Archive for February 23rd, 2008
Filed under: Consumer experience, China, Oil
 With fuel prices reaching their highest levels since last June, many consumers are worried that by the end of the summer driving season we may actually see $4.00 a gallon. With crude oil moving over $100 a barrel, and with a market driven by speculators and not fundamentals, crude prices moving up are a self-fulfilling prophecy.
But is it possible that the opposite may happen? That prices drivers pay at the pump make actually decrease? The answer may very well be yes. Why? Inventories. The fact is that we have gas supplies that have quietly grown to their highest level in 14 years. With such a big supply, prices may drop. This isn’t China, where everything is government controlled, and we have seen shortages on all kinds of consumer staples. In the U.S., the market more or less (except when lawmakers butt in and add taxes on gasoline) sets the price.
Continue reading Will prices at the pump actually decline?
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Filed under: Deals, Law, Politics
The European Union has decided to get serious about having sovereign funds from Asia and the Middle East pledge that their investment in the region are “financial” and not “strategic.”
According to the Financial Times, “Peter Mandelson, the European trade commissioner, said the code would set out basic standards of governance and transparency for the funds.”
Sovereign funds have made large investment in banks and brokerage houses in Europe and the United States and the regulatory authorities do not want these dollars to become a way for the funds to push their nation interests.
The request is a bit two-faced. Funds and corporation from the West have been putting money into Asia and the Middle East for years. Big U.S. companies are not required to sign documents disclosing their intentions when they make investments overseas. Plans by Congress and the EU to push legislation to regulate capital from abroad may back-fire. When U.S. and Europe banks need more cash, sovereign funds may simply elect to invest elsewhere.
Douglas A. McIntyre is an editor at 247wallst.com.
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Filed under: Politics, Presidential elections
The New York Times reports that Hillary Clinton is giving off signals that her campaign for President could be nearing an end. It’s hard to know if this veil of tears is just Hillary using the crying gambit — as she did in New Hampshire — in the pages of her hometown newspaper. But as she acknowledges in the article, running for President is a marathon from which the fittest political athlete emerges victorious.
The Times article helps highlight a critical difference between Clinton and Obama which may explain why Obama is proving himself to be the fitter of the two Democratic candidates. With Clinton, it appears that the voter’s job is to help her to realize her ambitions by giving her money or votes. By contrast, Obama presents himself as the vessel for achieving voter’s hopes. In short, with Hillary it’s about what voters can do for her. And for Obama, it’s about what he can do for voters.
The effect of these different approaches is that Clinton appears tired as she struggles to break an 11 state losing streak in the upcoming March 4th primaries. It’s as though she needs the voters to give her the strength to keep going and that evidence of insufficient support saps her strength. By contrast, Obama looks like he hasn’t really broken a sweat as he goes from victory to victory.
Continue reading Why Hillary’s presidential hopes are fading
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Filed under: Earnings reports, Hewlett-Packard (HPQ), Penney (J.C.) (JCP), Whole Foods Market (WFMI), Darden Restaurants (DRI), General Mills (GIS), OfficeMax Inc (OMX), Intuit Inc (INTU)
Here are a few highlights from this past week’s earnings coverage from BloggingStocks:
Also, Douglas McIntyre examines how a slowdown in orders is likely to affect the earnings of Airbus and Boeing Co. (NYSE: BA), and Brian White looks at how HP might “do better” for the rest of this year.
Upcoming results to watch for include Lowes Companies Inc. (NYSE: LOW), Office Depot Inc. (NYSE: ODP), Home Depot Inc. (NYSE: HD), AutoZone Inc. (NYSE: AZO), Viacom Inc. (NYSE: VIA), and Freddie Mac (NYSE: FRE).
Visit AOL Money & Finance for more earnings coverage.
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Filed under: Management, Insiders
One of the first things you learn in economics is that incentives matter — and that if you get the incentives wrong, the results can be, well, interesting. Exhibit A: the subprime mess.
In an interesting column in this weekend’s Wall Street Journal, Herb Greenberg writes (subscription required) about Lululemon (NASDAQ: LULU), where the terms surrounding options grants put top executives in a position to serve the private equity backers rather than other minority shareholders who bought the shares during or after the IPO — at a much higher price.
In the case of Lululemon, CEO Robert Meers saw some of his options vest based on when the private equity backers cashed out. According to Greenberg, “The vested amount would immediately leap to as much as 40% if private-equity investors sold; the actual amount was based on a sliding scale tied to how much they actually made.”
Options that vest based on some sort of performance are great. But I’m skeptical of options that vest based on when private equity backers who paid a tiny fraction of what other investors paid for their stake in the company cash out.
I’m wary of companies taken public by private equity firms in general. The buyout shops are masters of the art of “buy cheap and sell dear,” and “buying dear” tends to be a great way to lose money in the stock market.
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Filed under: Deals, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO)
A memo by a senior Microsoft (NASDAQ: MSFT) executive sets out some of the reasons for the company’s bid for Yahoo! (NASDAQ: YHOO). According to The Wall Street Journal (subscription required), “Kevin Johnson, president of Microsoft’s Platforms and Services Division, reiterated the Redmond, Wash., software maker’s reasons behind its unsolicited offer, writing that a combination would provide a compelling alternative in search and online advertising.” The note goes further to indicate that Microsoft values both the Yahoo! brands and the technical skills of its engineers.
Yahoo! should not take the memo seriously. It would be hard to name a company that Microsoft has purchased that still maintains its own brands and independent operations. Bill Gates has said that the software company will put its full engineering skill behind an effort to build better search technology than Google (NASDAQ: GOOG) has. It may be an audacious and arrogant approach to catching the industry leader, but Microsoft has never looked for outside help to solve its most urgent problems.
All Yahoo! shareholders can look for in the generous Microsoft buy-out offer is a good payday. The world’s largest software company looks at Yahoo! as a step in advancing its own agenda and nothing more.
Douglas A. McIntyre is an editor at 247wallst.com.
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Filed under: Wal-Mart (WMT), Columns
 Welcome to the 50th installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes down to a very hot topic these days: Wal-Mart.
In this week’s Wal-Mart Weekly, I’ll take a look at the burgeoning efforts of Wal-Mart in the international markets it serves. In 2006, the world’s largest retailer hung its head in shame as it exited the Germany and South Korean markets. From all accounts, Wal-Mart Stores, Inc. (NYSE: WMT) just didn’t realize the local flair that made existing retailers in those markets successful. You can’t bring a ‘big box’ store to every country and expect immediate success, in other words.
But all of a sudden, 2007 saw Wal-Mart join up with China’s Trust-Mart and India’s Bharti to take advantage of the two largest international retail opportunities. It also pumped up efforts at its UK-based Asda chain, but then saw dismal failure within its interest in Japan’s Seiyu chain. But having just released figures on international performance, Wal-Mart has charged ahead again with some recent excellent performance. Can it continue?
Continue reading The Wal-Mart Weekly: International performance ramping up fast
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Filed under: Bear Stearns Cos (BSC), Stocks to Buy
 Readers of this space know that the investment thesis offered here favors large-cap companies with demonstrated business models and that have a competitive advantage in established markets, preferably with a favorable global trend as a support.
Still, every once in awhile an exception is made, in this case to get-ahead-of the-curve regarding a sector’s recovery, and with the aforementioned in mind, Bear Stearns is worth an evaluation.
Bear Stearns (NYSE: BSC) is a leading investment banking, securities, and derivatives trading, clearance, and brokerage firm serving corporations governments, institutional, and individual investors worldwide.
Analysts expect Bear’s prime brokerage and asset management businesses to continue to grow, along with adequate-to-good results from its trading division.
Further, there’s a sense now among analysts that BSC’s mortgage securities and leveraged loan commitments on its balance sheet have been sufficiently written down. That’s not to say that there won’t be more write-downs or an additional financial bump or two, but the worst appears to be over, at least for Bear.
Continue reading This Bear’s hibernation is about to end
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Filed under: Cisco Systems (CSCO), General Electric (GE), Exxon Mobil (XOM), Citigroup Inc. (C), Bank of America (BAC), Wachovia Corp (WB), Comfort Zone Investing
 Ted Allrich is the founder of The Online Investor and author of: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he’ll offer advice to investors who are just getting started.
Bellwether stocks are industry leaders, the biggest and usually, but not always, the best. Investors watch them to get a sense of where that particular industry, or in some cases, the economy is going. Some bellwethers are portfolio anchors while others are good indicators but not necessarily the best stocks to own. Here are some to know.
For a broad economic indicator, watch General Electric Company (NYSE: GE). This company is so large and involved in almost every aspect of the economy that it gives a good reading on how the economy is doing. It finances houses, builds jet engines, sells light bulbs, owns NBC Universal, manufactures major household appliances and consumer electronics, has electrical distribution, generates energy from coal, oil, natural gas, nuclear energy, water and wind technologies, supplies railroad locomotives and management technologies, offers security systems, has water treatment and wastewater treatment, provides healthcare with medical technologies and services such as medical imaging. There isn’t much GE doesn’t touch in our daily lives. While GE’s stock has been in a rather tight trading range (it did break up to $42 a share late last year, but then retreated), it’s worth watching as an indicator for the pulse of the U.S. economy. The stock’s price has been decidedly down for the last six months.
Continue reading Comfort Zone Investing: Watch these bellwether stocks
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Filed under: Earnings reports, Wal-Mart (WMT), Safeway Inc (SWY), Newmont Mining (NEM), Crocs Inc (CROX), Garmin Ltd (GRMN)
Here are a few highlights from this past week’s earnings coverage from BloggingStocks:
Also, Jim Cramer sees Hewlett-Packard as a market bellwether, and Ted Allrich looks at some other bellwether stocks. Sheldon Liber gets a sense of deja vu from Exxon Mobil’s (NYSE: XOM) big profits and its tussle with Chavez.
Upcoming results to watch for include Nordstom Inc. (NYSE: JWN), Macy’s Inc. (NYSE: M), Washington Post Co. (NYSE: WPO), Dell Inc. (NASDAQ: DELL), Sprint-Nextel Corp. (NYSE: S), and Sears Holdings Corp. (NASDAQ: SHLD).
Visit AOL Money & Finance for more earnings coverage.
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