Monday, May 28, 2007

Mainstream Media Love Tech Again

As I've noted in a number of posts, tech is back, big time. I believe this tech 2.0 cycle is in the early innings of a nine inning game. Gradually over the last year, wall street and the main stream media seem to have caught on. Touting tech is no longer taboo as the wounds of the dot com era have been mostly healed or forgotten. The silicon valley companies of today are better run, more tangible, and vastly more profitable than their fallen brethren of the past.

In Fierce Competition, Google Finds Novel Ways to Feed Hiring Machine

MOUNTAIN VIEW, Calif. — On a spring Saturday, about 90 students from Stanford and as many from the University of California, Berkeley, converged on Google’s corporate campus for a day of spirited team competition over mind-bending puzzles, Lego building problems and video games.

It was called the Google Games, a convivial way for the mostly computer science and engineering students to renew the Stanford-Berkeley rivalry. But behind the fun was a serious corporate recruiting event that underscores a rivalry no less intense: the tug of war for talent between Google and its competitors.

As much of the high-tech industry is enjoying a renewed boom, the competition for top recruits in engineering and other fields is as intense as ever. Companies like Google, Microsoft and Yahoo frequently find themselves going after the same candidates or recruiting in one another’s backyards. At the same time, they are running up against a myriad of start-up companies across Silicon Valley that have been pumped up with venture capital in recent years.............

Excerpts from NY Times

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Wednesday, May 23, 2007

VC's on the Rise

The prospects for the northern California economy look very promising with venture capital on the rise. Could the number break $30 Billion this year? Remember almost 1/2 of all U.S. venture capital goes through California......

VC investments reach 5-year high nationwide

"Venture capitalists invested $7.1 billion in the United States during the first three months of the year, lifting the industry to its biggest quarter in more than five years, according to figures to be released today.

The amount spread across 778 deals represented the most venture capital to pour into start-ups in a quarter since the final three months of 2001, based on data compiled by PricewaterhouseCoopers, Thomson Financial and the National Venture Capital Association.

The first-quarter flurry represented an 11 percent increase from the $6.3 billion invested by venture capitalists at the same time last year.

The fast start indicates "this will be a breakout year for U.S. venture capital," said Darrell Pinto, Thomson Financial's director of global private equity performance. "

By Michael Lied - the Associated Press

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Saturday, May 19, 2007

Job Growth Still Strong In Sacramento

Just the Facts Please:
Over 27,000 new Jobs in Sacramento in the last year at a growth rate of 3%.
Over 260,000 new jobs in California in the last 12 months.
Looks like a strong foundation for growth.

From the Sacramento Business Journal

Region still adding jobs

The four-county Sacramento metro area added 3,300 jobs in April to reach 924,600 jobs, keeping the local unemployment rate at 4.9 percent, unchanged from March.

Gains were scattered across several industries, with the biggest monthly gains in professional and business services at 1,100 and agriculture at 900, according to data issued Friday by the California Employment Development Department. There were small declines in leisure and hospitality as the ski season limped to a close; in finance because of mortgage-industry woes; and in transportation and utilities, possibly related to high gas prices.

Year-over-year, the four-county area added 27,300 jobs, a "relatively strong" 3 percent gain, EDD reported. Nearly half of the game came from growth in state and local government, public service, education and health care. The region also added 2,900 construction jobs despite the housing slowdown, although part of that gain may reflect the earlier start to the 2007 construction season compared to the rainy spring of 2006.

The local jobless rate of 4.9 percent is unadjusted for seasonal variations, and compares with an unadjusted rate of 5 percent for California and 4.3 percent for the United States. California's seasonally adjusted rate for April was 5.1 percent, up from 4.8 percent in March; California added 7,400 jobs to reach 15,250,200, state officials reported. That reflects growth of more than 266,000 jobs year-over-year, up 1.8 percent.

Sacramento Business Journal - 11:56 AM PDT Friday, May 18, 2007

Story Link Here

Wednesday, May 16, 2007

Reasons to Feel Good

Since my last post we've been treated to a few "bright" spots in some recent economic indicators.

First of all, as I've reiterated dozens of times............inflation was not and is not a threat. The Fed should be preparing to cut rates to meet the market . Though they will continue to talk big, I see rate cuts coming starting in Q3.

Here are the recent numbers on our tame inflation picture:

May 11th - Core PPI - Expected: .2% - Actual .0% - that's right nada

May 15th - Core CPI - Expected .2% - Actual .2% - with the 12 month number at 2.1% - just a rounding error from the Fed's "comfort" level.

Excerpt Regarding Inflation from May 15 WSJ -

"Early Tuesday, the Labor Department said the April consumer price index rose 0.4%, but the core CPI, which excludes volatile food and energy prices, advanced just 0.2%. The data, which largely matched Wall Street forecasts for a 0.5% CPI increase and 0.2% core rise, suggest inflation remains tame. That reinforced a growing belief among investors that Federal Reserve policy makers will cut rates later this year.

"I read [the CPI data] as very bullish for the economy," said Timothy Rogers, chief economist at "I suspect that the reasons for the Fed to tighten [credit by raising interest rates] have largely disappeared." Mr. Rogers expects central bankers to cut their target lending rate by a quarter percentage point in the fourth quarter.

Lower interest rates make borrowing cheaper and spur investment, so hopes for lower rates tend to boost stocks. However, they can also fuel inflation, which until recently was higher than the Fed's supposed comfort zone. Now that price growth seems to have slowed, the Fed may feel freer to soften its vigilant stance on inflation and perhaps even cut rates.

In addition, a Fed reading on the health of the New York manufacturing sector met expectations, increasing from April and signaling a possible rebound in manufacturing overall."

And last but not least the backbone of our economy retrenched in April. Industrial production knocked the cover off the ball today coming in at .7%, significantly higher than the .2% expected.

Monday, May 07, 2007

Memo To Bernanke: It's Ok to Cut Too

I have reiterated ad nauseam on this blog that inflation is not a threat nor has it been at any time in recent memory. The Fed has successfuly snuffed out any chance of inflation and then some. Not long ago I mentioned as evidence the flat yield curve and the Tips spread. Not convinced? How about the two year treasury yield suggesting the fed is at least 75 basis points too tight. Another back of the napkin calculation taking Q107's nominal GDP growth of 4.7% and subtracting the Fed Funds rate of 5.25% causing a trend in the economy toward negative growth of almost 3/4%. Negative growth means monetary policy is too tight. In other words.............the only thing that can derail this goldilocks economy is an overzealous Fed targeting housing (succeeded) and employment (succeeding - I'm a little troubled by April's weak job number especially the downward revisions for Feb and March). Do they realize their policy has a lagging consequence? I'm starting to wonder. So as many are suggesting the Fed should declare victory on inflation and worry about growth again. I believe the Fed target rate should hit 4.5% by the end of the year. Bookmark this now and come back and see..........

Wednesday, May 02, 2007

Upside Surprise

Some great news that might well depict and end to the argument of Goldilocks and a soft landing. Factory orders were 50% higher than expected, durable good orders exceeded expectations, and the ISM number was the best in 11 months.....

U.S. Factory Orders Rise Sharply
Orders to U.S. Factories Jump in March by the Largest Amount in a Year

"WASHINGTON (AP) -- Orders to U.S. factories surged in March by the largest amount in a year, an encouraging sign that the recent slowdown in manufacturing may be ending.

The Commerce Department said Wednesday that total factory orders rose by 3.1 percent in March, pushed higher by a big jump in demand for commercial aircraft and the biggest rise in the category that tracks business investment in new equipment in 2 1/2 years.

The increase was far better than the 2 percent figure that analysts had been expecting and offered hope that manufacturers were beginning to experience rising demand after a recent weak period brought on by troubles in housing and auto sales.

The good news on factory orders followed a report from the Institute for Supply Management that its closely watched gauge of manufacturing activity rose to 54.7 in April, the best showing in 11 months......."

By Martin Crutsinger, AP Economics Writer

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