A Cliff-Top View

There is good news here somewhere, if you look for it. The positive economic news this month is payroll growth, the unemployment rate maintaining a rate of 4.7%, and the quarterly growth rate currently posting a strong 3.9%. Hourly earnings are also up 3.8% from a year ago. The service sector in general is showing robust strength, as evidenced in the Institute of Supply Management’s October index findings, which show that the health of non-manufacturing industries rose to 55.8 vs. 54.8 in September: anything above 50 is indicative of expansion.

Conversely, one need not look far for bad- or at least, shocking, news on Wall Street, and in the press. The important bank sector is nervous about each banking firm’s exposure to a declining housing market, and the related credit and credit-asset losses that have been announced in the third and fourth quarters. These conditions are encouraging tighter lending standards at lending institutions.

40% of the bank respondents to a Federal Reserve survey related to Prime Mortgage lending said standards for the best loans have been tightened. Therefore, the sub-prime mortgage situation has created conditions that make it harder for qualified borrowers to qualify, for not only mortgages- but other forms of credit, too. These developments could chill the economy as Americans get into the holiday season shopping spirit.

Other top executives on Wall Street are under fire for performance-related and credit market related financial catastrophes. UBS, along with Merrill, Bank of America, Bear Stearns, and Citigroup, has announced multiple-billion dollar write-downs. Deutsche Bank and Credit Suisse have been more tight-lipped about loss exposure, and the markets are waiting for that information to round out perceptions of how bad this CDO and SIV situation could get.  Wachovia Bank is expected to increase its loan loss provisions as well, while Wells Fargo has managed to stay out of the news relative to the CDO mess.

As markets tumble with the delivery of negative investment related news, this is a perfect time for the best financial advisors and Wall Street professionals to sharpen their competitive advantage, and coddle nervous clients, leading them in decisive directions. Not only can a conscientious professional secure new relationships, but work can also be done to strengthen existing ones as they work to lower the risk and protect the assets of desired clients, with sound methods of risk management.

One can work to increase the level of communication when it is appreciated the most. Contrary to this, is the un-trusted advisor that is hiding from clients expecting the worst, and cowering from the worry of delivering bad news. This often includes having to re-sell products and services delivered long ago, and to possibly re-justify fees and services. One’s state of mind and positive attitude will determine the outcome of these two very different outcomes. Either way, a tremendous opportunity presents itself to deepen the personal relationships we thrive on in the service industry, when crises threaten the emotional balance of a customer or even fellow employees. It might be the time to take personal inventory about what you are doing to enhance your opportunities?

Deragon Executive Search is in urgent need of experienced, professional advisors in a dozen locations in the San Francisco Bay Area, with the CFP designation at a premium. Our Southern California activity has similar needs though not as numerous, and we are looking for business development professionals on the West Side of LA.  If you are interested in growth and new opportunities, please contact us at (805) 783-0292, or visit our website www.deragons.com.

• Quan Zhu, a former executive at Countrywide Financial Corp., was recently charged for insider trading after he sold stock three years ago, just prior to negative earning results were posted. Zhu settled without admitting or denying the allegations by paying $110,000 in fines.
• Morgan Stanley reports that it sees a $3.7 billion write-down in its subprime assets for Sept.-Oct., with potential losses of up to $6 billion.
• Visa has agreed to pay rival American Express $2.5 billion to settle antitrust allegations brought forth against the no.1 credit card network and MasterCard.
• IndyMac Bancorp took a loss in the third quarter that was six times worse than expected, $2.74 a share ex items.
• Deutsche Bank’s said it’s third quarter net profit grew 31% to $2.33 billion, beating it’s own forecast.
• Consumer confidence has plunged to the lowest level since Hurricane Katrina in 2005. The RBC Cash Index marked consumer confidence at 64, down from an 80.6 reading in early October.
• The 30-year fixed-rate loan fell 2 basis points to 6.24% in the week ended Nov. 8, Freddie Mac said.  The rate has not been this low since mid-May.
• Oil prices made a threatening move closer to $100 a barrel.  The record high settled in at $98.62 a barrel on November 7th.
• Applications for unemployment benefits fell 13,000, according to the Labor Dept. Recent wildfires helped boost claims by 3,000.

• More tech companies are trying email-free Fridays to foster more face-to-face communications in a bid to bolster the exchange of ideas. –USA Today


• A jacket designed with global positioning satellite equipment is gaining popularity with parents in Britain.  Clothing maker, Blade Runner, introduced the GPS jacket with a price of $510, and a monthly satellite charge of $20. –Investors Business Daily  (IBD)


• A Secret Service study found that less than 20% of identity crimes are done over the internet, rather are using low-tech methods such re-routing mail and dumpster diving for personal financial records.  The study also showed that two-thirds of ID thieves are men 25-34 years old. –IBD


• According to a new Harris poll, 79% of the US population is using the Internet regularly –only 9% were in 1995.  The average time spent online is 11 hours a week. -IBD

Confidence

You have to pretend you’re 100% sure.  You have to take action; you can’t hesitate or hedge your bets.  Anything less will condemn your efforts to failure.
–Andrew Grove, Intel co-founder

Free Enterprise

Some see private enterprise as a predatory target to be shot—others as a cow ready to be milked.  But few are those who see it as a sturdy horse pulling the wagon.
–Winston Churchill, British Prime Minister

Observation

I don’t make jokes.  I just watch the government and report the facts.
–Will Rogers, humorist

Leadership

The task of the leader is to get his people from where they are to where they have not been.
–Henry Kissinger, secretary of state