Required reading:

http://online.wsj.com/article/SB119798901839036859.html?mod=googlenews_wsj

The staff proposal would also “generally” ban lenders from “directly or indirectly paying mortgage brokers in connection with consumer credit transactions secured by a consumer’s principal dwelling, unless the mortgage broker enters into a written agreement with the consumer” and provides certain disclosures. Creditors wouldn’t be banned from paying brokers if the compensation isn’t determined by the borrower’s interest rate (YSP).

Fed staff also are proposing to ban lenders from structuring traditionally “closed-end” mortgage products as “open-ended.” Fed staff believes this is necessary to prevent lenders from trying to evade the new protections.

The new proposal would apply to loans secured by the consumer’s principal dwelling where the annual percentage rate exceeds the yield on comparable Treasury securities (30-year now at 4.53%, 5-yr now at 3.50%) by at least three percentage points on first-lien loans, or five percentage points for second-lien loans.

So the axe is gonna fall, one way or another.  What are we going to do about it?

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This article on Bloomberg talks about Paulson and Bernanke wanting to increase the Fannie and Freddie market from $417,000 to $1,000,000.   I’ve got a couple of reactions to that:

1. If Fannie and Freddie are currently bleeding money and we don’t really know how bad things are in their current portfolios and they don’t have enough capital (or it appears that they don’t) to handle the current loan pipeline and what do we want to do?  Give them a larger portion of the mortgage market?   Are we asking for trouble?

 2. I’d love to see Fannie and Freddie start buying jumbos because I think it would unfreeze the jumbo market a bit.

So, what do you think?

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The National Association of HomeBuilders reported that their index of home builder sentiment stayed at the same level this past month and that marks a three month level pattern.   Does that mean we’re seeing the first sign of a “bottom” in the new home market?   Or is it a temporary?

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Filed under: Before the bell, Google (GOOG), Apple Inc (AAPL), Pfizer (PFE), XM Satellite Radio (XMSR), Walt Disney (DIS), Lilly (Eli) (LLY)

The Wall Street Journal reported that Apple (NASDAQ: AAPL) is not resting and keeps planning forward. After the recent launch of the iPhone in Europe, it is Japan’s turn, and reportedly, Apple has held talks with NTT DoCoMo. Jobs, according to “people familiar with the matter,” recently met with NTT DoCoMo’s president, Masao Nakamura, to discuss a deal to offer its iPhone in Japan. Engadget notes, however, that NTT DoCoMo does not run a GSM/EDGE network and maybe consumers there will have to wait for the 3G version of the phone.

After announcing a dividend increase Monday, drug maker Eli Lilly and Co. (NYSE: LLY) said Tuesday CEO Sidney Taurel will retire on March 31 and step down as chairman of the board at the end of 2008. President and Chief Operating Officer John C. Lechleiter will take over as CEO on April 1.

Hong Kong Disneyland, held by Walt Disney (NYSE: DIS) and the Hong Kong government, which holds a majority stake, failed to meet its visitor attendance target for the second year running, a park official said Tuesday, revealing that numbers tumbled to over 4 million in its second year of operation from 5.2 million a year earlier.

Dealbook reports today that “European lawmakers say they will press the bloc’s fiercely independent antitrust regulators next month to look at data privacy issues surrounding Google (NASDAQ: GOOG)’s proposed takeover of the online ad tracker DoubleClick.” Gizmodo also posted about the first Google Android prototype “in the wild.” But some are skeptical.
Universal Music Group and XM Satellite Radio Holdings Inc. (NASDAQ: XMSR) Monday announced they have agreed to settle a copyright infringement lawsuit over a portable music player sold by Xm that enables users to make digital copies of music. The wild ride the two satellite stocks are taking continues and after a 4.7% drop Monday, XM is up nearly 2.5% in premarket trading.

Like Lilly, Pfizer Inc. (NASDAQ: PFE) announced Monday it was raising its dividend by 10%.

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Filed under: Internet, Intel (INTC), Newsletters, Stocks to Buy, Technology, Best Stocks for 2008

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

“My favorite conservative idea for 2008 is Intel (NASDAQ: INTC), which I consider a core holding,” says Paul McWilliams, editor of Next Inning.

“INTC is the number one semiconductor company in the world and if we exclude memory products, Intel manufactures more wafers on leading-edge fabrication processes than all the rest of the semiconductor industry combined.

“While its prior CEO was caught sleeping at the wheel, its new CEO, Paul Otellini, has both revitalized Intel’s ‘healthy sense of paranoia’ and usurped the short-term architectural advantages temporarily enjoyed by its only viable competitor, Advanced Micro Devices.

“The net result is that Intel’s pro forma operating profit margin has bounced back from a low of 17.7% in early 2006 to nearly 26% last quarter. Between this and the anecdotal evidence we can see in the constant barrage of advertisements we see for PCs, I think the evidence strongly suggests that Intel is again able to sell its processors at a premium when compared to Advanced Micro Devices.

Continue reading Best Stocks for 2008: Inside Intel (INTC)

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Filed under: Citigroup Inc. (C), Goldman Sachs Group (GS), Morgan Stanley (MS), Bear Stearns Cos (BSC), Cramer on BloggingStocks

TheStreet.com’s Jim Cramer says a few things are finally going right for this group.

We are in a rare moment. There are virtually no more analysts who matter who can downgrade the financials. That’s it. No more blindsiding. With those sells out of the way, you have to ask yourself if there is much more bad news ahead.

Plus, Morgan Stanley (NYSE: MS) (Cramer’s Take), Bear Stearns (NYSE: BSC) (Cramer’s Take) and Goldman Sachs (NYSE: GS) (Cramer’s Take), which I own for Action Alerts PLUS, are already pounded into oblivion.

Sure, the earnings can go lower, but the multiples are pretty low — I know they can be up big if we are in “peak” mode. But I think that Goldman, in particular, is going to start winning a lot of business simply because it is doing better than others, and no one wants to be in something that could turn into a Refco, meaning an outfit you are custodied in that gets crushed.

Continue reading Cramer on BloggingStocks: Financials get a window of opportunity

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Filed under: Forecasts, Deals, Consumer experience, Apple Inc (AAPL), iPhone, Japan, Technology

In some ways, Wall Street should be surprised that it did not happen sooner. Apple (NASDAQ: AAPL) is talking to cellular carriers about launching the iPhone in Japan. In the country that created the Walkman and PlayStation, it would seem only logical that a tech gadget like the iPhone would be a huge success.

Japan is known for its obsession with cellphones. It is a large market for text applications and ringtones.

The Wall Street Journal writes that Apple is in talks with NTT DoCoMo (NYSE: DCM), the largest carrier in Japan, and Softbank. The Japanese market has “nearly 100 million mobile-phone users who buy new phones every two years on average. Japanese consumers are also already used to shelling out hundreds of dollars for expensive phones with advanced capabilities such as digital television, camera and music,” according to the paper.

Continue reading Apple (AAPL) shops iPhone in Japan

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Filed under: Newspapers, Magazines, Apple Inc (AAPL), General Motors (GM), Goldman Sachs Group (GS), NIKE, Inc’B’ (NKE), iPhone

MAJOR PAPERS:

• Looking to enter the Japanese market, sources familiar with the matter said that Apple Inc (NASDAQ: AAPL) CEO Steve Jobs recently met with NTT DoCoMo Inc (NYSE: DCM) to discuss a deal to offer its iPhone, the Wall Street Journal reported.
• Nike Inc (NYSE: NKE) is in talks with Mike Ashley to try and persuade the entrepreneur to not block its £285M takeover offer for Umbro, the Financial Times reported.

OTHER PAPERS:

• The Detroit News reported that in an effort to cut costs, General Motors Corporation (NYSE: GM) is looking to form a deal with the United Auto Workers on a buyout program for veterans.

WEB SITES:

• According to two people familiar with the fund, The Goldman Sachs Group Inc (NYSE: GS) is looking to start Goldman Sachs Investment Partners, its newest stock hedge fund, with as much as $10B, Bloomberg reported.

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Filed under: Before the bell, Google (GOOG), Apple Inc (AAPL), Pfizer (PFE), XM Satellite Radio (XMSR), Walt Disney (DIS), Lilly (Eli) (LLY)

The Wall Street Journal reported that Apple (NASDAQ: AAPL) is not resting and keeps planning forward. After the recent launch of the iPhone in Europe, it is Japan’s turn, and reportedly, Apple has held talks with NTT DoCoMo. Jobs, according to “people familiar with the matter,” recently met with NTT DoCoMo’s president, Masao Nakamura, to discuss a deal to offer its iPhone in Japan. Engadget notes, however, that NTT DoCoMo does not run a GSM/EDGE network and maybe consumers there will have to wait for the 3G version of the phone.

After announcing a dividend increase Monday, drug maker Eli Lilly and Co. (NYSE: LLY) said Tuesday CEO Sidney Taurel will retire on March 31 and step down as chairman of the board at the end of 2008. President and Chief Operating Officer John C. Lechleiter will take over as CEO on April 1.

Hong Kong Disneyland, held by Walt Disney (NYSE: DIS) and the Hong Kong government, which holds a majority stake, failed to meet its visitor attendance target for the second year running, a park official said Tuesday, revealing that numbers tumbled to over 4 million in its second year of operation from 5.2 million a year earlier.

Continue reading Before the bell: AAPL, LLY, DIS, GOOG …

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Filed under: Earnings reports, Goldman Sachs Group (GS)

Goldman Sachs Group (NYSE: GS) is scheduled to report earnings at 8:30 a.m. Forbes reports that analysts expect it to make EPS of $6.61 for the quarter and $24.36 for the year. Its competitors are not expected to do as well.

How does Goldman do it? Joe Kernen of CNBC’s Squawk Box asked me that this morning — click here for the video. My answer was that, as I discussed in my book Value Leadership, Goldman is a firm of brilliant team players while many of its competitors employ a star system. This matters because Goldman encourages debate about critical decisions rather than imposing a decision from above.

This is how Goldman’s proprietary trading desk was able to persuade its top managers, including its CEO, CFO and COO, that Goldman should short the ABX last year. According to the Wall Street Journal, by the time the rest of the market began to bet heavily on a decline in subprime mortgage-backed securities, Goldman had amassed a huge short position which enabled it to make $4 billion — handily offsetting its $1.5 billion to $2 billion worth of losses in its own $10 billion Collateralized Debt Obligation (CDO) portfolio.

Continue reading How does Goldman Sachs (GS) beat its competitors?

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