No this isn’t an attempt to start an argument about which car is faster, the Ford Mustang or the Chevy Camaro.
I wanted to share some very insightful thoughts from the chief economist at Ford, Ellen Hughes-Cromwick. I’m a member of the New York Association for Business Economics and when in NYC on business sometimes I’m able to catch a luncheon with one of our guest speakers. It just so happens I did just that, this week.
First let me say that Ellen is an extremely intelligent and sincere person. And she happens to be the top economist for one of the world’s largest auto manufacturers Her research style and analysis seems different than most other economist I have spoken with or read. Important points were stressed that I wanted to share with you, mainly because as I’ve stated often, the media and financial journalist in particular get the story wrong.
For example: we have been told for years that China, with one billion people give or take, will demand products for all those citizens. The fact is when it comes to automobile sales for example Mrs. Cromwick has China divided into 3 sections and one of those sections is already saturated with auto’s. The other important point she conveyed in her talk was that before the other sections are able to purchase a vehicle they have to achieve a middle-class like status. That means and income equal to $5,000 – $15,000.
Example 2: India. Another emerging market (more on that term in a minute) that is heavily populated and in need of goods and services as incomes rise. One thing that has constantly been reported by journalist is the lack of infrastructure in the country. However, Mrs. Cromwick informed me that as she has traveled the country not only are there roads, etc in major cities like Delhi and Mumbai, but also outlying areas as well. The government of India has been committed to infrastructure, as well as, a reputable Central Bank (akin to our Federal Reserve.) Why do I use these examples? It’s rather simple if Mrs. Cromwick is charged with identifying macro-economic trends in order to help Ford strategize for future automotive development, transportation, appropriate vehicle models, etc. she will obviously go the extra mile to learn the true state of affairs in an existing or potential marketplace. Again this is from a skilled and crafted chief economist, not a financial journalist who may be mainly consumed by creating an emotional headline to get a persons blood pressure up.
Before signing-off I’ll touch on the term I mentioned earlier, “Emerging Markets” This phrase may be very misleading a times. For example there is an acronym that was created (I don’t know by whom) quite a few years ago to describe emerging markets in one fell swoop. The acronym is BRIC. it stands for Brazil Russia India China.
To put this into perspective:
Brazil is deeply entangled with mandatory trade agreements with Argentina and also is at a very serious crossroad with it political elections this year.
Russia is not only throwing mud at America and Europe while repatriating Crimea from Ukraine, but its also in a recession.
India was discussed briefly above. I will add that it also is in the midst of a major political change.
China is the elephant in the elevator. We hate them for making cheap products, jailing people under their buildings and giving false economic data that makes it very difficult to truly judge the health of its economy. But, we have been able to sell them a ton of our debt to finance America’s spending problems.
So the question is should Brazil and Russia really be thrown in the same category with India and China. I think not. I have always believed that each emerging market should be judged on its individual merit and not by anything else and they definitely shouldn’t be lumped together.
The lesson of the day is be very cautious of what you read, watch, listen to and download. Much of the material should come with the surgeon generals warning “This information may be hazardous to your health.”
And for the gentleman reading, please, no cheap shots on my title. I just feel sure that I’m going to get a “Mopar No Car” response from someone.
Best Regards – Chris
P.S. Mrs. Cromwick commented that she’d like to come on the ”Your Financial Editor” radio program. We’ll be working to make that happen because I’m sure you’ll find her as enjoyable as I did.