The other day while reading the Wall Street Journal in Starbucks after a quick lunch, my neighbor at the next table turned to me and said, “All bad news in there, I guess.” To his surprise, I responded that to the contrary there was a great deal of very positive news. After mutual introductions, I learned that he was a struggling entrepreneur, who had gone into business just as the recession was worsening.

Mulkern AssociatesHis pessimistic comment called to mind the red deer called Ahornia which roam freely in the border area between West Germany and Czechoslovakia. During the Soviet era and the Cold War, the herd was separated by an electric fence which they learned to avoid. Though the fence was removed 20 years ago, they still will not approach this “no-man’s land.” More strange is that none of the deer alive today had been born at the time the fence was last in place! The herd has learned its lesson too well, or as one German observer remarked, “The wall in the head is still there.”

Unfortunately, my new friend was in danger of having learned “too well” that the economy was in a recession, of playing it safe, and of being constrained by an imaginary wall of limitations.

For the sake of readers who suffer the aftershocks of having been repeatedly zapped by bad news for the past year and one-half, some of the positive indicators of the last few months are summarized below, in no particular order of priority or chronology:

  • Intel had its best quarter ever in Q4, and in Q1 2010 saw profits rise by 44%, significantly beating analysts’ predictions. As a sign of its outlook for the rest of the year, the company plans to add 1,000 to 2,000 new workers.
  • General Motors’ sales surged 24% overall in March. Ford is profitable again as its sales jumped by 40%.
  • American International Group (AIG) is on track to repay close to half its loan to the Fed through asset sales that will raise $51 billion. It appears that the total cost of Troubled Asset Relief Program (TARP) to taxpayers will be significantly less than originally thought, maybe four-fifths less.
  • Warren Buffett, one of the shrewdest investors in the world, recently invested over $26 billion in Burlington Northern railroad, a sure sign that he is optimistic.
  • IBM had a 13% growth in Q1 profit for 2010, beating analysts’ predictions.
  • Citigroup reported Q1 earnings of over $4 billion, the best since the financial crisis began in 2008.
  • Corporate bond sales are up by 19% for the first quarter over last year, meaning that sophisticated investors are increasingly optimistic and willing to loan corporations their cash, which will in turn be put to work growing those companies.
  • The largest 500 or so companies outside financial services are sitting on about $1 trillion in cash and short-term investments, waiting for the right opportunity to add fuel to the U.S. growth engine.
  • In March, U.S. manufacturing expanded at its greatest rate in 5.5 years.
  • In the same month, the U.S. service sector grew at its fasted pace in four years.
  • The construction industry of Chile is set to experience a boom in wake of the recent disastrous earthquake in that country. U.S. heavy equipment manufacturers will also benefit.
  • The stock market in March had the best month in years, and the bull market is continuing into April after passing the 11,000 point, thus rebounding 70% from its low point.
  • Productivity grew in Q4 2009 by 5.8%. Many newly lean companies intend to stay that way, which is the best allocation of resources, thereby stimulating further growth and productive jobs.
  • EMC, the maker of information storage systems, saw its Q1 earnings soar 92%, added 800 new workers in that same quarter, and expects to add another 2,000 jobs globally by the end of 2010.
  • As of February, the federal Climate Prediction Center, declared that 92% of the U.S. is now drought-free, compared to only 50% three years ago. Rains since then have probably improved those numbers, thus mitigating another drag on the Southern California economy.
  • Mexico, one of our most important trading partners, moved up to number 41 out of 179 countries in the Index of Economic Freedom published by the Heritage Foundation and The Wall Street Journal. Increased economic freedom correlates very strongly with prosperity, as well as political stability.
  • Biggest medal winners at the Olympics were capitalist democracies. At a time when capitalism as a system is under attack, this is one more indication of what economic and political freedom tends to produce, as well as a symbol of the resilience of such societies in spite of tough times.
  • The sale of new homes increased by 27% in March compared to February, the largest monthly increase in 47 years.
  • The movie “Avatar” has brought in over $2 billion in revenues worldwide. This shows that consumers will still spend freely to enjoy creativity, originality and quality—in addition to the fact that it is good for the movie industry and Los Angeles.

The above is truly only a sample of the positive news available.

I think the conversation with my new friend at Starbucks helped him to see that opportunity is all around us, even if not obvious at times. It must first be imagined and looked for. This is why those who find new business are sometimes referred to as the “hunters.” Whether you prefer the metaphor of the hunter or the gatherer, the “food supply” is returning and is available for the taking to the swift, the creative, and those who do not expect it to show up in all the old patterns, places, shapes and sizes.

Yes, credit markets still need to loosen, and there remains an inhibiting uncertainty about tax policy, as well as about pending and proposed federal legislation. As the above list makes clear, however, these factors need not hold you back from growth and increase. Do not be constrained by a “wall in the head.”

Here’s hoping the rest of 2010 are the best three quarters ever for you business!


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Copyright, Mulkern Associates, 2010