JEREMY.COM

Sherri in black dress.

Barbarian and Warlord in singles attire.

Jeremy

Jeff Hardy - you guys are absolutely right.  We’re going to correct that hand in a running change.  I don’t know which variation will be in shorter supply.  We’ve caught it thanks to your help. 

Umaga - we’ve not had any issue setting up the cage.

Regarding Classic Superstars, still signing…  It’s not over.  I believe there are still 10 slots to fill for 2009 +/-.

I’m working on the LJN collection.  I’d like to get that as complete as possible.

Jeremy Padawer

Tim Ash has been arguably the most aggressive completionist wrestling action figure collector of all-time.

In addition, Tim is one of the more stand up people I’ve ever met. 

I was sad to hear that Tim is going to sell off his collection in order to help a family member.  This is well within Tim’s character.  It is of no surprise that Tim would go the extra mile for a loved one.

If you are looking for the most complete collection ever… find Tim.

http://www.wrestlingfigs.com/inner2.php?id=8716&page_id=1

Regards to a tremendous person,

Jeremy Padawer

Excuse me while I go off the page and vent a bit. 

Every day it seems that we are faced with another piece of negative economic news.  Unfortunately, I feel that we are in the very beginning of a difficult cycle.  This has been driven by forces both political and financial. 

Housing Market

In the last 7 years, we’ve seen an unprecedented run up in home prices in the US… specifically in my home of Southern California.  Single family homes that sold for $600K in 2001 are selling for $1.1-$1.5MM in 2008.  Now, with the downturn, we’ve seen about 20% shaved off of the top of that gain.  On one hand, this is healthy, as new buyers have the opportunity to enter the market at more reasonable levels.  On the other hand, there are so many folks who have entered the frenzy and or borrowed against their “equity”, that we are in a potential melt down mode. 

Unfortunately, I fear that we are in just the beginning of the housing slump - there is more downside to come…  I will explain after I jump through Monetary Policy.

Monetary Policy on the Housing Market.

The Federal Reserve sets monetary policy in the US.  In early 2001, the Fed lowered interest rates in response to the stock market crash.  The Nasdaq lost 75% of its value +/-.  The lower the reserve rate, the lower the rate that banks can lend money.  The idea goes like this… The more money, the more spending.  Spending, in almost all forms is good for the greater market.  Investment spending in companies and real estate, Capital expenditures (corporate) in new equipment and operations, and consumer goods spending for products/services is all good for the economy.  More money, more spending.  So…

As a result of more money a 30 year fixed rate note went from 8-9% down to 5.5-6%.  These levels were unprecedented.  To borrow money at 5.5% for 30 years is almost mind boggling. 

Consumers jumped at the chance, and for the first few years there were incredible deals in the housing market. 

Think about it.  A $200,000 house at 9% 30 year fixed costs $1,609.25 PITI / month.  However, when that rate goes to 5.5% 30 year fixed, the same home costs $1,135.38 PITI / month!

So, what happens?  Cash flow becomes indifferent.  Very quickly, the $200,000 house becomes a $285,000 house.  Why?  Because it’s all about cash flow.  The 5.5% 30 year fixed on a $285,000 house is approximately the same as a 9% on a $200,000 house.

But, it gets worse.

You now borrow against the $285,000 house (formerly $200,000) with the new found equity. 

In the meantime, others are seeing housing as a huge positive investment and also jump in the ball game.  More demand = higher pricing.  So, now the $285,000 house is $300,000.

And, it gets worse.

Predatory lending creeps in.  Banks push creative loans that will allow you to pay interest only or negative amortization or adjustable rate.  That $300,000 house becomes $400,000.

So what has happened to housing… and what will happen from here?

In 2008, we are seeing a 15% housing decrease YOY (Year On Year).  In California, that number is 5%-35% depending on your location.

The most concerning issue is that this decrease has come without interest rates increasing.

I always believed that the pop of the housing market would come from higher interest rates.  Unfortunately, the first 15% national pricing shave was simply due to other market factors.

The next 15% shave will be because of cash flow.  Pure cash flow.

We’re now reverting from the 5.5% back to… whelp you know… 8%+.

Why?

Inflation in raw materials…

I sell toys.  I market and manufacture toys.  Everything is impacted by raw material prices.  You buy from a retailer who buys from a manufacturer who sources from a factory who sources raw materials.  When raw material component prices go up, everything along the line goes up.

Ouch.  It’s all tied together.

:-(  And, it stinks.  Nobody wants pricing to go up. 

Oil is a raw material that impacts not just gasoline, but also the production and extraction of (you got it) almost all other raw materials. 

So, as I see corrugate and plastic and fabric increase, I know that this extends to all industries.  This is inflation.

The Fed must, in turn, raise the lending rate, because you can not lend money at lower levels than the inflation rate.  Right?  If you could find that deal, take it. 

In the meantime, lending rate goes up, housing comes down, prices go up.  Consumers have less equity and money no longer goes as far.  Double whammy.

Stock Market.

Oh, triple whammy.  The stock market gets creamed - the more stuff costs and the less people buy, the more the bottom line of a company balance sheet gets hit.  Investors foresee the hit and bet on the sectors where the hit will be minimized… and those sectors that will benefit.

The problem is that in a time like this, fewer sectors benefit than get hit.

Weak Dollar

One last note… the more money available in the system, the less any 1 dollar is worth vs tighter monetary policy economies.  The Fed still has the lending rate low in the US, and this will ultimately change (as stated above).  Until then, the dollar is weak.

So Now What?

I think we’re in for some tough times in the US.  I tend to work in one of the industries that does ok in a down market.  People still buy toys for their children and manufacturers respond with fewer higher priced toys.  Some sectors of business will get clobbered… Some segments of the housing market will get clobbered…  Some personal fortunes will get clobbered.

My hope for all of you is that in the next 3-5 years of concerning time in the US (and around the world), that you keep your eyes open, spend wisely and look for opportunities that come with a down market.

Ok.  Now back to toys…

I’m trying to sign Ricky Steamboat.  Does anyone have his latest address?  Please do not contact him personally. 

Jeremy Padawer

Scratch another LJN guy off the list!

Jeremy Padawer

http://mmajunkie.com/news/4644/fight-biz-more-to-ufcs-merchandising-future-than-toys-and-trinkets.mma

Also, wrestling news soon. 

http://www.labusinessjournal.com/article.asp?aID=17919581.4978861.1640691.75507702.4337106.517&aID2=126198

Cool.

Jeremy Padawer

ANNOUNCER #1:
“So, I’m thinkin this is a doll”
- No.

ANNOUNCER #1:
“Clearly, Ultimate Fighting Championship is the most violent sport ever televised.”
- No.

ANNOUNCER #1:
“So, are you going to target these toward 7 year old boys to teach them how to beat up people?”
- No.

BROCK:
“Today with this announcement, we’ve gone big time for sure.”
- Yes.

Listen to the questions of Announcer #1 vs #2. The #2 guy asks really substantive questions. The #1 guy is Mr. Funny 1987.

This morning we announced the acquisition of the UFC master toy license.

To say that I am excited would be a massive understatement. UFC is a game changer, a franchise player…

I will elaborate more on brand strategy in months to come.

Tonight, I am having dinner with Dana White, President of UFC.

You know me.

I am a fan boy as well as a toy marketer. My heart and soul is in this. The team is going to do a spectactular job.

Last night I flew into NYC to attend Licensing Show. This is the show where manufacturers of all kinds of categories meet with license holders. The plane was scheduled to arrive at 10PM. I landed after 1AM and got to my room after 2AM. Go figure. Air traffic control problems… Sweet.

Got to the show in the early AM to meet a few folks at the show. Relatively laid back, schmooze fest.

Some good things around the corner.

Jeremy Padawer

You’ve probably seen this before… but, have you seen the extended version?