HQ #5 - Berkshire Hathaway

Buffet rents the 14th floor of a nondescript office building in Omaha, NE, where he and 20 employees run a business empire worth almost $300 billion. He doesn't have a computer on his desk.  This shows him playing cards with Bill Gates.

HQ #4 - Microsoft

In Redmond, WA

HQ #3 - The Googleplex

In Mountain View, CA

.

M6 as of 12/31/13

M6 as of 12/31/13
M2	10,990.3
Public Debt	12,355.4
Less Fed-owned Treasuries	-2,208.8
Global 30 Market Cap	6,977.7
	28,114.6

This is 3.7% higher than the total of 27,108.0 on 9/30/2013.  The biggest increase came from stocks.

=====================
The G30 as of 12/31/13 was subsequently revised to 6,857.2 with the addition of Merck and removal of Toyota.  That makes the M6 total 27,994.1, which is 3.9% higher than the total of 26,934.8 on 9/30/13.

PetroChina vs FaceBook

"PetroChina was established on November 5, 1999 with CNPC as its sole promoter. As of December 31, 2007, CNPC owned 157,922,077,818 shares, representing approximately 86.29% of the share capital of PetroChina, and, accordingly, CNPC is our controlling shareholder.  ... CNPC’s interests may sometimes conflict with those of some or all of our minority shareholders. We cannot assure you that CNPC, as controlling shareholder, will always vote its shares in a way that benefits our minority shareholders."  Source: PetroChina's SEC Filing

This isn't a stock for widows or orphans.  I'm removing it from my Global 30 list.  If I was a billionaire like Warren Buffet, I wouldn't invest a dime in this company.  Ownership of stock in PTR would be more like owning a bond.  And maybe they mean well, but in a financial crisis, you would be the last to be paid back.  I'm replacing it with another company.

============================
FaceBook now has a market cap of over $140 billion, which is absurd.  But I think it is indicative of our bubble economy.

The Global 30 is my version of the fabled Dow Jones Industrial Average.  I'm  adding FaceBook to it.  See previous posts, which I will edit.

Other possible candidates were Verizon (VZ), Merck (MRK), PhilipMorris (PM), and GlaxoSmithKline (GSK). And Comcast (CMCSA).  FaceBook stock is increasing faster than these companies, and it will probably drop faster in a crash, which is exactly what I want to show.

I wonder when FaceBook will be added to the DJIA?  (joke)

HQ #2 - ExxonMobil

ExxonMobil is building a massive new campus in The Woodlands, Texas, north of Houston about 20 miles.  The campus will be on 385 acres and cost $1.2 billion and have space for 10,000 employees.

However, Exxon is such a massive company that this will only be one of its campuses.  Its corporate headquarters remain in the Las Colinas area of Irving Texas.


Mustangs running through Las Colinas.

Exxon moved its headquarters to Irving from Rockefeller Plaza in NYC in the early 1990s.  Mobil had its headquarters in Fairfax County, Virginia, before merging with Exxon in 1999.  Exxon's HQ is apparently just a single office building with a few hundred employees.  I can't find much detailed information.

Headquarters #1. The Republic of Apple

I think it will be interesting to do a series on the headquarters of the biggest companies. Apple is #1 on the list, and they are building a spaceship in Cupertino, California at a cost of more than $5 billion.  The 4 story building will have 2.8 million square feet of space over 4 stories. The campus is 175 acres of prime land in the heart of Silicon Valley.  (The architect is the renowned Lord Norman Foster, who also designed the HSBC building in Hong Kong and futuristic buildings in Astana, Kazakhstan).

I call it the Republic of Apple, because they are the biggest tax avoider in the world.  They have declared themselves a "sovereign nation" for tax purposes and since nobody is challenging them on it they have succeeded.  They have over $100 billion in cash in offshore bank accounts, and they are very well connected in Washington.  They will probably be the world's first trillion dollar corporation.

M6

M6 is the name of my new index. This isn't the best name, but I can't think of anything better at the moment.  It is my M5 index, plus the market cap of the Global 30 companies.  It has four components:  M2, the debt held by the public, less Treasuries owned by the Fed, plus the Global 30 market cap.  (I subtract Treasuries owned by the Fed so they aren't counted twice.  Otherwise those would be included in both M2 and the debt held by the public).

At first, it seems like just a collection of random numbers.  But it represents first of all, a portfolio that a prudent wealth person might own.  About 37% in cash, 40% in bonds and 23% in stocks.  Actually a wealthy person wouldn't have that much in cash, but they might if they were really risk-adverse, plus consider that this "cash" is M2, which keeps going up at 5-10%/year, so it is getting interest.

I want it to represent an expanded view of money supply.  Money is not just the coins in your pocket and the Federal Reserve notes in your wallet.  It also includes the money in your checking account.  And US T-bills that you own that are as good as cash.  It also includes stocks in massive companies that you own, that are easily sold for cash.

Note that I am including only the Global 30 stocks for several reasons.  If the Fed (or the Social Security Trust Fund) were to buy stocks, which they might some day, these would be the ones they would most likely buy.  Also these are all too big too fail companies.  They will all be around, in one form or another, in 100 years.  And the newly created money goes mostly into the stock market.

It shows my theory of money.  Where does money come from?  First, intrinsic money, coins.  Second, private banks create it through loans.  Third, the government creates it by issuing debt. Fourth, the Federal Reserve creates it by buying things besides government debt.  Fifth, the stock market creates it.

It don't want to overstate its importance, it is just a number.  My baseline is 9/30/2013. I don't want to go back before that as it is too much work, but somebody could if this is a useful tool.

M6 as of 9/30/13
M2	10,880.8
Public Debt	11,976.3
Less Fed Treasuries	-2,076.9
Global 30 Market Cap	6,409.2
	27,189.4

I think I will update this at least quarterly going forward.  I will do the comparison for 12/31/13 in a few day when I get some more data.  I think it will be very interesting.

The M6 number should never go down. If it does, everyone freaks out.  If there is a stock market crash, then that means we are in a recession and deficit spending will increase in an attempt to compensate.  (Note that stocks are only 23% of the total so even a 20% drop won't have that big of an effect on the total).

This shows something else.  The US is a half-capitalistic, half-socialistic country.  Everyone agrees that we want the capitalist side to succeed - jobs are good.  But when the capitalist side isn't working (a recession) that is when the socialist side kicks in.

=======================
Update:  I revised the Global 30 Market Cap as of 9/30/13 to be 6,327.8 with the addition of Facebook and the removal of PetroChina.  This changes M6 as of 9/30/13 to 27,108.0.

=======================
Update 2:  With the other changes (G30 stocks at 6,154.6) , the total is now 26,934.8 as of 9/30/13.

The Global 30 as of Sept 30

For comparison purposes, here is the Global 30 market cap as of 9/30/13.  There might be some minor errors here with the number of shares.  Companies are always issuing stock options, giving stock dividends, or buying back shares.  But I think it is pretty accurate.  Banks are in bold.

Symbol	Company	Shares (M)	Price	Total (M)
AAPL	Apple Inc	899.7	473.98	426,440
XOM	Exxon Mobil	4370	85.46	373,460
GOOG	Google	334.09	875.91	292,633
BRK-A	Berkshire Hathaway	1.65	170,410	281,177
MSFT	Microsoft	8350	33.03	275,801
JNJ	Johnson Johnson	2820	86.09	242,774
GE	General Electric	10120	23.70	239,844
WMT	Wal-Mart	3240	73.53	238,237
CVX	Chevron	1920	120.49	231,341
CHL	China Mobile Ltd	4020	56.43	226,849
WFC	Wells Fargo	5270	41.03	216,228
HSBC	HSBC Holdings	4000	53.78	215,120
RDS-B	Royal Dutch Shell	3140	67.95	213,363
PTR	Petrochina	1860	109.95	204,507
PG	Proctor Gamble	2720	75.00	204,000
TM	Toyota Motor Co	1580	128.03	202,287
IBM	IBM	1090	184.19	200,767
JPM	JP Morgan Chase	3760	50.65	190,444
NVS	Novartis	2440	76.71	187,172
PFE	Pfizer	6480	28.51	184,745
BHP	BHP Billiton Ltd	2660	66.50	176,890
T	ATT	5270	33.37	175,860
VOD	Vodafone	4860	34.65	168,399
KO	Coca Cola	4420	37.62	166,280
BUD	Anheuser-Busch	1600	98.42	157,472
ORCL	Oracle	4540	32.95	149,593
BAC	Bank of America	10670	13.79	147,139
C	Citigroup	3030	48.50	146,955
AMZN	Amazon	457.7	312.64	143,095
BP	BP plc	3140	41.52	130,373
	Total			6,409,245

Not all of these went up between 9/30 and 12/31.  Notably, Toyota dropped from 128.03 to 121.92, and China Mobile dropped from 56.43 to 52.29.  Petrochina dropped from 109.95 to 109.74.  The rest of the companies rose, most by more than 10%.

See also The Global 30

=====================================================
Facebook (FB) has 2.45 billion shares outstanding.  On 9/30/13, it had a share price of 50.23, given it a market cap at that time of 123,064.

Removing PTR and adding FB gives the Global 30 a total of 6,327,802.

=====================================================
Adding Merck (MRK) and Comcast (CMCSA) and dropping CHL and TM gives this a total of 6,154,645 as of 9/30/13.

You're as cold as ice

"Temperatures in the wake of a stubborn weather pattern that dropped several inches of snow could be summed up in a single word: brutal. At 7 a.m., O'Hare International Airport recorded a temperature of -15, breaking a record low of -14 set on this date in both 1894 and 1988. By 8:30 a.m., the official Chicago temperature had dipped another degree, to -16.  With the wind chill factored in, Monday's temperatures were in the -40 to -50 degree range and even lower across the Fox Valley.  By midday, the lowest recorded wind chill was in Aurora, at -47 degrees. DuPage and Porter recorded -46 degrees and O'Hare reported -42 degrees."
Source: http://www.nbcchicago.com/weather/stories/Dangerous-Cold-Temps-Chicago-238467651.html

The former congressman who is now a prepper

Roscoe Bartlett

The octogenarian Republican from western Maryland—more than once labeled “the oddest congressman”—found himself gerrymandered out of office a year ago and promptly decided to take action on the warnings others wouldn’t heed, retreating to a remote property in the mountains of West Virginia where he lives with no phone service, no connection to outside power and no municipal plumbing. Having failed to safeguard the power grid for the rest of the country, Bartlett has taken himself completely off the grid. 

Read more: http://www.politico.com/magazine/story/2014/01/roscoe-bartlett-congressman-off-the-grid-101720.html

Denninger on Thorium

China's Local Debts Reach 18 Trillion Yuan

That's about $3 trillion.

"China's mountain of local government debt is among the biggest threats to its economy as investors worry a good part of it cannot be repaid since most of the money borrowed had paid for non-lucrative public infrastructure."
--http://www.reuters.com/article/2013/12/30/us-china-economy-debt-idUSBRE9BT09M20131230

Chinese money supply

2013-10: 107,024,216,664,233.000

At an exchange rate of 6.05 CNY to 1 USD, that is about $17.7 trillion.

2013-10: 5,559,572,018,797.3799, or about $919 billion.

They haven't discovered Japan or US-style QE yet.

The Global 30

The Global 30 are the biggest companies in the world by market cap.  These are all American companies or listed on the NYSE.  There are some other large companies from China and Switzerland that could be listed, but they aren't on the NYSE.  I find this list interesting for reasons I will explain below.  This is the market cap of the companies as of 12/31/13.

Symbol	Company	Market Cap
AAPL	Apple Inc	504,750
XOM	Exxon Mobil	439,622
GOOG	Google	374,418
MSFT	Microsoft	312,374
BRK-A	Berkshire Hathaway	293,535
GE	General Electric	283,664
JNJ	Johnson and Johnson	258,284
WMT	Wal-Mart	254,956
CVX	Chevron	239,827
WFC	Wells Fargo	239,258
RDS-B	Royal Dutch Shell	235,845
PG	Proctor Gamble	221,435
HSBC	HSBC Holdings	220,520
JPM	JP Morgan Chase	219,885
CHL	China Mobile Ltd	210,206
IBM	IBM	204,451
PTR	Petrochina	204,116
PFE	Pfizer	198,482
NVS	Novartis	196,127
TM	Toyota Motor Co	192,634
VOD	Vodafone	191,047
T	ATT	185,293
KO	Coca Cola	182,590
AMZN	Amazon	182,526
BHP	BHP Billiton Ltd	181,412
ORCL	Oracle	173,700
BUD	Anheuser-Busch	170,336
BAC	Bank of America	166,132
C	Citigroup	157,893
BP	BP plc	152,635
	Total	7,047,954

These companies make up almost half of the market cap of the NYSE, the largest stock exchange in the world. (Note that Microsoft is listed on NASDAQ not the NYSE).  (See also an earlier post showing a total cap of 6,919,352).

I have been following an expanded definition of money supply, which includes US government debt.  Could stocks also fit into an expanded definition of money?  I think that they could for several reasons.  First, they are highly liquid and very easy to sell.  Instead of keeping money in your bank account you might decide to buy stocks instead.  And when the prices go up, people think they are wealthier and will spend more.  Second, for the larger companies at least, they can treat their stock as money in paying employees or buying up competitors. Third, a lot of the newly created money goes into the stock market.

Ok, but why focus on just these companies and not every stock listed?  Primarily because it is hard to get the data.  But also because there is something interesting about a huge company like Apple that is bigger than most countries.

So I think I may publish stats that includes this in the total.  Note that the total public government debt of 12.3 trillion dwarfs this number.

=======================
Update:
Facebook (FB) has 2450 M shares outstanding.  As of 12/31/13, it had a share price of 54.65, giving this a market cap of $133,893 million.

Removing PetroChina (PTR) and adding FaceBook, gives this a revised value of 6,977,731.

======================
Update 2:
I'm thinking about adding 3 more companies to the list: Comcast (CMCSA), Verizon (VZ), and Merck (MRK).  I am going to hold off for now until their market cap breaks $150B.  Facebook is below $150B, but skyrocketing.

Machakos, Kenya

Jeddah

SP 500 and Base

Must be a coincidence.

Repent Walpurgis

I detest hippy music (anything that might have been played at Woodstock), but this band is extremely talented, especially the pianist, who obviously was trained on classical music and combines it with the jam.

Beethoven Virus