Analytical Wealth

The usual mixture of news stories and other tidbits I think you may find interesting:

An update on the Sirius-XM Radio situation: it appears that there is a proposal on the table whereby John Malone's liberty media would invest into the company in exchange for an eventual 50% stake. Nothing is definitive at this point but it does appear that Sirius-XM may not only be able to avoid bankruptcy, but avoid having to accept an investment from/being taken over by Charles Ergen. In truth this is sort of becoming a battle between Malone's Direct TV and Ergen's Dish Network, as both are eying Sirius-XM as a valuable addition to their respective empires.

For now it appears that Sirius-XM will either by rescued by one of two moguls, as I can't see the company turning down an investment from either one of them if the only other option is bankruptcy. The larger question is: how will the two companies be eventually integrated? While neither Malone or Ergen have said anything such plans, it's rather obvious that their end game is to leverage synergies from owning both a Satellite TV and a Satellite radio company.

Here are two updates related to R. Allen Stanford a Texas billionaire who runs multiple companies as part of a wealth management business:

Multiple federal agencies are looking into R. Allen Stanford's offshore bank in Antigua, their suspicions raised by the fact that the bank offers yields on CDs that are twice the national average. As a result several depositors have gone to Antigua to withdraw their money from the bank, which may serve to hasten the revelation of any fraudulent activity and/or simply cause the bank to fail altogether if the run on the bank gets large enough.

I won't comment as to the veracity of the allegations as I don't have enough information to make a judgment one way or another, I'll just say that it's about time the Feds started looking into things that are "too good to be true" before they come a problem.

Here is a look at the struggles likely to be faced by various Luxury Car Makers, according to the article all of them stand to lose money in the coming months as decreased demand in markets like the U.S. and the U.K. eat into profits. However their losses are likely to be mitigated by a combination of low debt and high cash reserves, especially when compared to their more mainstream peers.

The challenge for these companies will be to resize their operations to meet demand from the "truly affluent " as opposed to the "Poseur Class ", who used faux wealth from easy credit, housing appreciation or just plain overspending to live above their means. Think: individuals earning $50-$70k who used good credit, bad habits, etc, to finance luxury cars that were out of their realistic price range. 

For my fellow entrepreneurs here is  piece from the WSJ on how small business owners can cut their costs by renegotiating with vendors, landlords, etc.  In the current environment every dollar of savings helps, so you might as well find out if your partners are willing to work with you.

Here is a look at how the City of Charlotte, NC (AKA Wall St. South) is suffering from the fallout caused by the decline of Bank of America, and Wachovia's effective failure and later sale to Wells Fargo. How the city will fare in the future and/or it's status as a banking hub is hard to determine at this point, because we don't yet know how the dust is going to settle in the banking world in general. However I wouldn't be surprised if the city effectively loses Wachovia, but is able to mitigate some of the talent/job losses by other banks moving in to take advantage of talent, office space, etc.

But like I said it's anybody's guess what the banking world will look like ten years from now, so it's all speculation at this point.

Speaking of struggling cities here is a look at "America's Emptiest Cities" as in the cities with the highest rental and homeowner vacancy rates, in addition to having lost the most residents on a % basis. I would anticipate that there are going to be a lot of outlying suburbs that are going to suffer as well, as these areas tend to be more comprised of hastily constructed sub-divisions as opposed to being legitimate communities. Even if that's the case for a particular area, it stands to reason that the trend of "ghost town developments" will only get worse as the year rolls on.

The other thing to think about here is that a lot of condos, housing developments, etc, were built based more on demand from speculators (who purchased 25-33% of all homes during the boom) than they were from people who were looking for housing.

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.