North America’s future looks bright, according to David Petraeus and Vance Serchuk of KKR

Former general and CIA director made KKR Global Institute chairman David Petraeus was joined by fellow KKR executive Vance Serchuk to conduct an interview with Privcap that I recently got around to watching, and if the geopolitical climate interests you then KKR seems to have good news – the world is improving. Though the interviewees made a point to acknowledge the various struggles and conflicts around the world, they mostly highlighted how good North America really has it relative to other regions.

There are some interesting points from the interview that your average American citizen would call counterintuitive. According to Mr. Petraeus, we are the “the largest natural gas producers in the world and we have an extraordinary comparative advantage when it comes to natural gas”, paying between $3.70 and $3.80 per million BTU’s (British Thermal Units) compared to $16 or $17 in China for the same amount. We are evidently not as fuel-starved as many people believe.

Compounded on this, Petraeus was optimistic on energy for North America as a whole thanks to allies Canada and Mexico “having quite a lot of energy resources of their own already.” The overall result according to KKR is that North America has a lot of economic freedom as they are not leashed by energy imports from foreign countries, compared to say, Western Europe which is dependent on Russian sources of gas.

Mr. Serchuk mentioned another North American advantage – relative age. Thanks to immigration, the average age of the US population is dropping as we begin to recover from our recession. Comparatively, China’s population is aging rapidly due to demographic difficulties while suffering major brain drain as the wealthy and academic elite leave for North America and Europe and deplete China’s intellectual resources.

An oversimplification of global politics? Definitely, but the takeaway is that while North America is well positioned for success in the near future, the impetus is on North American governments and companies to use that position to its full potential. Successful reform of government and a more global-minded cultural mindset could lead to major positive change, as the region certainly has the natural resources and tools available to make that happen.

Update on Kerry’s Asia Trip

John Kerry © Center for American Progress Action Fund

Secretary of State John Kerry finished his Asian tour in place of President Obama in October after Obama decided to drop out to deal with the ramifications of the government shutdown. I had previously discussed the implications of the shutdown on this trip (see it here: https://lucaswalters24.wordpress.com/2013/10/29/government-shutdown-and-implications-for-asia/), and I figured it would be pertinent to follow up and see how it all turned out.

While on his trip, Kerry essentially made an I.O.U. response to the people of Malaysia when he stated that the country was a great one and President Obama would definitely be sure to visit sometime in the near future or so. Kerry also made sure to highlight the economic progress made by the country stating that Malaysia was successful in generating entrepreneurs in a multicultural area. He met with Malaysian Prime Minister Datuk Seri Najib Tun Razak among other leaders (both political leaders and economic leaders) as he spoke at the fourth Global Entrepreneurship Summit in Kuala Lumpur, Malaysia. Kerry also made sure to reiterate the importance of their market on our own economy when he said that it was critical to President Obama’s rebalance in Asia.; he said he hopes to strengthen the bond between the nations through the ASEAN organization.

This trip was particularly important for our nation because of China’s influence in Southeast Asia. Countries are looking for investors in the two countries, and by missing out on this summit we were inviting China to come in a instill a sense of functionality and confidence (mostly due to our own government shutdown–if we can’t take care of our own people, how can countries like Malaysia be confident in investing in us?). We needed to make this visit, and hopefully even though the President backed out of attending, our relationships with Southeast Asia will continue to improve.

On the importance of writing skills

The writing process ©jjpacres

Writing is one of the essential parts of being a functioning human. It is an important part of how we communicate. It’s how we share ideas. It’s what separates us from other species on Earth–besides opposable thumbs. Writing is critical to how we function. So why is this skill (yes, even just calling it a skill is somewhat cringeworthy as I believe writing is like eating–necessary to survive) something that people are lacking? Why is this something so desired by employers and yet hard to find? Shouldn’t we as productive members of society be able to communicate through writing?

Apparently not.

Employers are constantly reporting their difficulty in finding qualified candidates in the job pool, despite the fact that unemployment is still stubbornly pretty high. But what most often seems to be the case is the lack of writing skills that job seekers possess. Grammatical errors on a resumé (GASP) will immediately turn your extremely qualified experience into slush. You managed executive offices or consulted on high profile tax audits, but those glaringly obvious grammatical mistakes reduce your credibility by a large margin.

Not only are mistakes on the resumé something employers worry about, but they also worry about the writing skill as a whole package. Can you string together strong sentences utilizing different structures. Do you have an impressive vocabulary which permits you to procure, not inveigle, a Laodicean contingent? When we are learning these skills in school, we focus mostly on grammar, sentence structure and the ability to convey ideas. Some people argue the skill of effective writing gets lost in this structure. You won’t aggressively learn how to persuade a potential client through an email in school. And that’s exactly what the problem is. How are we supposed to learn these types of skills? Well, by communicating. Except, communication is no longer the practice of a healthy habit.

With social media polluting our grammatical habits (Seriously, how many people don’t know the difference between its vs. it’s, or affect vs. effect??) and texting causing words and numerals to be jumbled together to create a new language, it isn’t hard to see where we are failing in conveying strong writing skills. Basic grammar is slipping; and if we don’t do something about it, we will eventually find our methods of communication becoming something close to garbled junk.

Government Shutdown: How did this affect the jobs report?

©Cool Revolution

The jobs report for October is the object of scrutiny after its release reported a solid monthly increase–seemingly without any impact from the government shutdown. Analysts were quick to tackle what the statistics meant, and what started out as an extremely positive jobs report quickly turned into something more confusing.

The October jobs report found 204,000 workers had been added, all without any regard to the government shutdown. It was especially confusing since the furloughed workers would have technically been labeled as unemployed during that period. Also to take into consideration: the shutdown forced the report to come out a week late–a week that employers used to tally more added employees that normally wouldn’t have been included until the November report.

“Businesses may have inadvertently counted employment for an extra week,” said Mark Zandi, chief economist at Moody’s Analytics. “That could juice up the number. That may mean that we actually get surprised next month with a much weaker number.”*

*Quote lifted from Associated Press story: “The Shutdown’s Surprise Effect on Jobs Numbers”.

Included in the complications of the reporting were the furloughed workers themselves. Some workers were classified as being unemployed (which technically they were during the shutdown), while some furloughed workers were still reported to the jobs report as being employed. This upped the unemployment rate from 7.2 to 7.3, but it also stopped the report from stating the even higher current unemployment rate due to the shutdown.

November will likely have much less growth than the October report put out, seeing as a week of employment records were tacked onto October, but in December the report should be free of any anomalies related to the government shutdown.

Coffee Break: David Petraeus

David Petraeus ©U.S. Navy Chief Petty Officer Joshua Treadwell

Typically my “Coffee Break” posts on this blog are dedicated to fun interesting tidbits I find while cruising the interweb or other individual interests of mine unrelated to finance. However, this CB (Coffee Break) is a little different because it involves unrelated news mixed in with semi-related news. So here we go!

I’m calling this a Double Shot Coffee Break for its relevancy.

David Petraeus is back in the news, this time commenting on the state of Iraq. And like all news relating to Iraq, it’s sounding pretty grim. The relevancy in this article is how David Petraeus recently started working for KKR Global Institute (the global investment firm). Remember this? (http://www.huffingtonpost.com/2013/05/30/david-petraeus-kkr_n_3358253.html) Anytime you have someone high profile like David Petraeus working for your investment firm, their news becomes your news, so good job for KKR.

Back to Iraq and David Petraeus. In a new report released on November 2, 2013, David Petraeus has released a comment on the state of Iraq and saying the country is back on a back track. Giving examples like the resurrection of al Qaeda in Iraq and the civil war nearby in Syria, Petraeus believes this has thrown the Iraqi government into dysfunction. All in all, he believes Iraq currently looks worse today than it did in 2006. (All this can be found in an article written by David Petraeus for the Sun Herald.)

Iraq in 2006 was a disjointed mess, which led to the famous and effective Iraqi surge that took place in 2007. If Petraeus is right about Iraq, what does this mean for the United States and our future actions for the country?

Canadian oil will move through US with or without Keystone

Crude oil pipeline construction in Jefferson County. ©Ray Bodden

Few things in the business world are as controversial as social issues in politics. But one of the most controversial items this country faces is the construction of the Keystone pipeline. On one hand, people argue the pipeline will bring in large amounts of revenue and provide thousands of new jobs and help grow our economy. On the other hand are the environmentally driven people who argue against crude oil being shipped straight through the heart of the country and want the focus of energy to be on “green” jobs.

The latest news surrounding the Keystone pipeline, however, is likely to unite the two sides with frustration. Canadian oil will soon begin to be shipped through the United States by way of rail cars. Two Canadian railroad companies have already reported the amount of oil being moved followed by the growing demand for new shipments. Canadian Pacific, in particular, said it could expect to see 90,000 carloads by the end of the year, which is up from 65,000 carloads from the beginning of the year.

This new information brings the Keystone issue back to the front of the debate floor. If the oil is going to be transported through the US regardless of the Keystone pipeline, should we continue to fight against its production, especially if it will create new jobs?

Canadian National Railroad ©Space Ritual

SAC Capital set to pay total fine of 1.8 billion for insider trading

SAC Capital, led by billionaire hedge fund manager Steve Cohen, will plead guilty to the charges brought upon the firm by the federal government and pay a fine of $1.2 billion in addition to the previous fine of $616 million. This bring the total fine to a record $1.8 billion. In addition to this amount, SAC Capital will also close its investment advisory business, which would stop it from managing money of any outside investors. Criminal charges for Cohen are still possible as the firm’s guilty plea and fine do not include any kind of immunity or exemption for employees. Cohen still has civil charges being brought against him by the federal government, although any action has been delayed until the end of the current criminal investigation.

Steve Cohen and judge. ©Insider Monkey
www.insidermonkey.co

Cohen’s defense is worried about the impact of the firm’s guilty plea that will be felt in the media. Headlines with the guilty plea may taint the jury pool for any criminal charges and remove Cohen’s right to a fair trial.

Mr. Cohen has assured his investors that he acted accordingly with the law, with some people noting that he is positive the federal government is trying to shut him down and close his business. Keep checking back for more information as I continue to follow this story!

Kenneth Mehlman of KKR on investing in private equity

Kenneth Mehlman of KKR ©Katherine Ruddy

I stumbled upon this video of Kenneth Mehlman of KKR explaining the benefits of investing in private equity. The video is short, but I believe he explains with finesse the complicated process of understanding  private equity.

The link to the video can be found here: http://bigthink.com/users/kenmehlman

And here’s a quote:

“We look at our recent funds. There are 9 million retirees. A lot of them were once teachers. They were firemen or police. There are folks who have worked very hard all their lives; and because their state pension fund chose to invest in private equity, their returns are better and their retirement is more secure. And what that means is that the communities in which they operate, which otherwise might have to divert resources away from public services or education to pay for their retirement, they don’t have to.”

In addition to the private equity video, the link also has two more videos with Mehlman. One on the effects of government regulations and the other dealing with social policies within the Republican party. Good stuff.

For more information on Ken Mehlman, visit some of these sites!

Kenneth Mehlman – Jewish Virtual Library

(This one is a biography page. Interesting facts about his career and life as he ventured from the public sector into the private sector.)

Here are two links to his political stances on social issues. Kenneth Mehlman is famous for coming out of the closet and being a prominent member of the Republican party to advocate for gay marriage rights. You can check out a couple instances where Mr. Mehlman made the news based on his advocacy.

Kenneth Mehlman – Gay Marriage Mission

Reince Priebus vs. Kenneth Mehlman on Gay Marriage

 

Sean King concerned about shutdown implications for Asia

President Obama ©Justin Sloan

America isn’t the only country affected by the recent government shutdown; the effects are clear overseas in countries closely intertwined with our economy. But in order to combat the political problem at home, President Obama had to trim back on his trip to Malaysia and the Philippines–a move Sean King, Park Strategies’ Vice President, called “a lost opportunity.”

“Malaysia’s kind of ‘whatever,’ but missing the Philippines hurts, as Manila’s been such a key cog in America’s Asia pivot wheel,” says Sean King, senior vice president with the political consulting firm Park Strategies in New York and Taipei, Taiwan. “It’s a lost opportunity for sure.”

The full link to the article is here:
http://www.csmonitor.com/World/Asia-Pacific/2013/1003/Will-shortened-Obama-trip-to-Asia-buoy-China-video

And here’s a video where King had previously discussed the “Asia pivot”:

http://www.youtube.com/watch?v=3ONt7jLA3EU

(Fun fact from Google research on Sean King: Apparently he is fluent in Swedish. Yup.)

Back to why it matters

The point of the Obama trip to these countries was to meet with leaders to discuss the United States government involvement in a “rebalancing” of resources. These economic summits are vitally important to the global economy (and not just the growing economies in Malaysia and the Philippines), and our lack of presence only opens the door of opportunity for our rival country: China. In other words, how easy would it be for China to draw up support from these countries with the U.S. government collapsing on itself AND President Obama backing out on attending these summits? It doesn’t exactly send a message of concern or interest to these countries.

John Kerry is set to attend the summits in lieu of Mr. Obama. Whether or not Kerry’s presence will be enough to keep these countries interested in working with us and not China remains to be seen.

* See Sean King’s credentials on his Park Strategies CV.

JPMorgan latest to face implications from Madoff scheme

Do not pass Go. Do not collect $200. ©Mario Piperni

Bernie Madoff is back! (Not that he ever TRULY went away.)

Apparently, the country just can’t wash the bad Madoff taste out of its mouth. The man who enacted one of the largest ponzi schemes and screwed over Kevin Bacon has been pulled back into the public eye now that investigators are moving forward with new action in the investigation of JPMorgan Chase. The people briefed on the inquiry said the government could announce its course of action by the end of the year, bringing the multiple year investigation to a close.

Prosecutors are pushing for criminal charges to be brought against several undisclosed employees of JPMorgan who they believe turned a blind eye to the shady business strategies of Mr. Madoff–specifically, whether or not certain players at the bank failed to alert federal authorities of Madoff’s conduct. JPMorgan had served as his primary bank for roughly two decades. The prosecution is more inclined to go after a deferred prosecution agreement in favor of a guilty plea. Though, whatever the government chooses in relation to the bank will be bound to tie the entity to the infamous scheme, which won’t return JPMorgan with the best reputation. (Note: sarcasm.) The most daunting implication of this outcome would likely cause investors to withdraw from the bank.

Bernie Madoff is currently serving a maximum life sentence of 150 years, which is  76 years longer than the average life expectancy of an American man. Easy to say he won’t be entering back into the private sector any time soon, though his backdoor dealing and schemes will continue to reverberate throughout Wall Street.