Is Lance Armstrong losing his appeal as a corporate pitchman?
Lance Armstrong is one of the most beloved athletes in the United States, and his status as a champion as a cancer survivor has made him the ultimate corporate pitchman. Now, amid a growing story around doping allegations, can Armstrong stay on top? We’ve seen other athletes like LeBron James destroy their brands overnight with their own stupidity, but here events are out of Armstrong’s control.
I can’t find the link, but the magazine version of BusinessWeek recently ran a short story on how Lance Armstrong’s reputation has been taking a hit recently. Google searches using his name in combination with terms like steroids, drugs, liar, scandal, probe, etc. are growing.
The media is also starting to turn on him. In a recent blog post, Rich Karlgaard discusses the tragedy of Lance Armstrong and gives a powerful argument on why he know believes that Armstrong cheated.
Meanwhile, Armstrong has hired a criminal defense lawyer. That can’t be a good sign.
UPDATE: The New York Times just published a long piece on this subject. One thing I learned there involved the amount of money our U.S. Postal Service paid Armstrong to sponsor his team. Do we really need this government agency sponsoring cycling teams?
Posted in: Advertising
Tags: celebrity pitchman, endorsements, Lance Armstrong, Lance Armstrong brand, Lance Armstrong drugs, Lance Armstrong endorsements, Lance Armstrong Google searches, Lance Armstrong liar, Lance Armstrong pitchman, Lance Armstrong probe, Lance Armstrong scandal, Lance Armstrong steroids, LeBron James, LeBron James brand, LeBron James stupidity, personal brand, Rich Karlgaard, tragedy of Lance Armstrong
Mortgage rates keep falling
How low can home mortgage rates go? They keep falling.
The interest rate for a 30-year mortgage fell for the eighth time in nine weeks, according to a widely watched survey, with the record lows triggering the highest volume of home refinancing in 15 months.
Freddie Mac’s weekly report on lenders said solid borrowers with 20% down payments or home equity were being offered 30-year fixed-rate loans at an average of 4.42% this week, down from 4.44% a week earlier. The borrowers would have paid 0.6% of the loan amount in upfront lender fees.
The average 30-year interest rate recorded by the survey has not risen in nine weeks, although it remained flat at 4.57% for the weeks ending July 8 and July 15.
One reason is the terrible housing market. Homeowner confidence in the real estate market has dipped again.
Homeowners(i) are more pessimistic about the short-term future of home values in their local market than they have been in the past three quarters, according to the Zillow second quarter Homeowner Confidence Survey(ii). One-third (33 percent) believe home values in their local housing market have not yet reached a bottom, while 38 percent believe they have already reached a bottom.
Clearly, the foreclosure crisis has a long way to go.
Posted in: Economy, Personal Finance, Real Estate
Tags: 30-year fixed-rate loans, 30-year mortgage, down payments, foreclosure crisis, foreclusures, Freddie Mac, home borrowers, home foreclosures, home lenders, home mortgage, home mortgage rates, home refinancing, home values, Homeowner Confidence Survey, housing market, interest rates, low mortgage rates, mortgage rates, mortgages, upfront lender fees, Zillow
The battle regarding Elizabeth Warren
Elizabeth Warren has been a hot topic on both Capital Hill and Wall Street, as many are waiting to see whether she will be appointed as the head of the new Consumer Protection Agency.
The New York Times has written an editorial supporting her nomination. Meanwhile, more Democratic Senators are lining up to support her. Meanwhile, Warren is reaching out to some Republicans and lobbyists.
Chris Dodd has expressed concern over whether she can be confirmed, but many liberals argue that a fight with Wall Street supporters would help the administration heading into the midterm elections and would help fire up the liberal base.
We think this is a no-brainer for Obama – appoint her already!
The President’s economic team
Here’s an excellent article on how the White House economic team is organized. When you read about the President’s economic advisers, this article can help you understand how they all work together. It can also help you understand how different personalities work together, from Christina Romer to Larry Summers to Tim Geithner.
Thanks to Ezra Klein for the link. Ezra also has a great post on how Larry Summers might now be the ideal candidate to run the National Economic Council, given the nature of his personality.
Boutique investment banking firms are back
Wall Street went crazy over the past 15 years, and we had mega-banks gobbling up prominent investment houses, and then making risky trades on their own account with the stockholders, and then the U.S. taxpayers footing the bill.
Now things are changing, hopefully in a good way.
It’s been a miserable few years for investment banks. Between epochal meltdowns, shotgun marriages, a federal pay czar, congressional investigations, reform legislation, and SEC lawsuits, even the proudest firms have been flayed (often for good reason). One of the less publicized results of that tumult has been an exodus of talent. But many bankers aren’t fleeing Wall Street — they’re fleeing to the other side of the Street: small boutique firms that eschew the proprietary trading and lending to their clients that the giant banks emphasize. These younger firms hark back to a venerable model of financial firms, selling only advice.
The biggest and fastest-rising of these outfits is Evercore Partners (EVR), headed by Roger Altman, the ultraconnected former U.S. Treasury official, and Ralph Schlosstein, a superstar who joined the firm last year from BlackRock (BLK, Fortune 500). Evercore shuns risk — no trading for its own account, no lending — and prides itself on avoiding everything that brought the Citigroups (C, Fortune 500) and Goldman Sachses (GS, Fortune 500) to grief. Instead, Evercore’s main service is providing advice to CEOs on mergers and restructurings.
This is the way it should be.
Posted in: Finance, Markets
Tags: BlackRock, boutique investment banking, Citigroup, Evercore Partners, federal pay czar, Goldman Sachs, investment banking, investment banking firms, investment risk, Ralph Schlosstein, Roger Altman, SEC, Wall Street
The pro-business recovery
Ezra Klein takes on the ridiculous notion that the Obama administration.
This White House has “vilified industries,” complains the Chamber of Commerce. America is burdened with “an anti-business president,” moans The Weekly Standard.
Would that all presidents were this anti-business: according to the St. Louis Federal Reserve, corporate profits hit $1.37 trillion in the first quarter—an all-time high. Businesses are sitting on about $2 trillion in cash reserves. Business spending jumped 20 percent last quarter, and is up by 13 percent against 2009. The Obama administration has dropped taxes for small businesses and big ones alike. Maybe the president could be anti-me for a while. I could use the money.
The reality is that America’s supposedly anti-business president has led an extremely pro-business recovery. The corporate community has recovered first, and best.
He goes on to explain how deep recessions take time to recover. Read it for a dose of reality.
We shouldn’t be surprised, but less than a year after the largest bailout of Wall Street in history, somehow the government is anti-business. What a joke.
In stunning move, HP dumps CEO Hurd
This was a real shocker. Mark Hurd is known for the operational discipline he brought to HP, but now he’s been ousted for fudging his expense reports to cover up a personal relationship.
Mark V. Hurd, who turned Hewlett-Packard into the world’s largest technology company on the back of fierce fiscal discipline, has been ousted from his post for the lowliest of corporate offenses — fudging his expenses.
H.P.’s board stunned Silicon Valley and Wall Street late Friday by announcing Mr. Hurd’s resignation as chairman and chief executive of the computing and printing giant, involving what it said was a “close personal relationship” with a contractor who helped with the company’s marketing.
The woman’s lawyer contacted the company in late June, charging sexual harassment. While the directors were investigating that charge, they found inaccurate expense reports that covered payments made to the woman. The directors said, however, that the sexual harassment charge was unsubstantiated.
The board charged that Mr. Hurd, 53, failed to disclose his use of company funds. It urged Mr. Hurd to resign, but he balked and offered to compensate the company for the disputed funds, said to range from $1,000 to $20,000, according to a person close to Mr. Hurd who was briefed on the situation but was not authorized to speak publicly.
The board, however, insisted. “This was a necessary decision,” said Marc L. Andreessen, a venture capitalist and a director.
This seems like an extreme reaction, to say the least. It’s interesting that Hurd fought to keep his job – at least the story makes more sense now. It’s hard to imagine someone like him voluntarily quitting his CEO post over such an offense.
That said, the guy was pretty stupid.
Hurd helped to save HP after the mess left by Carly Fiorina, so it has to hurt letting such an operational genius go. But, it may have come at a good time for HP, as the company has squeezed out quite a bit of efficiency, and in the long run innovation and strategy matter as well.
Posted in: General Business, Markets, Technology
Tags: business strategy, fiscal discipline, Hewlett-Packard, HP, innovation, Marc Andreessen, Mark Hurd, Mark Hurd resigns, operational discipline, sexual harassment, Silicon Valley, Wall Street
Christina Romer leaves the Obama administration
Christina Romer is leaving the Obama administration.
Romer, who chairs the Council of Economic Advisers, announced Thursday night that she is returning to her previous job as economics professor at the University of California at Berkeley.
Her resignation follows that of budget director Peter Orszag.
In a statement, Romer called the her White House service the “honor of a lifetime.”
It will be interesting to see whether we’ll see any policy changes. Romer is an expert in the Great Depression and was instrumental in the stimulus package. In many ways she has served her purpose, and now the administration can shift to sustained growth as opposed to the crisis management of the past 18 months.
Unemployment rate stays at 9.5%
The new employment numbers were not very encouraging.
Private employers added new workers at a weak pace for the third straight month, making it more likely economic growth will slow in the coming months. The jobless rate was unchanged at 9.5 percent.
The Labor Department said Friday that companies added a net total of 71,000 jobs in July, far below the roughly 200,000 needed each month to reduce the unemployment rate.
Overall, the economy lost a net total of 131,000 jobs last month, as 143,000 temporary census jobs ended.
The census numbers need to be factored in, and it also looks like state and local governments are shedding jobs. In many ways that’s a good sign for long-term fiscal health, but in the short term the job losses hurt. Perhaps the recent jobs pill passed by the Senate this week to help save jobs for teachers and cops will have a positive impact in the coming months.
President Obama touts the auto bailout in visit to Ford plant
The bailouts last year of GM and Chrysler were very controversial. Ford didn’t get a bailout, but the company urged the government to bail out its competitors, arguing that it was critical to keep the domestic supplier base for the auto industry in place. Without it, many suppliers would have gone bankrupt, and millions would have lost their jobs.
More than one year later, the US auto industry is thriving, and President Obama has been touring auto factories to drive that point home. Today he stopped at a Ford Motor Company Chicago Assembly Plant in his home town of Chicago, Illinois, checking out the new Ford Explorer. According to reports, Ford said the plant will add 1.200 new jobs made possible by a Dept. of Energy loan that is intended to help companies retool to make fuel-efficient vehicles.
The bailout is still a source of political conflict.
On Thursday, Republicans criticized Mr. Obama’s visit here because, unlike G.M. or Chrysler, Ford turned itself around without taking a federal bailout. “Desperate To Claim Economic Victory, Obama Visits Ford Plant To Tout Success He Had Nothing To Do With,” read the headline on a statement from the Republican National Committee.
White House officials countered that Ford benefited from the industry bailout even though it did not accept aid itself, because the federal money kept a network of suppliers in business. They also pointed to the industrywide boost from the government’s cash-for-clunkers program, which used tax credits to encourage consumers to trade in older, more polluting cars for new models last year.
Moreover, officials noted that Ford used a $400 million loan from the Energy Department to retool the plant Mr. Obama visited on Thursday, which now builds an energy-efficient line of Explorers. And Mr. Obama arrived with more help for Ford — a $250 million loan guarantee from the Export-Import Bank to finance the export of 200,000 vehicles to Canada and Mexico.
The article also points out that “the auto industry added 55,000 jobs over the last year, the first net gain in a decade, and its exports were up 57 percent in the first four months of the year.”
The success seems apparent, but we have a toxic political environment and it’s an election year, so you can expect to see plenty of arguments on this point.