Tuesday, January 6, 2015

2015: To Be or Not To Be

The parties are over, the family has left town, the waist size has increased, the house seems empty with the holiday decorations in the garage, so it is now time to concentrate on 2015.

Expect nonstop energy drama in 2015: This year should be one of the most ambitious in energy and climate policy: President Obama's administration will spend 2015 taking on energy controversies from fracking to smog, from interstate air pollution to coal-burning power plants - and in December, his negotiators will head to Paris to try to reach a global agreement on climate change. In between all that, he just might make a decision on the Keystone XL pipeline.

Republicans ... vow to wield their spending and investigative powers to ensure none of this goes down easily. The collision between a strengthened GOP and a president with just two years to cement his legacy will be one of 2015's biggest policy dramas, while setting markers that will have repercussions for the 2016 presidential campaign. ... The Obama administration won't just be turning out new regulations - it will also implement ones it has been crafting over the last six years.

The senator to watch in 2015: Standing at the intersection of three foreign policy crises and a perennial constitutional tension, Bob Corker (R-Tenn.), incoming chairman of the Foreign Relations Committee, may be the senator who matters most in 2015.

The big question for the 2015 global economy is how dramatic China’s economic slowdown will be. A gauge of factory output in November registered an eight-month low, which piles onto a continuing slump in real estate. And this coming spring, expect China to announce its lowest official GDP growth target in nearly a quarter of a century: 7%. (Real GDP won’t outpace it either, as it has in the past.) The bright side? As China takes its foot off the gas, it can focus on reform efforts like dealing with its crippling pollution. The downside: Much lower growth could trigger widespread Chinese loan defaults—with global repercussions.     
Gas might be cheap, but a different American fuel is getting pricier: The cost of lattes is primed to increase in 2015 — potentially by as much as 30%. Prices of the morning salve’s main inputs — coffee beans and milk — are both up, and likely to keep rising. But this is all a preamble to 2080, when the coffee bean might disappear from the planet all together. If morning commutes are still around by then, expect mayhem.

Job growth has been faster in 2014 than at any point since the recovery began, but the American public is still down on the economy. Why? Wages for the average worker have barely kept up with inflation in recent years. That looks set to turn around next year. The unemployment rate already sits at 5.8%, close to full employment, and several other indicators suggest that the job market is about to get drum tight: this year saw a record number of job openings and increased labor market turnover. As the competition for labor gets tougher, employers will have to start offering raises if they want to keep talent.

10 Global Elections to Watch in 2015: From Louisiana to Saudi Arabia, this year isn't just a lead-up to 2016: Kentucky's Gubernatorial Election ... Nigeria's General Election ... Saudi Arabia's Municipal Elections ... Spain's General Election ... Chicago's Mayoral Election: Rahm Emanuel will be fighting for his political life this February ... Britain's Parliamentary Election ... Louisiana's Gubernatorial Election ... Canada's Parliamentary Elections ... Israel's Legislative Elections ... Argentina's Presidential Election.  

When reports surfaced that Xiaomi was raising money at a $50 billion valuation in late 2014, many were incredulous. But the Chinese company, which sells high-quality phones at razor-thin margins, overtook Samsung as China’s No. 1 smartphone seller this year. Now enter a half dozen other Chinese smartphone makers—including Meizu, OnePlus, and Vivo. Look for one to have a Xiaomi-like rise next year.

Same-day delivery services like eBay Now have proven costly and unnecessary. But on-demand services with very specific functions have thrived. For this, we can blame Uber, the wildly popular on-demand car service app. Uber’s seamless simplicity has conditioned us to summon anything we need—paving the way for startups like Washio (on-demand laundry), Glam Squad (in-home hair and makeup), Instacart (groceries), and Canary (the “Uber for weed”). There’s also the simplistic app Push for Pizza, which is exactly what it sounds like. Next year, the instant gratification economy will only get bigger and more ridiculous. Not-so-far-fetched ideas for 2015: on-demand tattoos, paternity tests and day-old bread. Need someone to brush your teeth for you? It’s only a swipe and a tap away. VCs, call us.

The world economy is still recovering from the last financial crisis, but is another just on the horizon? The consensus view is no, but economist David Levy says yes. He argues that China has over-invested in its export sector for years now without commensurate growth in demand across the developed world, and that this dynamic could trigger a Chinese debt crisis in 2015 that takes down an already reeling Europe and ultimately the U.S. This isn’t a popular view, as plenty of China watchers see the globe’s second largest economy continuing to grow at twice the speed of the world at large. But if the global economy does suffer a major slowdown, trouble Middle Kingdom will be the culprit.

Standard & Poor’s 500 Index will close 2015 at 2312, a roughly 10% increase from todays’ levels.

Liquid lunches will gain in popularity, not alcohol but Chicken Tea, a wide variety of soups and consommés, are gaining strength in restaurant menus.

Mixing warm metals, such as copper and rose gold, with cool ones like silver is hot right now in interior decorating: A strategic layered mix of silvery, gold and black metals as a stylish option to home décor.

Volvo V60 wagon is the hot automobile for 2015. Starting your car remotely from your smartphone, all seat heaters, this car is wired like hunting socks. Volvo On Call package of apps and telematics provides in-vehicle WiFi and app support. The GPS system is better than the Space Shuttle. Four big side doors and a top-hinged rear hatch. Zero to 60 mph in 5 seconds plus 28 mpg on the highway. A fantastic car, hugely practical, dead sexy, super fun, a class act all the way.

Augusta National moves ahead of Pine Valley into the top spot as America’s top golf course.

Tiger Woods and Phil Mickelson will never win another major golf championship; While Rory McIlroy, Jordan Spieth and Ricky Fowler will win many.

COLLEGE CHRONICLES - 'THE THREE Cs': Coding, college readiness and community impact define Forbes' "30 Under 30" education honorees this year. Sarah Kunst, 28, gets a mention for her work with groups like Venture for America, Code2040 and the State Department's Tech Women. Strive for College Founder Michael Carter, 26, also gets a mention, along with Higher Achievement Director Amelia Castañeda.

Colleges' New Aid Target: the Middle Class. As soaring college costs saddle more students with debt, colleges are increasingly earmarking aid for students who can fall through the cracks of existing programs: those who aren't from poor families, can't necessarily maintain a 4.0 GPA or hit a three-pointer at the buzzer." http://on.wsj.com/1Bkoa96

SOBERING DATA – U.S. off war footing at year's end, but wars go on. As of Dec. 16, a total of 2,215 U.S. troops had died in Afghanistan and 19,945 had been wounded. In Iraq, 4,491 died and 32,244 wounded.

TOP FILMS - The top 10 films at the North American box office in 2014," via AP: 1. 'Guardians of the Galaxy,' $332.9 million ... 2. 'The Hunger Games: Mockingjay, Part 1,' $308.9 million ... 3. 'Captain America: The Winter Soldier,' $259.8 million ... 4. 'The Lego Movie,' $257.8 million ... 5. 'Transformers: Age of Extinction,' $245.4 million ... 6. 'Maleficent,' $241.4 million ... 7. 'X-Men: Days of Future Past,' $233.9 million ... 8. 'Dawn of the Planet of the Apes,' $208.6 million ... 9. 'The Amazing Spider-Man 2,' $202.9 million ... 10. 'Big Hero 6,' $201.5 million.

Hollywood Predictions for 2015: Rupert 'retires' ... 2. Sumner [Redstone] 'retires' ... 3. Netflix crosses over. Which side is Netflix really on ... digital or is it TV? ... 4. Television crosses over ... 5. And Facebook wants to be television, too ... 6. Comcast deals NBCU ... 7. Boutique cable is the flavor of the year ... 8. A new notion enters the media discussion[:] ... 'the end of advertising.

2014 Box Office: Admissions Lowest Since 1995; Despite a fantastic Christmas at the box office, 81 million people didn't buy movie tickets this year. Not only were this year's domestic admissions of 1.259 billion off 6% from 2013's 1.34B, but the number of tickets sold hit their lowest level since 1995 when 1.211B people went to the cinema. ... Insiders attribute the down year to lackluster product and the lack of even bigger tentpoles versus ticket prices, which remained level.

114th CONGRESS CONVENES TUE. - Energy and Obamacare will dominate the first two weeks of Republican control of Capitol Hill. House Republicans will move next week on legislation to jump-start the construction of the Keystone XL pipeline and define a full workweek as being 40 hours for the purpose of the Affordable Care Act (ACA), according to a GOP leadership aide. The goal ... is to begin passing bills that will clear both the House and the Senate and end up on President Obama's desk. ...

The GOP is also trying to get ahead of another legislative crisis. In Congress' second week in session - the week of Jan. 12 - House Republicans will seek to pass a bill to fund the Department of Homeland Security, which runs out of money Feb. 28. Speaker John Boehner and House Majority Leader Kevin McCarthy are working with Senate leaders to craft a package that also includes reforms to the nation's immigration laws. One strategy under consideration is to include a border security package in the funding bill. That could set up a major confrontation with Obama.

SQUAWK BOX MOVES – The popular CNBC early morning business program moves to New York studios on January 7. Lets’ hope host Joe Kernen stops dying his hair in 2015. Still the best business show on television, sorry Maria.

HAPPY ANNIVERSARY – 70 years for President George Bush (41) and Barbara Bush

Mario Matthew Cuomo, 1932-2015: A national liberal champion when liberalism was marginalized: Cuomo became a political sensation through a medium thought to belong to another era: words. ... He was reared in a household of Italian speakers; English ... was his second language. ... Cuomo was a relative political unknown in 1984, when the Democratic Party's presidential nominee, Walter Mondale, asked him to deliver the keynote address at the party's national convention in San Francisco. ... He offered a polite but passionate assault on Ronald Reagan's America, his shining city on a hill. ...

Cuomo disdained the term 'liberal,' preferring to describe himself as a pragmatic progressive or a progressive pragmatist.

--STATEMENT BY THE PRESIDENT: "An Italian Catholic kid from Queens, born to immigrant parents, Mario paired his faith in God and faith in America to live a life of public service -- and we are all better for it. ... Michelle and I extend our deepest condolences to Mario's wife Matilda, his children, Governor Andrew Cuomo, Maria, Margaret, Madeline, and Chris, ... and New Yorkers who loved him dearly."

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to: Nicolas Cage (50), Bradley Cooper (40), Robert Duvall (84), Nigella Lawson (55), Nancy Lopez (58), Bart Starr (80).

SPORTS BLINK - Win for ESPN, but Title Game Is the Real Test - Ohio State's 42-35 upset of Alabama in the Sugar Bowl attracted 28.27 million viewers, making it the most watched event in cable TV history. Oregon's 59-20 blowout of Florida State in the Rose Bowl had 28.16 million viewers - the most for that bowl since 35.6 million watched Texas beat Southern California in the 2006 national title game on ABC. ...

Now comes Part B for ESPN : Ohio State versus Oregon at AT&T Stadium in Arlington, Tex [Jan. 12]. Will the final's viewership soar beyond 30 million, to a level akin to that of the N.F.L. conference championship games, which averaged 53.7 million viewers last year? Or will it fall below that aspirational level without a magnet team like Alabama as a draw? I'll predict 45 million.

COLLEGE FOOTBALL PICK OF THE WEEK – College Playoff Championship Game: Monday 1/12, 8:30 PM ET, ESPN: #2 Oregon Ducks (13-1) vs. #4 Ohio State Buckeyes (13-1). The Ducks will be too much for THE Ohio State, Oregon 45 Ohio 24   Season to date (12-7)

COLLEGE HOCKEY GAME OF THE WEEK – Saturday 1/10, 7:00 PM CT, CBS: #7 Minnesota-Duluth Bulldogs (12-6) at #1 North Dakota (13-4-2). A battle for first place in the NCHC, The ex-Fighting Sioux 4 the Bulldogs 3.   Season to date (0-0)

NFL PICK OF THE WEEK – Sunday 1/11, 1:05 PM ET, Fox: Dallas Cowboys (13-4) vs. Green Bay Packers (12-4). I smell an upset, Dallas 24 The Pack 21.   Season to date (13-5)


(NFL, Jan. 11) Indianapolis Colts (12-5) 28 at Denver Broncos (12-4) 35

(SCIAC Game of the Week, Jan. 6) University of La Verne Leopards (4-6) 65 at Pomona-Pitzer Endowments (2-8) 59

(NCAA hockey, Jan. 10) #19 Yale University Bulldogs (8-3-2) 5 at #3 Harvard Crimson (10-1-2) 4

(NHL, Jan. 10) Nashville Predators (25-9-4) 3 at Minnesota Wild (18-15-4) 2

Season to date (81 - 68) – Final 2014 totals 54%

MARKET WEEK - Nonetheless, the S&P 500 chalked up its third straight year of double-digit gains, its longest streak since a five-year run from 1995 to 1999.

The euro sank to a 4-1/2-year low on Friday after comments from European Central Bank President Mario Draghi suggested the institution could soon start buying the sovereign debt of member states. Draghi said the risk of the bank falling short of its mandate on inflation targeting had risen.

Mergers and acquisitions activity reached nearly $3.5 trillion in 2014, the highest level since 2007, the New York Times reported. Dealmakers announced more than 40,000 transactions last year, in part due to cheap debt financing and accelerating stock prices.

U.S. box office receipts fell about 5.3 percent in 2014 from the previous year, the Los Angeles Times reported. American movie-goers spent an estimated $10.3 billion last year as studios released fewer blockbusters than they did in 2013.

Digital album sales fell 9 percent in the United States in 2014, and online song sales slipped 12 percent, according to Neilsen data, the Financial Times reported. Meanwhile, audio and video streaming increased more than 50 percent.

It’s the first full week of trading in 2015, and there’s no shortage of economic data on the docket leading up to Friday’s December employment report. Among the highlights, December auto sales are released today, with the ADP private-payrolls report and minutes from the latest Fed meeting out Wednesday.

The euro hit a nine-year low against the dollar, as the timetable for ECB action appears to be accelerating thanks to a storm of negatives including concern about Greek politics.

U.S. crude and Brent oil futures dropped to new five-and-a-half-year lows this morning on continued worries about a surplus of global supplies against the backdrop of weak demand.

DRIVING THE WEEK – President Obama is back in DC and the 114th Congress kicks off on Tuesday. The President will look to steal some thunder from the GOP takeover by hitting the road to preview State of the Union themes. The road trip begins Wednesday in Detroit for an event on the automobile industry and manufacturing in general. Obama is in Phoenix on Thursday for an event focused on the housing sector ... Obama and VP Biden will be in Tennessee on Friday (when the December jobs number comes out) for an event focused on a college affordability initiative ...

Auto sales come out late this afternoon and are expected to dip to 16.9M from 17.1M ... ISM non-manufacturing at 10:00 a.m. Tuesday expected to dip to 58.0 from 59.3 ... ADP employment at 8:15 pm. Wednesday expected to rise by 225K ... FOMC minutes Wednesday at 2:00 p.m. will include discussion around dropping "considerable time" and replacing it with a pledge to "be patient" on rate hikes ... BLS jobs report at 8:30 a.m. Friday expected to show a gain of 240K with the unemployment rate dropping a tenth to 5.7 percent ... House will look to move on Keystone XL and other bills they can now probably get through the Senate and to the president's desk.

Next week: 2014/2015 Tax Planning

Until Next Monday, Adios!

Claremont, CA

January 5, 2015


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