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August 23, 2009 – Comments (11)

S&P 500 index March 2009 rally in green vs. NASDAQ 100 index January 1987 rally

11 Comments – Post Your Own

#1) On August 23, 2009 at 2:21 AM, portefeuille (99.66) wrote:



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#2) On August 23, 2009 at 3:01 AM, portefeuille (99.66) wrote:

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a guide to my blog posts can be found in the comment section to this post

(should be or should be close to the last comment)                                                                

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#3) On August 23, 2009 at 4:26 AM, checklist34 (99.73) wrote:

are we heading for a black swan kind of sell-off sometime later this year?

what say ye?

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#4) On August 23, 2009 at 11:32 AM, kaskoosek (35.65) wrote:

Idiocy is taking hold here.

 

Port

You are now posting blogs akin to a fortune teller. 

 

Very scientific. I hope this is some kind of joke.

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#5) On August 23, 2009 at 12:02 PM, awallejr (76.63) wrote:

I don't understand why the comparison of these two time periods tho.  January 1987 is a time leading up to its crash.  March 2009 is a time period following major crashes.  Also they revolve around different times and different events impacting their moves.

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#6) On August 23, 2009 at 1:23 PM, portefeuille (99.66) wrote:

This post is just an update to this chart I posted in comment #22 here.

More examples of this "type of rally" are given in this post.

 

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#7) On August 23, 2009 at 9:53 PM, G8BigBoom (67.55) wrote:

Hey portefeuille You are number one in biotech. I realize this most likely has nothing to do with this blog but caps has no real inter communication access to fellow fools. Do you really see Biotech doing much now or in the near future. Also if you dont mind what companies are you watching close and have some profit potential. I really do not have any experience in Biotech but I am starting to hear about it a lot more lately. Any tickers is greatly appreciated. G8

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#8) On August 24, 2009 at 2:54 AM, portefeuille (99.66) wrote:

Hey portefeuille You are number one in biotech.

zzlangerhans is the real expert here. I have some biotech calls among these calls.

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#9) On August 24, 2009 at 4:52 AM, portefeuille (99.66) wrote:

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Singapore July private home sales soar to record high

Mon Aug 17, 2009 4:22am EDT

SINGAPORE, Aug 17 (Reuters) - Private home sales in Singapore soared to a record high for the second straight month in July, indicating increased confidence and speculation in the city-state's property market, government data showed on Monday.

The Urban Redevelopment Authority (URA) website showed developers sold 2,767 private homes in July, smashing the previous monthly record of 1,825 units that was set in June.

Mohamed Ismail, CEO of PropNex, a real estate broker, noted that over 40 percent of sales involved mid to higher-tier homes costing above S$1,000 ($692) per square foot, indicating the boom was no longer restricted to cheaper apartments.

The higher selling prices were also "a result of developers reacting to consumers' demand and raising the prices," he added.

The URA data showed that City Developments (CTDM.SI: Quote, Profile, Research, Stock Buzz), Fraser & Neave's (FRNM.SI: Quote, Profile, Research, Stock Buzz) property arm Frasers Centrepoint and banker Wee Cho Yaw's UOL Group (UTOS.SI: Quote, Profile, Research, Stock Buzz) were among developers with the largest number of sales.

National Development Minister Mah Bow Tan said last month that there were signs of speculation in Singapore's property market and warned the government may step in to calm the market. For stories on concerns about asset bubbles, see [ID:nSP511078].

Private home sales in Singapore, Hong Kong and China have soared since February this year, despite the weak global economy, helped by low interest rates and the huge amount of savings amassed by many households. (Reporting by Kevin Lim; Editing by Neil Chatterjee)

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#10) On August 24, 2009 at 6:15 AM, portefeuille (99.66) wrote:

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Interview with Dr. Jürgen Hambrecht in the German weekly journal Wirtschaftswoche

On August 24, 2009, the German weekly newspaper Wirtschaftswoche published an interview with BASF’s Chairman Dr. Jürgen Hambrecht. In the interview, Hambrecht spoke about a number of topics including the global economy, short-time work, agricultural business and plant biotechnology.

 

You can find the full text of the interview below:

 
„A hostile takeover is possible“

Chairman Jürgen Hambrecht is worried about BASF’s independence, praises SPD candidate Frank-Walter Steinmeier and speaks in favor of plant biotechnology.
 

Mr. Hambrecht, the economy is growing, exports are up, share prices are rising and order books are filling up. The economy appears to be picking up again. But you are playing the part of chief pessimist for German industry. Can’t you give us some good news?

Things seem to have bottomed out, the relative figures are getting better. But that still doesn’t mean anything. These days we are getting excited about growth rates of two, three or four percent, but previously growth had dropped by around 10 percent. I don’t think it’s a strong recovery. This crisis will go on longer than we think. The car scrapping premium runs out at the end of this year - that will hit the auto industry hard. Industry in general is suffering from huge overcapacity. There won’t be a real recovery until that has been removed.


 
But the Chinese economy is growing again.

China too has provided substantial stimulus packages, for instance in the automotive sector, but also in the form of sensible investment in infrastructure. And of course the Chinese are able to implement everything immediately. So we have seen a boost in demand from China. That helps, but it won’t save the day because the volumes we export to China are not large enough. China is a glimmer of hope, nothing more.

 

The chemical industry is a leading indicator for the global economy. So how do things look in other markets? Where can we find hope?

With the exception of Japan, and to a degree Korea, Asia will grow again this year. South America has managed to insulate itself from the crisis relatively well. We are more likely to see growth there than in Europe. North America will climb out of the crisis very laboriously over the next few years. Our hope is that we will start to see positive signs again in Europe as early as next year.

 

And what about Germany? The crisis has officially been over for several weeks now,. GDP rose 0.3 percent between April and June and is likely to grow again in Q3.

The recovery will be anemic. But I do think Germany will come out of the crisis better than other countries. Our industrial structure is stronger than in almost any other country. Lots of small and medium-sized companies are world leaders in their field.

 

…but right now things are pretty gloomy.

I’m afraid we will see higher unemployment, and bankruptcies are rising.

 

Will there be any new jobs in Germany? The SPD candidate for chancellor Frank Walter Steinmeier has promised four million new jobs by 2020. Or are the jobs being lost now gone forever?

That’s not how I see it. In the last 60 years German industry has reinvented itself on many occasions, and there are plenty of technologies in which we lead the world. It’s a huge success story. I am convinced that we will create new jobs. But for that we need to talk about getting the framework right. For instance, we need to take a different view of new technologies like plant biotechnology. We need rational arguments about opportunities and risks, not shrill popularism. Zero risk means zero growth. We can only continue to be successful if we offer new and better products. We need a change in mentality, and we have to get away from this hostility to industry and innovation. The worlds of politics and business have to show what industry can do for people.

 

Then you must like Steinmeier’s ‘Germany Plan,’ which says our wealth comes mainly from industry.

This statement is very positive. I can only emphasize that he is absolutely correct. We have to start thinking harder about the strengths of manufacturing industry again…

 

…having seen the financial sector on the brink of collapse?

With the benefit of hindsight I see huge differences in the way the real economy and the financial sector approach risk assessment. At BASF, new products are tested thoroughly before they come to market. If the banks had done the same thing with so-called structured securities, we would have fewer problems today. I shudder when I hear the term ‘structured securities.’ I’m a scientist, and my understanding of ‘structured’ is something completely different.

 

And those same people who gambled with them now no longer have enough capital or confidence to lend to companies facing hard times.

I think the banks are right to apply stricter standards now. But at the moment they have an ultra-safe mentality. This is putting the brakes on the real economy. If there is one positive thing to come out of this crisis, it’s the fact that companies no longer just finance themselves with bank loans; they are increasingly borrowing on the bond market. However, there is absolutely no doubt that we are in a phase where it is harder to raise cash.

 

Are you afraid that the government’s increasing need for funds could take money away from companies?

That’s something we shall have to watch very closely. The risk is relatively high.

 

Will that affect BASF too?

No, BASF has relatively good ratings and so far we have had no problems placing our bonds in the market.

 

There are already a lot of people working short-time at BASF’s sites in Münster and in Schwarzheide in the east of Germany. Should your staff be worried about these facilities being shut down completely?

Shutting down our sites in Münster and Schwarzheide would be nonsense. We have temporarily idled various plants, including a central one in Ludwigshafen, one of a pair of crackers that convert naphtha into starting materials for a host of BASF products. I can’t say when this cracker will be restarted.

 

While plants in Ludwigshafen are being idled, you’re expanding your site in Nanjing, China. You’re investing a hefty $1.4 billion there with your partner Sinopec.

You can’t balance Ludwigshafen against Nanjing. That's not the way it works. BASF has also shut down facilities in China, Japan, the United States and Korea. We're not closing down here and opening up again in China. What we produce in China is almost exclusively for the Chinese market. That market is growing, so we are investing there. But that doesn’t result in jobs being lost in Europe. It would make absolutely no sense to produce in China for Europe. The shipping costs and the raw materials costs are far too high for that. It is very important for companies to manufacture where their customers are located. That’s the only way to be close to the customer, react flexibly and offer tailor-made products and system solutions. That’s how German industry can still score points against the global competition.

 

But BASF is in the middle of a crisis; you are heavily dependent on troubled sectors like autos and construction. Shouldn’t you be reconsidering your industry mix?

The crisis is affecting us, and this year we probably won’t earn our cost of capital. Autos and construction each account for 10 to 15 percent of our sales, otherwise we are broadly diversified and I see no need to reconsider our industry mix. What we are thinking about is innovations for cars, lightweight plastics and better catalytic convertors. We are working on important components for electric cars and have made a commitment to fuel cells. We will still make a lot of money from products for the auto industry.

 

Hasn’t BASF underestimated the crisis? In autumn 2008 you had to issue two profit warnings in close succession.

We made internal preparations in good time. We were certainly the first in the industry to react and shut down plants. But I will be the first person to admit that what then happened was worse than I could have imagined.

 

You announced the takeover of your Swiss rival Ciba for €3.7 billion on the very day that Lehman Brothers went bust and the financial crisis took a serious turn for the worse. You would have paid a lot less if you had waited a few weeks.

We stick by our agreements. We have a long-term strategy. Ciba is facing a tough restructuring program that will take time. But you will see that Ciba, with its high-value pigments, additives and UV filters, is a logical addition to BASF. Our new colleagues from Ciba are working hard. The integration is running smoothly and according to plan.

 

BASF has several billion euros in the bank and a lot of companies are cheap. Do you have any further acquisitions planned?

First we have to sort out the crisis and integrate Ciba. We won't be making a major acquisition like Ciba, that would overstretch our capacity.

 

Looking at things the other way round, are you afraid that a mighty fund or financial investors could buy BASF? Your market capitalization is relatively low at just over €30 billion.

They would have to pay €70 billion, twice the market price. They would need the money up front, and the banks would have to lend it to them.

 

BASF holds €3 billion in cash. Investors could split off the oil and gas business and sell it.

It’s not hard to work out that that is not enough to finance a takeover of BASF. But yes, an attack is possible, no question. Our shares are widely held. Just like other companies, we are always thinking about this, and we have come up with a defense plan with the help of our advisers. But our most important defense has to be this: We have to be better than everyone else. And that’s what the whole BASF team is working on.

 

BASF used to always be mentioned in the same breath as Bayer and Hoechst. Hoechst has more or less disappeared. Bayer has spun off a lot of its chemicals business and concentrated on pharmaceuticals. Bayer is more profitable and has a higher market capitalization. Does that irritate you?

It doesn't annoy me. There have been times when our market capitalization has been greater than that of Bayer. Nowadays the two companies are completely different. Bayer is essentially a healthcare group…

 

…and thanks to the pharmaceutical business it can enjoy a degree of shelter from the economic downturn. Do you regret that BASF sold its pharma business years ago?

No, that was the right thing to do. We see ourselves as a chemical company – nobody is good at everything. Any anyway, there are risks even in the healthcare business.

 

What ideas do you have to make your company less cyclical?

Amongst other things, we will significantly expand our agricultural solutions business with crop protection products and above all with plant biotechnology.

 

The agricultural business makes up only 5 percent of BASF sales. Both Bayer and Syngenta of Switzerland are ahead of you.

You are absolutely right as far as sales are concerned. But when it comes to profitability, we are doing better. And our agricultural business will grow rapidly. Plant biotechnology is going to be a big business. We are working with our partner Monsanto on plants that have a higher yield and that can survive in dry, salty soils. In parts of Africa and China there are already entire regions that have scarcely any water left. We will have the first applications between two and four years from now. At that stage this area will see huge growth and become a new division of BASF. By 2020, BASF and Monsanto could be generating market value of well over €1 billion with plant biotechnology.

 

It’s going to be some time until we reach that stage. What specifically is BASF working on right now?

We are analyzing genes and can predict precisely which genes have what effect in plants. Some types of moss can survive several years of drought. We can extract the relevant genes and put them into corn, for example.

 

And we end up with biotechnology on our plates.

How else do you propose to feed people in future? There are 6.7 billion people on the planet today. Within 20 to 30 years, there will be nine billion. The area of land under cultivation is no longer growing, it’s contracting. So we have to make better use of the area we have. Without plant biotechnology, the day will come when the human race can no longer feed itself.

 

You have a partnership with the U.S. company Monsanto. BASF pays 50 percent of the costs, but only gets 40 percent of the profit. How come BASF is being squeezed like this?

Monsanto and BASF both conduct their research independently. The two partners put their best research findings into joint, i.e., 50-50, development. Monsanto is contributing its valuable seed bank and carrying out the field testing. However the marketing, with all the costs that involves, is being done solely by Monsanto. That’s why the profits are being allocated accordingly.

 

Monsanto is treating BASF as a junior partner.

That’s nonsense. This is one of the best partnerships we have ever had.

 

You could hardly have found a partner with a worse reputation. Monsanto has a name for giving farmers a hard time and being very aggressive with people opposed to biotechnology.

Monsanto did not always handle its communications so well in the past. But things have changed.

 

You have also been fighting for years for Amflora genetically modified potatoes, which BASF thinks will give the industry a boost.

The way the E.U. has handled this is outrageous. We have been submitting filings for Amflora for 13 years. Thirteen years! Just recently we had yet another confirmation of safety, but Amflora has still not been approved.

 

What consequences will you draw from that?

If Amflora is not approved, we will consider withdrawing from plant biotechnology in Germany and Europe. Such a decision would be negative, politically driven and devoid of any scientific sense.

 

Do you think that you will see Amflora approved while you are still chairman? After all, your contract ends in early 2011.

I very much hope so, and despite everything I remain optimistic.

 

Maybe you might have to extend your contract if you want to see Amflora thriving while you are still in this job.

For me, 2011 marks the end of the road.

 

Can you tell us who your successor will be?

Speculation is a waste of time. Anyway, the decision will be taken by the Supervisory Board. Thanks to our excellent management development program they have several candidates to choose from. One thing you can be sure of is that BASF’s next chairman will, as always, come from within BASF.

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BASF-Konzernchef Jürgen Hambrecht "Ein Angriff ist möglich"

 

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#118) On March 06, 2009 at 2:57 PM, portefeuille (99.98) wrote: BASFY.PK - 25.93 - outperform

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BAS.DE (BASFY.PK) is currently at ca. 36.90 EUR.

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#11) On August 24, 2009 at 8:11 AM, G8BigBoom (67.55) wrote:

Thanks  portefeuille

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