. Over the past few years Wal-Mart has slowed the opening of superstores, from 132 in 2007 to just 49 in 2009. The company is looking to reach the metropolitan consumer by opening more efficient formats. They are talking about store of about 15000 square feet, maybe with drive through lanes. It just goes to show you that even if you are the biggest, a company must always be looking to expand and innovate.

Goldman shorts mortgage market

It seems Goldman had a pointed objective to short the mortgage market and made $3.7 billion in the process. Hopefully, the government will come up with finance reform that will prevent this from happening in the future. Goldman will go in front of the Senate and will be asked hard questions to prove that they were planning to short the mortgage market. The Senate will be looking at emails to prove their point. Goldman was doing what companies do. They play within the set of rules or no rules to maximize profits. The problem with the finance community there are few if any rules and that's what needs to be changed.

The sun will come out tomorrow

What a difference a year can make in the life of a company. GM has repaid $6.7 billion in U.S. government loans ahead of schedule. When these bailout loans were granted many Americans, myself included, did not think they would ever be repaid. As a matter of fact, many people thought the U.S. government was going into the car making business. Even Chrysler reported a first quarter operating profit and boosted its cash reserves. This bailout strategy appears to be working. Not only did it help the companies involved but it definitely save many jobs, which helped the economy recovery at a quicker pace. Don't get me wrong we are not out of the woods yet and the $6.7 billion payback is only a small portion of the original $50 billion bailout. However, it is a step in the right direction and the sooner the auto makers recover then the sooner the entire U.S. economy will recover. Support America go out and buy a car built in America. That doesn't mean you have to buy an American brand car, Toyota is built in America.
These manufacturers add to the economy also.

Retail Recovering

Economy may be rebounding faster than anticipated. There was an increase in March retail sales of 1.6%. This boost in retail sales is giving forecasters hope that the 8.2 million jobs that have been lost since the recession began may be coming back. Some believe we are underestimating the strength of the recovery. Historically, long recessions are typically followed by steeper recoveries. Many economists are stating that their growth forecast for the next 18 months was probably too low. After the retail report came out the Dow Jones Industrial Average rallied to over 11000, which was up 7.6% over last year at the same time. This was the largest increase since July of 2005. Although many factors that have held the economy back, like bad debt, wounded banks, and many foreclosed homes, still prevail, the outlook is positive. The Federal Reserve appears to be keeping interest rates low in order to shore up growth. This may cause inflation adjusted spending to rise at a rate of more than 3% instead of the forecasted 2%. Hopefully, this increase in spending will be supported by increased incomes so that the U.S. won't be back in the cycle of bad debt and a tight money supply. Only the future will tell. I say Americans go out and buy a new car, go out to dinner, remodel your house, and go on vacations.
Keep the economy growing.

Company's boost advertising budgets

Makers of basic household goods are boosting their advertising budgets for 2010 in hopes of getting the U.S. consumers to start spending. Although retail spending is on the rise, consumers are not spending those dollars on every day household items. Consumers are more likely to eat out or buy new shoes than buy basic products. Brand manufacturers are developing new improved products to entice consumers to spend. However, they need to get the word out and the way to do this is increased advertising to sales ratio. Currently, consumer product manufacturers expect to spend 9.7% of sales on advertising for 2010, up from 8.6% in 2009. P & G plans to increase advertising 20% in 2010. Not only are the companies spending more in advertising they are coming out with record new innovative products and improvements to products. The manufactures have to overcome the sharp rise in private label and store brands which is becoming a buying pattern for consumers. This additional advertising spending will test the theory that boosting the brand's share of advertising beyond current market share will increase its market share. These manufactures have their work cut out for them trying to convince the consumers that their products have more value than cheaper store brands.

China is key market for auto makers

GM had a 68% increase in sales in March 2010 over March 2009 in China. They actually sold more cars that month in China than they did in the U.S. For the entire year, the U.S. market is still the largest for GM; however, China is gaining fast. The China market is putting up fantastic monthly increases like 68% or 71%. This ever expanding global economy is good for global vehicle manufacturers because when sales are down in one market, another market may be up and carry the company. Not only has China overtaken Japan as the world's largest vehicle manufacturer, they have overtaken the U.S. as the world's largest auto market by units sold.
The small cars seem to be selling the best in China. This is probabtly due to tax incentives from the government and fuel efficiencies. This whole scenario reminds me of the early 1980's and Japanese cars invading the U.S. market. Who says American made cars aren't fuel efficient the Chinese seem to think they are.

I Pad on Letterman

I saw David Letterman using an I Pad to read his que cards last night on his television show.
This is huge advertising for I Pad. I am sure they gave him this for free. However, I wonder if they paid him to feature their new product. This exposure had to be tremendous and will reach
the target segment that stays up to watch the David Letterman show.