Market Correction: "THERE it is"

Gold Down 3% . . Mosaic Down 5% . . . Apple Down 3% etc.

If you're a fan of "30 Rock," you'll recognize Liz Lemon's signature line ("There it is . . ") when she spots the inevitable flaw in her prospective new, too-good-to-be-true suitor.

So, for everyone waiting for a break in what's been an uninterrupted tear for such things as commodities and high-flying stocks . . . "[t]here it is."

Whether today's sell-off is due to profit taking, or Cisco's earnings miss, or tightening Chinese monetary policy -- remains to be seen.

"Bidding War" Dynamics Shift

Sellers Fret Over Scaring Off Buyers

Interesting tidbit from today's Wall Street Journal (my paraphrase):

Whereas a few years ago the two rival Buyers might have been drawn into competitive bidding, this time the Seller "concluded that the risk of the first Buyer terminating its discussions with the Seller outweighed the benefits" of soliciting an offer from another Buyer.

A would-be home Seller trying not to scare off a prospective Buyer?

Not exactly.

The article, titled "Gap Widens Between Tech Richest and the Rest," discusses Starent Networks Corp. and its decision not to jeopardize an offer on the table from Cisco by soliciting a competing bid from Juniper Networks.

Starent accepted Cisco's $2.9 billion offer last October.

Subtract 5 zeroes, and the foregoing applies pretty well to today's housing market.

Cisco for General Motors

Economic Watersheds & Financial Footprints

If you follow the Dow Jones Average, you know that General Motors was recently dropped for Cisco Systems (and Citigroup for Travelers).

Locally, there is an echo of this "changing of the guard": the old Ford Motor dealership in St. Louis Park, near 36th St. and Highway 100, is out, and a new LA Fitness is on the way in (hard bodies for car bodies??).

Leaving aside what happened to Detroit and why, there is an obvious economic difference between a manufacturer like Ford, and a service business like a health club.

Think of it this way: each car sale creates demand for car parts, steel manufacturing, repair services, auto insurance, banking and finance, etc. Economists call this a multiplier effect.

By comparison, what you might call the "financial footprint" of a health club is much smaller.

On the plus side, at least it can't be outsourced . . .