Are you Pinterested (aka getting old)?

According to this, Pinterest should be THE social site for adults, since over 70% of the users are between the age of 25 to 54. Indeed, I felt its power today by uploading my firstever "pin" (the pic is from the internet), which brought me 9 likes and 14 repins almost instantaneously. But the sad thing is, this also means that I am truly getting old now, or at least my taste is...

p.s. I got really excited when Pinterest's pinbot sent me emails notifying how many people likes my pin and repins it, but it won't take long to find this really annoying (yet another sign that I am getting old...)

Two reads on US manufacturing

For years, conventional wisdom has maintained that US manufacturing industry is on a permanent decline, so some people are arguing, for various reasons, that US government should intervene by either subsidizing the sector or offering tax benefits. Two recent articles I read this weekend offered some new perspectives on American manufacturing.

1. Christina Romer of Berkeley argued that, even if the US manufacturing sector is on the decline, there is little reason that the government should offer the manufacturers a "special treatment".
2. Hal Sirkin of BCG, a consultancy, is bullish, rather than bearish, on the future of American manufacturing.

China 2030: How to get there?

World Bank Group President Robert Zoellick visits Beijing today to launch a report on China's strategic directions in the next two decades.

The report, China 2030: Building a Modern, Harmonious, and Creative High-Income Society, a collaborative work between the World Bank and the Development Research Center (DRC) of the State Council, recommends steps to deal with the risks facing China over the next 20 years, including the risk of a hard landing in the short term, as well as challenges posed by an ageing and shrinking workforce, rising inequality, environmental stresses, and external imbalances.

Six strategic directions for China’s future are laid out specifically:

• Completing the transition to a market economy;
• Accelerating the pace of open innovation;
• Going “green” to transform environmental stresses into green growth as a driver for development;
• Expanding opportunities and services such as health, education and access to jobs for all people;
• Modernizing and strengthening its domestic fiscal system;
• Seeking mutually beneficial relations with the world by connecting China’s structural reforms to the changing international economy.

Some steps are hard to push further, such as the reform and restructure of state-owned enterprises (SOEs) and banks, since such steps could face fierce resistance from bureaucrats who manage or supervise these enterprises. It's not about "what" to do but "how" to get things done. When it comes to "how", it's not easy to find common ground for all parties to resolve some of the most contentious issues - like personnel arrangements. For instance, surrounding the topic of state enterprise reform, neither the World Bank nor DRC has proposed privatization of state enterprises because they both know it's politically infeasible, instead, they argue that SOEs should be overseen by asset management firms and even lay out some specific steps to do so. But, the proposal is still bitterly criticized by the current SOE regulatory agency, the State-owned Assets Supervision and Administrative Commission. Contentious issues were still debated until the last hour of the release of the report.

Visualize US exports to China, 2002-2011

The US exported 103.88 billion dollars worth of goods to China in 2011. On top of that list is neither civilian aircrafts, engines and parts, nor semiconductors, as it once was in the early 2000s, but...soybeans (also see here for some recent implications). Indeed, in terms of dollar value, soybeans have been the top US exports to China since 2008, and peaked in 2010 at $10.8 billion. In 2011, the amount slipped a little bit to $10.5 billion, but still took over 10% of the entire worth of exports to China. The next in line under the "Foods, feeds, and beverages" category is Fish and Shellfish, but it only contributed $1.2 billion. Civilian aircrafts, engines and parts came in 2nd overall with a total of $6.5 billion. Cars, semiconductors, and copper ranked 3rd to 5th, respectively. In aggregation, the top 10 exports totaled $49.15 billion, nearly half of the entire worth of exports. Here is an interactive chart that gives you better visualization of the data:

But what about the export pattern for product categories rather than for specific goods? How about their pattern over time? Does each category's relative position change a lot both in dollar terms and percentage-wise or does it remain stable? Not hard to tell if you use the interactive chart below:

A look back at Facebook

A 3-minute video clip tells us all.

Overoptimistic company disclosures increase litigation risks

Firms always choose rosy terms in their disclosure to please the shareholders or at least make them believe that the company is right on track, but could that optimitism go too far? A recent paper from The Accounting Review (here - subscription needed or here - working paper version) found evidence that firms that use unusually optimistic language in their disclosures to shareholders are more likely to be sued than similarly performing peer companies. Specifically, overly positive statements in earnings announcements - whether in press releases, conference calls, media interviews, or meetings with investors - are most often cited in plaintiffs’ complaints.

The authors found that in 91 percent of the earnings announcements that were analyzed, the portion quoted by plaintiffs was much more optimistic than the non-quoted portion, which, according to the authors, is the first concrete evidence for the intuition that plaintiffs target optimistic language when bringing actions against [a] firm. Since every firm is likely to make some optimistic statements, the authors have to further determine whether unusually optimistic tones lead to a higher risk of litigation, controlling for industry, size and performance-related effects. They did the comparison and found that sued firms used substantially more optimistic language in their announcements. They also found that, more specifically, a change of just one standard deviation in the “optimism score” given to each earnings announcement translated into a 75.9 percent increase in the likelihood of being sued.

HT: strategy+business.