No IPOs = First Time in 30 Years

Venture Capital

2Q 2008 - No VC-backed IPOs = first time since 1978: 1) weakness in capital markets, 2) investments in product markets (alternative energy, 'green' technologies) which take longer to grow.




2008 - 36 IPOs (vs. 130 during same period in 2007); raised $27 billion ($18 billion by Visa) vs. $60 billion in 2007.

Acquisitions of venture-backed companies are down:

1) second quarter - 50 mergers or acquisitions of venture-backed companies completed (down from 70 in the first quarter);

2) first half of 2008- 120 mergers or acquisitions of venture-backed companies, down 28% from 169 in the first half of 2007;

3) 2007 - median age of a venture-backed company from founding date to public offering hit a 27-year high of 8.6 years.
(source: National Venture Capital Association)

General Motors - Subcontact Share Price

Automotive


June 26, 2008 - GM's stock closed at $11.43 per share, the lowest in 34 years. General Motors’s market capitalization - just $6.47 billion, vs. $162.6 billion for Toyota.









GM's share price: 1970-2008 (source: www.bigcharts.com)

Charlie Wilson, former President of General Motors from 1941-1953 and Secretary of Defense under President Eisenhower from 1953-1957, said during closed hearings of the Senate Armed Services Committee on his confirmation in 1952: "For years I thought that what was good for our country was good for General Motors, and vice versa."

Over the years Wilson's comment has usually been misquoted as "as General Motors goes, so goes the country”. But, if his opinion were the least bit true, then the U.S. is in decline.

Consumer Confidence?

U.S. Economy


The Conference Board (established in 1916) reported consumer confidence index fell to 50.4 in June, down from 58.1 in May, its lowest point since January and February 1992 (1985=100). Americans feared they might lose their jobs or be unable to find work. April - home prices in the steepest annual decline since 1988, according to Standard & Poor’s/Case-Shiller home price index; average home price fell 1.4% from March and 15.3% from a year earlier (worse than the 14.3% year-over-year drop recorded in March).
(The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS, world's largest custom research company. The cutoff date for June's preliminary results was June 18th.)

iTunes - 5 Billion Strong; Music Sales Down

Entertainment

IFPI (International Federation of the Phonographic Industry) reported:

1) global music sales fell in 2007
2) sales of CDs, music DVDs dropped 13%
2) music sold online rose 34%

Meanwhile, Apple reported customers had bought and downloaded more than 5 billion songs from its iTunes Store = largest music retailer in the U.S. (based on the amount of music sold during January and February as tallied by NPD Group's MusicWatch survey). Customers also rent, purchase over 50,000 movies every day, makes iTunes the world's most popular online movie store.

Housing and the Presidency

Real Estate

Relationship between U. S. home prices and President's economic policies: 1) when prices rise moderately faster than rate of inflation, consumers tend to approve of economic policies; 2) when prices fall, disapproval is swift.

The Euro - 10th Anniversary

Money- The History


January 1, 1998 - Euro, single European currency, introduced for use by European businesses (global currencies previously tied to dollar, linked to gold); June 1, 1998 - European Central Bank opened in Frankfurt, Germany.

January 1, 2002 - The euro became legal tender for European consumers - currency of 15 countries, 320 million people; replaced Deutsche Mark, French franc, Italian lira, Spanish peseta, Greek drachma, Austrian schilling, Belgian franc, Finnish markka, Irish pound, Luxembourg franc, Dutch guilder, Portuguese escudo; around 7.8 billion euro notes, 40.4 billion euro coins (worth €144 billion) put into general circulation by central banks of twelve participating countries of euro area; euro notes distributed by bank machines; shops started to give customers change in euro cash.

Euro - (http://www.civitas.org.uk/eufacts/ graphics/euro.jpg)

More successful than ever imagined:

1) European Central Bank has kept inflation in check
2) Prices rose an average of 2.1% /year over last 10 years
3) No politician has made serious attempt to undermine Central Bank's role
4) No country has seriously considering leaving European Union

"Behavioral influence" of common currency limited - no reform policies by unions, politicians; divergence in economic performance amongst members = distribution of risk.