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Bull and Bear – an optimistic and pessimistic view of investment news. Today’s stories: The reinvention machine: a new Blackberry emerges from the prickles. Mortgage approvals and house prices continue upwards march. China set to pass the crossroads. Toyota in another US car recall. China offers to meet Japan half-way. Companies in the news: Imperial Tobacco, Renishaw, United Utilities 

The reinvention machine: a new Blackberry emerges from the prickles

Reinvention is a risky thing for sure, but sometimes it is even more risky not to try it.

Some are good at it. Ziggy Stardust, Aladdin Sane and the Thin White Duke or –as some prefer to call these three individuals – David Bowie show what can be done. Madonna was pretty good at re-invention too. But is Blackberry another Bowie?

Not only has the company launched a new product designed to be more iPhone than the iPhone, but it has changed its name. No longer is it called Research in Machines, no longer can we refer to it as RIM; instead the company is now plain old Blackberry.

The reviewers seem pretty impressed with the company’s new products. The new Z10 and the Blackberry 10 operating system have the blogosphere buzzing. And the new phone doesn’t even have a keyboard.

Some reviewers have been raving; others have been saying the product is good but not spectacular. Maybe if the company had launched this product 24 months ago, it would be vying with Apple and Samsung for market leadership. But it didn’t and alas it isn’t.

It would be great to see the company pull it off, and, who knows, maybe it will. The odds are stacked against it, however. Good as the new phone appears to be, it is just one of many in a crowded market place.

The company fell victim to innovators’ dilemma several years ago, and has been playing catch-up ever since.

Maybe Blackberry will emerge as one of the winners, as might Nokia, or indeed Microsoft. But all three companies were caught napping and they lost their edge, and now they are pretty much competing on an open playing field.

Sometimes masters of re-invention get it wrong; even Bowie fell victim to this with his single ‘The Laughing Gnome’. But he got away with it.

Will Blackberry?

Mortgage approvals and house prices continue upwards march

So that’s five months on the trot. Mortgages approvals were up in December, as they were in August, September, October and November – at least that’s what data from the Bank of England says.

It’s been quite a rally, although it may be worth noting that the total value of mortgage approvals in December was £12.6 billion. In December 2011 the figures was £12.5 billion, so actually – while the last five months has been encouraging – it’s hardly the stuff of a runaway boom.

According to the latest credit conditions survey, the average interest rate on a mortgage is down too, from 3.82 per cent in June to 3.65 per cent.

Meanwhile, the Nationwide recorded 0.5 per cent rise in house prices in January, and over the last 12 months the market was flat, with prices neither rising nor falling.

Robert Gardner, Nationwide’s Chief Economist, said: “While activity in the housing market remains muted by historic standards, there have been tentative signs of a pick up in activity in recent months.  The Funding for Lending Scheme has achieved some success in bringing down mortgage rates, with some signs of a pick up in lending activity. Hopefully, the momentum will continue to build in the months ahead, though much will depend on whether the wider economic environment improves.”

Matthew Pointon, Property Economist at Capital Economics, said: “2013 may bring better news for the housing market. But there is no guarantee that they will, and the bigger picture remains that house prices still look very overvalued.”

China set to pass the crossroads

Crossroads can be interesting places. Apparently, and this is surely a true story, rock’n’roll was invented after Robert Johnson met the devil on the intersection of highways 49 and 61 in Clarksdale, Mississippi, where he sold his soul in exchange for being transformed from the the worst to the best guitarist in the world.

China, according to the National Institute of Economic and Social Research (NIESR), is also at a crossroads, and this time the soul of a nation may be at stake.

NIESR has taken a look at China.  It is at a crossroads it said and: “some commentators are revisiting debates about the sustainability of China’s economic growth.” It asked: “Is this justified?”

The answer came back: “No.” The argument goes that: “The burgeoning middle-classes offer new opportunities to China’s producers, sending them up the value chain to produce goods and services that an ever-more sophisticated consumer base demands. This can only be good news for China, provided they keep wage-push inflation in check whilst satisfying the demands of workers for better working and living conditions.”

According to Alex Bryson, Principal Research Fellow at NIESR: “China is special. Contrary to popular opinion, its political system fosters explosive economic dynamism and experimentation. It’s often accused of having ‘weak institutions’ by those in the West who haven’t taken the time to try to understand the economic revolution that has been going on in China for 30 years. Political challenges remain, there’s no doubt about that, and the natural environment is taking a battering in some parts of China. The distribution of wealth does not reflect the efforts put in by workers, particularly migrant workers. But there are things the West can learn from China economically. We hope to spend more time and energy examining China’s economy in the coming years.”

Toyota in another US car recall

Toyota is number one again. It has shaken off all those woes from a couple of years back to become the world’s largest automaker. And true to form, just as it reaches the top, it has another one of those disasters – a million cars are being recalled in the US.

Poor old Toyota, why can’t it get this right?

Or maybe it can. Look at this from another point of view.

Actually, the fact that Toyota is recalling cars is no big deal. All the car makers do it. What is interesting is that the US media should think that it is news.

Ever since GM was toppled from the top spot in the world car league there has been this constant stream of bad press from the US that appears to be contrived at helping GM back to its former glory.

The thing is that virtually all of the major manufacturers (including the Germans) carry out recalls for faults on a fairly regular basis.

There is a website in the US that logs every recall a manufacturer makes – click here -  – it is easy to search for Toyota because they sell most of their cars under the one brand. On the other hand you can’t search for GM because they sell lots of different brands and you have to know what they are to find out how many recalls they have carried out.

There is a similar database in the UK – click here –  the curious thing is that you actually can find ‘General Motors’ in the list of manufacturers!

Is it a conspiracy? Well, probably not a deliberate one.  It probably has more to do with national psyche. While the Brits like to find fault with all things British, other nationalities have a quite different approach, and love to find fault with all things not American (in the case of America), or, say, not French in the case of France.

China offers to meet Japan half-way

As has been suggested here before, the dispute between China and Japan over the Senkaku/Diaoyu islands is more serious that you possible imagine from the scant publicity given to the dispute in the UK media.

But take some re-assurance from this article in the ‘China Daily’. It quotes Foreign Ministry spokesman Hong Lei as saying China is willing to meet Japan “half-way.”

Meanwhile, Japan’s Prime Minister Shinzo Abe said earlier this week that it was necessary to “re-establish the relationship, starting with a summit.”

China’s government responded saying it was necessary for Japan to first “create conditions” for improving strained relations. It’s progress, of sorts. See China Daily, 

Beijing hopes to meet Tokyo ‘halfway’ in spat

By the way, it is interesting to note the ‘China Daily’s’ use of the word “spat” to describe the dispute. Since the paper is often thought of as a voice piece for China’s government, is this a deliberate attempt to down-play the crisis?

Companies in the news

In today’s ‘Telegraph’ Questor took a look at Imperial Tobacco, and said “buy.”  Revenues are below expectations, the firm is cost cutting, and shares are down. But Questor saw this as an opportunity, saying: “the so-called ‘sin investments’ will continue to prove a lucrative home for your cash.”

Meanwhile, Tempus at the ‘Times’ reviewed Renishaw, which make precision tooling which enjoys 28 per cent of revenue from Asia. Tempus said: “if you are prepared to take a long view and disregard further price gyrations, they look like good value.”

Finally, United Utilities also came under Tempus’s stare. And once again, to complete a hat-trick of bullishness today, it gave the company a positive report. It was the safe yield that Tempus liked.

These views and comments are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees


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