Sunday, June 29, 2008

Ford's 88 MPG Hybrid SUV. Get Ready For the Oil Bear.

I've posted a handful of commentaries on the tremendous transformation going on in the labs and garages of inventors. It seems many are missing the incredible transformation taking place right before our eyes. The solutions of tomorrow are being formulated as I write this. We can expect government to play a role in this transformation as well. Some of it will be beneficial and some of it won't. Corn ethanol production probably isn't a sustainable or worthwhile effort facilitated by government but then government funding in other areas is making a substantially positive impact.

Along those lines, I would like to comment on a recent proposal by Presidential candidate McCain. McCain has offered to have the government pay $300 million to create a new car battery with certain specifications. I am quite confident that there is enough incentive that anyone working on energy storage research would realize exponentially more than $300 million of profit in the market were they to develop a leapfrog technology. McCain's idea is novel but does it provide economic incentive?

A fundamental problem with the idea is how it is framed. Having a technology neophyte, or for that matter even the most brilliant scientist, anticipate what specific technology would provide the best solution to the market is misguided. What if a better battery isn't the best answer? What if it isn't even the right question? As an example, what if the more appropriate question is how we transform business into a more self-directed virtual organization so that many people don't need to drive to work? I consider McCain's proposal to be an extension of existing knowledge as opposed to inspiring inventors to dream new solutions. The most important reality is one cannot and should not frame what has not been invented beyond incenting new invention. I'm going to get up a post at some point about the many very misguided calls for a "Manhattan Project" on energy. And, it has nothing to do with dogma or ideology involving government participation in markets.

As it pertains to this topic, the current Presidential administration must have the worst public relations apparatus in history because they seem indefensible re being aligned with oil companies and not doing enough to further alternative energy. Correct me if I'm wrong, but I do believe President Bush has allocated more money for alternative energy research than all other Presidents combined. That would be over the last two hundred years. Yes, I realize the time value of money doesn't allow me to compare George Washington's nuclear power program with that of today but the point is Bush is the alternative energy President. The operative word being 'the'. Of course, were those words ever uttered, most would laugh. Why we don't hear about that investment is beyond me. Well, it's not beyond me but it's unfortunate.

Now let's change gears. General Motors' market research had shown that the vast majority of daily driving for Americans is less than forty miles. Makes perfect sense. So, automakers only need engineer cars with alternative energy capabilities of forty miles to make an enormous impact on petroleum consumption. We don't need vehicles that run forever on alternative energy as an initial phase of energy independence. And, there will be phases. The ENIAC doesn't bear a lot of resemblance to a Cray XT5 supercomputer.

AutoSpectator and other news sources are reporting on Ford's 88 MPG plug-in hybrid SUV. This is obviously a prototype vehicle and, therefore, we don't know what the cost would be in production trim but it is nonetheless an interesting milestone. We now have people calling the end of pickup trucks and a relatively primitive technology achieves 88mpg. (It's not really 88mpg but that's okay. The point is it doesn't use a lot of petroleum over moderate driving distances.)

The fastest way for America to achieve the greatest impact in its use of petroleum with current technology is through plug-in vehicles. Note the words fastest and existing. To take it a step further, the addition of nuclear power generating facilities in conjunction with plug-in vehicles would have an encompassing and enormous impact. A step further would be to have distributed energy capability(s) where every home had its own power generating source be it solar, wind or something yet developed. A step further would be to have solar efficiency reach a point where the car could recharge its power storage device through its own solar panels or even run directly via solar power. In the latter few of these scenarios one would never have to buy any energy for normal daily driving. At some point capabilities along some line such as this will be a reality. And, there are other substantial sources of research that hold significant promise as well. Then all of those trillions of dollars leaving the U.S. every decade for oil will be spent here creating new jobs, creating new sources of wealth and the economic vibrancy most believe has now passed America by.

It sounds like a broken record but the U.S. will very likely come out of this economic crisis with an even greater economic advantage than at any time in modern history. I don't need to be bullish on stocks or the intermediate term economic outlook to make this statement. And, I'm clearly not bullish on either. I simply need to be bullish on the long term prospects for America. And for more reasons than I could ever cite, I remain long term bullish. Conversely, I'm extremely bearish long term on oil and many emerging markets. I'm extremely bearish on oil and emerging markets today. Quite frankly, I'm just plain bearish without qualification on both.
posted by TimingLogic at 11:16 AM

Thursday, June 26, 2008

Effective Leadership & Chrysler's Nardelli On "The Business"

"There are a lot of industries that need fixing." -- Wilbur Ross

- The ability to inspire others in a shared vision. Leaders have clear visions and they communicate these visions to their employees. They foster an environment within their companies that encourages risk taking, recognition and rewards, and empowerment allowing other leaders to emerge.

Why does Wilbur Ross state that a lot of industries need fixing? Ineffective leadership. It's likely no secret to many who read this blog that I believe we are experiencing a systemic crisis in leadership. Not just in business but in society. How many people in national or business leadership positions come to mind when you read the above definition of leadership? We all see the polls as it pertains to political leadership regardless of party affiliation. But, there are also polls regarding business and they are overwhelmingly negative regarding leadership. Anecdotally, most people probably sense this. The reality is people are really quite accurate in their instincts.

There are many factors that have contributed to a crisis in leadership but that's for another day. That said, trends never last forever. And, I am completely confident this trend is over. I have a post that I believe will be very interesting on this very topic. But, I have a hard time keeping up with posting ideas because I have a limit to the amount of time I spend writing on here. We are entering a defining moment of history where great leadership will emerge. Not this very instant but over the coming years. Someone is going to fill the vacuums that exist today. Maybe that someone will be you or someone you know.

I've commented on the state of Chrysler's business a few times this past year. Now we have a chance to listen to their CEO Bob Nardelli in the video below. But first I'd like to make a few additional comments.

It's ironic that Nardelli remarked a handful of months ago that Chrysler was effectively bankrupt. Yet, in this video he talks about beating financial forecasts. Well, which is it? We are bankrupt but beating forecasts? Is doublespeak one of the benefits of being private? I later read his remarks about bankruptcy were meant to motivate Chrysler's employees. Some time ago I had outlined a post focused on effective leadership using the original comment about being bankrupt but decided not to develop it. So, now let me do the cliff notes version.

Anyone who understands effective leadership knows motivation can be provided by positive or negative stimuli. Anyone who understands psychology and effective leadership knows negative motivation has a limited and temporary effect. And there are typically unintended and unmeasured consequences of lost productivity, lost talent, quality of work, morale, etc. Arguably the most important skill of any leader is the power of positive persuasion, inspiration or the human factors element.

To use a worst case example of negative stimuli or motivation, look at the consequences of men and women attempting to stay alive in a war zone. There is plenty of motivation to succeed and plenty of negative consequences. Additionally, look at children whose parents are emotionally unsupportive versus a child that grows up in a supportive and inspirational family and you will see the difference between night and day. People may pay hundreds of thousands of dollars for an education but great leadership was well understood before we even had the concept of formal education. Books, seminars, expensive degrees, gimmicks and gurus aside, the human factors element of great leadership are timeless and they can be had for free. While these are extreme examples, the reality is people don't respond well to negative motivation or stimuli over long periods of time. So, if someone is going to use negative motivation, they need to realize its effects, consequences and its decling time value. It can often be effective in specific situations but creating a pervasive and lasting environment or culture around it is very damaging. Having a frank discussion that our company is in crisis and we need to come together as a team to overcome the challenges we face and, if we work together, we have a high probability of success is much different than using 'we are bankrupt' as motivation.

Command and control leadership is best left on the battlefield. There may be certain times when it may be needed to manage a short term crisis but in general, it is not an effective management style. In fact, my experience is that those using such tactics most often do so because they don't have the developed leadership tools necessary to lead effectively. In other words, it's a clear sign of poorly developed leadership skills. It's also a tactic not embraced by a great CEO I wrote of a few weeks ago - Herb Kelleher. Regardless of whether this is the situation at Chrysler or whether Bob Nardelli is a strong leader, the points I'm talking about are applicable to leadership in any business or, for that matter, society.

In closing, I find some of the interview remarks to be rather inconsistent and unusual. First off this appears less of an interview and more like shagging fly balls on the practice field. Nardelli doesn't answer many of the questions. This isn't really unusual because the business press has become far too lazy. Serious journalism by the mainstream media might have alerted society to some of the crises we are now dealing with well before they gained critical mass. Nardelli says he doesn't have to worry about PE being private? If you are a CEO of a publicly traded company and you are focused on PE ratios, you aren't doing your job. And what does a PE ratio have to do with being able to determine the cash position of a company? If you can't determine a cash position of any company, be it public or private, you must be Ed Zander at Motorola. If a CEO or the CFO can't easily tell me the cash position of any company they have a serious problem. The comments about being able to monetize nonperforming assets in a private environment are also quite odd. Selling below book value is easier in a private environment? I wouldn't be too happy if I were a Cerberus investor. Selling something for less than its worth generally isn't considered to the benefit of the seller where I come from. Of course shareholders of a public company would not be supportive of such a strategy any more than you would sell your personal assets for less than they are worth. That is, unless your ultimate goal was to go bankrupt or there were some really extenuating circumstances such as a lack of liquidity. The concept of selling nonperforming assets in a publicly traded company generally would be greeted with enthusiasm as long as shareholders had confidence in the management team and a sound business plan. And, as long as the assets were sold for a value benefiting the shareholder.

The reality is that without execution in the market place, and Chrysler is failing in the market place, Chrysler will not continue to meet its financial goals or any other goals. The new management team inherited this situation so we need to take this fact into consideration. But what is Chrysler's strategy to turn around their business? Deals to make pickups for and source small cars from Nissan? It's obvious Nissan got the better of that negotiation. Reselling Nissan's cars is not a sustainable strategy. Hoping the Chinese automaker Chery will provide them with an affordable subcompact at some point? Another risky strategy. One the market will likely reject as nationalism builds in a weak economy.

Nardelli and Chrysler need to improve their game. Being private is no tonic for success. If consumers start to see Chrysler's future as opaque and risky, they could easily avoid purchasing Chrysler products because of perceived future risk and personal loss. This was a similar concern at GM and Ford that forced both to increase transparency into future strategies. Similarly Chrysler needs to increase transparency into its future strategies. Automotive media and consumers need to be reassured purchases will be rewarded and supported.

Of course, the alternative perspective may be that Cerberus doesn't have the capital or access to it to invest in Chrysler's around. That they completely miscalculated. And, that rather than invest, they are simply biding time in hopes of an economic turnaround where they can jettison Chrysler. Given a benefit to being public is that companies have greater access to capital, Cerberus might be experiencing their own liquidity problems. Bloomberg had an article recently which potentially supports this grim position. If so, biding time only provides a self-reinforcing downward spiral as new product development lags the competition. Such a strategy nearly guarantees Chrysler will fail as investment is the only strategy that can improve Chrysler's fortune.

Pushing money around Wall Street while waiting for asset price inflation to provide a return to private investors bears no resemblance to the talent required to run a capital-intensive industrial company. Now tell me again, what benefit is there to being private?

posted by TimingLogic at 9:50 AM

Monday, June 23, 2008

Merrill Lynch Calls Banking Bottom and The Market Rewards Its Stock With A New Five Year Low

Over the weekend I wrote that Merrill's call on a banking bottom didn't jive with any data I model. Ironically, today Merrill makes a new five year low. How much is Merrill's stock worth? Given the lack of transparency, to me its worth nothing. The company has already lost nearly $30 billion so I must assume the worst. That is it could easily report similar or larger losses going forward for a multitude of reasons. And, that is exactly what the market is pricing into the stock. Which, quite honestly, is why I helped my family move money out of Merrill in the fall of 2006. You remember the fall of 2006? It was the height of our economic glory as told by Wall Street.

John Thain has a lot of work to do to earn that $84 million he was rumored to receive as the new Merrill CEO. Given Merrill's enormous losses how does Thain fix Merrill? Most likely by doing what isn't intuitively obvious. That is, to do exactly the opposite of what Merrill has done for the last decade. Why? Because Merrill's current business model isn't sustainable. Any business model that reports those type of losses is not a business model at all. It's an instruction book for going out of business. So far, Thain appears to be attempting to salvage the status quo. The market will take care of Wall Street's business model regardless of whether anyone wants to oblige or not.

Wall Street CEOs are still fighting the last war as all good generals do. That is they are trying to fix their Frankenstein finance machine rather than going back to their very important role of supporting the real economy. They'll wake up at some point. Most likely when desperation sets in. Or when the market inflicts unwanted change.

5 year chart of Merrill Lynch
posted by TimingLogic at 12:09 PM

Sunday, June 22, 2008

Jefferson County Alabama Update

I have talked repeatedly about the lack of transparency and how banks have fought to achieve this environment. Why have they fought to achieve this environment? In very simple terms, a lack of transparency allows banks to do whatever they want. That includes charging fees clients don't know about and, frankly, charging whatever they want in many instances.

An example of lack of transparency anyone can relate to is how Consumer Reports transformed the car buying process as an innovator in providing full disclosure to consumers. Before transparency existed, auto dealers could and did charge whatever they wanted. Not only for the purchase but hidden dealer costs and financing costs. I'm sure a raft of consumer protection laws now exist in this process but imagine if you wanted to acquire and finance an automobile or a home today and there was no transparency into the process. What if you were to buy a house but didn't know the purchase price or a breakdown of the fees? The only thing you knew was a bottom line amount inclusive of whatever fees were deemed appropriate by those setting the fees and controlling the process. Or if the process was so complicated that you were told just to trust the people in the process to look out for your best interests. And, let's say there was no choice in the matter because there was no transparent central clearing house for the purchasing process as there is now. A process that promotes confidence by transparency to the benefit of all parties.

Bloomberg Markets has a story titled The Fleecing of Alabama: The Bills Come Due. If you want to see how lack of transparency into markets has impacted Americans in ways not even imagined by most, I would encourage you to read this article. It is an excellent piece of journalism. This isn't confined to Jefferson County but as you will read is being investigated nationwide by government agencies as there appears to be potential collusion across the country.

This is an example of earnings-at-risk or many bank-related earnings that are gone forever as I again mentioned a few posts ago. Banks are alleged to have charged fees above market rates while not disclosing them to their clients. In the Jefferson County situation alone it appears overcharging of fees amounted to hundreds of millions of dollars. The amount nationwide could amount to untold billions and billions of dollars as there are surely many circumstances similar to the Jefferson County fiasco. There is no doubt government should and will force transparency into the process and markets and these "earnings", if you want to call them that, will be gone forever.

posted by TimingLogic at 5:23 PM

Huntington Bank Assures Investors. Are Banking Stocks Bottoming?

Last summer when I found out some friends owned Huntington Bank's stock, I encouraged them to sell it. I'm sure anyone who would have heard that conversation would have thought I was being a little too dramatic. Given the stock is down around 70-80% to the $5 range the only thing now dramatic is the size of the stock's drop and the fact that it appears Huntington could very well be in serious trouble. That is, unless investors are completely wrong in valuing the stock.

On Friday Huntington Bank, one of the largest regional banks in the U.S., assured investors that they were prepared for a weak economic environment. At the same time they are moving nearly $800 million in investments to nonperformaing assets. I suspect the CEO's comments could have been motivated by an attempt to stop a flight of depositor's capital that could develop with a plummeting share price. Accounts that are FDIC insured within the constructs of that program are considered safe but the real issue for Huntington is that any such flight could create a self-reinforcing spiral of less capital and potential concerns about capital ratios with regulators.

Banks with international exposure surely have greater access to capital than regional and smaller U.S. banks. But, then larger banks also have greater capital requirements. The pundit talk about banks being takeover candidates is generally wishful thinking. First off, the merger boom is over. And, secondly, few either have the will or wherewithal to ante up capital and deal with the issues of managing a merger when we are now entering the economic phase of this crisis. In other words, the risk of economically induced bankruptcies now rises substantially. Although those saving for a rainy day will indeed make substantial gains in this environment. One, is Warren Buffett who has amassed a massive war chest to feed off of the mistakes of the foolish.

As an aside, re the comment about the merger boom being over, you do now realize that the merger boom never would have taken place if banks had used appropriate risk management? Because the money never would have been there to lend. In other words, many American banks have been basically insolvent for years. Appropriate management of those institutions would never have allowed these foolish merger and acquisition loans to have been approved in the first place. Now we see banks dumping many of these loans and associated bridge loans for substantial loss. It also represents another very high risk for banks. One that is possibly larger than the mortgage mess.

Regardless, if one simply looks at Huntington's stock, they could conclude it is likely in a battle for its very existence. Or soon will be. Below is a chart of the company's stock since 1991. On Friday Huntington's stock was up almost 30% or somewhere north of $1 to $6 and change based on assurances by the CEO. Not to compare the two situations but banking executives made the same assurances in 1929 and 1930 and 1931 .......... right before we saw thousands of banks fail. I am sure the CEOs comments are accurate but are market participants pushing down the value of the shares based on today's position or concerns over the future of the economy? One must realize even regulators have publicly cautioned that we will see a rise in bank failures. Let's hope that doesn't happen but the economic environment is substantially precarious.

So are we seeing a bottom in banking stocks as Merrill Lynch is telling us? This brings up an interesting point. I had a recent correspondence with someone who was still buying bank stocks on the thesis that some banks were selling at a low price to earnings multiple on future earnings. Well, price to earnings is one of the great fallacies in how to value a bank's stock. In order to maintain equity valuations at varying percentages of book value, banks should show a sustainable dividend to book ratio based on a sliding scale of sustainable investment returns. In today's environment book values are dropping drastically and future returns on existing investments are producing hundreds of billions and soon to be trillions in cumulative losses. In addition, given these facts, what business can banks anticipate to return their portfolios to positive and sustainable returns? The reality is anticipated future earnings estimates are a fantasy. Ask any bullish analyst for a breakdown of future earnings estimates and one would surely find an analysis lacking in substantive specifics.

One of the things I model is bank liquidity and all I can say to Merrill Lynch's bottom call is ............ what are you looking at? I see absolutely nothing in support of such a call. Of course, I suspect Merrill's call is something more of a 'gut feel' because bank stocks have dropped so much. The logic of they have fallen so much they must be a buy is no logic at all. Unless they can prove their call through measurable and thoughtful analysis, it is fraught with tremendous risk.

posted by TimingLogic at 9:48 AM

Friday, June 20, 2008

Banks Find New Ways To.................Bamboozle Investors

Well, the title of the Wall Street Journal article is Banks Find New Ways To Ease Pain of Bad Loans.

The reality is banks are searching for new ways to bamboozle shareholders and society by perpetuating an opaque environment of deception. This will do nothing but lead to more confusion, a greater lack of confidence in financial institutions and ultimately a larger mess. It's really quite sad we can't get honesty into the system.

Wouldn't it be refreshing if all companies would provide a complete and accurate accounting of all bad and potentially bad investments? In detail. Could we get some regulatory leadership? Better yet, could we get some leadership out of the banking community? Confidence in America's capital markets is predicated on transparency more than any other single variable. Confidence in our society is predicated on transparency as well. These institutions are guaranteeing a terrible outcome by their actions. No transparency=>No confidence. Yet, this environment is exactly what the banking industry lobbied to get. Newton's third law of equal but opposite reactions is surely in play here. Banks seek to hinder transparency and oversight and the market responds by collapsing. I'm assuming some transparency will come to pass when the SEC's promise to require full accounting takes effect. Speak of which, SEC Chairman Cox had an article in the Wall Street Journal yesterday. I have reasonable confidence in Chairman Cox. He inherited this crisis and has a history of noble leadership. (This article does not require a subscription.)

The article Banks Find New Ways To Ease Pain of Bad Loans requires a subscription but some key highlights from the article are below.

From lengthening the time it takes to write off troubled mortgages, to parking lousy loans in subsidiaries that don't count toward regulatory capital levels, the creative maneuvers are perfectly legal.

Yet they could deepen suspicion about financial stocks, already suffering from dismal investor sentiment as loan delinquencies balloon and capital levels shrivel with no end in sight.

"Spending all the time gaming the system rather than addressing the problems doesn't reflect well on the institutions," said David Fanger, chief credit officer in the financial-institutions group at Moody's Investors Service, a unit of Moody's Corp. "What this really is about is buying yourself time. ... At the end of the day, the losses are likely to not be that different."

Still, as long as the environment continues to worsen for big and small U.S. banks, more of them are likely to explore such now-you-see-it, now-you-don't strategies to prop up profits and keep antsy regulators off their backs, bankers and lawyers say.

Another eyebrow raiser: switching bank charters so that a lender is scrutinized by a different regulator.

That means the regional bank no longer will be regulated by the Office of the Comptroller of the Currency, which has become increasingly critical of banks such as Colonial with heavy concentrations of loans to finance real-estate construction projects.
posted by TimingLogic at 7:27 AM

Wednesday, June 18, 2008

The Street Runs Red With The Blood Of Banks

Since first posting on here in late April and May that we were going to start another leg down, many banks are down nearly 50%. In a month or so. Today we see major banks from across the country typically down 3-17% at their lows for the day. Fifth Third Bank, a super regional, takes the top spot down 17% - another dividend paying stock cutting its dividend. The bulls have tried to rally the market intraday but that failed. Most likely an attempted rally is because we gapped down at the open and because it's witching week as opposed to any revelation that the world economy is improving.

Back in May of 2007 when Professor Jeremy Siegel was espousing a position of how great a value stocks were in some of his writings, we used him as an example of someone likely top ticking the market. Someone in whom society had misplaced trust and expertise. And, what investing theme does Siegel espouse as an equity strategy? Dividend paying stocks. What is getting killed in this market? Dividend paying stocks. What did we write in that post?

--Earnings are the most cyclical in fifty years
--Earnings at risk and not current or expected PE more appropriately defines this market
--This market is very expensive and by implication...........
--The Fed valuation model is worthless in this cycle
--The bulls looking for their PE expansion have already gotten it in small caps, commodities,
commodity related stocks, transports, utilities, financials, consumer stocks, etc.
--The financial industry is peaking over a very long cycle
--Bubbles usually come in pairs

We wrote of earnings at risk in a more detailed post well before this mess developed. So, how much of the banking sector's earnings were and are at risk? At permanent risk? Gone forever. It's not just banks in this situation either.

Finally, it appears many professionals are realizing the credit crunch was not an exogenous event. Talk of housing or banking problems spilling into the economy were and are completely erroneous. The appropriate reality is the economy is spilling into housing and banking. Amongst other factors, it is the fact that my quantitative models actually work that has allowed me to accurately anticipate these outcomes while Wall Street's quantitative models costing billions and billions of dollars are imploding. It's not that securitization or derivatives caused this implosion as some would espouse. Or that real estate is the cause as is most often blamed by the media and industry pundits. Neither are true. This means what? It means all of the media and industry experts paraded on television and in the press are all wrong. And, that they have all been wrong for years. And, that much of what society was led to believe over the last five, ten or twenty years was also wrong.

This leaves an interesting topic for another post.
posted by TimingLogic at 11:02 AM

Tuesday, June 17, 2008

Jefferson County Sues Major Banks

Many who read this blog are likely aware of the Jefferson County, Alabama debacle that is unfolding. In a nutshell, Jefferson County residents have been bamboozled into a nearly 400% increase in sewer rates over the last decade while being saddled with nearly $12,000 in sewer-related debt for every citizen in the county. I believe Jefferson County is now officially in default and flirting with bankruptcy.

A class action lawsuit was filed today alleging fourteen civil charges including negligence, conspiracy and fraud. Named in the suit are Goldman Sachs, JP Morgan, Bank of America , Bear Stearns, Lehman and others. A copy of the 44 page suit can be viewed here.

I expect we will see more suits similar to this one before this cycle is over.
posted by TimingLogic at 9:30 PM

Monday, June 16, 2008

AIG's CEO Is Out

Another finance CEO is out because of massive losses. The New York Times and other news agencies are reporting AIG has ousted its CEO. July 12th of last year a professional money manager, whose blog I used to read, wrote of why he was adding AIG to his portfolio. He provided a detailed analysis of why AIG was attractive and about to break out.

I posted on his blog that his analysis and balance sheet were far from pristine. And that insurance companies were eating risk fed to them by financial firms. And that the company's stock could fall by as much as 50%. At that time AIG's stock was about $70. Today, it's $34 and reporting losses greater than the income of many nations. I suspect I was wrong in my initial perspective. The stock is already down 50% and I expect a lot more downside to the equity markets before we get through this cycle. A lot more.

I am just amazed at how many professional money managers are getting clobbered. It's not like a negative analysis of AIG was prescient. If nothing else, it was common sense. Well, in addition to the fact that very few professionals in today's world seem to know how to do a fundamentals-based analysis on a company. To be fair, even if someone is capable of doing a fundamentals-based analysis, firms aren't exactly being honest about the foolish mistakes they have made. That is putting it mildly. Remember what I said some time ago - As the quantitative Frankenstein implodes, only a firm understanding of fundamentals-based analysis will provide safety from the freak show. Or as I just wrote a few posts ago, quantitative finance won't go away but what we see today is likely gone forever. Wall Street and society still haven't recognized what that means.

This is really a shame. It's a shame AIG is in serious trouble. Put there by a complete failure in risk management practices. But, it's even more of a shame that many money managers are throwing client's money down the drain. It's hard enough for people to save money in an environment like this. To have money managers make completely incompetent decisions only adds to the lack of confidence developing in global financial markets. A lack of confidence that is very well deserved.
posted by TimingLogic at 7:15 AM

Sunday, June 15, 2008

Congratulations To Audi & Peugeot At Le Mans

Audi has again won the world's greatest automotive endurance race, the 24 hours of Le Mans, while holding off Peugeot which took the second and third positions. The winner drove over 3,200 miles or nearly one thousand miles farther than Los Angeles to New York. They did it in one day.

Of course, no one does it better than Steve McQueen in the race's first lap of the 1971 movie classic Le mans. It's still the greatest racing movie ever made.

posted by TimingLogic at 9:03 AM

Friday, June 13, 2008

Outside Of The Box On Friday The 13th

Given it is Friday the 13th, I thought I'd put up what many will view as a controversial video. Why controversial? Because it tugs at many people's belief systems. What's Friday the 13th without some uneasiness? Ralph Nader has generally been successfully portrayed as a radical fringe element by those benefiting from the status quo. Ron Paul, another free thinker, has also been portrayed as a radical fringe element. Nader is a liberal. Paul is a conservative. Actually Paul is also a liberal. It's just how one decides to interpret the word. Our political engines, having undue influence on the media, help shape what we believe. I suspect Ron Paul and Ralph Nader have more in common than any two people so portrayed in the media as radically different. Paul believes in personal liberties and so does Nader. Anyone espousing personal liberties throughout history has been a liberal. Gandhi was a liberal. Jesus Christ was a liberal. The great Buddha was a liberal. Martin Luther King was a liberal. And Thomas Jefferson was a liberal. Because increasing personal liberties has always been against the desires of the status quo. Or of generally held beliefs of the time.

One should not assume I espouse particular political views because of the above statements. You would likely be incorrect. Mostly because I know every person's true beliefs are beyond some silly definition set forth by the media and political machines. I don't talk about politics on here because I consider the topic as framed by the media and politicians as completely ridiculous. It's a little like Mark Twain's old saying, "Don't let schooling interfere with your education.". In other words, release yourself from the silliness that spin machines have perpetuated on society. Both parties are mirror images. They feed off of each other and consciously perpetuate their monopolies and the status quo.

In this video Nader talks about personal freedoms and the concept of corporations gaining Constitutional 'rights'. Because few people ever care to learn about history and even fewer ever question the status quo, we generally find that many accept most anything perpetuated in the media as truth. Nader argued nearly twenty years ago to the day the very fact he is again discussing in this video as it pertains to corporate influence over our form of government and how it impacts the rights of citizens. And, how it is surely it does not benefit those whom the Constitution was meant to protect - us.

I don't agree with everything Ralph Nader espouses and I don't agree with everything Ron Paul espouses. But, I do agree with the rights of people to espouse whatever they want. And, I am naturally attracted to those who think beyond the obvious with new or compelling strategies or perspectives. So, I find both of these men intriguing. Mostly because the obvious perspective is almost always wrong. Of course, I also find Barack Obama and John McCain intriguing because they also don't fit a traditional mold the status quo would have us accept.

On Friday the 13th, let's peer into some of the "how's and why's" we have government bailing out corporations for their obvious incompetence. Incompetence that also significantly benefited those who were the most incompetent. All while citizens are generally left to fend for themselves. Because indeed what Nader is talking about plays a large role in why it is happening.

posted by TimingLogic at 1:48 PM

Thursday, June 12, 2008

Lehman Reports Senior Executives Are Out........... the headline from Reuters this morning. Surely not a surprise. I talked to a money manager yesterday who said the Wall Street speculation was that Lehman was about to fall. That hasn't happened but the stock is down close to 60% in a month. Let's hope Lehman can right the ship. I'm not holding my breath. Regardless, this is another significant blow to the U.S. banking system. (Sure seems like a different world than when I was writing about major risks in the banking system back in 2006. A time when the world was in complete agreement that we had achieved enlightenment. And, that dividend paying stocks were a great investment. Something else we wrote negatively about. By the way, KeyCorp bank cut its dividend in half today.)

This brings up an important point. What fundamentals changed to drive Lehman's stock down 60% in a month? Nothing. Anyone who uses stock price to gauge fundamentals is a fool. ie, A position that Lehman must be out of the woods because their stock is up near $50 is as ridiculous as stating Potash's stock is up 1,000+% and that is reflective of fundamentals.

Equity markets are doing a very poor job of reflecting reality either present or future. Why? Two main reasons. One, the talent pool has become marginal over a lengthy period of fat and lazy growth on Wall Street. Obviously, we see the outcome of this in the massive crisis of incompetence unfolding. The reality is most on the Street seem to have no idea what they are doing. And, two, we have quantitative trading gone mad. But this is really a symptom of number one. Or as Paul Volcker said -to paraphrase- it seems Wall Street has hired all of these scientists to create these mathematical models but the scientists had no understanding of economics. I think we can infer that Wall Street obviously didn't understand anything about economics either given they relied on these models.

Is there a CEO on Wall Street that can explain how any of these models work? Of course not. That in itself is dripping with incompetence that a banking CEO would threaten his or her depositor, shareholder or investor's money by participating in risky schemes they clearly don't understand. I'm telling you, I could be CEO of Morgan Stanley or Lehman or Citi. I could easily lose just as much money as the current crop of brilliant executives on Wall Street.

If you believe the future lies in quantitative finance, you are likely to be completely wrong. Quantitative finance won't die but most of what we see today will likely cease to exist. And again we will all pretend to be as surprised with that outcome as with every other 'surprising' outcome.
posted by TimingLogic at 9:00 AM

Wednesday, June 11, 2008

Former SEC Chairman Levitt On the SEC & Federal Reserve

Former SEC chairman Levitt talks on Bloomberg about the SEC, the Fed and new oversight initiatives. It seems apparent that without offending the current bureaucracies, Levitt is telling us what really needs to happen. That is we need to go further in reform of credit rating agencies - specifically that agencies should not be compensated by debt issuers - and we shouldn't grant more oversight to the Fed because of their involvement in this crisis.

Those two key points are the exact two things I wrote about just a few days ago. Neither are being addressed. One needs to understand what we are witnessing. As I have written, when under attack, the first thing any bureaucracy will do is attempt to save itself. And, to perpetuate the status quo. That is what we see in the heretofore actions of the Fed, the SEC, the Treasury Secretary and the U.S. financial system. Because those organizations disproportionately have access to the media, they have the pulpit and will try to assuage society that they have the problems under control. They don't. They caused the problems.

First, their response was to tell everyone that all was well. I wrote about this early last fall when the entire Presidential economic team made a first ever joint media appearance. The message? The world is great. That's it. So, they've never made a joint media appearance and out of the blue they decide to get together to tell us how wonderful the global economy is? No other motives? With their busy schedules? As I wrote then, I think not. Then they told us the global economy would pull us through. Then they old us the markets would solve this problem. Then they told us regulation would choke off the innovation of America's financial system and create job losses. Then they told us they wanted to grant more powers to the status quo. Then they told us some changes would take place but not the changes that are needed. That's about where we are. Generally we see one step forward and two steps back. Crisis will push change over the top. Crisis will kill the status quo. And, ultimately, that will be the medicine the system needs. The status quo still doesn't get it. They will. And while it will be too late to save the economy, ultimately that change will be good for all of us. Denial ain't just a river in Egypt.

A point of fact is that one seldom uses the same strategy to get out of a crisis that was used to get in it. And, almost never do the same people provide the new leadership required to make effective change. Asking those responsible for much of this mess to fix it is a little like asking someone with a chocolate addiction to guard the Godiva chocolate facility. The status quo is under assault. And, that's a good thing for everyone. Including those resisting change.
posted by TimingLogic at 12:03 PM

Tuesday, June 10, 2008

New Research Just In - Men Have Limited Mental Capacities

How about a 'lite' post in a world of angst?

So, is this possibly the reason for the financial crisis? I'm not sure we needed a researcher to tell us any of this.

I want to know how much this research project cost. I could have saved them a lot of money.
posted by TimingLogic at 1:56 PM

Shanghai Index Mini-Crash. Shares Down Another 8% Today.

I haven't seen anyone else in the press, on Wall Street or in the blogosphere that was as critical of China as I have been. And, most of that criticism came when the enthusiasm for China was off the charts. All while the Wall Street machine pumped away.

Is there anything else I can say about China? We've talked about a currency that is effectively worthless, a banking system in shambles, overproduction and overindustrialization on a scale never before seen, the lowest consumer spending numbers of any major economy ever recorded, a stock market gambling machine at levels that would make 1929 blush, completely incompetent government, a completely incompetent central bank, an out of control economy and the ultimate potential for economic collapse leading to armed conflict or revolution. That about sums it up.

By the way, did anyone see the BBC story about prominent U.S. business leaders who were plotting to overthrow the U.S. government during the 1930s in an effort to install a fascist leader? More politely represented as someone with the authority and power to get things done by circumventing the rule of law? No one really knows what happened but it was interesting. My point is that economic uncertainty can create very dire social instability. Especially in a country, China, where human rights violations are some of the worst in the world.

Today the Shanghai Composite had another mini-crash and was down 8%. The cause? Maybe the fact that bank reserve requirements were raised for the 15th time in the last eighteen months. China is imploding and there is nothing anyone can do to stop it. I suspect the ultimate downside risk to the Shanghai Index is down about 95%. Why 95%? Because picking zero isn't an option. I believe we are about half way there without looking.

It's a deflationary world.
posted by TimingLogic at 9:46 AM

Monday, June 09, 2008

Self-Policing Markets Or Regulation?

Harvard has a very timely article on the concept of self-policing or self-regulating markets versus government regulation. This is obviously a very timely discussion point that needs to be hashed out given the incredible mess banks now face. Unfortunately the Executive Summary of the article is short on summary but the link to the entire article is at the bottom page of the link above. I have expressed strong opinions about financial regulation in the past and have a post outlined on the topic of regulation I may or may not get up at some point.

I will say that those espousing markets to solve all ills are as inaccurate as those espousing overregulation. Thomas Paine once said the only thing worse than government was no government. In other words, leaving the world to its own devices we eventually see the outcome being man's desire to dominate his brother. We see that today in China, the Middle East, Venezuela, Myanmar and other governments where those who have anointed themselves as king-of-the-moment run these countries. Self-government is obviously preferable. The same can be said of regulation. The only thing worse than regulation is no regulation. We've seen regulation choke off the economy but we've seen no regulation result in poisons and toxins being dumped in foods and drinking water, devastation of the environment, child labor abuses, substantial work-related deaths, abusive employment practices, banking crises that have caused depressions, predatory lending and on and on and on.

There are obviously trade-offs and benefits to both approaches. I prefer regulation that promotes transparency, fairness and free market ideals before I support regulation or deregulation that allows opacity, labor arbitrage, unnecessary government meddling in the process of business and anti-competitive outcomes. The first step in regulation is to promote transparency. Depending on the act to be regulated, that may be sufficient. An example would have been transparency that allowed shareholders to see into banks and the messes they have created through proper disclosure - this would have either prevented a run on Bear Stearns or allowed it to fail because people would have known the counterparty risks to failure. Thus society could have quantified the actual risk of failure. Regulation that allows transparency and removes the conflict of interest where ratings agencies are compensated by debt issuers instead of debt buyers. Regulations allowing transparency into hedge fund activities and international capital flows.

Update: This morning New York's Fed President Geithner embraces an overhaul of financial regulation.

Unfortunately, I don't support Geithner's position that the Fed should be the beneficiary of that oversight. Or his support for Paulson's plan which is nothing more than reinforcing the status quo. While Geithner impressed many with his public speaking skills when called before Congress to explain how this mess could happen, his remarks today clearly show a lack of understanding and sophistication as it pertains to the Fed's contribution to this crisis vis-a-vis lack of regulatory oversight.

We need oversight that includes increased transparency. While I support Bernanke's attempt to save the banking system - although doing so has likely created a bigger commodities mess - I do not support the Fed as an oversight agency as it is the antithesis of transparency. In other words, if the Fed wants more regulatory control, we should first see the Fed overhauled to increase its transparency and oversight by society. We already now see that a group of twelve bureaucrats have no more insight into what should and should not happen in our banking system. The cumulative oversight of society can and would surely do a much better job. Let's make the Fed accountable just as the banking system should be held accountable to society. While we are at it, let's make government work again by increasing its transparency so we know what lobbyists are doing and how they are impacting our economy.
posted by TimingLogic at 10:16 AM

Friday, June 06, 2008

National City On Probation And Banking Index Hits New Lows

I've been very critical of banks since starting this blog. It's just silly and completely incompetent for anyone to be telling us the crisis has passed as so many have. Do you know quantitatively what needs to happen for this crisis to pass? Qualitatively? Something you might want to think about. I could cite a multitude of market professionals in the press and on television who have told us to buy banks since this environment started unfolding. But these are the same people telling us to buy banks when they were at all time highs and enthusiasm for Goldilocks was dripping. They didn't know what was happening on the way up and they still don't know what is happening on the way down.

A handful of months ago, Morgan Stanley upgraded National City after it had fallen substantially. I wrote at that time someone needed to downgrade Morgan because they obviously didn't know what they were doing to be upgrading National City. Since then, National City has falling about another 40%. Now, when the wheels are falling off and the company is down about 85%, OCC regulators are finally scrutinizing National City. Ya think? Reuters writes the bank is working with regulators to ............ what? The damage is done. Now, when the company can least afford it, regulators come in and put more pressure on the company. I don't question the need to do this but would it not have been prudent if this had occurred five or ten years ago? Or before lax enforcement of regulation and repeal of many regulations created a mess? To ensure a mess would never be created as part of ongoing prudent oversight? And, to do so pro-actively when National City was financially sound?

It's ironic that the Office of the Comptroller of the Currency has seemingly pushed back against state involvement in resolving many banking issues. Effectively taking the position that banks are their jurisdiction and they have the situation under control. All while states take a position of consumer advocacy and protection in attempting to deal with this.

With the banking index at new lows, we can be assured they don't have anything under control. It's also ironic that the OCC has the following on the home page of its web site. - "Ensuring a safe and sound national banking system for all Americans." For some reason I am lacking in confidence in this statement. Could it be because banks have been engaging in activity that nearly guarantees an unsafe and unsound national banking system? And the that OCC seemingly was asleep while this happened? And the current head of the Treasury that is responsible for the OCC was the CEO of one of the major banks that appears to be a major contributor to this unsoundness?

Now we hope and pray the wheels don't fall completely off the system. Somehow, I'm not encouraged by hoping and praying as a strategy. Either for my future or for that of the banks.
posted by TimingLogic at 10:07 AM

Thursday, June 05, 2008

Chrysler Continues Down The Black Hole

We've written of the pickup truck economy, falling vehicle sales and the state of the auto business over the life of this blog. While I remain long term bullish on the industry, I have also written it would not be unrealistic to see bankruptcies in the interim. Bullish on long term prospects does not necessarily translate into being bullish on a stock. This is something many professionals don't seem to understand. I could be bullish on the long term prospects of Intel in 2000 yet not be bullish on the stock as it fell in depressionary percentage terms. I did write positively of Ford's stock at one point then subsequently withdrew that bullish support while the stock was still in positive territory. This is no time to be a hero.

Along those lines, Chrysler just announced auto sales and they were again atrocious. With auto sales at Chrysler down 33% year-over-year, it is unique amongst major automakers in reporting larger drops in auto sales than SUV and pickup sales. Combine that with a product mix overly reliant on high ticket sales, SUVs, minivans and pickups and you have a recipe for a disaster in the making. We can thank DaimlerChrysler management for moving Chrysler away from being a low cost producer of affordable vehicles to the worst product mix of any major automaker on earth. Now, new management has to deal with the consequences.

We don't have a lot of insight into Chrysler's finances given the company is now private. Reasonably substantiated data shows that Daimler effectively paid Cerberus to take Chrysler after originally paying $36 billion to acquire the company. Given all of the costs incurred with Chrysler, Daimler would have come out better if they had simply thrown $50 billion into the Rhine. Or better yet, increased its dividend. It's an interesting aside that the CEOs who masterminded this master blunder walked away with hundreds of millions in compensation. All for losing over $50 billion.

The cash burn rate of any automaker is incomprehensible to most. The burn rate of an unprofitable automaker or an automaker with a large fixed cost footprint witnessing significant declining sales is a death march. Chrysler needs new product now. Because that is not the case, it must speed up any cost reduction plans in order to attempt to bring costs in line with declining sales. Or eventually cease to exist.

Back at the time of the buyout a spokesman for Cerberus was quoted as saying, "Our plan really is to provide patient capital to free management from quarter-to-quarter results and allow them to focus on a long-term recovery and transformation plan." That quote looks terrible today. It doesn't matter if a company is public or private, when sales in a capital intensive industry are this bad, it's not quarter-to-quarter results that matter but day-to-day.

Darker clouds are building over Chrysler. Can they move fast enough to transform their business? The economy isn't likely to support their efforts any time soon. That makes their effort much more difficult.
posted by TimingLogic at 3:29 PM

Tuesday, June 03, 2008

Management And The American Airline Industry - A Chronic Crisis In Leadership

Let's start this post with an undeniable truth. There is no such thing as a great company or by extension a great government or any other greatness associated with an organization. There are only companies, organizations and cultures which recognize the greatness of their people. There we will see greatness in leadership, in act, in management and in execution.

I've railed on the airline industry a few times here. Management in the airline industry continually ranks as some of the worst in the world. This is an industry that continually resists change, innovation, new ideas and transformation. Instead we see the same business models run by the same leadership (loosely termed) regurgitated time and again through bankruptcy after bankruptcy. The company names may change but we relive the same experiences over and over.

In the last few months four U.S. airlines have gone bankrupt. It's easy to blame high fuel prices but the airline industry problems are structural and are well beyond high fuel costs. Now we have private equity and hedge funds exerting pressure on these same incompetents to merge aka Delta & Northwest and United & US Airways (recently scuttled). This seems eerily similar to the Hechinger & Builders Square merger while trying to compete with what was a great organization with great leadership. That being Home Depot. Another great culture that was jeopardized by poor leadership. Last time I checked, combining two companies that are perpetual losers doesn't make a winner but we are at it again. The definition of insanity is doing the same thing over and over again and expecting a different result. This, indeed, is insanity.

How many times do we go through this Samba before anyone learns from prior mistakes? One positive outcome for companies is that consolidation to a minimum number of players does allow for monopolistic control of markets and ultimately pricing power. It's also a recipe for creating Soviet-style organizations with insular, unresponsive cultures where customer satisfaction and employee morale have no meaning or purpose to their existence. Competition does improve the breed. Airlines are seeing high load factors and have used bankruptcies to reduce the amount of excess capacity. So, we see improved load factors regardless of how little they value customer satisfaction or their employees. This is due to decreased competition as opposed to brilliant strategy or leadership. If you don't like flying today, it's probably going to get a lot worse as more competition is removed from the market place. If you support competition, free markets and not monopolies, write your Congressional representatives and tell them its time to put a stop to airline industry consolidation.

It's completely surprising to me that after nearly one hundred years of flight, only one airline in the U.S., Southwest, consistently gets it right. That same airline is again the only airline in the U.S. to make a profit something like thirty seven years in a row. And, also has some of the highest wages in the airline industry clearly dispelling the myth that flight attendants, pilots and maintenance crews must earn prison wages for an airline to be profitable. Not that unsustainable work rules, wages and benefit growth didn't contribute to the mess in the airline industry.

I've alluded to this fact before but this is something I believe every person should use as a litmus test when investing in any company's stock. Every company is a knowledge company. The days of a manager pointing a stick to a task and expecting a worker to comply without using their intellectual capital are over. Your company may not realize this yet but they will. Or they will end up scraping the bottom of the barrel for profit crumbs. As such, every company should aspire to hire the most talented people it can afford. Because talent determines what economic return an employee will bring to the organization. Strong wages determine the long term viability of any company or country. Companies who understand employees are vast reservoirs of knowledge to be tapped for leadership, productivity enhancements, innovation, transformation, customer service and commitment to excellence will be the leaders in the twenty first century. This very fact is a key reason why Toyota and Honda have decimated American auto makers for decades. And why GM sells less cars today than it did forty years ago while Toyota and Honda have grown to be colossus powerhouses at GM, Ford and Chrysler's expense. It's not a surprise that customer satisfaction is highly correlated to labor satisfaction. They are one in the same. Both are defined by organizations that respect and encourage the greatness of people be it a customer or an associate.

As I wrote about Toyota long ago, lean methods or continuous improvement relies on employee knowledge as the very foundation for building ongoing and self-reinforcing excellence. Therefore, hiring superior employees is a predicate to long term business success. The generally held beliefs of capital trumping labor that Wall Street has perpetuated throughout society over the last few decades is a complete fallacy. Because in today's world the most important form of capital is human capital. Profits flow from human capital. Without this truth, there will be no sustainable capital. (You might really want to think about what this means in today's global environment.) Those who don't tap the cumulative intellectual power of profits employees provide will be the laggards of tomorrow.

Herb Kelleher, a founder and former long time CEO of Southwest personifies greatness in leadership. I was once a longtime shareholder in Southwest. I was a shareholder for one reason - Herb Kelleher. Because from great leadership flowed a great culture that valued its people and customers above all other measurements. It is not an overly dramatic statement to say that Kelleher is one of the greatest leaders the world has ever seen. Leadership is something the world is searching for in this time of uncertainty. In a world of gimmicks, financial engineering, off balance sheet accounting and a general lack of employee respect shown by so many corporate leaders today, Kelleher used proven leadership tactics as ancient as civilization itself. He created and maintained an identity and value system, he instilled consistent organizational clarity, he hired great people, he treated associates and customers with dignity, he invested in associates and customers and he created a structure of personal accountability and empowerment. And he led by example. He walked the walk. Then his team went about crushing the competition by providing a superior product for superior value. Could Southwest have accomplished its goals without a primary requirement of hiring the best talent and an environment of empowering that talent? Absolutely not. It's not any more likely that United, American, Delta, Northwest or any of the other mismanaged corporations were going to beat Southwest than it was that the Soviet Union was going to win the cold war. There is no difference. For both situations were studies in how labor trumped capital. Just not in the way that Wall Street's financial crowd has convinced society to view labor and capital. But in the way that successful organizations and countries view labor and capital.

While the mega carriers continued to cling to outdated business models and incompetent management, Southwest quietly became one of the world's largest airlines at their expense. Just as Toyota, Nissan and Honda did at Chrysler, GM and Ford's expense. And Southwest did this while easily being the most profitable airline in history.

We've watched many of the mega carriers in the U.S. declare bankruptcy, cut wages drastically, fire tens of thousands of employees and default on pension funds. Necessary? Well, it's highly debatable that carriers could not have averted such disasters with strong management. They have repeatedly claimed that Southwest's business model wasn't scalable or that Southwest was a regional carrier and their clients required a national carrier. And on and on and on. All the while Southwest has become all of the things their competitors said they couldn't profitably become. And, they did so because their competitor's management never realized the greatness of their associates or their customers. In the end, that cost shareholders, customers and employees of these venerable institutions.

So, what's the latest tactic to restore confidence in the airline industry? A current strategy seems to include hiring pilots for near minimum wage. But you say that cannot be true! Are poor wages for technicians and engineers who maintain the aircraft far behind? Well, much of that business has already been outsourced to low wage workers in far off lands. The next time you book a flight, you might be flying on a plane where the pilot has less experience flying a plane than you have flying a kite. This is part of the "race to the bottom of the barrel" wage strategy endorsed by politicians and business leaders short on leadership skills or business acumen. And, it's pervasive. How confident are you flying with a pilot making minimum wage? Would you hire a cardiologist working for minimum wage? Would you work in a skyscraper if the engineering company designing it paid minimum wage? Maybe the airline CEOs should be making minimum wage.

The Delta-Northwest merger is another act of incompetence by leadership unable to manage these companies to profitability. And, if politicians allow this merger to go through without regard for anti-trust enforcement, we'll see more layoffs, more wage compression and more chronic issues with customer service. And more monopolies. Is it not ironic that deregulation of the airline industry has come full circle? Without fostering competition and enforcing anti-competitive practices we have once again returned to an environment where a handful of carriers now dominate the market. Of course, anyone who understands markets and the lack of enforcement of free market principals could have predicted this.

We shall see an emergence of greatness in the airline industry when we see greatness in its leadership. From that flows a culture that embraces the greatness of its most valued resources - its employees and customers. Maybe they'll even realize their greatest customers are their employees. Or that their greatest sales source is a satisfied employee.
posted by TimingLogic at 8:13 AM