Ralph Perna, Newmark Grubb Knight FrankIn our ever-changing world of technology and media, where information is coming at us from all directions on a 24/7 news basis, it is difficult to determine, what information and who to believe.
I am constantly trying to assess whether the information we are receiving and going to rely on is correct, or just an opinion. Many times, I have noticed that on one day, news on a given subject is positive, and a couple of days later, there is a negative slant presented on the same subject. What makes this even more disconcerting is that often, the information we are receiving is based on supposedly real statistics. So why are there so many inconsistencies?
As business executives try to evaluate their next move and make decisions based on the information and reports we receive, there is a lot of confusion. Can this information be relied upon to hedge and to offset their next downturn? Will their decisions start a trend which could lead to a slowdown of activity?
As brokers, we always witness and experience the initial trend of activity whether a slowdown or build-up. After all, we are on the front line of the market and the first to witness and understand the next cycle. With real estate prices at a cycle high, world markets in turmoil and, the world’s second largest economy, China, in a free fall, who or what do we believe?
Newsday writes about the Long Island unemployment rate being the lowest in years at 4.9 %. That sounds great. New car sales are at all-time record level; also good news housing prices are at an all-time high since 2006 and contracts for contractors are up 51 % from the previous year. If you take this news, which is based on market data, at face value, everything is looking up. But, can we really rely on this information?
With all this positive information why is there such an atmosphere of uncertainty? It is logical that when entering the seventh year of an economic expansion, everyone is waiting for the other shoe to drop? How much longer can we continue our growth from 2008?
What is exacerbating the problem is a 1,500 point drop in the stock market. Additionally, commodities are at an all-time low due to a downturn in overseas manufacturing.
However, with all this being said, the brightest spot is the fact that gasoline levels are at their lowest in almost three years. This certainly has a ripple effect in many sectors. Transportation costs will decline and, as a result, profits in certain sectors will increase. The hospitality sector will benefit from increased vacations and highway travel and the sale of previously ignored “gas guzzlers” may increase.
Again, we need to ask, are the weekly and monthly economic indicators based on true statistics or are they being exaggerated? Based on several articles, it appears that jobs and industries are coming back to the United States. However, how much conviction is there in this information?
We are also told from our media sources that banks and overseas markets that were rapidly lending to expanding companies now all seem to be teetering on the edge of default.
News bulletin: For the first time in history, the United States is pumping more oil than ever before. With that being said, why are we still importing nine million barrels of oil per day? Think about the jobs that could be created, along with the expansion of existing companies to monitor, refine and deliver the oil - gas or diesel.
Astute business people need to understand their markets and listen to customers’ responses and hopefully, mark a trend, rather than try to understand the conflicting reports we receive on a daily basis.
Last, but not least, is the dollar. The dollar has been rising against foreign currencies worldwide. I believe this is information we can truly count on. However, there are a couple of different schools of thought on the subject. Imports become less expensive and corporate profits based overseas will be negatively impacted.
Let’s try not to get caught up with information that is based on opinion and even statistics which may or may not be accurate. Take note – and with confidence, I can attest – as of the date of this article’s writing, the Dow is at 16,300, oil is at $43 a barrel, the dollar is at $1.11 to the euro, the jobless rate is at 4.9%, and I am leaving for Spain in one week.
Stay Tuned.
Ralph Perna is executive director of Newmark Grubb Knight Frank, Melville, N.Y.
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