May 1 is decision day for American colleges on the million applications from aspiring freshman. A lot of the seats that used to be occupied by Jimmy from Janesville and Susie from Springfield will be taken by Sing-Sung from Shanghai. Higher education in the United States is in a secular growth pattern despite skyrocketing tuitions because foreign students must pay full boat for an American college education. Their parents see it as the surest path to riches and respect in the world economy.
U.S. parents may be doubting the value of a four-year university and its accompanying debt load, but not the nouveau riche of Asia. Increasingly they are also applying to high school exchange programs and pricey prep schools to position their kids for the college application process. Things have changed since the ’70s and ’80s when the Japanese elites made a big push into American commerce. Japanese culture valued American markets, but businessmen were cautious about their families becoming too Americanized. The Chinese do not seem to carry the same worries.
So far I have not seen a backlash against the Chinese charge into American higher education, and the U.S. colleges are eager for the dollars. It definitely aids the trade balance numbers. It will be fascinating to monitor attitudes as Chinese students take more front row seats at lectures here.
The aggregate numbers in housing are still rather grim, but when you drill into particular markets, you see a different picture. Two of the hottest markets are Phoenix and Tucson, which have been the poster children of the housing debacle. The price of homes is up 20% year over year there as speculators paying cash have been pouring hundreds of millions of dollars into buying homes for renting and flipping. It’s the best game in town these days, in Arizona.
My sister lives in Potomac, Maryland, near D.C. and she says houses are drawing multiple overbids these days as people are jumping into the market. The same is true in the Bay Area. San Francisco and Silicon Valley are red hot.
Unfortunately, back in the Rust Belt of Chicago, homes are still pretty dead, but industrial is picking up a bit. Rents are rising briskly in residential. A prediction: by the time you are ready to pull the trigger to buy a property, you may have missed the bottom by a year.
Chrysler sales were up 20% in April versus a year ago. The Jeep Grand Cherokee is selling so well that Signore Marchionne, who is running the show now, is adding a third shift to make more SUVs and keep the plants running in the summer. With $4 gasoline, go figure.
Baseball is a funny game. Albert Pujols signed a mega contract with the Los Angeles Angels. He went homerless (zero) in April for his new team. On Monday, Ryan Braun, who beat the Commissioner on alleged steroids usage during the offseason, hit three homers and a triple in one game. This is almost unheard of, but to do it at Petco Park in San Diego, which is bigger than Omaha, is ridiculous.
Add Joe Madden, Tampa Bay’s fabulous and slightly eccentric manager, who went “Steve Jobs minimalist” on his team headed for a short three game road trip. He suggested players take one pair of underwear, one shirt, and one pair of jeans. Say it ain’t so, Joe.
Question: Are you in the market for a house now?