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f48bad3d6fd6de52ad7536d726607601 | https://www.cnbc.com/2009/10/06/financial-reform-package-picking-up-steam-in-congress.html | Financial Reform Package Picking Up Steam In Congress | Financial Reform Package Picking Up Steam In Congress
The Obama administration’s regulatory reform package is back on the front burner in Congress and will soon be coming to a boil.
Barney FrankAP
Powerful House Financial Services Committee Chairman Barney Frank (D-Mass.) has scheduled a series of committee voting sessions for key parts of the reform package, according to Congressional sources.
The new schedule indicates that momentum for the financial reform effort has been regained, at least on the House side, and increases the chance that Democrats can meet their goal—as outlined in in early September -- of having a “comprehensive plan” in place by the end of October or November.
The tentative schedule, a copy of which was obtained by CNBC.com, was sent to members early this week. It calls for markups of bills covering expanded oversight over OTC derivatives, the creation of a consumer financial protection agency and capital markets regulator reform.
(Related: Fed Chief Bernanke and Treasury Secretary Geithner plan "full court press" on Congress this week. See video)
The markup will follow a series of public hearings on the remaining pieces of the sweeping overhaul plan, which includes the creation of a system regulator, new federal authority over too-big-to-fail firms—such as AIG ,which had led to embarrassing and costly federal bailouts in the crisis of 2008—and limits on executive compensation.
Senate Banking Committee Chairman Chris Dodd (D-Conn.) recently said he wants to write his version of the bill in October towards a markup in November, but further details about the timing have not been made public.
Slideshow: The Biggest Bank Failures of 2009
Thus far, Frank’s committee has only advanced pay legislation, which the full House approved by a 237-185 margin in late July right before the summer recess.
Until the latest round of hearings that began in both the House and Senate in mid September, there was growing speculation that legislative momentum has been lost for the financial system reforms and that it might not happen this year. House Democrats and President Obama had repeatedly stated they want the package to become law this year.
VIDEO0:0000:00Treasury Reform Meetings On Hill
The slowdown appeared to be partly a result of the preoccupation and overwhelming complexity of heath care reform legislation, which is considered the administration’s top priority this year.
The push for regulatory reform comes as lawmakers and the nation approach the one-year anniversary of emergency legislation authorizing a $700 billion financial aid package for the financial sector.
“He (Frank) wants the political will there,” said one Congressional source familiar with the committee and the legislative agenda. “Our memory isn't that long, especially when it comes to passing extreme regulatory reform.”
Based on the current schedule the House committee will mark up bills on derivatives and the consumer protection agency from Wednesday Oct. 14 to Friday Oct. 16. The fact that the work will take place on Friday, which is usually a travel day for members, is notable.
Frank’s committee will spend two days (Oct. 21-22) on the markup of capital markets regulatory reform, following a one day hearing on the systemic risk regulator and prudential regulation of banks.
Both measures have been the subject of controversy lately. The administration’s proposal to give more authority to the Federal Reserve drew protests from both sides of the political aisles. Some concerns were recently allayed by the latest Congressional testimony of Fed Chairman Ben Bernanke, which in downplaying the central bank’s role appeared to appease Congressional critics.
Banking regulation, however, has the potential to be a hot-button issue, because Frank and Dodd have very different preferences on the regulation of institutions in the future structure.
Dodd in September outlined a format where the current regulatory powers of four federal agencies—including the Fed and FDIC—would be folded into one new entity.
Frank is pushing something similar to the administration plan that would merge the functions of the agencies overseeing the banking and savings and loan industries.
Frank and Dodd at times have also appeared at odds over both the strategy and timing of the financial reform legislation, but they now appear to at least share the same deadline.
Unlike the House, the measures will not be handled on a piece-meal basis in the Senate, where there is always the threat of a filibuster..
"We're going with one comprehensive package because we thing everything is so closely tied together," said a spokeswoman for Dodd.
Slideshow: The World's Safest Banks 2009
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7e628dea11c6f35df24c4ec605e259f5 | https://www.cnbc.com/2009/10/06/how-to-lead-in-a-crisis.html | How To Lead In A Crisis | How To Lead In A Crisis
CNBC.com
The World Business Forum starts today in New York City bringing together political and business leaders for two days to discuss the ongoing crisis, leadership, talent management, leading change in jobless times and many more issues related to how we conduct business and lead teams today.
For a CEO, this event promises to show key indicators of where and what might lead us out of the current crisis. From changing the way you mentor teams, spearhead campaigns and make your brand successful, the next decade will require evolved leadership skills if you and your company want to succeed. The introductory speaker Bill George, ex-CEO of Medtronix and a professor of management practice at Harvard Business School will focus on discussing the focal point of the event: How to lead in times of crisis.
He will speak from experience.
He has not only led Medtronix for a number of years but also serves on boards of many multinational companies and has authored several books including his latest publication 7 Lessons for Leading in Crisis.
In a recent guest post on Vault’s CSR blog In Good Company, he says “It’s quite easy to be a measured, good-natured, principled and strategic leader in smooth sailing, but reputations are made in the depth of crisis. I want to ensure that the next generation of leaders, like those students of mine at HBS, clearly understand that concept and grasp the inherent vulnerability they face as leaders in crisis.”
His primary concern though is a familiar one and one that hits at the top of every company: That the economic collapse was not caused by oft-repeated reasons like subprime mortgages and credit default swaps but by failed leadership.
Below are a few tips he hopes will help you as company (and team) leader to make the right decisions and keep everyone afloat.
Don’t point fingers when you are to blame. Don’t try to go it alone – you will fail. Don’t go for the quick fix. Don’t forget the media – they hang on every word. Don’t shy away from opportunity – come out swinging. Don’t be afraid to change your leadership style. Don’t ever, ever waste a good crisis - it is your opportunity to change your company for the better Do get behind the podium and inspire your company back to profitability. Do get down in the weeds with your managers and work the problem. Do focus on long-term viability rather than short-term profits. Do be forthright in acknowledging fault. Do encourage a culture of candidness. Do call on trusted mentors when you need a fresh perspective. Do keep a close eye on the balance sheet (in crisis, cash is king). Simply, lead with every intention of having an aggressively positive impact on your company, employees, and customers. Crisis or not.
More Executive Strategies on CNBC.com:Best American CEOs of All TimePortfolio's Worst American CEOs of All TimeExecutive Career Strategies
________________________________Aman Singh is an Editor with Vault and works with Fortune 500 companies on reporting their diversity recruitment strategies and initiatives. Comments? Send them to executivecareers@cnbc.com
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d4070a0e81e252ecc9503dc2d0879ea6 | https://www.cnbc.com/2009/10/06/how-you-can-get-an-endorsement-deal-with-nike.html | How You Can Get An Endorsement Deal With Nike | How You Can Get An Endorsement Deal With Nike
There's a new company called Udorse.
It allows you to get paid - in cash and in product - by companies whose products you wear in pictures you tag on social media sites.
VIDEO0:0000:00Udorse CEO
We sat down with Udorse CEO Geoff Lewis to talk about the company.
Lewis talked to us about how the idea works, how you can make money and how you can even get a free pair of Nikes .
Questions? Comments? SportsBiz@cnbc.com
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630263265a3f570a964d5209aa9df6c0 | https://www.cnbc.com/2009/10/06/ibm-signs-outsourcing-contract-with-telecom.html | IBM Signs Outsourcing Contract with Telecom | IBM Signs Outsourcing Contract with Telecom
IBM Corp. says it has won a $200 million contract to handle some technology chores for a company called Datacom Solutions as it rolls out telecommunications services in India.
The three-year outsourcing deal, set to be announced Wednesday, will give Datacom access to IBM technology that helps manage cell phone and Internet networks and make sure the services are working properly.
V.N. Dhoot, chairman of the Indian firm Videocon Group, the parent company of Datacom Solutions, said in a statement the company picked IBM because of its "unmatched track record of building leadership in telecom in markets not only in India but worldwide."
Armonk, N.Y.-based IBM, which makes most of its money from services and software, signs billions of dollars in services deals every month. In the April-June quarter, the company signed $14 billion in services contracts, 17 of which were $100 million or bigger.
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6c21c8669b6b4bcb9cdeb46956599a8f | https://www.cnbc.com/2009/10/06/investment-indigestion-at-stanford.html | Investment Indigestion at Stanford | Investment Indigestion at Stanford
Stanford University is holding a garage sale.
Not the desks-and-chairs kind. Instead, Stanford is selling stakes in funds run by the biggest names in private equity at deeply discounted prices.
Stanford UniversityPhoto: Jawed Karim
While no one will confirm the names aloud, they are of the caliber of Henry R. Kravis, Stephen A. Schwarzman and Leon D. Black.
During the boom times, Stanford Management, joined other endowments in a rush to plow increasingly large percentages of their funds into private equity, real estate and other illiquid investments — committing some $12.6 billion of the university’s endowment.
But then the market soured, and Stanford’s endowment lost $4.6 billion in value in its last fiscal year, a decline of 27 percent. So it now seems to be suffering from investor’s remorse.
Its plan to sell part of its stakes in private equity firms — a bid to raise $1 billion or more — appears to be an attempt to cut losses on current investments and a way to get out of committing more money to future deals.
In flush times, putting a for-sale sign on such assets would attract a crowd of potential buyers. But just about everybody is sitting on their own losses. And soon enough we may start seeing similar sales from other campuses around the nation.
Harvard, whose endowment shrank 27.3 percent last year, looked to sell some assets earlier this year. But given the lukewarm response, it struggled in a bid to sell about $1 billion of assets before pulling the sale. The California Public Employees’ Retirement System has been looking to sell, too.
Stanford isn’t planning to sell stakes in individual private equity deals. Rather, it wants to sell its place as an investor in private equity firms. (The funds, of course, won’t just let endowments out of their commitments.)
One executive involved in the auction process, first reported last week by LBO Wire, a news service of Dow Jones, called it “the biggest fire sale in private equity, ever.” A potential buyer said, “For someone in our business, it’s a rare chance to get a portfolio of this quality and of this size.”
Even so, Stanford’s decision will send a chill through the halls of endowment offices at other universities. By trying to sell such a large position all at once, Stanford will invariably depress prices for any institution considering a similar move.
Virtually nobody in the industry would talk on the record about Stanford’s planned sale. Everyone contacted was a buyer, adviser or consultant — or wanted to be — and considered this deal to be the third rail of the endowment industry.
Stanford is adamant that it does not need the money; it says it is not facing a liquidity squeeze.
And it did, in fact, already take out an expensive $1 billion line of credit as a cushion in the event that it needed help keeping the lights on for students. Its decision, according to people who have been briefed on the university’s thinking, is a strategic one — it wants to reduce its exposure to future private equity deals.
But taking this step suggests that Stanford wants to distance itself from other endowments like that of Yale, led by David F. Swensen, who pioneered the push toward universities holding illiquid investments.
That strategy is often called the Swensen model. His fund has been decimated as well, falling $5.6 billion, or 24.6 percent, in the last year. (The average large university endowment dropped 17.2 percent in that period, according to the Wilshire Trust Universe Comparison Service.) But unlike Stanford, Mr. Swensen is not changing course and selling assets — at least not yet.
When Stanford tries to sell its stakes in private equity portfolios, it will be entering a netherworld of secondary deals inhabited by a small cadre of investors looking to buy stakes on the cheap. They include AlpInvest Partners, Coller Capital, Credit Suisse, HarbourVest Partners, Goldman Sachs and Lexington Partners. The auction is being handled by Cogent Partners.
Nyppex, which tracks secondary deals, said that earlier this year such deals were made at 29.3 cents on the dollar, based on net asset value.
That number has moved up in recent months as confidence has returned to the markets, and Nyppex’s latest estimation indicates that recent deals have gone for an average of 51.58 percent of net asset value.
One question that has vexed the endowment industry is how to determine the value of portfolios. At the end of every quarter, private equity firms typically send out current valuations of their portfolios and the endowments accept them at face value.
But what happens if Stanford is able to sell its stake at only 50 cents on the dollar, for example, when K.K.R. is listing it at 80 cents? If other endowments hold similar stakes, what happens to their value?
This is still a hypothetical, because unlike investment banks, endowments don’t have to mark to market. Instead, they value their assets on a hold-to-maturity basis, which means they should not have to reduce the value of those portfolios in the short term.
But if things get worse, will they have to?
Universities specialize in the art of big-picture questions. This probably isn’t one they want to contemplate.
•
Throughout the week on DealBook’s Web site (nytimes.com/dealbook), we are holding DealBook Dialogue, our first online roundtable with leading academics, market participants and regulators.
The debate topic is “Too Soon to Rethink? Assessing the Financial Crisis.”
Among the thought leaders who have begun a conversation among themselves and with readers is Leo E. Strine Jr., vice chancellor of the Delaware Court of Chancery; Lucian A. Bebchuk of Harvard Law School; and Howard S. Marks, chairman of Oaktree Capital Management.
The debate is being moderated by our own “Deal Professor,” Steven M. Davidoff. I encourage you to stop by.
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6146b2859e2ff5e7772a639bb1f08475 | https://www.cnbc.com/2009/10/06/lightning-round-potash-red-hat-hudson-city-bancorp-and-more.html | Potash :Terra Nitrogen is the only agriculture-related stock that Cramer will recommend right now.
Buckle : Cramer is bullish on BKE.
10 Tips for Building Wealth
Red Hat : Red Hat is a buy, Cramer said.
B&G Foods : Cramer likes BGF and its dividend yield.
China Green Agriculture : “This is just way too speculative,” Cramer said. Don’t buy CGA.
Activision Blizzard : “I do not like the gaming business,” Cramer said. Sell ATVI.
Hudson City Bancorp : Cramer likes HCBK and its 4.6% dividend yield.
Call Cramer: 1-800-743-CNBC
Questions for Cramer?
Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com
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ef145e274f4026d76ccb50d7db53b160 | https://www.cnbc.com/2009/10/06/more-despair-for-shorts.html | More Despair for Shorts | More Despair for Shorts
So much for the correction.
Days like this show you the opportunity cost of being in cash. The S&P 500, at 1057, is just a little more than 1 percent from the September 22nd closing high of 1071.
This, after a drop of...a measly 5 percent. The worst correction we have had since the March bottom was the 9 percent drop between June and July. All other "corrections" have been in the 3 to 5 percent range.
What about the double dip? Fact is, everyone talks about it, some strongly believe it, but go into the world where people actually have to make a published bet-economists, or stock pickers, and the consensus is it's possible, but they're not betting big on it.
Farrell: Noriel Says It's a "U"
Why do I say that? Because the consensus among economists is for 2010 GDP growth of 2 percent. Where are the double dippers here?
And in the world of stock pickers, most say: what's the alternative of selling all or part of your stock portfolio? Getting out of market in a flat market is often not worth it. Not when Treasuries yield between 0.9 percent (for the two-year Treasury) and 3.2 percent (for the 10 year). Corporates are not much better.
And even if stocks move sideways, just holding stocks will get you a 2-3 percent dividend.
No wonder shorts are so miserable.
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The Dow 30 in Real TimeThe CNBC Stock Blog
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Questions? Comments? tradertalk@cnbc.com
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3dadc8025fccb7e658ecdc03e2635abd | https://www.cnbc.com/2009/10/06/notebook-pcs-outpace-weak-backtoschool-sales.html | Notebook PCs Outpace Weak Back-to-School Sales | Notebook PCs Outpace Weak Back-to-School Sales
While most retailers saw bleak sales this back-to-school season, consumer electronics chains saw renewed demand for notebook personal computers, according to a report from market research firm NPD Group.
Photo: Daniel Feldt
That could be good news for PC makers this holiday shopping season, with few stand-out gadgets to woo shoppers.
Overall consumer technology revenue for the U.S. back-to-school season fell 12.5 percent this year to $7.6 billion, NPD said on Tuesday. NPD measured sales for the seven-week period from late July through mid-September.
But notebook PCs performed better, as revenue for the category was flat versus a year ago, largely influenced by a drop in the average selling price per unit to $624 from $804.
Within that category, thin and light netbooks were a big draw, accounting for 14 percent of all notebook units sold for back-to-school. That was up from just less than 2 percent of sales last year, NPD said.
NPD called notebook PCs "the only true must-have" category for back-to-school in the consumer technology sector. They made up 21 percent of all revenue, it added.
"Notebooks seem to be recession-proof and this back-to-school season was no exception," said Stephen Baker, vice president of industry analysis at NPD.
More consumers opted for netbooks and low-cost notebooks under $500 as viable options despite the weak economy, Baker said.
Hewlett-Packard Co. , the world's No. 1 maker of personal computers, expects very aggressive pricing for PCs during the coming holiday season, as consumers remain focused on buying lower-priced products.
Electronics retailer Best Buy Co. said last week it was beefing up holiday hiring, expecting a better holiday sales performance fueled in part by purchases of netbooks, flat-screen televisions and digital book readers.
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a49f70ba458a436262946a4b46161656 | https://www.cnbc.com/2009/10/06/novartis-flu-shot-across-the-bow.html | Novartis' Flu Shot Across The Bow | Novartis' Flu Shot Across The Bow
Pharmacist wearing face maskAP
As the first H1N1 vaccine arrives in clinics this week, the mainstream media are once again cranking up their swine flu coverage. CNBC is devoting more airtime and CNBC.com is allocating more space to the topic as well, but most of the stuff is a little more niche focused for an investor and business audience.
Yesterday and today thousands of kids and healthcare workers around the country started getting AstraZeneca's H1N1 FluMist, the vaccine that's sprayed into the nose. The first shots from Novartis and Sanofi-Aventis may be available later this week. GlaxoSmithKline and Baxter are still waiting for the FDA to approve their vaccines.
Fighting the Flu
But with the vaccines getting increased media attention, the companies are busy trying to show they're on top of the situation. GSK put out a press releasetoday updating the size of government orders for its H1N1 shot that it's calling "Pandemrix."
Swine Flu By Any Other Name ... Like H1N1
And NVS issued a press releaseupdating the amount of seasonal flu vaccine it has shipped. But I don't think the 27 million doses has sent to the U.S., so far, is the headline. Rather, I think the most remarkable thing in the press release is how NVS has apparently decided to go on the offensive regarding the safety of flu shots.
Check out this excerpt:
"The number of people in the U.S. who die every year from the flu is similar to the more than 40,000 people in the U.S. estimated to die from breast cancer every year and about half of the estimated 70,000 people who die annually of diabetes and its complications. During the 2007-2008 influenza season, 83 children were reported to have died of influenza-related causes. Of the 63 whose vaccination status was known, 58 (92 percent) were not vaccinated according to recommendations. Influenza vaccination is one of the most effective public health interventions ever implemented, sparing millions of people from complications of the infectious disease. Use of currently available seasonal flu vaccines has been calculated to save more than 8 million lives annually; translating to one person saved every five seconds."
VIDEO0:0000:00Swine Flu Fighters
I haven't seen that kind of blunt language in any other company's releases.
To compare flu deaths to the highly publicized number of breast cancer and diabetes deaths is pretty powerful.
And the 92 percent unvaccinated statistic for fatalities among children is darn sobering.
Will it quiet the critics or convince all fearful parents to get their kids vaccinated? I don't think so. But you have to hand it to Novartis for, at least, recognizing the buzz (some might call it misinformation) that's out there and trying to very matter-of-factly take it on.
Questions? Comments? Pharma@cnbc.com and follow me on Twitter at mhuckman
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a5641172c31801d14b3308b955cf605b | https://www.cnbc.com/2009/10/06/options-bullish-on-this-retailer-stock.html | Options Bullish on This Retailer (!) Stock | Options Bullish on This Retailer (!) Stock
Limited Brands drew upside options trading ahead of its September sales report Thursday.
The women's apparel retailer jumped 7.75 percent yesterday (Monday) to close at $17.38, back near its 52-week high of $17.73 reached Sept. 23. LTD stock is up nearly 70 percent in the last three months.
CNBC/ Trading School:
Options Terminology: GlossaryBasic Strategies — with ExamplesOptions Basics: The ABCs
The options activity was concentrated at the January 17.50 contracts, which averages just 180 calls trade each day but yesterday saw 4,185 change hands above open interest. The bulk of those calls were bought for $1.35 and $1.45, according to 's proprietary tracking systems.
The stock would need to rise at least 8.5 percent for those calls to turn a profit by the time they expire in mid-January.
The company will release its same-store sales report for September before the bell on Thursday, at 7:30am ET. It is scheduled to report its third-quarter earnings results on Nov. 18.
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Mike Yamamoto is an analyst and writer for .
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Disclaimer
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a68b2e705433feab429f45c2ce513b3a | https://www.cnbc.com/2009/10/06/pops-drops-mosaic-nutrisystem.html | Following are the day’s biggest winners and losers. Find out why shares of Mosaic and NutriSystem popped while Vimpel-Comm and St. Jude Medical dropped.
POPS (stocks that jumped higher)Mosaic (MOS) popped 4%. Despite an earnings miss, investors bid the stock higher on an anticipated uptick in demand. - I think the ag names have bottomed, speculates Joe Terranova.
VIDEO0:0000:00Stock Pops & Drops
NutriSystem (NTRI) popped 16%. The maker of prepared weight loss meals said Walmart will begin to sell its products. - It's a great move for them, says Pete Najarian.
eBay (EBAY) popped 5%. A larger move higher in retail took this stock along for the ride. - I'm a buyer on dips, says Guy Adami.
Corning (GLW) popped 5%. UBS upgraded the company to ‘buy’ from ‘neutral’ at UBS citing improvws demand from China. - I don't like this stock here, says Joe Terranova.
Joy Global (JOYG) popped 2%. The maker of mining equipment made gains as gold touched at an all time high.
Emerging Markets ETF (EEM) popped 2%. The weak dollar gave commodities a boost and this ETF went with them.
DROPS (stocks that slid lower)
Vimpel-Comm (VIP) dropped 3%. Investors took profits after the Russia-based firm moved higher on Monday. - I think it's a great cellular play, says Tim Seymour.
St. Jude Medical (STJ) dropped 13%. The medical device maker forecast third quarter earnings below Street estimates citing financial pressures and weak sales. - Not good, says Pete Najarian.
______________________________________________________Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! If you'd prefer to make a comment but not have it published on our website send your e-mail to .Trader disclosure: On Oct. 6th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Terranova Owns (NOV), (MOS), (JPM); Terranova Owns Dec. Gold Futures; Terranova Owns March Sugar Futures; Terranova Owns Crude Futures; Terranova Is Short (CCL), (WYNN), (GRMN); Seymour Owns (AAPL), (STD), (EEM), (RIMM), (BAC), (MSFT), (SBUX), (VIP), (RTP); Najarian Owns (C) Calls; Najarian Owns (BRCD) Call Spread; Najarian Owns (DELL) Call Spread; Najarian Owns (GE) Calls; Najarian Owns (JPM) & Short (JPM) Calls; Najarian Owns (LAZ) & Short (LAZ) Calls & Long (LAZ) Put Spread; Najarian Owns (MSFT) And Is Short (MSFT) Calls; Najarian Owns (MYL) Calls; Najarian Owns (TEVA); Najarian Owns (ORCL) & Short (ORCL) Calls; Najarian Owns (RIMM) Call Spread; Najarian Owns (WFC) Puts; Najarian Owns (YHOO) Call Spread ; Najarian Short (AA) Calls
GE Is The Parent Company Of CNBCNBC Universal Is The Parent Company Of CNBCFor Greg Troccoli:Troccoli is Short (SPX) For Dennis Gartman:Gartman Owms Canadian DollarGartman Owns GoldGartman Is Short British PoundGartman Owns US 10-Yr Note
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02cd43de214243700b990adc442b6a8e | https://www.cnbc.com/2009/10/06/prepaid-but-not-prepared-for-debit-card-fees.html | Prepaid, but Not Prepared for Debit Card Fees | Prepaid, but Not Prepared for Debit Card Fees
Buying a prepaid debit card these days is just about as easy as picking up a bottle of shampoo or a candy bar. Walk into a Wal-Mart or almost any major drugstore, and rows of plastic worth $25, $100 and even $500 beckon from kiosks alongside prepaid phone cards and gift cards for retailers.
“No Credit Check. Safer Than Cash. No Bank Account Needed,” says the Green Dot Visa Prepaid Card: Just pay at the register and the card is ready for A.T.M. withdrawals, store purchases and online shopping.
Credit Card swipe
For many people who do not have bank accounts, or cannot get a credit card, the appeal is irresistible, making the reloadable cards among the consumer banking industry’s fastest-growing products. But their convenience comes with a catch: fees, often hidden in the fine print.
The MiCash Prepaid MasterCard docks cardholders a $9.95 activation fee. Like many competitors, it then charges numerous recurring fees, including $1.75 for each A.T.M. withdrawal, $1 for each A.T.M. balance inquiry, 50 cents for each purchase, $4 for monthly maintenance, $2 for inactivity after 60 days and $1 for a call to customer service.
The Millennium Advantage Prepaid MasterCard goes further, listing an application fee of up to $99. The Silver Prepaid MasterCard advertises that it does not charge for overdrafts as many debit cards do, but it gives itself the option of charging a $25 shortage fee if customers exceed their balance.
“It’s a very expensive way to bank,” said Jean Ann Fox, director of financial services at the Consumer Federation of America.
A cottage industry only 10 years ago, reloadable prepaid cards have tapped into the vast pool of about 80 million consumers who have little or no access to bank accounts. The market includes college students who do not want to carry around wads of cash and consumers who do not want to type their credit card number into the Internet.
More typically, it comprises low-income people and immigrants who have fewer financial options than other Americans. Often, they turn to these cards because they cannot open a bank account, or they become fed up with the costs of check-cashing stores or overdraft fees on checking accounts.
Industry officials say the cards are a good deal because users can avoid the fees charged on low-balance bank accounts and at check-cashing stores.
“If you look at these products today compared to even a checking account, many consumers have found that they can be far less expensive,” said Gary Palmer, chairman of the Network Branded Prepaid Card Association.
But even as the industry expands, many prepaid cards continue to charge fees — including for purchases and paying bills — that can quickly accumulate.
Like many workers, Tyrell Blocker, 20, of Brooklyn, could ill afford the surprise when he took such a card last week to a Pay-O-Matic Financial Services store in Manhattan after a bank turned him down for an account because he lacked one of two required pieces of identification. As soon as the cash from his paycheck landed on his card, he noticed fees accumulating. Mr. Blocker returned to Pay-O-Matic to complain and only then was provided a detailed list of more than two dozen fees, he said.
“I need every last dime I got; I’ve got a newborn,” Mr. Blocker said. A spokesman for Pay-O-Matic said the card was fairly new and the firm was working to make the fees more transparent.
Little Regulatory Scrutiny
Because it is a relatively new industry, prepaid cards have not undergone the Congressional and regulatory scrutiny of credit and debit cards. In the spring, lawmakers restricted interest rate increases and hidden fees on credit cards, and regulators are now examining stricter rules on overdraft fees on checking accounts. Even gift cards, which expire when the money runs out, will soon be subject to new rules limiting monthly fees and expiration dates.
Congress has asked regulators to determine if prepaid cards warrant the same protections extended to debit and credit cards. The industry’s trade association says such measures are unnecessary and would make cards more expensive.
But consumer advocates say the lack of regulation means that prepaid card users can continue to be blindsided by hidden fees, and have few legal protections to recover their money if a card is lost or a charge disputed.
Mike Henry, who owns a small print shop in California, had not been able to recover $50 stuck on his Only 1 Visa prepaid card after it stopped working. He gave up after numerous calls to customer service — at 95 cents each — went unresolved. Only 1, meanwhile, continued to send daily updates of his balance as it was eaten away by monthly fees. His account was finally whittled to zero.
“For the last six months, I turn on my computer and check my e-mail and get slapped in the face,” he said.
Only 1 officials said they regretted his inconvenience and were refunding Mr. Henry’s money.
Among the beneficiaries of these cards are Visa , MasterCard and Discover , which receive about a nickel to 20 cents each time a credit or debit card emblazoned with their logo is swiped. While the companies do not disclose income from prepaid cards, their efforts to add tens of millions of users represents a potentially significant source of new revenue.
Financial firms that issue the cards are often little-known companies with names like Green Dot, NetSpend and AccountNow. Since they get money upfront from the consumer, there is relatively little risk with prepaid debit cards, compared with credit cards and other loan-making products.
Credit Card Swipe
Given the number of people who have little or no relationship with a bank, both in the United States and abroad, the financial industry is betting on a boom. In 2008, for instance, customers loaded about $8.7 billion onto prepaid cards, a 125 percent increase over the previous year, according to the Mercator Advisory Group. The industry is expected to balloon to $119 billion by 2012, Mercator predicts.
“Every year we’ve seen big growth,” said Steve Streit, the founder of Green Dot, now one of the largest reloadable prepaid card companies. “There’s a part of me that believes we are just at the entry ramp to growth right now.”
The cards are part of a larger universe of plastic that includes prepaid phone cards and gift cards, payroll cards and government benefit cards. Industry officials are particularly excited about the explosive growth from government agencies and companies as they replace paper checks with prepaid cards to save money. Social Security payments are now offered on prepaid cards to retirees without bank accounts, and many states do the same with welfare payments. Wal-Mart recently said it would pay employees only on prepaid cards if they did not have a bank account for direct deposit.
These fees tend to be lower than those on commercial prepaid cards. But critics question why there are any fees at all, particularly when the recipients do not have a choice.
“To me, it’s a terrible thing to give people their pay on a card that has fees on it,” said Linda Sherry, director of national priorities for Consumer Action.
Reloadable prepaid cards hardly existed a decade ago. Then, as credit cards surged and the Internet bubble lifted the economy, a handful of companies noticed an untapped market in teenagers who wanted to shop on the Internet, but were not eligible for credit cards. But it soon became clear that the larger market for prepaid cards was people who do not use banks and the uncreditworthy.
In the years since, dozens of companies and banks have latched on, some offering celebrity branding to lure customers. Johnny Cash, Usher, Carmen Electra and the football player Vince Young have all had their name attached to a prepaid card, and the hip-hop impresario Russell Simmons continues to back the RushCard, mainly to African-Americans, as a “better alternative” than banks and credit cards.
But these efforts are not without controversy. Mr. Simmons, for example, has batted down repeated criticism that his card saps money from low-income users. His Pay-as-You-Go card has come under scrutiny for charging a $19.99 activation fee deducted from the cash first loaded onto the card; a $1 convenience fee for the first 10 purchases every month; and a fee of $1 for every bill paid with the card.
Fees Are Declining
Industry officials say fees have been declining, especially after Wal-Mart this year trimmed fees on the MoneyCard Prepaid card it sells, which prompted several other issuers to cut prices too. They add that consumer complaints are rare and that surveys indicate the vast majority of customers like the cards.
An industry-sponsored study by Bretton Woods, a bank advisory firm, said that cards like Green Dot, Wal-Mart and NetSpend are cheaper than a checking account, whose annual cost can be as high as $353, assuming six overdraft charges, compared with $207 for a direct-deposit prepaid card.
Yet in many instances, even the lowest-fee prepaid cards can cost more if consumers are able to avoid bank overdraft fees. That should get easier after several large banks announced recently they would let customers decline overdraft protection.
While most major banks charge $10 or less a month for a low-balance checking account, a survey of two dozen prepaid cards released in August by the Consumers Union, the publisher of Consumer Reports, found that the cheapest, the Wal-Mart Money Card, cost $16.59 in the first month and $21.54 in the second.
By contrast, the most expensive card, the Millennium Advantage card, cost $115.05 in the first month, because of a $99 application fee, and $27.95 the second month, the survey, compiled by Michelle Jun, a lawyer for Consumers Union, showed.
And the actual fees charged can be confusing. A spokesman for the Millennium Advantage card said that while it lists the $99 fee, the company charges only up to $30. A spokesman for the Silver card said that it does not actually charge the $25 shortage fee shown in its fine print, and is working to remove it from company documents.
“How are consumers supposed to keep the fees straight if the companies can’t?” said Michael McCauley, a spokesman for Consumers Union.
In the meantime, bewildered by opaque terms and often dodgy customer service, many consumers are fending for themselves.
Damon Saxton, 34, said he had given up on prepaid cards and hoped to return to a bank, if they will have him. Mr. Saxton began using a prepaid card after being barred from getting a bank account for cashing a check from an eBay sale without realizing it was fake.
Related Stories from CreditCards.com
Beware of 'Fake' Grandkids Calling for CashHow To Protect Yourself from Data Breaches
But Mr. Saxton, who lives in Florida, said that the two years he used his Vision Premier Prepaid Visa Card were marred by petty fees and horrible customer service.
Mr. Saxton said that when he punched the wrong code into an A.T.M., the bank charged him $2.95 for a declined A.T.M. transaction. When he called to complain, he said, they charged him an additional $1.95. When someone got hold of his card number and racked up several hundred dollars in shortage fees, Vision Premier covered the fees with Mr. Saxton’s tax return, which was directly deposited onto the card, he said.
A spokesman for the Vision Premier said Mr. Saxton’s experience was not the norm. The company eventually refunded the fees.
“I wasted countless hours dealing with this problem, not to mention the stress,” Mr. Saxton said. “I think the whole business is based around nickel and diming.”
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86b682e4a6c83d65757d855a605a971c | https://www.cnbc.com/2009/10/06/price-wars-in-toyland-target-to-match-walmarts-cuts.html | Consumer Nation | Consumer Nation
Let the holiday price wars begin.
Target is expected to announce that it will match toy price discounts put in place last week by rival Wal-Mart Stores .
Parents shop in the toy aisle at a Target store, Kingston, Massachusetts(AP)
The news is not surprising given that toys play a vital role in driving traffic to discount stores during the holidays, and most analysts are expecting consumers to be frugal this holiday season.
Wal-Mart's plans include offering 100 toys for less than $10. These toys include popular brands such as Transformers, Play-Doh, and Barbie.
Target has gone through this list and will match Wal-Mart's prices if it sells those items as well, said Tony Fisher, Divisional Merchandising Manager at Target. The company also is sending out a sales circular this week to shoppers that will include additional toys that will be getting price cuts of 25 percent or more.
Fisher said the promotion is part of its effort to emphasize Target's "low-price promise."
Although it may seem early for retailers to be going head-to-head on toy prices, Wal-Mart and Target weren't the first to start this battle. Toys 'R Us offered "Black Friday-like" price discounts as part of its "Christmas in July" effort.
Also, Sears is ratcheting up its focus on toys and got its holiday efforts off to an early start this summer.
So let the battle begin and brace yourself for more promotions ahead.
The National Retail Federation, which issued their holiday forecast earlier today, and said they expect to see aggressive price promotions this holiday season. In fact, prices in some categories, including electronics, may even be lower than they were year ago.
"Price is paramount," said NRF spokesperson Ellen Davis on the industry trade group's conference call Tuesday.
Ho Ho Hum for Retailers, Holiday Sales to Fall 1% for 2009
According to Davis, consumers will continue to watch their spending closely and research their purchases carefully before they shop.
NRF also expects consumers to stick to the basics this holiday season. In apparel, that might mean jackets and jeans rather than cashmere scarves and sequined clutches. But for many parents, Christmas means there are toys that must be purchased.
Still, it's a challenge for retailers. If you are going to be selling 100 toys under $10, you will need to push a lot of inventory out the door to make up for the lush margins on pricey flat-screen TVs that dominated sales in Christmases past.
Slideshow: Hot Holiday Toys
Although the NRF forecast offer retailers little holiday cheer, they have had a year to plan for this tough climate. Discounts this year are likely based on thoughtful planning rather than a knee-jerk reaction to push languishing inventory out the door.
And there are other strategies retailers are using. We're likely to see some savvy merchandising in the weeks ahead.
Also there has been a renewed focus on store brands. Target, for example, has been selling toys under its private label brands, Playwonder and Circo. Although this is a small slice of its overall toy business, the number of products it is offering under these brands are growing.
More from Consumer Nation:
Toymakers Stress Value for the HolidaysStingy Santa Is Coming Back This Holiday SeasonWill a $10 Hamster Have Them Fighting in the Aisles?
Questions? Comments? Email us at consumernation@cnbc.com
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5b8abee8ccb9678304838ae60f8ac744 | https://www.cnbc.com/2009/10/06/protect-the-dollar-go-for-growth.html | Protect the Dollar; Go for Growth | Protect the Dollar; Go for Growth
Two big economic stories today.
The first is about the demise of the dollar. According to London’s Independent, the Arab oil producers in the Gulf are planning with China, Russia, Japan, and France to end dollar transactions for oil and move instead to a basket of currencies that might include the Japanese yen, the Chinese yuan, and the euro, along with gold and some kind of regional Gulf state currency.
The other big story is about a possible new stimulus package from Team Obama, which is panicking over the lousy jobs and unemployment numbers from last Friday.
Dollar's Pain Sets Up Record-Setting Gold for More Gains
As far as the currency story goes, I say where there’s smoke there’s fire. The dollar-demise story has been around for a while, and it keeps coming back. And it’s now clear that China and others have lost confidence in the greenback and want to end the dollar reserve-currency system. For the U.S., this is mostly a self-inflicted wound. And the Treasury and the Fed are in denial about this.
The gold price, by the way, has jumped $22 to $1,045. The dollar index has fallen again. Of course, the U.S. is creating too many dollars through the Fed, and fiscal disarray continues to threaten more of the same.
So I have a thought, at least for the short run: The Fed should follow Australia, the first G-20 country to raise their target interest rate. The Aussies raised their rate a quarter point to 3.25 percent. Right now the U.S. Fed should raise its target rate by 25 basis points. The fed funds target is currently 15 basis points, so this would make it 40 basis points. It would be a dollar-protection signal; a price stability signal. At least, it would be a beginning. Next, the Treasury should buy some dollars in the open market to back up the Fed.
Slideshow: Most Expensive Gold Coins
As for the second stimulus package, here’s my plan: Go for growth. Reduce tax rates to provide growth incentives, something Team Obama has avoided like the plague. Cut the top corporate tax rate from 35 to 25 percent, and accompany that with a small-business tax cut from 35 to 25 percent. And leave the Bush tax cuts alone. Don’t let them expire in 2011. That’s cap-gains, dividends, and the top personal rate.
Yes, this is a supply-side solution. Reducing tax rates will spur growth incentives. Forget about Keynesian spending multipliers, which Harvard’s Robert Barrow writes are less than one. Instead, borrow from George W. Bush, Bill Clinton, Ronald Reagan, and John F. Kennedy. (And Calvin Coolidge and Andrew Mellon, too.) Forget about Keynesian spending. Forget about class warfare. Forget about income redistribution. Go for growth.
Of course, none of this is gonna happen, either on the dollar or tax rates. I am a supply-side fossil. I am a dinosaur. I am a relic of the past. But I still believe the Mundell-Laffer policy approach works: A stable King Dollar for price stability and low marginal tax rates for growth.
ECONOMY/MISC
Slideshow: Biggest Holders of US Gov't DebtSlideshow: America’s Biggest Trading Partners Slideshow: Companies at Greatest Risk for DefaultSlideshow: World's Biggest Debtor NationsSlideshow: Largest IPOs In US HistorySlideshow: What Does $1 Trillion Look Like?Slideshow: America's Top 15 Golf CommunitiesSlideshow: Which Oil Producers Are Making Money?Slideshow: How Your Tax Dollars Are Spent
Questions? Comments, send your emails to: lkudlow@kudlow.com
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df78c6ef3d47cdda19b7e410be23fe69 | https://www.cnbc.com/2009/10/06/schork-oil-outlook-the-fundamentals-just-arent-there.html | Schork Oil Outlook: The Fundamentals Just Aren't There | Schork Oil Outlook: The Fundamentals Just Aren't There
Gas production is trending lower, but in light of the pullback in rig counts, it is occurring at a snail’s pace. For example, the year-on-year deficit in gas rigs has been greater than 50% since May; yet onshore production (ex Wyoming) is only down by 0.6% through July. Thus, the proliferation of non-conventional drilling and a rebound in LNG has been enough to offset a large portion of shut-in conventional output. As a result, gas is still getting into the ground vis-à-vis domestic production and imports. More importantly, the extant contango on the NYMEX continues to pay producers to build inventory.
Slideshow: Which Oil Producers Are Making Money?
Further to that point, imports of LNG have been on the rise, especially from Egypt. While pipeline imports from Canada through July are down 11% this year – a statistic that dovetails with the dearth of Canadian rigs this spring and summer – waterborne imports of gas are up 41%.
As the EIA notes, demand is still poor. On one hand, steel production has been trending steadily higher since the start of the year. According to data provided by the American Iron and Steel Institute (AISI), weekly U.S. steel production hit a year-to-date high at the end of September, 1.39 million tons. That is a good sign, but that is still 25% below the 2008 average. As of 2002, the latest year for which the EIA has data, U.S. steel mills consumed the equivalent of 8.9% of the average open interest of the NYMEX Henry Hub natural gas contract, 417 trillion Btus. All told, aggregate metal production (ferrous and nonferrous) in the U.S. is 33% less than it was in 2002.
Meanwhile, chemicals production, the other major heavy industrial end-user of natural gas, is about even to 2002. That’s important, because there is a growing consensus in this market that appears to be buying into a recent bullish winter weather forecast by a prominent meteorologist.
In this light, analysts at ran some numbers against the 2002/03 winter, which as we recall, was brutal. All told, heating degrees were 7% above normal that season. As a result, underground storage fell 7% below the seasonal average. If we continue an autoregressive forecast for this winter’s stocks, we will end up 13% above the seasonal average; so even if heating degree days do come in at 2002-03 levels, we are still going to end this winter with an overhang of Btus.
To really make a difference, this winter will have to generate heating degree days 20% greater than the DOE’s latest STEO assumption.
Bottom line, production today is greater, as are imports and demand is weaker than it was seven years ago. Therefore, fundamentals do not explain the current runup on the NYMEX; but falling open interest and slack volume do… the shorts are covering.
Read what other CNBC Contributors are saying...
_________________________
Stephen Schork is the Editor of, and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.
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4afc92952f7eb5dc824e502cd3fd4a96 | https://www.cnbc.com/2009/10/06/soon-bloggers-must-give-full-disclosure.html | Soon, Bloggers Must Give Full Disclosure | Soon, Bloggers Must Give Full Disclosure
For nearly three decades, the Federal Trade Commission’s rules regarding the relationships between advertisers and product reviewers and endorsers were deemed adequate. Then came the age of blogging and social media.
Close up of someone typing on a laptop.
On Monday, the F.T.C. said it would revise rules about endorsements and testimonials in advertising that had been in place since 1980. The new regulations are aimed at the rapidly shifting new-media world and how advertisers are using bloggers and social media sites like Facebook and Twitter to pitch their wares.
The F.T.C. said that beginning on Dec. 1, bloggers who review products must disclose any connection with advertisers, including, in most cases, the receipt of free products and whether or not they were paid in any way by advertisers, as occurs frequently. The new rules also take aim at celebrities, who will now need to disclose any ties to companies, should they promote products on a talk show or on Twitter. A second major change, which was not aimed specifically at bloggers or social media, was to eliminate the ability of advertisers to gush about results that differ from what is typical — for instance, from a weight loss supplement.
For bloggers who review products, this means that the days of an unimpeded flow of giveaways may be over. More broadly, the move suggests that the government is intent on bringing to bear on the Internet the same sorts of regulations that have governed other forms of media, like television or print.
“It crushes the idea that the Internet is separate from the kinds of concerns that have been attached to previous media,” said Clay Shirky, a professor at New York University.
Richard Cleland, assistant director of the division of advertising practices at the F.T.C., said: “We were looking and seeing the significance of social media marketing in the 21st century and we thought it was time to explain the principles of transparency and truth in advertising and apply them to social media marketing. Which isn’t to say that we saw a huge problem out there that was imperative to address.”
Still, sites like Twitter and Facebook, as well as blogs, have offered companies new opportunities to pitch products with endorsements that carry a veneer of authenticity because they seem to be straight from the mouth — or keyboard — of an individual consumer. In some cases, companies have set up product review blogs that appear to be independent. One such case involved Urban Nutrition, a seller of supplements, that ran Web sites like WeKnowDiets.com and GoogleDiets.com. The National Advertising Review Council, which governs the industry’s self-regulatory programs, said the sites were “formatted as independent product-review blogs.”
Jonathan Zittrain, a professor at Harvard Law School and co-founder of the Berkman Center for Internet and Society, said, “the rules are looking ahead to a quite possible future when there is a market to buy ‘authentic’ public endorsements.”
Some marketing groups fought the changes. “If a product is provided to bloggers, the F.T.C. will consider that, in most cases, to be a material connection even if the advertiser has no control over the content of the blogs,” said Linda Goldstein, a partner at Manatt Phelps & Phillips, a law firm that represents three marketing groups, the Electronic Retailing Association, the Promotion Marketing Association and the Word of Mouth Marketing Association. “In terms of the real world blogging community, that’s a seismic shift.”
Ms. Goldstein added, “We would have preferred the F.T.C. to work closer with the industry to learn how viral marketing works.”
The new guidelines were not unexpected — the commission gave notice last November that it would take up the matter. They will affect scores of bloggers who began as hobbyists only to find that companies flocked to them in search of a new way to reach consumers.
About three-and-a-half years ago Christine Young, of Lincoln, Calif., began blogging about her adventures in home schooling. It led to her current blog, FromDatesToDiapers.com, about mothers and families. The free products soon started arriving, and now hardly a day goes by without a package from Federal Express or DHL arriving at her door, she said. Mostly they are children’s products, like Nintendo Wii games, but sometimes not. She said she recently received a free pair of women’s shoes from Timberland.
Ms. Young said she had always disclosed whether or not she received a free product when writing her reviews. But companies have nothing to lose when sending off goodies: if she doesn’t like a product, she simply won’t write about it.
“I think that bloggers definitely need to be held accountable,” said Ms. Young. “I think there is a certain level of trust that bloggers have with readers, and readers deserve to know the whole truth.”
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3c8f0be10246c401667c713d160ba992 | https://www.cnbc.com/2009/10/06/tessera-tech-where-small-is-big-business.html | Regular viewers of Mad Money have to give Cramer his due. He’s recommended a host of high-quality stocks that have performed well despite the market’s volatility over the past year.
10 Tips for Building Wealth
Most recently, those names have been pulled straight from mobile-Internet industry, Cramer’s latest favorite growth trend. Many companies in this group have enjoyed a good run, as big-money investors pour into what seems like the one trade that’s been working. And that run isn’t over. At least as far as the Mad Money host is concerned. He predicted this would be a multiyear trend, a move on par with advent of the PC.
Well, the next potential winner is Tessera Technologies , a semiconductor miniaturization company that’s up 37% since Cramer’s May 26 call. He thinks that demand for Tessera’s business – basically making chips smaller so Apple , Research in Motion and others can make smaller handsets – will push this stock “even higher,” he said.
Tessera has its hands in more than just chip packaging, as it’s called. The company also makes cell-phone cameras – a must these days, no? – DRAM memory and wireless chips. And Tessera has moved into “silent air cooling,” with its ionic cooling system. This will replace traditional exhaust fans in laptops and other small devices, allowing for a thinner product.
VIDEO0:0000:00Smart & Savvy?
Cramer was excited about a “very positive” analyst day for the company three weeks ago, where Tessera boosted its third-quarter revenue guidance and announced the potential for a big licensing agreement by year’s end. The company recently made similar deals with Samsung and Toshiba, which use Tessera products, so a new one could catalyze the stock.
There is a problem, though: The International Trade Commission struck down Tessera’s patent-infringement case. The company plans to review the ruling but will collect no royalties related to the case in the meantime. Another patent case initially went against Tessera, but was overturned during the review, but there are no guarantees.
How much does this latest ruling hurt the profit line? Will Tessera continue to outperform regardless? Those were just some of the questions that Cramer wanted answered. So he invited Tessera Tech CEO Hank Nothhaft onto the show. Watch the video for the full interview.
Call Cramer: 1-800-743-CNBC
Questions for Cramer?
Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com
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e1078a361cf8525226a0812b0dda0825 | https://www.cnbc.com/2009/10/06/the-s-word-is-a-real-pig-for-farmers.html | The "S" Word Is a Real Pig For Farmers | The "S" Word Is a Real Pig For Farmers
AP
Hog farmers have had it.
As if the global recession wasn't bad enough for business—farmers are still losing on average $25 a hog as they continue to thin herds to meet diminished demand.
But piling on is everyone who still calls the H1N1 virus "swine flu".
Like us.
The latest slap comes from New York Magazine, which has a cover story this week showing a pig in a hospital bed called "The 0.5 Pandemic".
Cute pig. The photo even includes a unique credit: "Animal makeup by Hagen Linss". ("Hey, Hagen, what do you do for a living?" "I put lipstick on a pig.")
"We appreciate humor as much as anyone else," says Chris Novak, CEO of the National Pork Board. However, he says 8 to 9 percent of consumers "still believe that you get H1N1 from eating or handling pork." Wrong. He says that while the situation has improved from last spring, when pork sales collapsed and China and Russia imposed some bans, there's still a lot of consumer confusion. He says use of what he refers to as "the 'S' word" is still having an impact on sales.
Novartis' Flu Shot Across The BowSwine Flu By Any Other Name ... Like H1N1
I suggested that maybe the cute pig in the magazine photo might make people more aware of H1N1, and lead them to take precautions against getting sick. "If this story does help motivate consumers to take action, that's a positive," Novak says, "we simply want them to not walk away with the wrong impression."
Novak knows he's fighting a losing battle. Last spring the industry launched a national print campaign to calm fears about pork when H1N1 first made news. Now, however, producers figure it's better to focus on positive messages—pitching pork as a good value—rather than drawing too much attention to the flu. They might look like they're protesting a little too much. Still, "Every story that repeats the misnomer is frustrating," Novak says. On occasion, he's even stopped strangers overheard saying "the 's' word" in public. "I work for the pork producers," he'll say to them. "We don't use that term."
Questions? Comments? Funny Stories? Email
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a2f2ee11af9a9b151f0f9ae897661e20 | https://www.cnbc.com/2009/10/06/this-stock-has-soared-932-in-2009.html | Cramer on Tuesday revisited Omnova Solutions, a stock that stumped him during the Sept. 30 Lightning Round.
10 Tips for Building Wealth
Omnova is an “extremely speculative” company, he said, that operates in everything from specialty chemicals to decorative products like wall coverings and laminates to single-ply roofing. The stock’s had a monster run, soaring 932% year-to-date. Needless to say, investors who took part in the move should cash out at least some of their holdings.
But Cramer said OMN is still a buy on any pullback. Omnova’s new products have been successful, the company’s finding new clients, and the stock’s very cheap on earnings. The price-to-earnings multiple is just 17 despite an expected 67% growth in earnings by next year.
So big run or not, this stock works for any investor who wants a little speculation.
Call Cramer: 1-800-743-CNBC
Questions for Cramer?
Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com
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6e357e6a8348944d32f4d6b3f6d4707f | https://www.cnbc.com/2009/10/06/three-quirky-investments-beating-the-market.html | Three 'Quirky' Investments Beating the Market | Three 'Quirky' Investments Beating the Market
Three exchange-traded funds (ETFs) are beating the market big, said Elizabeth Ody, associate editor for Kiplinger's Personal Finance magazine. She offered details to CNBC.
VIDEO0:0000:00Quirky ETFs Beating the Market
Claymore Spinoff — This ETF looks to buy former subsidiaries that have recently been spun off from their parent companies, Ody said.
"These companies can be sort of 'ugly duckling' companies, so hold onto them as management often goes through cost-cutting," she said.
Claymore Sabrient Insider ETF — It has more liquidity than Claymore Spinoff because it received four stars from Morningstar, Ody said.
This fund looks to buy companies where insiders have been purchasing shares and analysts have been upping their earnings estimates.
"Insiders often have a lot of reasons for selling their own stock, but only one reason for buying it," she said.
Powershares Buyback Achievers — It involves companies that have repurchased 5 percent of their outstanding shares over the past 12 months.
"It basically just ends up with a very nice, high-quality blue chip portfolio, which is why it outperformed during the bear market but also has [outperformed] during the bull market," she said.
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Dow 30 Stocks—In Real Time Oil, Gold, Natural Gas Prices Now Where's the US Dollar Today?
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Former GE CEO Jack Welch Leaves Hospital
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Verizon Wireless, Google in Android Partnership
______________________________ Disclosures:
Disclosure information was not available for Ody.
Disclaimer
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14b0a73b67e8ef86ea505ff838358088 | https://www.cnbc.com/2009/10/06/time-for-private-equity-to-pull-the-trigger.html | Time for Private Equity to Pull the Trigger? | Time for Private Equity to Pull the Trigger?
The famous World War II General George S. Patton used to say that he didn’t judge a man by how high he climbed, but by how high he bounced after hitting the bottom.It’s probably worth considering this as we explore the world of private equity funds and the role they’re playing in the biggest stock market rally in a least two generations.
Because the answer is: “not much of one”.PE firms have stumped up a measly 5 percent of the $1.46 trillion worth of deals this year (a figure down more than third from last year), their smallest contribution since at least 2000, according to Mergers & Acquisitions Report. And it’s not like there’s a wave of cash waiting to get put to work, either. London-based research group Preqin says that, globally, PE funds have raised $38 billion in the last three months, 45 percent less than in the second quarter and a fraction of the $208 billion raised just prior to the credit crisis in the second quarter of 2007.
Here in the UK, the figures are even more bleak, with only 31 deals in Q3 with a value of just £556 million ($890 million) -- the slowest pace in a quarter of a century. To make matters worse, previous (mostly leveraged) deals made with private equity cash are starting to come unglued: there have been 17-sponsored insolvencies in the UK so far this year, up 55 percent from 2008 and the highest total since the tech-bubble bursting aftermath of 2001.
In the US, the 62 PE-related Chapter 11 filings have already outpaced last years total, the most recent being Colony Capital-backed Station Casinos, which blew-up around $2.7 billion in equity.The industry itself , especially in Europe, is going through some major upheavals, with respected veteran John Moulton stepping down from Alchemy Partners after a clash over strategy. Damon Buffini will give up his role as chairman at Permira and Guy Hands is no longer chief executive at Terra Firma (although he is chairman and chief investment officer).So why the crisis of confidence and transactions?
VIDEO7:5707:57Private Equity Investment Turns a Corner
To begin, the credit crunch isn’t just about mortgages: with only $262 billion in syndicated loans sold thus far this year bank lending to the financial sector is only a fraction of its former self (one third of the second quarter in 2008, to be exact). That lack of juice squeezes the profitability of PE-sponsored deals, which typically rely on a big portion of borrowed money to complete.Technical moves in the corporate bond market, along with record sales in Europe thus far this year, have also made life tough for PE funds. Companies themselves can fund acquisitions based on the yield of their own cash flows, their financing costs and the free-cash-flow yield of their target (a big part of the reason Kraft will be able to cobble together the $17.6 billion needed to buy Cadbury). There are nascent signs of a PE recovery, though. Blackstone Group is said to be close to making a $3 billion bid for the theme parks owned by Anheuser-Busch InBev, including Busch Gardens and SeaWorld. (Blackstone is a co-owner of the Universal theme park in Orlando, Florida, along with NBC Universal, a subsidiary of General Electric and the parent of CNBC.) PitchBook Data, a PE-focused research firm, estimates the private equity “overhang” (the difference between cash raised by the PE industry and cash invested) at around $400 billion. With European shares valued at two-year lows (on a forward Price/Earnings basis) and expected to grow earnings by 25 percent in 2010 (compared to a 22 percent decline in 2009), PE firms could source a plethora of potential targets and keep a tidy bid premium into the current (albeit stalled) equity rally. And despite the conventional wisdom that mergers don’t make money, many recent deals are fairing quite well: Towers Perrin studied 204 transactions of $100 million or more - made between September 2008 and May 2009 - and found that the buyers outperformed non-buying peers by 6.3 percent.General Patton once said that courage was fear holding on just a minute longer. Private equity investors might paraphrase it to suggest that success is reticence investing just a little bit sooner.
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b1227a443396cb7a87ef26da1567c140 | https://www.cnbc.com/2009/10/06/tony-fratto-a-stimulus-by-any-other-name.html | Tony Fratto: A Stimulus by Any Other Name | Tony Fratto: A Stimulus by Any Other Name
What are words for, When no one listens anymore?" ("Words", Missing Persons)
Good question.
The White House is now considering new options for additional spending in light of weak employment data last week - spending that would be intended to both boost employment and economic growth.
But, in their latest round of rhetorical hijinx, the White House has instructed reporters not to call it "stimulus."
For a White House that has already played word games with "jobs saved or created", and Medicare cuts now lovingly labeled as "savings", it should come as no surprise.
What Happens to Stocks When Economic Stimulus Fades?
For to call it "stimulus", you see, would be to admit that the mammoth stimulus bill passed in February didn't work. But the stimulus, they have repeated assured us, "worked", so no need for additional "stimulus" -- just a little additional spending...to...you know...create jobs...and boost growth.
Uncle Sam and money
Yeah...that's it...that's the ticket...
Sigh...
I actually feel sorry for reporters trying to unscramble this jumble box of White House commentary on the effects of the stimulus. They were told the economy early this year was on the brink of collapse, then told it was even worse than anyone thought - leaving reporters to contemplate "the brink", while leaving unanswered the question of why an "even worse" economy didn't require more stimulus...
Then they were told that stimulus would break records for speed, but later announced a plan to speed up the spending - but that the "speeding up" was all according to plan.
And now, reporters have been told that something can look and sound like a "stimulus" plan - in fact, it can contain the very same programs trumpeted in the earlier stimulus plan - but, alas - foolish reporters - it's not stimulus. It may be a lot of things, but don't dare call it stimulus.
So what should a reporter call it?
It doesn't matter: no one is listening any more.
Australia Leads on Interest Rates - Is Bernanke Listening? We He Follow?
______________________ Tony Fratto is a CNBC on-air contributor and most recently served as Deputy Assistant to the President and Deputy Press Secretary for the Bush Administration.
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ff93ab9a10506ddb8aa3243f0bd6dacc | https://www.cnbc.com/2009/10/06/two-frontrunners-emerging-for-bofa-ceo-spot.html | Two Front-Runners Emerging for BofA CEO Spot | Two Front-Runners Emerging for BofA CEO Spot
Chief Risk Officer Greg Curl and Head of Retail Operations Brian Moynihan are the two most likely internal candidates to replace Bank of America CEO Ken Lewis, sources close to the situation told CNBC.
VIDEO0:0000:00Potential Successors for Ken Lewis
For the moment, BofA brokerage chief Sallie Krawcheck is considered a "long-shot," one of the sources said.
If Lewis is forced out early, it's still possible that board members Chad Gifford and Bill Boardman will replace Lewis on an interim basis. The interim CEO would in turn groom one of the internal candidates for the permanent job.
However, the majority of investors are pushing for someone from outside of the firm, rather than any of the six potential internal candidates, the sources said.
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73d8e300b1d9d2e46c97732cb0b51e0d | https://www.cnbc.com/2009/10/06/vote-for-the-top-business-leader-at-the-8th-cnbc-asia-business-leaders-awards.html | Vote for the Top Business Leader at the 8th CNBC Asia Business Leaders Awards | Vote for the Top Business Leader at the 8th CNBC Asia Business Leaders Awards
Singapore – 29 September -- CNBC, First in Business Worldwide, in Asia Pacific is giving viewers a chance to vote for their top business leader between now and October 23, 2009. The business leader with the most votes wins the Asia Viewers’ Choice Award that will be announced at this year’s 8th Asia Business Leaders Awards on November 26, 2009. This interactive element enables practitioners of Corporate Asia to have a say in the Business Leader they think should be honored. The 12 finalists for the Viewers Choice Awards are:
a. Mr. Zhou Jichang, Chairman of Board of Directors, China Communications Construction Co.
b. Mr. Frank Gaoning Ning, Chairman, COFCO Corporation
c. Mr. Shiv Nadar, Chairman & Chief Strategy Officer, HCL Technologies Ltd
d. Mr. Hiroshi Nagase, President & CEO, NAGASE & Co., Ltd
e. Mr. Peter Bahn-Suk Kim, Vice Chairman & CEO, LG Chem, Ltd
f. Mr. Johan Dennelind, Chief Executive Officer, DiGi.Com Bhd
g. Tan Sri (Dr) Francis Yeoh, CBE, Managing Director, YTL Corporation Berhad
h. Mr. Dean Lao Jr., Managing Director, Chemrez Technologies Inc.
i. Mr. Tan Pheng Hock, President & CEO, ST Engineering
j. Mr. Sunny George Verghese, Group Managing Director & CEO, Olam International Limited
k. Mr. Tang Kin Fei, Group President & CEO, Sembcorp Industries Ltd
i. Mr. Adirek Sripratak, President & CEO, Charoen Pokphand Foods PCL
CNBC pioneered the prestigious ABLA to salute remarkable business leaders for their continuing commitment to excellence in Asia. This event gathers the most influential names in both industry and government under one roof to celebrate vision and the spirit of achievement in business leadership.
To vote, please visit for more information on the nominees and cast your vote via the website. Viewers are able to vote until 23rd October 2009.
About CNBC Asia PacificCNBC Asia Pacific is uniquely positioned to speak to viewers from across the region. Headquartered in Singapore, the network provides nine and a half hours of live Asia-produced programming, which is complemented with coverage of live market action from Europe and the US. CNBC Asia Pacific's channels, which include CNBC Asia, CNBC-TV18 (India), CNBC Pakistan, Nikkei-CNBC (Japan) are available in more than 21 countries across the Asia Pacific region. CNBC also has a strategic alliance with Shanghai Media Group, which wholly owns a subsidiary, China Business Network, and a partnership with Digital Chosun, part of the Chosun group of companies, the biggest media conglomerate in South Korea. The channels are distributed via satellite, cable and terrestrial broadcast networks, as well as broadband. CNBC content is also distributed on the 3G platform through selective markets. For more information, please visit us athttp://asia.cnbc.com
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9ece41699504517fea11702b8f197e83 | https://www.cnbc.com/2009/10/06/what-happens-to-stocks-when-economic-stimulus-fades.html | What Happens to Stocks When Economic Stimulus Fades? | What Happens to Stocks When Economic Stimulus Fades?
Economic stimulus has been a friend to the stock market this year, but investors are worried that the two may be parting ways in the coming months.
US Capitol Building with cash
Wall Street has surfed along on a six-month wave of support generated in part on $787 billion in government stimulus that has complemented highly accommodative fiscal policy at the Federal Reserve.
But central banks both in the US and globally have indicated the party will be coming to an end soon. The Fed this month is ending its aggressive buying of Treasurys and many analysts believe that while rate increases aren't likely in the immediate term, the central bank will have to take some action in the coming months to curtail inflation.
Economist Nouriel Roubini referred to it this week as the "wall of liquidity" which could end up tumbling down on Wall Street.
"His wall of liquidity is what helped stocks. Money has to go somewhere, and many perceived that stocks had hit a ridiculous low," says Peter J. Tanous, president and director of Lynx Investment Advisory in Washington, D.C.
But now that the stock market has jumped 50 percent off its March lows, market pros are wondering what will propel it higher.
A need to curtail inflation, and its accompanying policy responses, could provide a substantial obstacle if the Fed's actions get ahead of the market's needs.
"The tightening effect that everyone is looking for six months down the road will be a reaction to the inflationary pressures that are caused by the massive deficits and the massive spending. It takes time for all the money to make its way through the economy and start affecting prices," Tanous says.
"Once it happens, the Fed has an itchy trigger finger to cut it off at the pass very quickly. Everyone is thinking they want to get ahead of the problem, not follow it."
Indeed, inflationary fears raised their head Monday in unexpected fashion.
A $7 billion auction of 10-year Treasury Inflation Protected Securities fetched a high yield of 1.51 percent. More remarkable, though, was the demand for the TIPS notes, reflected in what is known as the bid-to-cover ratio.
The ratio came in at 3.12, meaning investors bid $3.12 for every $1 auctioned off, nearly 50 percent higher than the $2.10 average of the last five auctions of similar securities.
Investor reaction was curious considering the cold water that policy makers have been pouring on inflation fears lately. The reaction could indicate that inflation worries are bigger in the marketplace than are being acknowledged.
"What we've done here is built up another huge bubble, and the bubble specifically is the US debt market," says Michael Pento, chief economist at Global Delta Advisors. "When that pops—and it will, make no mistake—there will be nobody left to rescue us. We've set ourselves up for a much worse scenario."
Pento puts a different spin on the stimulus story, contending that injecting boatloads of stimulus that was generated through debt has only made matters worse. The stimulus shouldn't have been used, he says, and cutting it off now is too little, too late.
"We've gone miles across the rubicon," he says. "There's no V-shaped rosy scenario for what we are in. We're so far into debt and we've made so many promises we can't keep. We can either have a very serious depression or get on with the business of reinflating the bubble and trying to hyperinflate our way out of this. I can guarantee neither will have a happy ending."
To be sure, the scenario all depends on action at the central bank, which can be unpredictable when it is looking to change monetary course.
Fed Governor Kevin Warsh sent ripples of fear through the market last week when he wrote an opinion piece in the Wall Street Journal saying that "prudent risk management indicates that policy likely will need to begin normalization before it is obvious that it is necessary, possibly with greater force than is customary..."
The remarks were interpreted as meaning the Fed could begin to take steps soon to ratchet down easy-money policies, and investors reacted by sending stocks lower. Moreover, the incident may have provided a preview of market reaction to upcoming Fed moves.
"Reaction from the market had to do with the fact that investors don't believe that the economy is ready for the Fed to exit," says Quincy Krosby, general market strategist at Prudential Financial. "When investors believe it is time for the Fed to start tightening and changing the language in addition to the other programs, (the Fed) will exit."
But an early exit, as shown by the market's reaction to Warsh's comments, could rattle the markets and, as Roubini stated, take away the liquidity on which the market has built its stunning rally from the brink of another Great Depression.
At the same time, rumbles continue out of Washington that there could yet be another stimulus to come along, which could change everything.
"There's no way that Democrats want to go into election season in 2010 with a 10-plus percentage point unemployment rate, or with the housing market that's not seeing a sustained recovery," Krosby says. "You're going to see more stimulus come into the system."
But until policymakers' moves become clearer, investors are likely to continue to flock to the safety of Treasurys and corporate bonds, as well as the inflation-indexed notes that sold off so robustly on Monday.
Lynx's Tanous points out that his firm's Real Asset Fund, which seeks to provide protection against inflation, was up 5 percent in September.
"That wall ... to a degree has been somewhat of an artificial boost in that it's not necessarily part of a fundamental recovery in the companies themselves that have seen their stock prices go up," says Owen Malcolm, chief operating officer at Sanders Financial Management in Atlanta. "Fundamentally we just don't see where all the optimism is coming from."
Slideshow: 20 Stocks Ready to Pop
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46a1c2e16f88d3566bf7657ab9c09014 | https://www.cnbc.com/2009/10/06/who-will-follow-australia-and-hike-rates-next.html | Who Will Follow Australia and Hike Rates Next? | Who Will Follow Australia and Hike Rates Next?
Australia's central bank boosted its key cash rate by 25 basis points to 3.25 percent Tuesday, the first major economy to tighten since the financial crisis took hold.
Australia's move won't lead to a stampede of other banks to hike. But it may signal the end of the era of cheap money at smaller central banks.
Australia has had a "good recession" and it is helped by the fact that it has China as its main trading partner, Graeme Maxton, chief economist at The Insight Bureau, told CNBC. But the rate rise may be a bit premature, Maxton said.
"The issue is with the lag between the time that you change interest rates and the effect it has on the economy, and that could be three to six months," Maxton said. "Increasing it now is giving a signal that everything is going to get better and people will have to pay more for their mortgages."
But central banks at major economies are likely to focus more on quantitative easing and stimulus policies than improving fundamentals when looking at monetary policy, according to Maxton.
"In the US and the UK for example interest rates are likely to have to rise because the government is going to have to issue so much debt because they're going to have to pay for all the spending they've done over the last year," he said.
Slideshow: Central Bankers Report Card
While some analysts do not expect more rate rises around the world this year, ING chief international economist Rob Carnell says Norway may still surprise the markets.
"I think Norway is next," Carnell told CNBC.com, adding that the country had a very "mild recession" and has had an aggressive fiscal policy, which helped it weather the crisis better than other nations.
Norway also has a "huge" oil fund to help bankroll the domestic economy and oil prices have recovered rapidly since March, he wrote in a research note. Norway's central bank cut rates aggressively to 1 percent and the country looks set to have an inflation problem when the recovery happens, unless the central bank acts quickly, he also wrote.
"Other economies around the world are slightly behind, I guess, where Australia is at this particular point in time," Jim Vrondas, manager of corporate business at OzForex, said.
"I think Australia is in a very unique position at present and I don't think that any other central banks around the world, particularly in Europe and England are likely to move in the same direction any time soon," he added.
Fed Mid-2010, ECB Later
The European Central Bank and the Bank of England will decide Thursday on monetary policy but analysts say any decision to hike will be taken next year.
The Bank of England may be the first of the two to raise rates, possibly as soon as in the second quarter, as the housing sector, which started to improve, and manufacturing, which is helped by the pound depreciation, are driving the UK economy, Carnell said.
The UK is running neck-and-neck with Canada for who will raise rates first among the G7 countries next year, he added.
The ECB, the "laziest" when it came to monetary easing, is likely to be the last to hike despite ECB president Jean-Claude Trichet's hawkish rhetoric at the onset of the crisis.
"I think we should be careful in projecting the Australian situation on other countries," ING euro zone analyst Martin van Vliet told CNBC.com. "Rate rises in Europe and the US are not on the horizon yet."
Historically, the Federal Reserve has hiked before the ECB after recessions and is likely to do so at the middle of next year, van Vliet added.
Track Bond Prices Here
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c57aaa042501885eea86d9e8da64085b | https://www.cnbc.com/2009/10/06/your-first-move-for-wednesday-october-7th.html | Here’s our Fast Money Final Trade. Our gang gives you tomorrow’s best trades, right now.
Tim Seymour suggests longRio Tinto because “the reflation trade is not a one day trade.”Guy Adami recommends longYum! (Scroll down to find out why)Joe Terranova prefers longMosaic . “I think the ag names have bottomed.”.Pete Najarian thinks McDonald’s is a buy “off of Yum! earnings
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YUM PROFIT TOPS STREET
After hours, Yum Brands, parent of the Taco Bell, Pizza Hut and KFC chains, posted a quarterly profit that blew past Wall Street estimates and they raised their full-year profit forecast, sending shares up 2% in post market trade.
Yum’s strong results stem, in part, from higher operating profit generated by China and other overseas markets.
What’s the trade?I like this stock, says Guy Adami, and it’s a great way to play China.The 200-day moving average is $32, I’d get long and make that your stop.
Click here to see other Final Trade posts.
______________________________________________________Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! Prefer to keep it between us? You can still send questions and comments to .
Trader disclosure: On Oct. 6th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Terranova Owns (NOV), (MOS), (JPM); Terranova Owns Dec. Gold Futures; Terranova Owns March Sugar Futures; Terranova Owns Crude Futures; Terranova Is Short (CCL), (WYNN), (GRMN); Seymour Owns (AAPL), (STD), (EEM), (RIMM), (BAC), (MSFT), (SBUX), (VIP), (RTP); Najarian Owns (C) Calls; Najarian Owns (BRCD) Call Spread; Najarian Owns (DELL) Call Spread; Najarian Owns (GE) Calls; Najarian Owns (JPM) & Short (JPM) Calls; Najarian Owns (LAZ) & Short (LAZ) Calls & Long (LAZ) Put Spread; Najarian Owns (MSFT) And Is Short (MSFT) Calls; Najarian Owns (MYL) Calls; Najarian Owns (TEVA); Najarian Owns (ORCL) & Short (ORCL) Calls; Najarian Owns (RIMM) Call Spread; Najarian Owns (WFC) Puts; Najarian Owns (YHOO) Call Spread ; Najarian Short (AA) Calls
GE Is The Parent Company Of CNBCNBC Universal Is The Parent Company Of CNBCFor Greg Troccoli:Troccoli is Short (SPX) For Dennis Gartman:Gartman Owms Canadian DollarGartman Owns GoldGartman Is Short British PoundGartman Owns US 10-Yr Note
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7ec56e2cd95f2c4735a9a25eac3a79fa | https://www.cnbc.com/2009/10/07/alcoa-ceo-recovery-coming-globally-across-industries.html | Alcoa CEO: Recovery Coming Globally, Across Industries | Alcoa CEO: Recovery Coming Globally, Across Industries
Alcoa beat the Street Wednesday when it reported a third-quarter profit after three consecutive quarterly losses, turning in a revenue number that also topped expectations.
CNBC's Maria Bartiromo spoke with Alcoa CEO Klaus Kleinfeld after the announcement.
VIDEO0:0000:00Alcoa CEO on Earnings
Bartiromo: Can you characterize the quarter for us
Kleinfeld: As you see, I mean, it's been a quarter where a lot of things have happened. And all the programs that we have, have worked out. Let me say three things.
We see, number one, on the outside we have record low inventories in the supply chain, the stimulus program is working. You see revenues for us have been going up by 9 percent. This is pretty much all across the board in all the industries that we're touching, other than aerospace and industrial gas turbine.
We believe that the aluminum market second half of the year is going to grow by 11 percent compared to the first half.
That's one thing, the second thing is, we turned the crisis into a real opportunity. We strengthened our cost structure, strengthened the balance sheet, refocused the portfolio. 90 percent portfolio is in the number 1 or number 2 position.
At the beginning of the crisis, we set really ambitious cash targets. We are exceeding, or reaching them. Procurement $1.6 billion of cash we're getting today. Overhead $400 million. Working capital $800 million. But all of that is much needed because we also have been facing pretty strong headwinds, coming from currency big-time and slowly creeping in from energy.
The third point, we have not compromised the present for the future. This quarter is also a quarter where we have been completing substantial growth projects. In Brazil, in China, in Russia, that has an outstanding opportunity to continue also to bring Alcoa further.
Bartiromo: Klaus, can you give us a sense of where the demand is coming from right now? Is it largely China, is it largely Brazil, or I guess the real question that everybody wants to know is, when are we actually going to see a turn in the United States? Where's the demand coming from? Look around the world, tell me the most important markets for you right now.
Kleinfeld: Look, I want to leave the forecast on the end markets to the economists. What we are seeing is this growth from second quarter to third quarter of 9 percent revenue growth.
That pretty much comes when you look at the end markets, comes from all across end markets, from automotive, from trucks and trailers, from building and construction as well as from packaging.
The only two industries that we're touching where it doesn't come from is aerospace and industrial gas service.
The second thing, when you look at it from a regional perspective, China clearly is back very, and back very strong and pulling some off the Asian markets with them. Asia and Middle East, I would say with them.
In the U.S., we clearly see stabilization in the U.S. and when we look at the aluminum industry, that we're going to see an increase of aluminum demand between the first half and the second half. That's driven by a number of factors.
Always keep in mind the de-stocking has gone to levels, which we have not seen before. They're at record low levels. And once that has — it hasn't set in yet. Once that is starting to set in, we're going to see a pretty substantial increases coming through.
Bartiromo: Klaus, what would you say about the fourth quarter? Any thoughts in terms of forecast, what the rest of the world looks like in the next three months?
Kleinfeld: Well, that's always a very difficult one. At this point in time, my impression is that we're going to see, on the China side, all indications of showing that this recovery is a strong and stable recovery.
AP
And the U.S. stabilizing and hopefully we will continue to see it coming back. For us, it basically means we will continue our path. We have cash sustainability targets as you can see in this quarter and you've seen over the course of the year.
Not only are we fulfilling our promises, but we've pretty much been exceeding all of the targets at this point in time. And we have been investing in the growth.
When we look at aluminum, we believe it's a future growth market, and as much as I can't predict how many automotives are going to be sold in the U.S. in the next quarter, one thing I can predict is the future automobile is going to have more aluminum in it.
Just today, our tech team has been sitting down with Magnum and talking about the future, what it's going to be like. It's going to be lightweight, strong and recycleable. All fundamentals in our industry.
Bartiromo: Yes, great point, Klaus. I know you strengthened the balance sheet, more than $1 billion on hand in terms of cash. What are you looking to do with that money? Is it dividends targeted? Is it buyback or acquisitions or what? Tell us everything right now, Klaus.
Kleinfeld: I tell you what, this is probably the biggest compliment that Alcoa can get today. The very fact that we have $1.1billion cash in there, gives us a lot of opportunities. The most important thing, and we've seen the biggest crisis in our industry, which has really drained us quite substantially, we're getting through it, looking at opportunities.
So at this point, it's not the point in time we start thinking about what to do with it. We will continue to follow up on the cash sustainability. We've also got to really look carefully at the headwinds, with the dollar weakening.
Against other currencies that are important for us, like the Brazil Real and Australian dollar. That's important headwinds, where we actually need all the cash performance at this point in time.
Get real-time, after-hours Alcoa quotes here.
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bd2d643ae25b0ed609d5765c35354eb9 | https://www.cnbc.com/2009/10/07/alcoas-profit-a-positive-start-for-show-me-earnings-season.html | Alcoa's Profit a Positive Start For 'Show Me' Earnings Season | Alcoa's Profit a Positive Start For 'Show Me' Earnings Season
Third-quarter earnings got off to a positive start Wednesday with Alcoa's surprising profit, but investors will be watching corporate results closely in the coming weeks to see if they justify a continued rally in stock prices.
AP
That was the case in the second quarter, when the market traded in a fairly tight range for three months but then broke out in July when earnings showed positive surprises by a nearly 3-to-1 ratio.
Whether the same thing happens in the third quarter is dependent on a variety of factors.
Investors over the summer were happy just to see companies making their numbers by cutting costs, but may not be in such a conciliatory mood this time around.
Alcoa CEO on Earnings: Click Here for the Full CNBC Transcript
"Coming out of this we expect the market will be very much in a show-me mood," says John Stoltzfus, senior market strategist at Ticonderoga Securities in New York. "We'll be looking for evidence of signs of growth."
Dow component Alcoa did just that when it posted a surprise profit and reported revenue that topped expectations.
Though the aluminum maker carries the smallest market cap on the bluechip index, its results are seen as the first shot across the bow for how the season will shape up.
There are no other significant earnings reports this week, but Johnson & Johnson on Tuesday, JPMorgan Chase on Wednesday and Google and Goldman Sachs on Thursday kick the season into full gear.
Alcoa also beat estimates in the second quarter, though early earnings trended lower and the market fell. That trend didn't last long, however, and stocks turned around when company after company beat expectations.
Still, most of the beats were accomplished on the backs of heavy cost-cutting—primarily layoffs—rather than revenue growth. That's a trend analysts likely will demand starts to reverse itself for third-quarter reports.
"It's important to see revenue growth. You can only cut so much," says Beth Larson, principal at Evermay Wealth Management in Washington, D.C. "It's also important to see revenue growth that's not just from inventory build. We have to see new demand."
Yet even in that climate, expectations will have to be tempered.
Analysts expect a 23 percent decline in year-over-year earnings and a 7 percent drop from the second quarter for Standard & Poor's 500 companies
Poll: Will the Dow Go to 9,000 or 10,000 Next?Click Here for CNBC.com's Earnings Central
Investors will be watching a few key sectors to use as benchmarks for the earnings season as a whole.
Defensive sectors—consumer staples and health care, among others—are likely to perform the best, while there also are high expectations for multinational companies that should have benefited from the relative weakness of the dollar. The US currency continues to post 12-month lows and is expected to continue to drop until the economy shows more strength.
After leading the market to a more than 50 percent drop from its October 2007 historic high, financials also will be considered an important barometer for Wall Street's health. The news is likely to be a mixed bag.
"We expect more of the same from the bank industry's 3Q09 earnings report and expect year-over-year earnings to fall for the 11th straight quarter—this time by 28 percent," financial services firm Keefe, Bruyette & Woods said in its third-quarter bank earnings preview.
KBW cut its quarterly estimates for nine banks by a median of 17 percent and raised estimates for five institutions. It also cut 2010 estimates for six banks and raised for 10 others.
The conservative outlook was shared by other analysts.
"Revenue should trend modestly lower quarter-on-quarter, driven by flattish spread revenue and moderating fee income trends," analyst David George of Robert W. Baird said in a note to clients.
US Bancorp was among analyst favorites heading into earnings, with positive expectations from both KBW and Baird.
VIDEO0:0000:00Alcoa's Earnings Out
At the same time, many analysts prefer to focus on corporate outlooks going forward rather than rear-view earnings. With the economy struggling to regain its footing, that's likely to be a key again this quarter.
"The key will really be the forward guidance," Jason Roney of Sharmac Capital told CNBC. "Coming out of any recession it's generally been the case that analysts get way too conservative. We are in an upwards revision cycle and when that happens that keeps an underlying floor in stocks no matter what the high-frequency economics data shows."
Should guidance and results both end up less spectacular than the strong second quarter, the result could simply be sideways stock movement until another catalyst comes along.
"I expect guidance to be muted. They're going to say business is looking like the worst is behind us but it's too early to call the rate of incline," says Uri Landesman, head of global growth strategies at ING Investment Management in New York. "I don't think they will be big market movers."
Slideshow: 20 Stocks Ready to Pop
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79edfb3933b9d28e688f1e792bc7d4f3 | https://www.cnbc.com/2009/10/07/all-eyes-on-the-virginia-governors-race.html | All Eyes on the Virginia Governor’s Race | All Eyes on the Virginia Governor’s Race
National attention is turning to Virginia, where voters will choose their new governor this November.
According to RealClearPolitics, the Republican gubernatorial candidate, Bob McDonnell, has the momentum and is pulling away in the polls.
VIDEO0:0000:00National Race in Virginia
Right now he’s up 50-43.
I spoke with Mr. McDonnell last night on the race, his plans for Virginia, and whether to some extent, the race is a hidden referendum on President Obama.
I was impressed with Mr. McDonnell—he’s a big positive surprise.
Questions? Comments, send your emails to: lkudlow@kudlow.com
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ce6b2955b56e7d73520f17a4f0e9829c | https://www.cnbc.com/2009/10/07/bejeweled-creator-popcap-games-raises-225-million.html | 'Bejeweled' Creator PopCap Games Raises $22.5 Million | 'Bejeweled' Creator PopCap Games Raises $22.5 Million
One of the video game industry’s most consistent hitmakers is taking things to the next level. PopCap Games, the creator of titles such as “Bejweled,” “Zuma,” “Bookworm” and “Peggle” – has raised $22.5 million from venture capitalists.
BejeweledBejeweled
The first round of funding, led by Meritech Capital Partners, represents a minority stake in the company. PopCap said it plans to use the money to fund its ongoing expansion into social gaming and possible acquisitions.
Throughout its 10-year history, PopCap has never had a dud. Its games are consistently praised by critics and devoured by players. “Bejeweled,” for example, has sold more than 25 million copies.
As a result, the company has been profitable since its inception.
“We’re probably more profitable now than we ever have been before,” says Garth Chouteau, vice president of public relations. “This is a case of us looking at an opportunity - and having a war chest can’t hurt.”
That opportunity might lie in the fast-growing field of social network gaming. PopCap has barely dipped its toes in those waters, but the efforts have been encouraging. A version of “Bejeweled” for Facebook found 8 million monthly users with no real marketing in one year, showing a notable demand for the company’s games.
Other casual game companies, such as Zynga (makers of “Mafia Wars”) and Playfish, have already established footholds – which could present a challenge to PopCap.
With the infusion of venture money - particularly from a late-stage investment company like Meritech – whispers have already started about what the future might hold for PopCap. After all, most VCs come in with an exit strategy of either IPO or sale in mind.
Both are possible. PopCap has, in fact, regularly been approached by larger publishing companies about a possible buyout – but has always opted to remain independent. The growing importance of casual games to the industry, though, may put increased pressure on the company.
Beyond the audience of casual gamers Nintendo has brought to the industry, several other companies, including Electronic Arts, Microsoft and Yahoo, have substantial casual gaming arms.
PopCap’s games are on all of those platforms – but to be able to offer them exclusively would be a big coup.
With its track record, PopCap might also be an attractive play for investors. Beyond its significant online presence, its games are sold in more than 20,000 retail locations.
Because it’s privately held, the company does not release precise sales figures. In January, of this year, it did report that 2008 revenue was up 85 percent over 2007 – with the largest growth coming in the fourth quarter. That propelled the company into the list of the industry’s top 20 publishers.
The “Bejeweled” franchise, meanwhile, has generated sales of more than $300 million life to date, along with tens of millions of dollars more in online advertising revenue. It’s a notable number for any game – but even moreso, when you consider that all of PopCap’s games retail for $20 or below – just one-third of what other publishers charge.
Slideshow: 25 Years of Tech Blunders
But when compared to the revenues of an EA or Activision , it’s a pittance – which could work against the company if it decides to go public. Should PopCap use this money to buy some of its bigger competitors, though, things could quickly change.
“I think investors would rather see some consolidation and the formation of a critical mass – and then you could go public,” says Eric Handler, senior equity analyst for MKM Partners. “Otherwise, what are the valuations and market caps for these companies? They’re pretty small. … [On its own,] would PopCap be able to get a premium multiple? I think it would be difficult.”
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89fd8017309e8d6a82233dca5e763421 | https://www.cnbc.com/2009/10/07/betting-on-a-dean-foods-march-pop.html | Betting On a Dean Foods March Pop | Betting On a Dean Foods March Pop
Dean Foods has been range-bound all year, but at least one trader is making a long-term bet that the dairy and beverage company will rise by next spring.
DF fell 1.48 percent yesterday to close at $18.61. The stock had rebounded sharply from its 52-week low of $11.30 back in November 2008 but has largely traded sideways since the beginning of the year, mostly between about $17.50 and $21.50.
OptionMonster's real-time systems detected heavy activity at the March 20 contracts, where nearly 3,800 calls traded within 2 minutes yesterday morning. Open interest is just 44 contracts at the strike, which boasts a grand total of 1 call in average volume for an entire session.
Nearly all the calls were bought at the asking price of $1.30 and $1.35. These options will profit only if Dean's stock rises at least 14.5 percent by the time the contracts expire on March 19 next year.
Investment bank Collins Stewart initiated coverage of DF with a "hold" recommendation last week. On Aug. 5 the company reported a 31 percent rise in second-quarter profit, meeting Wall Street's estimates, and raised its full-year outlook. It has not yet scheduled its next earnings report.
Total calls traded outnumbered puts by more than 17 to 1.
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6c3a320071bafa384fbe494d610e378f | https://www.cnbc.com/2009/10/07/biggest-ipo-of-year-prices.html | Biggest IPO of Year Prices | Biggest IPO of Year Prices
Banco Santander Brazil (BSBR) priced its IPO this morning in the middle of the range, raising $8.05 billion, in the biggest IPO on a U.S. exchange in 18 months.
The company priced 600 million units at 23.5 reals each, the middle of the price range. The U.S. traded shares will begin trading at $13.50 at the NYSE and will be dual listed here and in Brazil.
In an unusual offering, Santander will offer its shares in the form of units, with each unit comprising 55 common shares and 50 preferred shares of Banco Santander Brazil.
That amounts to about 15 percent of Santander Brazil. The goal is to give the Spanish bank more opportunity to expand into Latin America.
Other well-known brand names may also go public soon, including Hyatt Hotels, currently controlled by the Pritzker family in Chicago.
Officials from Santander Brazil will be ringing the opening bell at the NYSE, but have declined requests for interviews.
Elsewhere:
1) Family Dollar is up 4 percent after beating estimates ($0.43 vs. $0.41 est.) on stronger margins and improved customer traffic.
The discount retailer sees earnings guidance for the current quarter between $0.45 and $0.50 (vs. $0.47 est.) on an expected 3 percent to 5 percent rise same-store sales.
2) Yum! Brands is up 1% after reporting better-than-expected earnings ($0.70 vs. $0.58 est.) as a result of falling commodity costs and a lower tax rate. Sales for the fast-food operator were weak though, as same-store sales fell 6 percent in the U.S. while remaining flat internationally.
The company also raises full-year guidance to $2.10-$2.14 vs. $2.13 est.
3) Sunoco is down 2 percent pre-open after announcing it will halve its divided to $0.15 and close a major New Jersey oil refinery.
4) Everybody likes B of A: today Wells Fargo upgraded Bank of America, saying that it trades at the deepest discount to normalized earnings of any big bank in their universe (though they reduce earnings estimates for Q3); yesterday Buckingham upgraded it; on Monday Goldman Sachs upgraded the whole big cap bank sector.
5) Additional offerings: AirTran down 12 percent pre-open as it plans to sell $75 million in convertible senior notes and 9 million shares (no interest rate announced yet), while Avis Budget also down 9 percent as it plans to sell $250 million in debt and enter into a warrant transaction to purchase a hedge against the convertible notes (a warrant gives the holder the right to purchase its securities at a stipulated price in the future).
6) A little bit better news on housing: the Mortgage Bankers Association (MBA) said purchases were up 13.2 percent last week (refis were up 18.2 percent) as the average 30-year rate fell to 4.89 percent, the lowest rates since late May.
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07208ef7b89dc2e388d1be9b5d987495 | https://www.cnbc.com/2009/10/07/can-you-find-your-innovation-in-a-cup-of-joe.html | Can You Find Your Innovation in a Cup of Joe? | Can You Find Your Innovation in a Cup of Joe?
If there's anything sadder than a company in dire financial straits, it's one that got there by sticking to the tried-and-true, despite all evidence that points toward the road less traveled.
For the worst case scenario, you only have to look to General Motors, which produced the same cars and trucks - under various brand names and with slightly different packaging - and marketed them in the same way for decades, regardless of the economic climate or consumer trends. For a slightly less drastic example, there's Starbucks, now in the midst of a reinventionof sorts orchestrated by its (returned) original CEO and founder Howard Schultz.
Starbucks
Tons of criticism has been lobbed at Starbucks in the past couple of years, most of it resulting from overzealous expansion.
(We'll soon see what comes of the firm's release this week of VIA, its instant coffee formula.)
Since his return to the company early in 2008, Schulz has been busy stripping away all that Starbucks has come to (negatively) connote in recent years, while bringing coffee back to the forefront. It closed branches that performed poorly, increased store efficiency (with changes to ordering schemes, for example) and boosted product quality (better brewing schedules, removal of HFCS and artificial flavors from its baked goods). It even debuted an "off-brand" offshoot in Seattle: 15th Ave. Coffee and Tea, which is more about community than corporation - well, one blogger called it a "corporate indie" coffee shop - and includes beer, wine and ice cream among its menu options. The idea will be tested in two other Seattle locations, and if all goes well, rolled out (slowly, one would hope) to other cities. All of these elements have affected the company's share price and reputation, both of which have risen steadily since late 2008.
Every executive worth his weight has to similarly reassess him/herself from time to time, even if the results of such an exercise aren't released to the public. It's probably easier to do this when circumstances demand it. A marketing executive recently dropped from Big Ad House #2 will likely have to sell himself - well, his branded package of experience and potential - to an employer outside traditional "marketing," or to a client in a totally different field than he's used to (or even to a firm that's well removed from any previous reference point) in order to return to the workforce. But even if you're still working and relatively secure, an occasional review of your employment and educational background could help unearth talents that you've forgotten about in the ensuing years. Perhaps they'll resurface with some training classes or seminars; if possible, work them into your normal job routine. Getting together with old colleagues now and then is bound to jog memories of old assignments, the skills you utilized to handle them, and the associated business lessons learned (or not). Even if these skills can't become part of your usual job responsibilities, you should still somehow integrate your "newly regained" experience into your resume.
The bottom line: No one can afford to get stale, and in fact, it's terrible even to look stale.
Employers believe that one's brain grows soft when it's absent from the workplace; research supports the idea that the longer one is jobless, the faster a potential employer's interest wanes. We've all thought this way in some respect -- don't you reach for the milk with the later expiration date that's crammed at the back of the shelf, even though the ones at the front are still "safe"? No matter where you are in your career, you are the product in front. If you don't want to be passed over in similar fashion for human product that's "fresher," better find a way to reinvent yourself.
More Executive Strategies on CNBC.com:Where To Find A Job NowHottest States For Green JobsExecutive Career Strategies
________________________________Todd Obolsky has covered a wide range of industries for Vault’s print and online company profiles (including consumer products, government, non-profit, retail, advertising, internet, energy and publishing) and manages Vault’s Layoff Tracker. He has also written for Penguin Group’s Rough Guides and DK travel series. He holds a BS in Mathematics from Bucknell University and an MBA (with a market research concentration) from City University of New York’s Baruch College.
Comments? Send them to executivecareers@cnbc.com
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f531342aa2c8f18f9498f25b3b6d93a1 | https://www.cnbc.com/2009/10/07/charts-predict-gold-could-hit-2000.html | Charts Predict: Gold Could Hit $2,000 | Charts Predict: Gold Could Hit $2,000
The price of gold will continue to rise and outperform stock markets and could go as high at $2,000, depending on the strength of the S&P 500 index, according to Chris Locke, managing director at Oystertrade.com Management.
Gold has already passed the $1,000 level, and “the next point should be pretty quickly to $1250-$1300,” Locke told CNBC Wednesday. He said “no matter what happens to stocks and stock industries gold will outperform.”
VIDEO3:5503:55Charts: If S&P Holds, Gold Could Hit $2,000
Because of the current strength of gold, “dips should be very well supported,” he said, adding that “if the S&P holds around the 1,050 level, then gold should move to around $2,000.”
Locke’s outlook for the S&P 500 remains bearish.
“We’ve broken this uptrend from the lowest point of momentum last October,” he said, adding that “cracks are beginning to show for the S&P.”
- For more information on gold, the S&P500, and corn, watch the full interview above.
For the Investor:
Market Tips: How to Play the Australian Rate HikeDon't Expect a V-Shaped Recovery: StrategistSpecial Report: Investing in Emerging Markets
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e3a5414b4ff8b88ec106fb7d2b6cb83c | https://www.cnbc.com/2009/10/07/cisco-gets-upgrade-on-deals-economic-recovery.html | Cisco Gets Upgrade On Deals, Economic Recovery | Cisco Gets Upgrade On Deals, Economic Recovery
Cisco Systems is winning new deals and benefiting from a broad economic recovery, a William Blair analyst said Wednesday as he upgraded the company's stock.
AP
"Our analysis suggests that there has been significant pent-up demand building over the last year for Cisco's products ... which has started to loosen up over the past few months," William Blair analyst Jason Ader told investors in a note.
He raised his rating on Cisco , the world's largest provider of computer networking equipment, to "Outperform" from "Market Perform."
Ader said Cisco is benefiting from new projects as well as "overdue network maintenance needs" that customers have been putting off during the recession.
"From a competitive standpoint," Ader said, "Cisco has stepped up the pressure and has seen success from bundling and discounting."
He also praised Cisco's recently announced plan to acquire Norway's Tandberg ASA for $3 billion, a move he said will help the company make video communication "ubiquitous" in the business market. Ader said the potential growth of video helps offset some concern about slower growth in Cisco's core networking business.
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ed386d4edd20930a4321ac0b03c46275 | https://www.cnbc.com/2009/10/07/citis-pandit-gets-favorable-review-in-external-study.html | Citi's Pandit Gets Favorable Review in External Study | Citi's Pandit Gets Favorable Review in External Study
Citigroup CEO Vikram Pandit received a favorable review in an external study examining his role as the bank's head, sources close to Pandit told CNBC.
VIDEO0:0000:00Pandit's Report Card
Over the summer, the government hired Egon Zehnder to evaluate Pandit and his management team.
Pandit had received a lot of criticism as to whether he should have unwound Citigroup's empire much sooner since taking the CEO position in 2008.
Citi's board is expected to release some or all of the details from the report.
Also on CNBC.com:
Turnover Among CEOs Drops for 7th MonthCiti May Shed Unit That Will Pay Trader Up to $100 Million
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92e9750231bf3725278c0380a32b6d42 | https://www.cnbc.com/2009/10/07/commodities-spike-starting-a-longterm-bull-market-expert.html | Commodities Spike Starting a Long-Term Bull Market: Expert | Commodities Spike Starting a Long-Term Bull Market: Expert
Commodities prices are on the rise, with gold hitting another nominal high on Wednesday.
Rob Lutts, founder and chief investment officer at Cabot Money Management, and Kevin Kerr, president and chief trading officer at Kerr Trading International, shared their investment strategies.
VIDEO0:0000:00Cashing in on Commodities
Kerr's Outlook:
Although oil prices have recently steadied around $70, Kerr remains bullish on the commodity, he said. Though there is little short-term opportunity, he's approaching it on a long-term basis.
"My real fear is that during this time of lower prices...we've invested nothing in infrastructure, we're not drilling offshore, all that talk about alternatives, nothing's happening right now," he said.
"When demand does come back, [its going to] come back and slap us in the face and there will be even less supply this time around."
Art Cashin: Oil, Gold Led by US Dollar NowDollar's Demise? Bah, Humbug!Agriculture Will Reap Big Profits: Rogers
Kerr said he sees the spike in commodities as the beginning stages of a "serious" bull market, caused by a paradigm shift in the dollar.
Lutts' Outlook:
Lutts agreed that oil is entering a bullish phase, adding that gold is another good place for investors to protect their portfolios.
"It's very hard to know shorter term, but longer term I think we're going to see higher prices," he said. "It's all related to the emerging market demand, and that works into gold as well."
Platinum is also a good buy as the auto industry starts to rebound, he said.
Lutts' Picks:
SPDR Gold Trust
Market Vectors Gold Miners
Powershares Global Gold & Precious Metals Portfolio
Barrick Gold
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Citigroup's Pandit Gets Favorable Review in External Study
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Anheuser-Busch InBev Sells Theme Parks for $2.3 Billion
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Disclosure information was not available for Lutts, Kerr or their companies.
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69fd34c599dbaa9c7b58c5d21ae4be29 | https://www.cnbc.com/2009/10/07/costco-makes-a-comeback.html | Costco is making a comeback, Cramer said during Wednesday’s Stop Trading!, after stumbling through some problems. The stock was up about 2.3% in today’s trading session, thanks to a better-than-expected earnings report.
“Costco deserves to sell at a healthy premium to the rest of the group,’ Cramer said. “This is just the beginning of the move.”
10 Tips for Building WealthWho Is the Worst CEO?
Cramer recommended that investors use any decline that follows Thursday’s retail sales numbers to buy COST , saying it “could be a great opportunity.”
VIDEO0:0000:00Stop Trading, Listen to Cramer!
AT&T is also a buy, Cramer said. Despite the data bottlenecks caused by Apple’s iPhone and a potential loss in revenues from the addition of voice-over-Internet Protocol applications on its networks, T still offers a hefty 6% dividend yield. If the economy rebounds, investors will see the share price appreciate. In the meantime, Cramer said, they can collect that payout.
Google was up $15, or 3%, after bullish comments from CEO Eric Schmidt that the ad-spending recession was over. Cramer was hesitant to recommend the stock, but he did call Schmidt “probably the least promotional CEO in America.”
Lastly, ConocoPhillips has climbed five straight points, boosted in part by news that the company’s increasing its dividend and an overall strength in oil. Still, Cramer called the stock “too high.”
“People are being too foolish buying it at this price,” Cramer said. “Wait until it comes in a little.”
Call Cramer: 1-800-743-CNBC
Questions for Cramer?
Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com
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3184aac9949199ba10daf578c262ef7e | https://www.cnbc.com/2009/10/07/could-this-be-the-future-of-film-marketing.html | Could This Be the Future of Film Marketing? | Could This Be the Future of Film Marketing?
Sky-high marketing costs, usually half the budget of a movie, weigh heavily on studios balance sheets preventing them from taking more risks on releasing more movies. That's precisely why Hollywood is so carefully watching a little tiny movie called "Paranormal Activity" from Paramount , which may prove that a new model, hinging on the power of social media, really works.
"Paranormal Activity" is literally a tiny movie, costing just an estimated $15,000 to produce, just one tenth of one percent the cost of a typical studio blockbuster. It's being compared to "Blair Witch Project," which cost just slightly more to produce and generated nearly $250 million in global box office - one of the biggest home runs in movie history.
Why Marketing Does a Terrible Job of Marketing Itself
Paramount is taking a pretty unprecedented approach to marketing and distribution: instead of putting huge promotional resources behind a movie that could turn out to be a bomb, it's letting viewers do the marketing work. Paramount started the film in 12 college towns, then asking fans where to expand it, asking that they type in the city where they want to see the movie. The Web site's request is compelling - touting the "first-ever major film release decided by you," and that if the counter, now hovering below 500,000, hits "1,000,000 demands" then the movie will open nation-wide. When you request the movie come to your zip code the web service coordinating the campaign, Eventful.com asks for your year of birth and email address -- what better way to get detailed information about your fan base - then encourages you to spread the word through Twitter, or a Myspace or Facebook posting. The movie's Facebook page has nearly 38,000 fans and it's all over Twitter.
This past weekend the film played in only 33 U.S. theaters, screening only at midnight on Thursday, Friday, and Saturday nights. Nearly every screening was sold out, and it brought in the second highest per-screen average of any film this weekend, bringing its total box office to nearly $800,000. That may not compare with a film from the "Saw" franchise, but it's huge considering that the film cost next to nothing and the studio didn't risk a massive marketing spend. The response has been significant enough to demand a wider release, so the whole industry will be watching if demand keeps up as it hits more theaters this coming weekend. This wouldn't work for all films, but the horror genre in particular lends itself to word of mouth, as horror's target audience - teens - often trust peers on social networking sites more than ads or reviews.
Slideshow: Highest Grossing Movies of All Time
Why not let moviegoers determine what limited-release movies come to town? Last summer I reported on how the presidential candidatesused Eventful.com to measure local demand and determine what cities to visit. More commonly the site allows bands or stand up comedians to figure out what cities to hit when they go on tour. Now that more theaters are outfitted with digital projection systems, that eliminate the costly and time-consuming step of physically shipping film reels across the country, the option of making last-minute decisions about where to distribute films is a reality.
Questions? Comments? MediaMoney@cnbc.com
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2f08d3820f7d9b526dac0c385d67f83a | https://www.cnbc.com/2009/10/07/dick-bove-starts-coverage-of-boutique-bank-greenhill.html | Dick Bove Starts Coverage of Boutique Bank Greenhill | Dick Bove Starts Coverage of Boutique Bank Greenhill
Rochdale Securities Banking Analyst Richard Bove initiated coverage of boutique investment bank Greenhill & Co. with a "buy" rating Wednesday, Reuters reported.
Bove put a price target of $105 a share on the stock.
The stock closed at $89.71 on Tuesday and is up nearly 30 percent for the year.
Boutiques Grab M&A ShareLewis Pushed Out Because of Witch Hunt: Bove
Greenhill is among a group of smaller firms that have taken advantage of concerns about bonuses and pay restrictions at "bulge-bracket" firms and hired away key bankers, Reuters reported.
Boutique firms are now taking market share away from the top names in merger and acquisition business.
Greenhill is rated No. 16 in M&A market share, Reuters reported.
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World's Best Banks 2009The 10 Hottest Commodities of 2009
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Disclosure information was not available for Rochdale Securities.
Disclaimer
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5d0e7fc3c0972a3396e0323193768f13 | https://www.cnbc.com/2009/10/07/earnings-roundup-oct-7.html | Earnings Roundup: Oct. 7 | Earnings Roundup: Oct. 7
What follows is a roundup of corporate earnings reports for Wednesday, Oct. 7.
BEFORE THE BELL
Costco
The wholesale retailer posted a profit of 85 cents per share for its fourth quarter, down 6 percent from a year ago. The company reported revenue of $22.38 billion.Get Full Story Here
Family Dollar
The discount retailer reported a profit of 43 cents per share for its fourth quarter. The company posted revenue of $1.81 billion.Get Full Story Here
Monsanto
The agricultural production and chemical company posted a profit of two cents for its fourth quarter ended Aug. 31. The company reported revenue of $1.87 billion.Get Full Story Here
AFTER THE BELL
Alcoa
The aluminum production company reported a surprise profit of four cents per share. Analysts expected a nine cent loss. The company reported revenue of $4.62 billion.
*Earnings data based off of Thomson Reuters
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67dee0a17d5a27584d64598431b49194 | https://www.cnbc.com/2009/10/07/gold-rush-by-many-investors-could-push-price-up-to-1200.html | Gold Rush by Many Investors Could Push Price Up to $1,200 | Gold Rush by Many Investors Could Push Price Up to $1,200
Investors are continuing to push gold prices to record highs, leading analysts to predict that the metal could reach $1,200 and beyond this year.
AP
Gold hit another record high on Wednesday as the dollar slipped and global stocks rose for the third day running.
Slideshow: 10 Hottest Commodities of 2009
Analyts say investors are rushing into gold as they look for safe places to put their money amid continued turmoil not only in the economy but in the stock market and the US political structure.
"When you have such a large part of US population convinced we're running to hell in a handbasket with federal spending, you're going to have a large part of the population buying and taking possession of gold out of fear of what's going on," says Jim DiGeorgia, commodities analyst for Gold and Energy Advisor.
Investors can buy gold in a variety of ways—through futures contracts, mutual funds, exchange-traded funds, as well as actual ownership.
Owning gold is primarily done through purchases of gold bars, which can be stored in safe deposit boxes in banks. Other investors can buy solid-gold coins or even use jewelry as an investment. Gold bars, though, are generally considered the best investment because they can be bought at retail prices instead of the markups that other gold investments carry.
"I would recommend the average investor, if they want to get into hard assets, put 3 percent to 5 percent of their money in gold and hope they never have to use it," says Burton Rothberg, a former senior trader with Commodities Corporation, who has invested in the gold markets for decades.
The trend towards owning actual gold seemed to accelerate in August when Greenlight Capital hedge fund manager David Einhorn told clients he was getting out of the SPDR Gold Trust ETF in favor of physical possession, due in large part to fees from the fund that he said are higher than storing gold.
Analysts see the metal's surge continuing as stocks cool off and the possibility of a double-dip recession looms. Gold has a reputation as the classic inflation hedge, but is surging even though many economists see deflation as more of an immediate threat.
Gold has recently reached what technicians call a "symmetrical triangle" chart move, contributing to a strongly bullish feeling that they say could continue for years. That move has coincided as well with a weakening of the dollar. Dollar-denominated assets like gold can be bought more cheaply when the US currency falls.
"If the equity markets continue teetering at a very critical level, the longer we're here and flirt with that, the more nervous the average investor—and the smart money—will become," says Al Abaroa, commodity strategist for Options Pro. "The shift to gold is going to be that much stronger."
And as sentiment grows that the stock rally could falter soon, the trade for gold is back on and ready to keep pushing higher.
And turmoil in Washington, centering on both the health care debate and the future of fiscal and monetary policy, has investors looking for shelter.
Alternative Investing - A CNBC Special Report - See Complete Coverage
"When you add all of these things on top of one another, it's a very bullish case for gold," DiGeorgia says. "People are very concerned about a double-dip."
Projections vary as to how high the metal could surge. Abaroa sees $1,200 by the end of the year as likely.
For DiGeorgia the move could be even more pronounced, particularly if some type of "exogenous" event—a severe round of bank failures, or a geopolitical crisis—should occur. In the case, he says, 2010 could see $2,500 gold.
But even barring such an unusual forecast, he too predicts gold easily hitting $1,200.
"Gold is the best insurance against the ignorance and stupidity of politicians," DiGeorgia says. "There's a whole lot of stupidity and ignorance on both sides of the aisle."
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b65df10076940cd1bd970aaea55c432c | https://www.cnbc.com/2009/10/07/health-care-strategists-3-big-trades.html | Health Care Strategist's 3 Big Trades | Health Care Strategist's 3 Big Trades
Playing the volatility of the health care sector while legislation is still pending in Congress could be profitable, especially in managed care, Les Funtleyder, health care strategist at Miller Tabak, told CNBC.
VIDEO0:0000:00Betting on Health Care
Funtleyder touted Humana and UnitedHealthGroup as his two managed care picks, but suggested not buying the stocks outright.
"One of the things we are suggesting is, because of the volatility going into the next couple of months, either buying the volatility itself in the options market or maybe buying some calls either in December or going into next year," said Funtleyder.
"This way you don't buy stocks outright, but you do get to take advantage of upside post the volatility."
There will be about six to eight weeks of choppy trading in the managed care group, but then stocks should start rising, he said.
Funtleyder also recommended Johnson and Johnson . He said this stock was safe enough to be bought outright.
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JP Morgan Releases Upbeat Ad Insights
Citigroup
Citi May Shed Unit That Will Pay Trader Up to $100 Million
______________________________ Disclosures:
Disclosure information was not available for Funtleyder or Miller Tabak.
Disclaimer
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9041d2b3cf949a551705c9476f4b02c6 | https://www.cnbc.com/2009/10/07/help-name-the-newest-minor-league-team.html | Help Name The Newest Minor League Team! | Help Name The Newest Minor League Team!
Last year, we found out just how much our readers loved minor league baseball logos.
Our search to find the best logo in the minors - the Southern Illinois Miners- yielded more than 700,000 votes from our readers.
Name That TeamCNBC.com
So when we heard that the San Francisco Giants Double-A club, the Connecticut Defenders, were moving to Richmond, Va., we contacted the team's leaders to find out how much we at CNBC.com could be involved in the process.
Team management graciously agreed to give us an inside look from coming up with a team name to working with a company called Plan B to design the logo.
The first part starts today, as CNBC.com readers will get a chance to name this team.
For the last couple weeks, the team has held a contest with the local paper, the Richmond-Times Dispatch, to come up with the best name. More than 6,000 entries were received and 2,500 of those entries were unique, according to the team's chief executive Chuck Domino.
The field was then narrowed down to a final five names, all proceeded by the word Richmond: Rockhoppers, Rhinos, Flatheads, Flying Squirrels and Hambones. Below you will see explanations from the team executives as to why they like each name. You will also get a chance to vote on the current names. Please note, the team does not have any obligation to go with the top vote getter on our site.
Since we wanted to feel like we are also part of the process, the team has given us a 6th "Wild Card Entry."
If you have a team name you think would be great for the Richmond team, e-mail us atSportsBiz@cnbc.com.
Entries will be taken from 9 a.m. ET today (Wednesday) to 9 p.m. ET tonight.
CNBC.com's "Wild Card Entry" into the name game will be announced tomorrow (Thursday) morning and that name will be entered in a vote that will take place on the Richmond Times-Dispatch Web site. The winning logo will be announced by the team on Oct. 15. If the winning team name is one submitted by a CNBC.com reader, that reader will receive an official team cap, team jacket and picture with a short story in the inaugural game program.
While we wait for your submissions, please tell us which of the current five team names you like best. See below for explanations of why those names were chosen.
Richmond Rockhoppers (case made by Chuck Domino, Chief Executive Manager): The James River has many exposed rocks that both humans and animals use to cross the river. Thus, the options for the logo and multiple mascots are seemingly endless. Besides all of that, it just sounds good.
Richmond Rhinos (case made by Todd "Parney" Parnell, Vice President and COO): Rhinos are big, strong, rough and they overcome elements in the toughest of climates. Rhinos live long happy lives, plus Richmond Rhinos sounds cool. No one has ever done Rhinos and the merchandise possibilities are endless.
Richmond Flatheads (case made by Anthony Oppermann, Director of Media): The flathead fish inhabits the James River and judging by the response from the fans, the city feels a strong connection to the James as it being a part of its identity. We can also view a flathead as a nail or screwdriver, which would symbolize the industrial history of the city. No need to fish around for another name. Just nail it down with the Flatheads.
Richmond Flying Squirrels (case made by Tom Denlinger, assistant GM): The flying squirrel is a native species of Virginia, thus tying in the great wildlife and scenery of the area. It is nocturnal and since we play 90 percent of our games at night, it makes sense. With its dense brown coat, big dark eyes and a broad flat tail, it mixes the perfect combination for a fun family mascot.
Richmond Hambones (case made by Bill Papierniak, GM): Virginia ham is a staple of the South. Hambones is the best match for a theme beyond the logo and name that the region can easily find that connection and sense of ownership - a vital point in the marketing and merchandising of the team.
Questions? Comments? SportsBiz@cnbc.com
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8a89dc51a321a0f54f0ea2ed1ef7f78a | https://www.cnbc.com/2009/10/07/how-the-very-wealthy-are-investing-now.html | How the Very Wealthy Are Investing Now | How the Very Wealthy Are Investing Now
The wealthiest Americans have lost between 20 and 40 percent of their assets over the last year and a half.
VIDEO0:0000:00How the Very Wealthy Are Investing
Michael Sonnenfeldt, founder of Tiger 21, a peer-to-peer learning group for high-net-worth investors, told CNBC that the very rich have responded by taking fewer chances.
"Wherever they can, they're trying to take some risk out of their portfolio in case the double-dip scenario unfolds," Sonnenfeldt said.
To do so, wealthy investors have switched to higher levels of cash, shortened the maturities on their fixed income and gone to more liquidity, he said. They're also looking for dividend-paying stocks, preferred stocks and corporate bonds.
Track Treasury Prices/Yields Here
In the aftermath of Bernie Madoff's billion-dollar Ponzi scheme, wealthy investors have also gone "back to basics," getting directly involved in their finances and eliminating intermediaries, Sonnenfeldt said.
"What it's made them realize is that for many years they were prey to sophisticated products that they really didn't understand," he said.
More Market Intelligence:
Art Cashin: Stocks, Oil, Gold Led by US Dollar Now7 Big, Bad Retirement Account Mistakes
The majority of Tiger 21's members don't see underlying reasons for economic optimism, citing competition from China and India, concerns over Iran, and most specifically, the U.S.' enormous deficit, Sonnenfeldt said.
"Many of our members think that the market has [gotten] ahead of the reality," he said. "They don't see on Main Street the turnaround that you see down on the floor... They just think the longterm trend for the dollar is difficult to predict, and it's not positive."
CNBC Data Pages:
Dow 30 Stocks—In Real Time Oil, Gold, Natural Gas Prices Now Where's the US Dollar Today?
______________________________CNBC Slideshows:
Top Destinations for the WealthyColleges That Bring the Highest Paycheck
___________________________
______________________________CNBC's Companies in the News:
Cisco
Cisco Gets Upgrade on Deals, Economic Recovery
Costco
Costco Profit Falls 6%, but Tops Views
Monsanto
Monsanto Loss Wider Than Expected on Lower Sales
Fannie Mae
Freddie Mac
Fannie, Freddie to Aid Banks
______________________________ Disclosures:
Disclosure information was not available for Sonnenfeldt or his company.
Disclaimer
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a557114655527adbf0adf783b812b6ec | https://www.cnbc.com/2009/10/07/i-smell-a-rat-er-a-blog.html | I Smell A Rat, er, A Blog | I Smell A Rat, er, A Blog
AP
I’ve said it before, and I know it’s a bad cliché (is there such a thing as a good cliché?), but I learn something new almost every day.
Today, my lesson came in the form of an eye-catching research note out of Leerink Swann, which specializes in covering healthcare-related companies and stocks.
The report is on a company that I really don’t follow all that much: Sangamo Biosciences . But it’s the title that grabbed me. “Knockout Rats Using ZFN Technology Could Become Transgenic Animal Standard.”
I always thought rats are pretty ugly, disgusting, uh, dirty. I’ve never seen a rat I’d describe as a knockout. But, okay, if you say so. Alright, I’m not that dumb. With an assist from my producer, Ruth, (I was too busy on the Nasdaq hamster wheel) I learned that knockout refers to the research practice of knocking out an existing gene in a lab rodent and replacing it. But what in the heck is ZFN? Well, according to Leerink Swann’s report it stands for “Zinc Finger Nuclease.” I think I’m gonna save that lesson for another day.
Obama, Supportive Doctors Push Health Care Reform
So, back to those knockout rats. LS analyst Joseph Schwartz is telling clients, “We believe the market is underappreciating SGMO’s 10.5 percent royalty on all knockout (KO) rats soon to be sold by Sigma-Aldrich. KO rats could represent near-term revenues since FDA approval is not required and SIAL plans to begin selling them this month….” LS makes a market in SGMO and SIAL.
I hope I’m not inviting a flurry of nasty emails from animal rights folks, but this is big business. Schwartz says, “The transgenic animal market is estimated at $700 million-$1 billion.”
That knocks me out.
Questions? Comments? Pharma@cnbc.com and follow me on Twitter at mhuckman
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e9c898444ecbd9a3594c04b0758ebec2 | https://www.cnbc.com/2009/10/07/in-ebooks-its-an-army-vs-google.html | In E-Books, It’s an Army vs. Google | In E-Books, It’s an Army vs. Google
Google HeadquartersAP
Whenever it can, Google likes to have programmers solve its problems. But now it faces a dispute that even its ranks of lawyers and lobbyists are finding hard to smooth over.
A broad array of authors, academics, librarians and public interest groups are fighting the company’s plan to create a huge digital library and bookstore. Their complaints reached the ears of regulators at the Justice Department, which last month helped derail the plan by asking a court to reject the class-action settlement that spawned it.
That request led to a last-minute decision by Google and its partners, the Authors Guild and the Association of American Publishers, to redraft the agreement. A federal court hearing in New York on Wednesday will shed light on their progress.
Some analysts say the broad-based opposition to Google’s lofty plans was unprecedented and a harbinger of the intense scrutiny the company’s ambitious agenda will face.
“This was the first issue through which Google’s power became clearly articulated to the public,” said Siva Vaidhyanathan, associate professor of media studies and law at the University of Virginia. “All sorts of people — writers, researchers, librarians, academics and readers — really feel they have a stake in the world of books.”
Google expressed confidence that a new agreement that could win court approval might be ready within weeks. “I don’t think we need a lot of time,” said David Drummond, Google’s chief legal officer.
This is not the first time Google’s ambitions have collided with the Justice Department. Last year, after advertisers and competitors argued that a planned ad deal with Yahoo would harm competition, the department said it would try to block the partnership in court. Google chose to abandon the deal rather than fight.
This time, the department’s lawyers heard from Google rivals like Microsoft. But they also heard complaints from a much broader group, many of whom shared the same fear: that the deal would allow Google, the 800-pound gorilla of digital information, to bulk up even more and lock out competitors in the nascent digital book market.
In a recent order, the judge who will have to approve or reject the settlement remarked on the number and breadth of objections the court had received. “Clearly, fair concerns have been raised,” wrote Judge Denny Chin of the United States District Court for the Southern District of New York.
The Justice Department told the court that it hoped the parties would be able to modify the agreement to address antitrust, copyright and class-action problems, while preserving some of its benefits.
Some experts say that even if a modified deal is approved, the dispute portends the kind of suspicion that Google’s plans will likely face.
“Google will have continuous challenges to major initiatives around consumer choice, security and trust, privacy,” said David Yoffie, a professor at the Harvard Business School. “This will never stop. It will be a question of how well Google builds coalitions and lays the groundwork before they establish a fait accompli in a particular area.”
Google’s plan emerged from a sweeping settlement of a class-action lawsuit filed by authors and publishers in 2005 over the company’s effort to digitize books from major libraries. Google and its allies hailed the agreement as a public good: millions of out-of-print books would become widely available, unlocking vast swaths of human knowledge, while giving authors new ways to earn money from digital copies of their works.
While Google’s corporate rivals fanned the flames of opposition, much of the resistance to the deal began in the confines of academia and spread gradually. In the end, more than 350 individuals, companies, nonprofit groups, academics, library associations, overseas publishers, states and even foreign governments lodged complaints in court against the agreement, in whole or in part. They outnumbered the filings in support of the deal by about 10 to 1.
Many scholars initially sided with Google in 2004 when its scanning project, originally designed to create a kind of universal card catalog, drew lawsuits from the Authors Guild and the Association of American Publishers. But the settlement transformed Google’s plan into something far more ambitious.
Online users of Google’s digital library and store would get free access to 20 percent of any book and be able to pay to read the rest. Every library in America would be able to offer free, full access to Google’s library at one terminal. And universities would be able to purchase access to the entire collection. Revenue would be split among Google, authors and publishers.
Even before the agreement was signed last October, however, opposition began to brew. Harvard University, which along with a few other libraries had been invited to participate in some of the negotiations, withdrew. A few months later, Robert Darnton, head of the university’s library system, wrote an impassioned attack on the deal in The New York Review of Books.
Around the same time, Pamela Samuelson, a respected Internet law and copyright expert at the University of California, Berkeley, convened a meeting of concerned scholars who began spreading the word at universities.
At a conference at Columbia Law School in March, the outlines of the opposition began to emerge. Critics said the deal would grant Google quasi-exclusive rights to commercialize millions of orphan works, books whose rights holders are unknown or cannot be found. That would make it hard to compete with, potentially leaving Google free to raise prices.
Others said the deal turned copyright law on its head by letting Google profit from millions of books unless authors objected. Librarians grew concerned that Google wouldn’t adequately protect their patrons’ privacy.
Gail Steinbeck, the daughter-in-law of John Steinbeck, received notice of the settlement shortly before a May deadline for authors to opt out. She thought most authors would not understand it.
“When I saw this come through, just a few weeks before the deadline, I flipped out,” said Ms. Steinbeck, who along with her husband has been involved in a legal fight over the rights to some of John Steinbeck’s works.
Ms. Steinbeck quickly sent a letter to several influential authors laying out her fears. “It would be a shame to have to go back to Congress and/or the courts in a few years to ask them to split up a monopoly, when we have the chance to stop it in its tracks right now,” she wrote.
As a result, a group of authors that included the musician Arlo Guthrie asked the court for a four-month extension, which was granted. The delay proved crucial, as it gave time for opponents to get organized, leading to a veritable deluge of last-minute filings.
Lawrence Lessig, an Internet scholar and professor at Harvard Law School, said Google’s belief that its actions and motives were misunderstood reminded him of a frustration that permeated Microsoft in the 1990s.
“I’ve seen these big powerful companies filled with people who drank the Kool-Aid,” said Professor Lessig, who initially supported Google’s scanning but later came to oppose the settlement. “I really get the sense in which these people feel they are doing good. But I am always surprised by their failure to recognize how they will be perceived outside.”
Mr. Drummond said Google anticipated that a deal so sweeping would generate criticism. He said support for it was far broader than the opposition, noting that the guild and the publishers association represented a large portion of the American book industry.
Kneale: Hey Feds...Leave the Blogosphere Alone
“The benefits far outweigh any of these criticisms that are being made, many of which are quite theoretical,” Mr. Drummond said. “We have a good process now for taking into account some of the objections.” He added: “The fact that there are some critics doesn’t mean you should be paralyzed and not do something that provides value.”
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1e98862714728bebb5796e75a1dfe12b | https://www.cnbc.com/2009/10/07/in-your-face-portraits-of-wall-street-whipping-boys.html | In Your Face: Portraits of Wall Street Whipping Boys | In Your Face: Portraits of Wall Street Whipping Boys
During the financial crisis, many Americans turned their collective anger toward Wall Street. Geoffrey Raymond has turned this anger into street art.
Since the crisis erupted a year ago, the New York City-based painter has done a series of portraits of what he calls “Wall Street titans and villains.”
Man signing painting of Richard FuldPhoto by: Geoffrey Raymond
Among them: Bear Stearns CEO James Cayne, LehmanBrothers boss Richard Fuld, Former Federal Reserve Chairman Alan Greenspan, Former Treasury Secretary Henry Paulson and the current treasurer, Tim Geithner.
Recession Art Thrives in Brooklyn
Lately, Raymond has been exhibiting Bank of America CEO Ken Lewis, an ongoing taget for blame who recently announced his resignationby the end of this year.
Raymond has been exhibiting the paintings in front of Manhattan’s key financial venues, such as New York Stock Exchange and Lehman’s mid-town skyscraper. Unlike most artists, who would cringe at the thought of others defacing their work, Raymond invites people to vent their anger on his paintings.
“Would you like to write something on my painting?” Raymond asks passers-by. Many pick up the magic marker and scrawl away.
Slideshow: Favorite Wall Street Whipping Boys
The remarks range from the profane to the poignant. Many are bitter, but some have a sense of humor.
"Why didn't you see this coming?"
"May you get what you deserve!"
"Where's my bailout?"
"Coffee guy says go to hell!"
"Should we all have to pay for others' mistakes?"
The artist recalls one line that touched him the most. He describes the scribbler as “a very well-dressed man that seems to make $3 million a year.”
Yet what he put down was: "How do I explain to my two-year-old son that I am at home?"
Over the past year, as more people scribble on his paintings, Raymond has noticed a subtle change in attitude since the crisis began. Outrage has turned to resignation.
“It used to be people would grab the marker out of my hands and write something. Now they are sort of trudging along and that’s sad to see,” the artist says.
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84d3e5166e89e8a9188c8a61ed7b17f8 | https://www.cnbc.com/2009/10/07/is-your-chronic-impatience-killing-your-business.html | Is Your Chronic Impatience Killing Your Business? | Is Your Chronic Impatience Killing Your Business?
Confused man
I get it, I really do.
You don’t have the time, energy or staff to pay attention to everything all the time.
Our collective attention span is not what it used to be (remember the days before IM’ing, texting and emails.)
We’re all doing more – but paying less attention. And it’s costing you dearly.
Today’s guest blog is from Connie Dieken author ‘Talk Less, Say More’with three tips on “How to Influence the World – One Short Attention Span at a Time.”
Guest Author Blog
‘How to Influence the World – One Short Attention Span at a Time’ by Connie Dieken.
Today, you’ll leave a voicemail that will be zapped mid-sentence. You’ll send an e-mail that’s unceremoniously dismissed. As you try to make a point, someone will rudely interrupt. You’ll attend a meeting where no one will listen to the presenter. And the guy in the next cubicle will shoot you an e-mail instead of talking to you face-to-face.
It’s just another day in the life of a 21st century communicator.
Talk Less Say MoreTalk Less Say More
We’re living in a distracted, impatient, attention-deficit world. As the demands on our time and attention explode, a 21st century bad habit has emerged: chronic impatience. It’s as if we each have a channel-changing remote control embedded in our restless, fidgety brains. Is someone taking too long to get to the point? Zap. Are you boring me? Click.
Intrigued by this new phenomenon, I surveyed 400 business leaders who, thankfully, paid attention to my request and responded by completing the study. The results were nearly unanimous: 99% of businesspeople agree that attention spans are shorter today than 3 years ago and this is having a damaging effect on communication skills. Multi-tasking (such as checking e-mail or text messaging instead of listening) was selected by 93% of survey respondents as the leading cause of today's declining skills.
This confirms what you've been experiencing - both in the workplace and in your personal life. People are not paying attention as you speak– they’re quick to pull the trigger and tune you out.
Don’t want to be ignored? Fortunately, there's a solution. It takes just 3 habits to conquer this 21st century communication challenge: Connect, Convey, Convince.® I use these habits to elicit responses and I’d like to share them with you. My book, Talk Less, Say More, is loaded with tips and techniques to apply them to your world, but here are the basics:
Habit 1: Connect
Definition: Capture people’s attention by giving them what they want and value so they'll tune in Biggest mistake: Rambling
According to 71% of survey respondents, rambling or taking too long to get to the point is the major reason why people fail to connect with others.
Connecting in the 21st century is a whole new game - it’s changed profoundly in today’s busy world. That’s because there’s been a monumental power shift in communication. The listener now holds the power. In their quest for stimulation and speed, people are easily lured away by more appealing distractions like e-mails, text messages, tweets, cell phone calls, or web surfing.
Clearly, there’s a new urgency for you to get to your point quickly and banish long-windedness. But it’s not as simple as paring down the number of words that you use. You have to stay in their moment and frontload your message with what the listener wants and values most. What’s relevant to them, not just to you? Connect in this manner and you’ll engage and capture their attention. You won’t lose them at hello.
Blame the lure of instant gratification. We've become conditioned to getting what we want, when we want it. Think about it: there's speed dating, spray tans, instant tooth whitening, quick weight loss surgery - the list goes on. In our shortcut society, we don't need to wait patiently for the results we want. This desire for instant gratification is naturally spreading to our communication habits, which spells the end of yada yada yada.
Don't drive people to distraction by rambling. Connect by tapping into what the receiver wants and values. They’ll reward you by tuning out the distractions and tuning in to YOU.
Habit 2: Convey
Definition: Use portion control to get your points across with clarity, not confusion Biggest mistake: Overloading
79% of survey respondents said overloading others with too much information is the biggest reason why people do not properly convey their messages.
Let’s start with this premise: smart conveying is radically different in today’s information-laden society than it was just a few years ago. Social scientists say we’re buried beneath an avalanche of information ten thousand times bigger than what an earlier generation had to deal with.
We live and do business in a world of information overload. If you confuse, you lose. Navigating today's information jumble requires a new, more concise approach.
Our world is full of communiclutter® which you must conquer in order to convey successfully. What’s that? Communiclutter is my term for communication overload—when you’re bombarded with endless streams of communication 24/7, making it difficult to focus and process all of the short-burst, incoming information. You need shortcuts to process and understand it all.
In our new world, communiclutter is inescapable. What we can’t prevent, we must embrace—and manage. Just as you manage your incoming communications, you should also manage your outgoing communications. That’s information management.
I learned many conveying secrets during my two decades as a television broadcaster. The key to ensuring that your message is clearly understood is to use portion control. Sprinkle in more visuals, present information in triplets, and tell stories instead of dumping data on people. These portion control tactics create better shelf life for your information than mere words.
Habit 3: Convince
Definition: Create commitment to influence decisions, actions, and beliefs Biggest mistake: Lack of reasoning
According to 60% of respondents, not explaining why you want others to commit to a cause is the biggest reason why people fail to take action.
When I ask leaders for their secret weapons to convince resistant people to act, most say they simply back up and explain why they want people to do things in the first place. That’s how they enlist an army to become part of the solution. It’s easier to support something when you understand what you’re trying to solve and why.
When people don’t hear the real reason behind a decision, many people will assign it the worst possible reasoning. It’s human nature. Office gossips assume the worst and spread their poison, leading to grudges, resistance, and poor execution.
Revealing your reasoning, along with transferring ownership of your ideas to others, are the keys to persuading others to join the movement. They’ll help you gain long-term commitment, not short-term compliance.
The ability to convince others is not a genetic gift like singing ability. It can be learned. Most convincers don’t captivate crowds as successfully as Apple CEO Steve Jobs , a seasoned presenter who takes the stage with the rock-star status of Mick Jagger. They’re more like Microsoft founder Bill Gates, who’s not exactly known for his dazzling presentation skills.
Both men know the secret: convincing is not a thunderbolt event. It’s not an isolated, once-and-done occurrence. It’s a process of earning trust and respect. If you’ve connected and conveyed properly, convincing people to take a specific action should be the easiest step.
The Game-Changer
21st century influence is a process that unfolds incrementally—Connect-Convey-Convince®—to change hearts and minds and compel others to action. Miss a step and you’ll likely fail to be influential.
Communication is the single greatest challenge in business today. It takes just 3 habits to conquer it. Apply these habits and you'll become the powerful, influential communicator our impatient, attention-deficit world demands.
_______________________________
Connie DiekenConnie Dieken
Connie Dieken is a leadership communication coach and an Emmy Award-winning former television news anchor.
She’s the founder and President of onPoint Communication and has guided thousands of leaders from organizations like Apple, Olympus, and McDonald’s to be more influential and achieve positive results.
Her new book, “Talk Less, Say More: 3 Habits to Influence Others and Make Things Happen,”
(Wiley; September 2009).
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47413fad509cf578d2572e4b4d2d3094 | https://www.cnbc.com/2009/10/07/jp-morgan-releases-upbeat-ad-insights.html | JP Morgan Releases Upbeat Ad Insights | JP Morgan Releases Upbeat Ad Insights
Good news on the advertising outlook from J.P. Morgan, which this morning revealed some upbeat results from a proprietary survey about ad spending for the second half of the year.
The company projects ad spending in the latter half of 2009 to be more than 5 percent higher from the prior six months, with cable and Internet ads gaining market share from other platforms. Results in the second half are expected to be roughly flat with the year-ago period when the financial crisis pulled the bottom out of the ad market. These projections are based on J.P. Morgan's survey of 20 media buyers who manage $1.6 billion in annual advertising spend.
With overall advertising spending down by double digits this year, media giants like CBS, News Corp and even Disney are carefully watching for signs that ad spending is on track for a sustained rebound. It's been a rough year, particularly for sectors like newspapers and magazines, many suffering ad declines over 20 percent, prompting closures like Conde Nast's shuttering of four of its titles early this week. The fact that certain financial firms simply disappeared and US automakers dramatically reduced ad spending during their reorganization didn't help any. Meanwhile network TV is losing viewers and ad dollars to more targeted cable programming, and of course the Internet.
Murdoch in Asia Checking Out E-Reader Partners?Amazon.com takes Kindle global
J.P. Morgan's survey supports these continuing trends - Ad spending on broadcast and cable TV still dominates all other forms of advertising, at over half of marketers' budgets. But when it comes to growth, cable and the web are the fast-growers, with Internet ads expected to account for 29 percent of budgets in 2010, while cable is expected to attract a couple percentage points for 26.2 percent of overall budgets in 2010. That's not to say cable and web ads will eventually eclipse the rest of the business - hardly. The different media serve different purposes, and broadcast network TV is still seen as a premium-branding tool.
One interesting nugget buried in the report is the fact that some of these media buyers see *cable* television as an effective means of direct marketing. For next-generation direct marketing, we usually think of how Internet ads track consumer interaction and users responses, but now cable is proving surprisingly useful when it comes targeting - after all marketers can target by zip code and to specific programming. The cable giants have been talking about the benefits of "interactive TV," in which consumers could interact with the ads, saying yes to more food ads and recipes, and no to auto ads. As this kind of interactivity and even narrower targeting is implemented will surely snag more ad dollars from traditional formats like newspapers, radio, and broadcast TV.
As Alcoa kicks off third quarter earnings season, we'll be watching carefully to see what the media giants report, and what kind of guidance they can give about ad trends as we push into the fourth quarter, when marketers typically spend big to drive holiday sales.
Questions? Comments? MediaMoney@cnbc.com
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07ef93678315edb5cd6867859140ff30 | https://www.cnbc.com/2009/10/07/lightning-round-ot-dynegy-quest-diagnostics-and-more.html | Dynegy : DYN is “too speculative,” Cramer said, because of its bad balance sheet. Sell Dynegy.
Who Is the Worst CEO?10 Tips for Building Wealth
NY Community Bank : “This is a riskier bank than I like,” Cramer said. Go with First Niagara instead.
Quest Diagnostics : Cramer is bullish on DGX. He thinks it works as a play on President Obama’s intended health-care reforms.
Call Cramer: 1-800-743-CNBC
Questions for Cramer?
Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com
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3ad9eda7d00864ff3e141b571f382e64 | https://www.cnbc.com/2009/10/07/market-tips-other-metals-will-follow-golds-run.html | Market Tips: Other Metals Will Follow Gold's Run | Market Tips: Other Metals Will Follow Gold's Run
Global stocks rose on Wednesday, for the third day in a row, while gold trimmed gains but hovered near the all-time high of $1,043.45 hit on Tuesday. Experts told CNBC gold and its precious metal counterparts have higher to go.
Bullish on Bullion
Gold will continue to shine over the next year, believes Michael McCormick, asset manager at Belvedere Share Managers. He explains his bullish outlook on bullion.
Silver to Outperform
Silver will outperform, says Matt Zeman, trader at Lasalle Futures Group.
Bullish Medium-Term
Karl Eggerss, chief trader at LafferFrishberg.com is upbeat in the medium term but he says one should not confuse the current rally with a long-term bull market.
Upgrades in 2010 to Drive Australia
Earnings upgrades in 2010 will drive Australian markets higher, says Angus Geddes, CEO of Fat Prophets.
Long on Australia
The Australian market has more upside and "long" is the way to go, says Brett Cardamatis, client adviser at Patersons Securities.
Further Upside Seen for HK Markets
Alex Wong, director of asset management at Ample Capital sees further upside for the Hong Kong markets. He tells CNBC the Hang Seng Index could test 24,000 points.
Hot on Chinese Banks
Robert Howe, CEO of Geomatrix, likes Chinese banks because of their earnings profile and the strength of their balance sheets.
The Case for Cambodia
Cambodia is the most open economy in Southeast Asia, says Douglas Clayton, CEO of Leopard Capital. He outlines the other reasons why he likes Cambodia.
The Shift Towards Real Assets
The markets have gotten ahead of the economy, says Renee Haugerud, CIO of Galtere Limited. As such, she tells CNBC that we are in a major regime shift — from paper assets to real assets.
Track Stock Funds, Bond Funds, Money Market Funds and ETFs Here
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0b55adbdc509c99a8a70493cc927ebd8 | https://www.cnbc.com/2009/10/07/partisan-economics-in-action.html | Partisan Economics in Action | Partisan Economics in Action
Successful economic ideas usually end up being taken too far.
US Capitol Building with cash
Democrats dominated the middle part of the 20th century, thanks in part to their vigorous response to the Great Depression. They used the government to soften the effects of the Depression and to build the modern safety net. But they failed to see the limits of the government’s ability to manage the economy and helped usher in the stagflation of the 1970s.
Ronald Reagan then came to power promising to cut taxes and unleash the forces of the market. And the Democrats spent the next dozen years struggling to absorb the lessons of their failures.
More than a few people believe the Republican Party is in a similar place today.
When I asked Dale Jorgenson, the eminent expert on productivity (and a Republican), what had been the positive aspects of President George W. Bush’s economic policy, Mr. Jorgenson said, “I don’t see any redeeming features, unfortunately.” After Republicans opposed the stimulus package this year, The Financial Times, not exactly a liberal organ, called the party’s ideology harebrained. When Olympia Snowe was recently explaining why she might be the only Republican senator to vote for health reform, she suggested it was because her party had moved so far to the right.
But perhaps the most persistent — and thought-provoking — conservative critic of the party has been Bruce Bartlett. Mr. Bartlett has worked for Jack Kemp and Presidents Reagan and George H. W. Bush. He has been a fellow at the Cato Institute and the Heritage Foundation. He wants the estate tax to be reduced, and he thinks that President Obama should not have taken on health reform or climate change this year.
Above all, however, he thinks that the Republican Party no longer has a credible economic policy. It continues to advocate tax cuts even though the recent Bush tax cuts led to only mediocre economic growth and huge deficits. (Numbers from the Congressional Budget Office show that Mr. Bush’s policies are responsible for far more of the projected deficits than Mr. Obama’s.)
On the spending side, Republican leaders criticize Mr. Obama, yet offer no serious spending cuts of their own. Indeed, when the White House has proposed cuts — to parts of Medicare, to an outdated fighter jet program and to subsidies for banks and agribusiness — most Republicans have opposed them.
How, Mr. Bartlett asks, is this conservative? How is it in keeping with a party that once prided itself on fiscal responsibility — the party of President Dwight Eisenhower (who refused to cut taxes because the budget wasn’t balanced) or of the first President Bush (whose tax increase helped create the 1990s surpluses)?
“So much of what passes for conservatism today is just pure partisan opposition,” Mr. Bartlett says. “It’s not conservative at all.”
He became well known several years ago for attacking the younger Mr. Bush, in a book called “Impostor.” But Mr. Bartlett has turned out to be more interesting than most people who publicly break from their own party. In a series of columns for Forbes and in a book that comes out next week, “The New American Economy,” he has started to describe a new conservatism. He is, in effect, laying intellectual groundwork for a Republican Bill Clinton — the politician who curbs his party’s excesses.
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You can argue that this sort of reassessment should not make conservatives feel insecure. In many ways, they have won. Mr. Obama, like Mr. Clinton, has proposed raising the top marginal tax rate to a level that’s lower than it was for most of the Reagan administration. Most Democrats now acknowledge the central idea of supply-side economics: tax rates matter.
The best parts of supply-side economics have been “completely integrated into mainstream economics,” Mr. Bartlett writes. “What remains is a caricature — that there is no problem that more and bigger tax cuts won’t solve.”
His conservatism starts with the idea that high taxes are no longer the problem, even if complaining about them still makes for good politics. This year, federal taxes are on pace to equal just 15 percent of gross domestic product. It is the lowest share since 1950.
As the economy recovers, taxes will naturally return to about 18 percent of G.D.P., and Mr. Obama’s proposed rate increase on the affluent would take the level closer to 20 percent. But some basic arithmetic — the Medicare budget, projected to soar in coming decades — suggests taxes need to rise further, and history suggests that’s O.K.
For one thing, past tax increases have not choked off economic growth. The 1980s boom didn’t immediately follow the 1981 Reagan tax cut; it followed his 1982 tax increase to reduce the deficit. The 1990s boom followed the 1993 Clinton tax increase. Tax rates matter, but they’re nowhere near the main force affecting growth.
And taxes are supposed to rise as a country grows richer. This is Wagner’s Law, named for the 19th-century economist Adolf Wagner, who coined it. As societies become more affluent, people demand more services that governments tend to provide, like health care, education and a strong military. A century ago, federal taxes equaled just a few percent of G.D.P. The country wasn’t better off than it is today.
Modern conservatism, Mr. Bartlett says, should therefore have two main economic principles. One, it should prevent government from getting too big. There is no better opportunity than health reform, given that the current bills don’t do nearly enough to slow spending growth. Instead of pushing the White House to do better, however, Congressional Republicans are criticizing any effort to slow spending as an attack on Grandma. They’re evidently in favor of big Medicare, just not the taxes to pay for it.
The second goal should be to keep taxes from being increased in the wrong ways. Supply-side economics is based on the idea that higher tax rates discourage work and investment, two crucial ingredients for economic growth. But higher taxes on consumption don’t have nearly the same effect as taxes on incomes or companies. If anything, consumption taxes encourage savings, which lifts investment.
So Mr. Bartlett advocates a value-added tax — a federal sales tax — which most other rich countries have. Canada has a value-added tax that raises revenue equal to 2 percent of its G.D.P., and its economy has grown faster than this country’s over the last decade. Britain raises 6 percent of its G.D.P. through such a tax and Sweden raises 9 percent, and their economies have grown as fast as the American economy.
I don’t agree with everything Mr. Bartlett says, and you probably don’t either. Maybe you don’t like a national sales tax because you think it will inevitably hurt the poor. Maybe you have specific ideas for cutting hundreds of billions of dollars from the federal budget to keep taxes from rising much.
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But you don’t have to agree with all the specifics to see that he has a larger point. One of the country’s two political parties has no answer to an enormous economic issue — the fact that the federal government cannot pay for its obligations. This lack of engagement is a problem, just as it was a problem when Democrats were saying that welfare was working, teachers’ unions were always right and stagflation couldn’t happen.
For now, there is little reason to think the Republicans are on the verge of a Clinton-like reform. But it is hard to see how they can ultimately stick to their current platform. At some point, the government will have to figure out how to pay for the baby boomers’ retirement. “Trends that can’t continue,” as Mr. Bartlett says, “don’t.”
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95da81e853c9595ee416b5dc49b8eb3a | https://www.cnbc.com/2009/10/07/profiting-from-krafts-takeover-bid-for-cadbury-charts.html | Charting Asia | Charting Asia
US food giant Kraft has been in the spotlight in recent weeks following its $16 billion bid for British chocolate firm Cadbury. For investors holding the company's stock, should they buy, hold, or sell?
Takeovers are more about trading strategies rather than chart analysis. The takeover dance usually has 2 or 3 steps and sometimes more.
The dance starts with the offer from the predator to the target prey. This offer is routinely rejected as far below fair value which is decided by an independent valuation report commissioned by the prey.
The second dance step is when the predator increases the offer made to the prey. This offer may include an additional sweetener such as cash or options as well as shares. The prey plays hard to get, and often the predator will need to increase the offer a third time.
This dance has a rally and plateau effect on the price chart of the prey. The target company rallies as traders anticipate a higher offer from the predator. Price consolidates and moves sideways until the new offer is received.
The predator bleeds capital, or debt, in the takeover. Unless it has a particularly strong balance sheet the market treats the predator with caution. The reaction away from the consolidation level between $28.00 and $29.00 confirms this cautious reaction. There is often downward pressure on prices for the predator so it's important to look for successful support areas. With Kraft these are near $23.50.
However, the real dance action is in the trading, not the chart analysis. Takeovers provide two trading opportunities. The first is a classic capital appreciation strategy applied to trading the target prey. The second is a conversion strategy where traders buy the target shares and hold them until the takeover is competed and they are converted into predator shares.
The classic strategy is to buy the prey company because the predator invariably lifts the takeover offer price. If there is more than one predator chasing the target, then counter bids quickly add up to capital gains. This is trading for capital gain.
The conversion strategy relies on buying the target prey shares and holding them until they are absorbed into the predator shares.
This is a type of arbitrage style opportunity because we know the future price of the instrument, and are able to compare it with the current price combination. The math is not that difficult, but using a spreadsheet makes the calculations much simpler.
We start calculations by characterizing the two players as the target and the predator. The two most important variables are the price at which the trader purchases the target shares, and the eventual value of the predator shares once the takeover is completed.
We start with the current cost of the target shares. The offer has been announced, and we need to decide if we buy target shares today just how profitable this may be in the future given changes in the price of predator shares. Once we know these figures we can make a better estimate about the risk of the trade.
Next we establish the conditions of the takeover. In this example the predator is offering 20 predator shares for every 100 target shares.
The next most important variable is the current price of the predator shares. This price will change over the course of the takeover. The take over conditions remain in place for an extended period while the price of the predator shares varies according to market sentiment. Traders who decide to wait and convert their target shares into predator shares need to understand the impact of these price changes on the profitability of their trade.
The assumption is that the conditions of takeover remain the same. Once the predator price drops below $12.00 in this example this strategy becomes unprofitable. It is not until the predator price, when the shares are converted, reaches more than $13.80 with a 10% return, as shown by the red lines, that this strategy becomes relatively profitable.
Predator and prey calculations allow traders to make a better judgement about the strategy they prefer to use when a takeover offer is made. It tells them which is sweeter – Kraft or chocolate.
If you would like Daryl to chart a specific stock, commodity or currency, please write to us at ChartingAsia@cnbc.com. We welcome all questions, comments and requests.
CNBC assumes no responsibility for any losses, damages or liability whatsoever suffered or incurred by any person, resulting from or attributable to the use of the information published on this site. User is using this information at his/her sole risk.
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05999cf41e69a7e6680b7ef49f467dd2 | https://www.cnbc.com/2009/10/07/schork-oil-outlook-wall-street-jargoncaveat-emptor.html | Schork Oil Outlook: Wall Street Jargon….Caveat Emptor | Schork Oil Outlook: Wall Street Jargon….Caveat Emptor
Last Wednesday Uncle Sam reported that commercial stocks rose by 0.8%. Bottom line, stocks are on pace to end the third quarter at the highest level since 1991… and at the 18th highest level since… 1920… since the era of the break-up of Standard Oil! For this morning’s report the crowd is looking for a 2.0 MMbbl build. Last night the API reported 0.25 MMbbl draw.
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Per a story on Reuters… Sunoco will indefinitely idle its 145 Mbbl/d Eagle Point refinery near Philadelphia, to reduce losses in its refining business.
“Sunoco will shift current Eagle Point production to its two nearby refineries in Marcus Hook and Philadelphia, Pennsylvania, which will now operate at higher capacity utilization…”
Roughly 400 workers will be furloughed as a result.
It’s a good thing Wall Street keeps telling us that demand for oil is so strong; otherwise, we presume Sunoco would really be in trouble.
The Schork ReportTrading Strategy:
Post DOE bids through yesterday’s 71.97 high print alert to follow through momentum towards our 72.75 inflection-point.
We will look for further strength above here towards our 74.63 intra-day.
On the other hand, offers through the 62% retrace at 69.98 clear a path towards our 69.01 inflection-point. Below here we will look for offers towards our 67.13 intraday.
Read what other CNBC Contributors are saying...
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Stephen Schork is the Editor of, and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.
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3a66b26a5b6b2f82d4747f035bca08f7 | https://www.cnbc.com/2009/10/07/should-the-fed-save-the-dollar-by-hiking-rates.html | Should the Fed Save the Dollar by Hiking Rates? | Should the Fed Save the Dollar by Hiking Rates?
The Greenback has seen its share of red arrows in recent days.
Prior to today's gain, the dollar has been mired in a four day losing streak.
Its recent setback was one the catalysts that drove gold to a new nominal record this week.
We've seen this week's reports that Arab oil producers are planning with nations like Russia, China, France and Japan to end dollar transactions for oil in favor of a basket of alternative currencies. This comes on the heels of continuous chatter from China about its concerns about the role of the US dollar. With all this talk about the Greenback's 'demise' - one question that is taking on more urgency is, whether or not the Federal Reserve should take some course of action to stem its slide?
Slideshow - Weirdest Currencies In the World
Raising rates would send a strong signal about the U.S's intention to protect the dollar and stabilize prices. But is this a realistic scenario? And even if the Fed felt motivated to make such a move, would it be sooner than later?
Blog - End the Fed, Save the Dollar: Ron Paul
Already some banks are making their own predictions. Deutsche Bank recently cut their 2010 dollar-euro forecast amid the expectation that the Fed would lag other central banks when it comes to rate hikes.
Take our poll below. We'll explore that issue today at 3pm on the Closing Bell.
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2d88ea597f662292bb4e6c7c43593f4a | https://www.cnbc.com/2009/10/07/small-caps-big-problem-now-5star-manager.html | Small Caps' Big Problem Now: 5-Star Manager | Small Caps' Big Problem Now: 5-Star Manager
Small caps have risen 70 percent from their March lows, but Eric Cinnamond, senior portfolio manager at Intrepid Capital Funds' 5-star small-cap fund, said it's been harder to find good companies at discounted prices.
VIDEO0:0000:00Investing in Small Caps
While higher-risk, more cyclical companies were attractive in late 2008 and early 2009 — with many small-caps being sold at 50 percent discounts compared to their worth — this trend has reversed, he said.
"Currently, our newer ideas are closer to 15 to 20 percent discounts and they're more steady types of businesses," he said. "We think some of the cyclical companies right now are pricing in 2007 type of margins that, really, we don't believe will return in the near future."
Intrepid is specifically targeting companies with strong balance sheets and free cash flows, Cinnamond said.
Cinnamond's Fund Owns:
Prestige Brands
Core Mark
Constellation Brands
Weis Markets
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Disclosure information was not available for Cinnamond or his company.
Disclaimer
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32f9086a3d65ae79ed965fa22ffc1de1 | https://www.cnbc.com/2009/10/07/turnover-among-ceos-drops-for-7th-month-this-year.html | Turnover Among CEOs Drops For 7th Month This Year | Turnover Among CEOs Drops For 7th Month This Year
Turnover among CEOs dropped 25 percent in September as compared to the same month a year prior, according to a report by Challenger, Gray & Christmas outplacement company.
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The number was relatively unchanged on the month, as 105 left their positions in September, compared to 101 in August.
On the year, 939 CEOs have left their positions — a 17 percent decline from the 1,132 departures through September 2008, Challenger said in a press release.
The financial sector has accounted for 87 of these departures, including Morgan Stanley CEO John Mack, who will step down at the end of the year but remain chairman.
Bank of America CEO Ken Lewis announced he will retire at the end of the year, two years sooner than scheduled.
JPMorgan Chase has restructured its executive roles, replacing co-heads Bill Winters and Steve Black with Jes Staley as CEO of its investment arm.
"The financial sector is still reeling from the impact of the current recession. Even banks that have done well navigating this recession, such as Chase, are shuffling management in preparation for the future," said John Challenger, chief executive officer of Challenger, Gray & Christmas.
"As these financial institutions, as well as organizations across all industries, make the transition from recession to recovery and integrate new business opportunities, regulations and objectives into their plans, succession plans are being reworked to reflect the many changes."
September was the seventh month this year that departures were lower compared to the year prior.
The health care sector continued to lead in CEO turnover, with 151 departures so far in 2009.
Slideshow: America's Highest-Paying Jobs
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a0cea6fd2e00920e608981449da42ce3 | https://www.cnbc.com/2009/10/07/warehouse-lending-fannie-and-freddie-to-the-rescue.html | Warehouse Lending: Fannie and Freddie to the Rescue! | Warehouse Lending: Fannie and Freddie to the Rescue!
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Several months ago on the blogwe discussed the predicament small independent lenders are in because they are no longer able to access the cash to make their loans. That is because warehouse lending has dried up considerably. That leaves the big banks to get most of the share of the mortgage market. As it stands today, Wells Fargo , J.P. Morgan and Bank of America deliver more than half of all new mortgages.
But now, as first reported in the Wall Street Journal, "Fannie Mae and Freddie Mac are preparing to introduce a program aimed at helping independent mortgage banks acquire the short-term credit they need to make home loans."
They would do this through advance commitments to purchase the home loans, as long as they meet certain quality standards. This way the smaller banks could get short-term credit because the loans would be deemed less risky.
I gave a shout over to Howard Glaser this morning, who recently launched an advocacy group for community based mortgage lenders called Community Mortgage Lenders of America. He and the group have been pushing for such a plan.
Fannie Mae's plan to increase the flow of mortgage capital to independent mortgage bankers is welcome news for borrowers. By making credit available to the community based bankers who make 46% of the mortgage loans in this country, the cost of mortgage credit to borrowers will go down. With the housing market showing signs of a fragile recovery, Fannie's action will help ensure stability in the housing sector.To say that every little bit helps in today's mortgage/housing market is an understatement. Glen Corso of the Warehouse Lending Project says, "Based on the details available this program should expand warehouse lending capacity by allowing more efficient utilization of capital at the warehouse banks, that is allowing them to do a greater volume of warehouse lending with the same amount of capital. That development would definitely be a plus for what is still a very constrained situation in warehouse lending. More remains to be done and we continue to work with Fannie , Freddie , Ginnie Mae and the Treasury, but this is movement in the right direction."We saw mortgage applications jump over 16 percent last week because rates dipped below five percent. Granted, the bulk of these were refis, but there was also a surge in purchase applications. If smaller lenders can get back in the game, that will only create more competition and hopefully at least provide the foundation to keep rates low without need for additional government intervention in the market.Slideshow - Million Dollar Homes Across America: Then & Now
Questions? Comments? RealtyCheck@cnbc.com
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5f5d80608b884cbc1834ef4e62499189 | https://www.cnbc.com/2009/10/07/whos-full-of-red-bull.html | Who's Full of (Red) Bull? | Who's Full of (Red) Bull?
The beverage business can be brutal, just ask Gatorade over the whole "Got G?" thing. But few companies have managed to do so well so quickly as Red Bull.
Now there's a new drink getting some buzz, a drink which doesn't boost energy, but prevents a hangover. It's called NoHo, for No Hangover. Like Red Bull before it, NoHo has been busy promoting itself, being distributed at parties and high-profile events since launching in May.
A friend of mine went to a party Monday to watch Bret Favre do his thing. People there were drinking NoHo, presumably to mitigate the effects of whatever else they were drinking. "Something was weird with the can," he tells me. "The weird thing - it was a diet Red Bull. NoHo just put a sticker on the Red Bull can. See the attached pictures."
The pictures, shown here, indicate that there was a NoHo label wrapped around a can of Red Bull. This wasn't some homemade label. It looks authentic, even containing nutritional information.
No Ho DrinkCNBC.com
No Ho DrinkCNBC.com
Is Red Bull the company behind NoHo? "Red Bull does not have any affiliation with NoHo and has never heard of anyone slapping a label on a Red Bull can," Red Bull's Paul Yoffe told me.
No Ho DrinkCNBC.com
So...I emailed the folks at NoHo to find out, well, what the heck?
"I think someone may have been playing around with you," was the response I received from the "sstephenson" at the company. "Our cans aren't even out yet. They will be out in two weeks." Pictures of the drink on the NoHo website show the product in a type of bottle, not a can, as you can see in this image here.
No Ho drinkSource: Nohodrink.com
"Our cans, which are actually being filled next week, will be launched at the NACS show in Vegas on the 21st," the email says. "We have had labels made internally to wrap different size cans for visuals, so not sure if someone grabbed one and brought it out."
My friend says the cans came from a very well-known nightclub in the OC. I've contacted the restaurant to find out where it got the Red Bull, er, NoHo, er, whatever, but haven't heard back.
Theories? Please let me know in the comment section below. Quite a bit of buzz for a drink designed to cut down on the effects of a good buzz.
Questions? Comments? Funny Stories? Email
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619bc77ac22874556c56d94eaa2b596d | https://www.cnbc.com/2009/10/08/against-all-odds-ufl-kicks-off-tonight.html | Against All Odds, UFL Kicks Off Tonight | Against All Odds, UFL Kicks Off Tonight
The United Football League kicks off tonight with the California Redwoods taking on the Las Vegas Locomotives at 9 p.m. ET on Versus. It’s hard enough to start a new football league from scratch and it’s even harder to do that during these trying economic times. I sat down with the league’s chief operating officer Frank Vuono to discuss the launch.
Darren: People are going to want to judge your league quickly. Let’s start with attendance. We know that the league is hoping for 20,000 fans each game. What are you specifically expecting for tonight?
Slideshow - Super Bowl Spending
Vuono: We’re less concerned with the amount of people that are going to show up for tonight. We know we have to have people in our stands. It’s how outsiders are going to gauge us. Right now, we are concerned with the quality of the football on the field and the broadcasting aspect and we’re very happy with that. As for tonight, I think 10,000 is the number.
Darren: What will fans who watch the game tonight be surprised about?
Vuono: The amount of access we offer is unparalleled. The reporters will be interviewing the players and coaches as the game is happening and we’ll have a camera inside the locker room.
Darren: You’re also pushing the boundaries in terms of sponsorship?
Vuono: Tonight, for example, people will notice we will have a Men’s Warehouse logo on the helmets. StubHub will also be on the helmets in future games.
Darren: How would you describe your relationship with the NFL?
Vuono: It’s a very positive one. They’re going to scout our players and they’re happy that there’s a place that they can find players that are in football shape in season. So they’re going to use us as a resource.
Darren: Who is your star player? Is it J.P. Losman?
Vuono: There’s no question that he’s a very impressive player. In fact, Jim Fassel told me he wouldn’t trade him for four or five quarterbacks that are starting in the NFL.
Darren: Are you upset that Michael Vick didn’t fall to you?
Vuono: Well, he would have been worth millions of dollars in publicity for sure. And it’s clear that people were willing to forgive him. But we were beneficiaries of all that publicity too.
Darren: People were surprised that the UFL only started with four teams. You happy with that decision?
Vuono: We did it right. Each team will play each other a couple times and then we’ll have a championship game. We’ll bring in two more teams next year, including one in Los Angeles.
Darren: It has been a very hard year. Tonight in a way is an achievement in that you guys still did what you said you were going to do.
Vuono: Yeah, it has been an uphill battle and we’ve done it against tremendous odds and I’m very proud that we’re taking the field tonight.
Questions? Comments? SportsBiz@cnbc.com
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133f5a09714e9217127175c56898c34e | https://www.cnbc.com/2009/10/08/alcoa-analysis-with-klaus-kleinfeld.html | Alcoa Analysis With Klaus Kleinfeld | Alcoa Analysis With Klaus Kleinfeld
Klaus Kleinfeld, President & CEO of Alcoa joined Maria Bartiromo after the close today, with an exclusive look at its thrid quarter report which hit the wires at 4:05pm ET. Alcoa, which officially kicks off the third quarter earnings season for blue chip companies did not disappoint.
Alcoa reported its first profit in a year, with earnings of 4¢ per share, that compares to estimates for a loss of 9¢ share. Revenues were in line, coming in at $4.62B. On the 9% quarter-on-quarter increase in revenue, Kleinfeld said that this was pretty much "across the board in all the industries, other than aerospace and gas turbine." He also told us that Alcoa "strengthened our cost structure, strengthened the balance sheet and refocused the portfolio."
Perhaps the biggest positive from the report is that the company is sitting on $1.1B in cash.
Kleinfeld did not want to speculate on where he might be putting that cash to work but he said it "is probably the biggest compliment" for the company. He also added that while it gives Alcoa a lot of opportunities, given the unprecedented crisis the company and industry has seen.
Overall, Kleinfeld was optimistic on the outlook, expecting a "stabilization in the U.S." and expects an increase in aluminum demand. He's predicting an 11% growth in the aluminum market in the second half of the year versus the first half. In terms of where demand is coming from, Kleinfeld said that "China clearly is back and back very strong and pulling some off the Asian markets with them."
But there are some clouds on the horizon. Kleinfeld pinpoints energy and the weakening dollar as factors that he's watching closely, especially against the Brazilian Real and Australian Dollar. He says this is important to Alcoa, because "we actually need all the cash performance at this point in time."
Liza Tan contributed to this story
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f82cd2fafd7160b5ef111509fb5bdafa | https://www.cnbc.com/2009/10/08/alcoa-and-australiamorning-stars.html | Alcoa And Australia-Morning Stars | Alcoa And Australia-Morning Stars
Commodities and commodity stocks higher pre-open on Alcoa earnings. While Alcoa is getting all the attention, Australia is again helping Asian markets due to a much better than expected jobs report there...Australia reported an increase of 40,600 jobs in August versus a forecast of a drop of 10,000 jobs.
Futures also got a modest pop from Initial Jobless Claims, which at 521,000 was 19,000 less than expected and the lowest figure since January.
Elsewhere:
1) Alcoa up 6 percent pre-open. The good news on Alcoa was that the beat on earnings and revenues seems to have come from the end-market "downstream" businesses (Flat-rolled Products, and Engineered Products and Solutions Business) rather than the "upstream" businesses of Alumina and Primary Metals. This is good news because it indicates increased demand from their customers, with the exception of aerospace which remains weak.
2) Retail sales coming in better than expected. Overall, the gain is 1.1 percent for September compared to the same period a year ago, according to RetailMetrics, versus expectations of a decline of 0.8 percent.
Lots of improved guidance as well: TJX, Ross Stores raised guidance, American Eagle and Aeropostale raised guidance.
Target was in line but guided above consensus for the third quarter.
JC Penney also provided better guidance for the third quarter: $0.03-0.10, prior guidance was a loss of $0.05 to a gain of $0.05. October same store sales will be down 5 to 8 percent, that is better than the 13 percent decline seen in October a year ago.
Sales were better for several retailers: Limited reported positive 1 percent sales, better than a loss of 3.4 percent expected, American Eagle was flat when a decline of 4.6 percent was expected.
Dig Deep Into the Sales Here
The downside: traffic appears to have trailed off toward the end of the month.
Rockin' Retail
3) Shares of Ruby Tuesday are up 4% in pre-market trading following the company's announcement that first-quarter earnings jumped even though same-store sales fell 3.1%. The restaurant chain posted a gain of $0.11 a share, up from $0.01 a share just a year ago. Analysts were expecting a gain of $0.09. Ruby Tuesday trimmed five cents of the top of its fiscal 2010 outlook to earnings of $0.50-$0.60 from an earlier estimate of $0.50-$0.65.
4) Marriott International swung to a third quarter loss on write-downs on its timeshare business and lagging revenue in its core hotel business. Marriott previously said it would record impairment charges on the timeshare business because it needed to cut prices, sell undeveloped land, and scale back development. For the quarter, Marriott reported a loss of $1.31 a share. Worldwide revenue per available room decline 23.5% on the quarter. Management pegs fourth quarter earnings between $.20 and $0.23 a share. The company declined to provide typical earnings guidance for FY 2010, but said it expects worldwide REVPAR to decline by as much as 5%.
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5ed37d452b9994ec747b1cc2897798bf | https://www.cnbc.com/2009/10/08/analyst-and-strategists-get-more-bullish.html | Analyst and Strategists Get More Bullish | Analyst and Strategists Get More Bullish
Going into the retail sales reports today, retail analysts were raising estimates for third quarter sales (remember many retailers have quarters that end in October).
See What Stores Hit, Missed and Scored
Now strategists are joining them. This week, many strategists have also been sounding more bullish, as Laszlo Birinyi noted recently.
B of A/Merrill Lynch, for example, said: "Purchase stocks on pullbacks, this rally hardly seems overdone, S&P to rise to 1,200 in 12 months."
Goldman Sachs: "Buy US companies with BRIC [Brazil, Russia, India, China] sales, they will outperform the market as Q3 revenue tops estimates."
JP Morgan: "S&P 500 may easily top 1,100 in the next three months, rehabilitation of a lot of segments in the economy could be much faster, especially corporate profits."
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The Dow 30 in Real TimeThe CNBC Stock BlogEarnings Central
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Questions? Comments? tradertalk@cnbc.com
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9f6cd06e0662aa1ea39af17abae41fff | https://www.cnbc.com/2009/10/08/as-a-phone-it-makes-a-good-gps.html | As a Phone, It Makes a Good GPS | As a Phone, It Makes a Good GPS
From the beginning, certain high-tech pairings have made eminent sense: Clock+radio. Camera+cellphone. Fridge+freezer.
This week, after many delays, Garmin and AT&T have unveiled a new candidate for the Gadget Combo Hall of Fame: GPS+cellphone.
It’s called the Garmin Nuvifone G60, and it costs $300 (after a $100 rebate and a two-year AT&T contract at $70 a month or more). And except for one small niggling detail, it’s a surprisingly successful mating.
First of all, it’s a fantastic auto or pedestrian GPS unit. The suction-cup windshield mount is brilliantly designed: when you’re in the car, the Nuvifone snaps in neatly and securely with no effort at all. But when you’re using it as a smartphone, it pops out cleanly, with no latches or protuberances to ruin its handsome rectangular lines.
nüvifone™ G60Source: garminusa.com
Garmin has endowed this thing with its top-of-the-line navigation goodies. For example, it speaks street and place names (“Turn right on Bayberry Lane” rather than “Turn right in 400 feet”). Better yet, the speech doesn’t sound as if it’s stitched together from canned chunks, like most talking gadgets (“In half of a mile — turn left on — forty — first — street”). Instead, it speaks flowingly, in complete sentences.
The software is easy to navigate. (Evidently, Garmin has realized the importance of simple software in a moving car. After all, in the end, driver distraction equals fewer potential customers.)
When you pop the unit off its car mount, it memorizes its location, so you can easily find your car again when you return.
The Nuvifone includes a national White Pages and Yellow Pages; you can look up any residence or business in seconds. A gas-station app shows current gas prices at stations near you. A movies app instantly shows you what movies are playing nearby, complete with today’s show times, and can even add a selected showing to the phone’s calendar for you. (An included Windows-only synching program keeps your phone up to date with your PC’s calendar and address book.) The Nuvifone also receives real-time traffic details; color-coded road lines represent traffic speed, and the unit offers to route you around them.
Sadly, the bundle of real-time information services (traffic, gas, movies, weather, White Pages, Local Events) costs $6 a month forever.
Now, the Nuvifone is a cellphone, too, so it can perform all kinds of cool tricks that a regular GPS unit can’t. For example, when you tap an address or a point of interest, you’re offered not just a Go button, but also a Call button. It makes perfect sense, as you’re steered toward some restaurant or store, to call ahead from the same screen to find out what time they close.
Similarly, you can tap someone’s name in your address book and see on a map to (or navigate to) that person’s house.
Unfortunately, your happiness with this gadget begins crashing the moment you snap it off that ingenious windshield mount.
Oh, it feels great as a smartphone. It has almost exactly the same dimensions as an iPhone, but is thicker (by a hair) and blockier (by lots of hairs). The screen is big and bright.
But whatever technology Garmin (and Asus, its computing collaborator) chose for the Nuvifone’s touch screen was a balky mistake. You have to really bear down to make it register a click, and “flicking” to scroll a list works only sometimes. The rest of the time, it registers a click on whatever item was beneath your finger at the start of the flick. It’s wildly frustrating.
The Nuvifone has Wi-Fi built in, so you can hop onto wireless Internet hot spots to check your e-mail or consult a Web page. But this Web browser gives “crude” a whole new meaning. There are + and – buttons to zoom into or out of a Web page, but of course you can’t control what it’s zooming into, meaning that after each zoom, you have to re-center the page, which means you have to flick to scroll, which means ... well, see above.
There’s a long list of other frustrations, all of which scream, “Garmin’s a GPS company, not a smartphone designer!” For example: Incredibly, there’s no way to advance from one e-mail message to the next; you have to return to the Inbox after reading each one. To save power, the screen turns off when you’re on a call — but since there’s no proximity sensor, it doesn’t turn back on when you pull the phone away from your face. So to hang up, you have to first wake the phone up. Grrr.
There’s no Home button, only an on-screen Back button. (You can get Home by holding down that Back button, but a proper button would have been simpler.) There’s a so-so camera, but it’s slow, and it doesn’t record video. And although it has a basic MP3 music player, this “smartphone” can’t play video, either.
You’re supposed to enter information (e-mail, for example) by tapping an on-screen keyboard. But considering the amount of force required by this screen, it’s tough slogging.
The speaker, and thus the driving directions, are feeble; you’ll want to use a Bluetooth headset or external speaker if you drive more than 40 miles per hour.
You keep running up against these weird design decisions. For example, when you get a text message, a notice pops on the screen, saying, “You have an unread text message from 1 (273) 513 3201.” Well, good heavens — if you’ve got room to say all that, why not just display the message itself?
Even in light of all of these annoyances, though, the Nuvifone could still be a contender. Plenty of smartphones have balky touch screens and the occasional brain-dead feature.
No, for most people, the real deal-killer boils down to one word:
Why?
Why does this phone exist? Who would buy a two-trick pony that costs $100 or $200 more than a proper smartphone like an iPhone, BlackBerry or Palm Pre?
Now, I’m not going to argue that an iPhone with a downloaded GPS app is just as good as a Garmin. Integration, polish and depth make a huge difference to a feature’s usefulness.
For example, most iPhone or BlackBerry GPS programs don’t come with windshield mounts; some GPS apps require insane monthly fees for the navigation service; incoming phone calls turn off the navigation; important features like spoken street names may be missing; the phone book and GPS aren’t integrated; and so on.
Tech Talk: More Columns by David Pogue
But even if an iPhone or Pre or BlackBerry isn’t as good at GPS, it trounces the Nuvifone in virtually every other category: e-mail, Web browsing, text-message handling, games, music, video, photos, camera, typing, and on and on and on. There’s no app store for the Nuvifone, for example, and precious few accessories. (One of them is the cigarette-lighter charger, for which AT&T has the gall to charge $25 extra. And without it, you’re lost; on battery power alone, my Nuvifone battery was dead after two hours of driving and 15 minutes of phone calls.)
So yes: if you live in your car in unfamiliar neighborhoods, and GPS is the main thing you want from a phone — well, the Nuvifone is the best GPS phone there is.
But you’ll pay dearly for the privilege. Not just because you’ll sacrifice so much awesomeness in every non-GPS corner of the phone, but also because the Nuvifone is darned expensive. Even those $6-a-month information services ought to be free; on regular smartphones, traffic, gas prices, weather and the like are free.
GPS+cellphone might well have become one of the classic gadget pairings — if it had had its debut in 1999. Today, in the face of competition from so many overachieving superphones, the Nuvifone winds up looking eccentrically out of touch.
David Pogue is a columnist for the New York Times and contributor to CNBC. He can be emailed at: pogue@nytimes.com.
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5c733c39976b88dc4a81bee327aa5f57 | https://www.cnbc.com/2009/10/08/bending-costs-or-logic-in-health-care.html | Bending Costs, or Logic, in Health Care? | Bending Costs, or Logic, in Health Care?
The Congressional Budget Office says Senator Max Baucus’ healthcare bill will lower the deficit. I’m doubtful, but let's give him the benefit of the doubt.
Here’s a crucial point—deficit neutral, even deficit reducing is NOT the same thing as bending the cost curve of growing health care costs. You can get to deficit neutral, even deficit reducing, by raising taxes. In fact, this bill raises the overall cost of healthcare spending over 10 years compared to his last proposal. Taxes go up dramatically on many industries and individuals. But that’s not my point.
There are true ways to bend the cost curve, and there are ways to pretend you are bending the cost curve.
Here’s an example that speaks to the true “spirit” of the phrase “bending the cost curve.”
Providing insurance to the un-insured lowers health care costs because those individuals will stop using the very-expensive emergency room for basic needs, and instead use general practitioners. They will get better preventive care, which means in the long run they will need less of more expensive care.
I’m not sure any of that is true, but at least it speaks to the true spirit of the meaning “bending the cost curve.”
This bill reduces costs from the top down. It simply cuts funding to Medicare and other government run insurance programs arbitrarily. That’s usually how it works when the government is involved in having to allocate scarce resources. That’s what happened in Maine and Massachusetts where the state government is involved in providing health care to everyone. Now in Maine there is a waitlist to get on the state health insurance program because they have arbitrarily cut the funding because the state can’t afford it. By insuring everyone, they didn’t bend the cost curve, so now they will just do it from the top down.
The true way to bend the cost curve is to make sure individuals have to bear some of the cost of their care so that they become much more careful users of it. Higher co-pays, higher premiums for people who engage in activities that will likely lead to higher costs such as smoking and over-eating. Those are ways to get individuals to take responsibility for their decisions, which end up costing the rest of us in costs.
More Caruso-Cabrera ... Why Chicken Feet Matter to Business
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e143eb7c8d7798e786c36039f8221bed | https://www.cnbc.com/2009/10/08/cnbc-exclusive-cnbc-interview-cnbcs-maria-bartiromo-speaks-with-klaus-kleinfeld-alcoa-ceo-president-director-today-wednesday-october-7th-on-cnbcs-closing-bell-with-maria-bartiromo.html | CNBC EXCLUSIVE: CNBC INTERVIEW: CNBC'S MARIA BARTIROMO SPEAKS WITH KLAUS KLEINFELD, ALCOA CEO, PRESIDENT, & DIRECTOR, TODAY, WEDNESDAY, OCTOBER 7TH ON CNBC'S "CLOSING BELL WITH MARIA BARTIROMO" | CNBC EXCLUSIVE: CNBC INTERVIEW: CNBC'S MARIA BARTIROMO SPEAKS WITH KLAUS KLEINFELD, ALCOA CEO, PRESIDENT, & DIRECTOR, TODAY, WEDNESDAY, OCTOBER 7TH ON CNBC'S "CLOSING BELL WITH MARIA BARTIROMO"
WHEN: TODAY, WEDNESDAY, OCTOBER 7TH
WHERE: CNBC'S "CLOSING BELL WITH MARIA BARTIROMO"
In a CNBC EXCLUSIVE interview, Maria Bartiromo speaks with Alcoa CEO, President, & Director Klaus Kleinfeld on CNBC's "Closing Bell with Maria Bartiromo."
All reference must be sourced to CNBC's "Closing Bell with Maria Bartiromo."
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MARIA BARTIROMO: WE'RE JOINED RIGHT NOW ON THE TELEPHONE BY KLAUS KLEINFELD, CEO OF ALCOA. HE JOINS ME IN AN EXCLUSIVE INTERVIEW AHEAD OF HIS CALL WITH ANALYSTS. THANKS FOR SPENDING TIME TODAY ON THE PROGRAM.
KLAUS KLEINFELD: HELLO, MARIA.
BARTIROMO: CAN YOU CHARACTERIZE THE QUARTER FOR US?
KLEINFELD: AS YOU SEE, I MEAN, IT'S BEEN A QUARTER WHERE A LOT OF THINGS HAVE HAPPENED. AND ALL THE PROGRAMS THAT WE HAVE HAVE WORKED OUT. LET ME SAY THREE THINGS. WE SEE, NUMBER ONE, ON THE OUTSIDE WE HAVE RECORD LOW INVENTORIES IN THE SUPPLY CHAIN OF THE. A SIMILAR PROGRAM IS WORKING. YOU SEE REVENUES FOR US HAVE BEEN GOING UP UP FROM Q2 TO Q3 BY 9%. THIS IS PRETTY MUCH ALL ACROSS THE BOARD IN ALL THE INDUSTRIES WE'RE TOUCHING, OTHER THAN AEROSPACE AND INDUSTRIAL GAS TURBINE. WE BELIEVE THAT THE ALUMINUM MARKET SECOND HALF OF THE YEAR IS GOING TO GROW BY 11% COMPARED TO THE FIRST HALF. THE SECOND THING IS, WE TURNED THE CRISIS INTO A REAL OPPORTUNITY. WE STRENGTHENED OUR COST STRUCTURE, STRENGTHENED THE BALANCE SHEET, REFOCUSED THE PORTFOLIO. 90% OF THE PORTFOLIO IS A NUMBER ONE OR NUMBER TWO POSITION AT THE BEGINNING OF THE CRISIS, WE SET REALLY AMBITIOUS CASH TARGETS. WE ARE EXCEEDING, OR REACHING THEM. PROCUREMENT $1.6 BILLION OF CASH WE'RE GETTING TODAY. OVERHEAD $400 MILLION.WORKING CAPITAL $800 MILLION. BUT ALL OF THAT IS MUCH NEEDED BECAUSE WE ALSO HAVE BEEN FACING STRONG HEADWINDS, COMING FROM CURRENCY BIG-TIME AND SLOWLY CREEPING IN FROM ENERGY. THE THIRD POINT, WE HAVE NOT COMPROMISED THE PRESENT FOR THE FUTURE. THIS QUARTER IS ALSO A QUARTER WHERE WE HAVE BEEN COMPLETING SUBSTANTIAL GROWTH PROJECTS. IN BRAZIL, IN CHINA, IN RUSSIA, THAT HAVE AN OUTSTANDING OPPORTUNITY TO CONTINUE ALSO TO BRING ALCOA ON A FURTHER --.
BARTIROMO: KLAUS, CAN YOU GIVE US A SENSE OF WHERE THE DEMAND IS COMING FROM RIGHT NOW? IS IT LARGELY CHINA, IS IT LARGELY BRAZIL, OR I GUESS THE REAL QUESTION THAT EVERYBODY WANTS TO KNOW IS, WHEN ARE WE ACTUALLY GOING TO SEE A TURN IN THE UNITED STATES? WHERE'S THE DEMAND COMING FROM? LOOK AROUND THE WORLD TELL ME THE MOST IMPORTANT MARKETS FOR YOU RIGHT NOW.
KLEINFELD: LOOK, I WANT TO LEAVE THE FORECAST ON THE MARKETS TO THE ECONOMISTS. WHAT WE ARE SEEING IS THIS GROWTH FROM SECOND QUARTER TO THIRD QUARTER OF 9% REVENUE GROWTH. THAT PRETTY MUCH COMES WHEN YOU LOOK AT THE END MARKETS, COMES FROM ALL ACROSS END MARKETS, FROM AUTOMOTIVE, FROM TRUCKS AND TRAILERS, FROM BUILDING AND CONSTRUCTION AS WELL AS FROM PACKAGING. THE ONLY TWO INDUSTRIES WE'RE TOUCHING WHERE IT DOESN'T COME FROM IS AEROSPACE AND INDUSTRIAL GAS SERVICE. THE SECOND THING, WHEN YOU LOOK AT IT FROM A REGIONAL PERSPECTIVE, CHINA IS BACKED VERY, VERY STRONG AND PULLING SOME OFF THE ASIAN MARKETS WITH THEM. ASIAN AND MIDDLE EAST, I WOULD SAY WITH THEM. IN THE U.S,, WE CLEARLY SEE A STABILIZATION IN THE U.S. AND WE ALSO BELIEVE WHEN WE LOOK AT THE ALUMINUM INDUSTRY, THAT WE'RE GOING TO SEE AN INCREASE OF ALUMINUM DEMAND BETWEEN THE FIRST HALF AND THE SECOND HALF. THAT'S DRIVEN BY A NUMBER OF FACTORS. ALWAYS KEEP IN MIND THE STOCKING OF THE SUPPLY CHAIN HAS GONE TO LEVELS WHICH WE HAVE NOT SEEN BEFORE. THEY ARE AT RECORD LOW LEVELS. AND ONCE THAT HAS -- IT HASN'T SET IN YET. ONCE THAT IS STARTING TO SET IN, WE'RE GOING TO SEE AN INCREASE OF SUBSTANTIAL INCREASES COMING THROUGH.
BARTIROMO: KLAUS, WHAT WOULD YOU SAY ABOUT THE FOURTH QUARTER? ANY THOUGHTS IN TERMS OF FORECAST, WHAT THE REST OF THE WORLD LOOKS LIKE IN THE NEXT THREE MONTHS?
KLEINFELD: WELL, THAT'S ALWAYS A VERY DIFFICULT ONE. AT THIS POINT IN TIME, MY IMPRESSION IS THAT WE'RE GOING TO SEE, ON THE CHINA SIDE, ALL INDICATIONS OF SHOWING THAT THIS RECOVERY IS THE STRONG AND STABLE RECOVERY. AND THE U.S. STABILIZING AND HOPEFULLY WE WILL CONTINUE TO SEE IT COMING BACK. FOR US, IT BASICALLY MEANS WE WILL CONTINUE OUR PATH. WE HAVE CASH SUSTAINABILITY TARGETS AS YOU CAN SEE IN THIS TARGET AND YOU'VE SEEN OVER THE COURSE OF THE YEAR. NOT ONLY ARE WE FULFILLING OUR PROMISES, BUT WE'VE PRETTY MUCH BEEN EXCEEDING THE TARGETS AT THIS POINT IN TIME. AND INVESTING IN THE GROWTH. WHEN WE LOOK AT ALUMINUM, WE BELIEVE IT'S A FUTURE GROWTH MARKET, AND AS MUCH AS I CAN'T PREDICT HOW MANY AUTOMOTIVES ARE GOING TO BE SOLD IN THE U.S. THE NEXT QUARTER, ONE THING I CAN PREDICT IS THE FUTURE AUTOMOBILE IS GOING TO HAVE MORE ALUMINUM IN IT. JUST TODAY, OUR TECH TEAM HAS BEEN SITTING DOWN AND TALKING ABOUT THE FUTURE CAR AND WHAT IT'S GOING TO BE LIKE. IT'S GOING TO BE LIGHT WEIGHT. THAT'S OBVIOUS, AND STRONG AND RECYCLABLE. ALL OF THEM ARE FUNDAMENTALS IN OUR INDUSTRY.
BARTIROMO: YES, GREAT POINT, KLAUS. I KNOW YOU STRENGTHENED THE BALANCE SHEET, IN TERMS OF THE CASH POSITION, MORE THAN $1 BILLION ON HAND IN TERMS OF CASH. WHAT ARE YOU LOOKING TO DO WITH THAT MONEY? IS IT DIVIDENDS TARGETED? IS IT BUYBACK OR ACQUISITIONS OR WHAT? TELL US EVERYTHING RIGHT NOW, KLAUS.
KLEINFELD: I TELL YOU WHAT, THIS IS PROBABLY THE BIGGEST COMPLIMENT THAT ALCOA CAN GET TODAY. THE VERY FACT THAT WE HAVE $1.1 BILLION CASH IN THERE, GIVES US A LOT OF OPPORTUNITIES. THE MOST IMPORTANT THING, AND WE'VE SEEN THE BIGGEST CRISIS IN OUR INDUSTRY WHICH HAS REALLY DRAINED US QUITE SUBSTANTIALLY, WE'RE GETTING THROUGH IT, TURNED THE CRISIS INTO OPPORTUNITIES. SO AT THIS POINT, IT'S NOT THE POINT IN TIME WE START THINKING ABOUT WHAT TO DO WITH IT. WE WILL CONTINUE TO FOLLOW UP ON THE CASH SUSTAINABILITY. WE'VE ALSO GOT TO REALLY LOOK CAREFULLY AT THE HEADWINDS, WITH THE DOLLAR WEAKENING. AGAINST OTHER CURRENCIES THAT ARE IMPORTANT TO US, LIKE THE BRAZIL REAL AND AUSTRALIAN DOLLAR.THAT'S IMPORTANT HEADWINDS, WHERE WE ACTUALLY NEED ALL THE CASH PERFORMANCE AT THIS POINT IN TIME.
BARTIROMO: ALL RIGHT. WE'LL LEAVE IT THERE. KLAUS, I KNOW YOU HAVE TO GO, GET ON THAT CALL WITH WALL STREET RIGHT NOW. WE APPRECIATE YOU SPENDING THE TIME AND TALKING TO US FIRST. THANKS, KLAUS.
KLEINFELD: MY PLEASURE.
BARTIROMO: KLAUS KLEINFELD, CEO AND PRESIDENT OF ALCOA.About CNBC:CNBC is the recognized world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide, including more than 95 million households in the United States and Canada. The network's Business Day programming (weekdays from 5:00 a.m.-7:00 p.m. ET) is produced at CNBC's headquarters in Englewood Cliffs, N.J., and also includes reports from CNBC news bureaus worldwide. Additionally, CNBC viewers can manage their individual investment portfolios and gain additional in-depth information from on-air reports by accessing http://www.cnbc.com.Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://nbcumv.com/cnbc/.
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bf8ce920292fb8b51ee963000b594ced | https://www.cnbc.com/2009/10/08/cnbccom-launches-investors-guide-to-real-estate-today-thursday-october-8th.html | CNBC.COM LAUNCHES INVESTOR'S GUIDE TO REAL ESTATE TODAY, THURSDAY, OCTOBER 8TH | CNBC.COM LAUNCHES INVESTOR'S GUIDE TO REAL ESTATE TODAY, THURSDAY, OCTOBER 8TH
Extensive Real Estate Report Offers Tips for Buying & Selling in Today's Housing Market and Analysis of the Housing Climate in Your Area
ENGLEWOOD CLIFFS, N.J., October 8, 2009 Amidst the current debate over whether we have hit a false bottom or whether we have hit the beginning of a full-fledged recovery, today, Thursday, October 8th CNBC.com shows you how to capitalize on the current housing market....
CNBC.com's "Investor's Guide To Real Estate," which launches today, Thursday, October 8th, offers users a comprehensive break down of today's housing market from buying and selling a home to foreclosures to investing in real estate without purchasing property. The guide also includes industry updates and special reports from CNBC's real estate correspondent Diana Olickand author of CNBC.com's "Realty Check" blog. Plus, CNBC.com features regional snapshots and analysis of the best and worst valued cities across the country.
"CNBC.com's "Investor's Guide To Real Estate" is a vast resource for users, providing them with an array of options on how to take advantage of the current real estate market," said Allen Wastler, Managing Editor, CNBC.com. "For those looking to buy or sell their homes right now this guide will serve as a pertinent source of information."
Additional features include:
Million Dollar Homes, Now and Then -- How much can $1 million buy you in today's market
Seller's Guide: How to Move a House in a Tough Market -- Now, more than ever, getting a signed contract in hand is all about price and quality
How to List and Sell Your Home Without a Realtor -- By cutting out the middle man and selling your home yourself you could walk away with tens of thousands more in your pocket
Rent Now, Buy Later Option May Be Ticket to Home Ownership -- Homeowners who are having a hard time selling their place are driving the trend, in addition to potential buyers that are finding it harder to get a loan because of tighter lending practices
America On Sale Now -- Looking at specific houses in a dozen markets that have undergone a 20% price cut in the past year
For more information log on to: http://realestateguide.cnbc.comAbout CNBC:CNBC is the recognized world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide, including more than 95 million households in the United States and Canada. The network's Business Day programming (weekdays from 5:00 a.m.-7:00 p.m. ET) is produced at CNBC's headquarters in Englewood Cliffs, N.J., and also includes reports from CNBC news bureaus worldwide. Additionally, CNBC viewers can manage their individual investment portfolios and gain additional in-depth information from on-air reports by accessing http://www.cnbc.com.Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://nbcumv.com/cnbc/.
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89ee74b4f4063216e4bd428c4edc2d1d | https://www.cnbc.com/2009/10/08/cnbcs-minor-league-team-name-wildcard-winner.html | CNBC’s Minor League Team Name Wildcard Winner | CNBC’s Minor League Team Name Wildcard Winner
Name That TeamCNBC.com
Yesterday we told you that the new minor league baseball team in Richmond, Va., had graciously agreed to allow us to come up with a name for their team.
The team had already asked fans their picks though the local paper, the Richmond Times-Dispatch, and came up with a top five list.
Those names included the Richmond Rockhoppers, Richmond Rhinos, Richmond Flying Squirrels, Richmond Hambones and Richmond Flatheads.
Our name would then be added to the list of the possible names and included in a vote in Richmond that would start on Friday and conclude on Sunday. The new team name would then be announced on Thursday, Oct. 15.
Thanks to the press we received – John O’Connor (Richmond Times-Dispatch) and Andy Baggarly (San Jose Mercury-News) - we received more than 9,000 write-in votes.
The most common names suggested included references to American history and the local James River. Hundreds of people wrote in for the River Rapids or River Cats. Others picked names like the Revolution, Generals and Cannonballs.
There were names referencing the area’s tobacco heritage – the Lucky Strikes and the Tobacco Barons - and a bunch of submissions for the Virginia Lovers (in a tribute to the state motto). Richmond’s favorite son Arthur Ashe even got a name (Ashe Kickers?) even though it’s the wrong sport.
When we considered what name we would submit, we had to take into account the local community, the mascot possibilities and political correctness. I mean, did Frank Huguenard really think we could pick the Richmond Emphysemiacs?
With all that in mind, I came up with my top 10: Hellbenders (lizards), Grits, Stink Pots (turtles), Battle Ants, Cicadas, River Raptors, Hush Puppies, Tree Frogs, Blood Suckers (mosquitoes) and Dirt Balls.
In the end, we decided to go with Hush Puppies and here's why:
It has that deep-rooted Southern heritageIt's different from what has been out there (I was concerned about the Ogden Raptors and the Everett Aquasox)It's kid friendlyIt has great mascot possibilities It has an automatic concession tie-in
Out of all the submissions we received, only one person suggested the Richmond Hush Puppies. That man is Jeff Dunn, who sent us that pick at 8:37 p.m. last night, 23 minutes before the deadline. Jeff will receive a cap, a team jacket, a team picture and a short story in the inaugural game program should the name be chosen on Oct. 15.
Thank you to everyone who participated in this. It's amazing the amount of passion that is associated with this process. We hope the people of Richmond and around the country embrace this name and it ultimately prevails.
Questions? Comments? SportsBiz@cnbc.com
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09ff94b5c6ec36688bb88eaa3601f79b | https://www.cnbc.com/2009/10/08/cramer-expect-a-big-holiday-shopping-season.html | “The consumer is alive and pretty well,” Cramer announced Thursday, no matter what the pundits say.
The better-than-expected retails sales numbers that surprised Wall Street today, and helped push the Dow up 61 points, were met with jeers, as analysts spoke of a “mixed picture,” a “subpar performance” and a tough business environment.
That’s funny, though, because all 13 of the key retailers that Cramer follows reported big increases. And the results were the same across the board: at high-end Nordstrom , low-end Ross Stores and middle-of-the road Macy’s and Kohl’s .
Look at how the analysts reacted to Target : The company beat expectations and upped its earnings guidance, but management did say that it remained cautious. The bears jumped all over this, completely ignoring TGT’s surge to a 52-week high thanks specifically to its sales numbers.
VIDEO0:0000:00Misdirected Market?
All of these retailers said that business is better than expectations, and those expectations were created a month ago during a time of rising unemployment. How could someone call that a mixed picture?
Cramer chalked it up to the human condition: People just don’t like to admit when they’re wrong – analysts included.
But the facts can’t be denied. The consumer, while not at full strength, certainly is getting stronger. Whether it’s because of government stimulus, a rising stock market, housing stabilization or a renewed confidence that their jobs are safe, people are once again opening their wallets. That’s why Amazon.com is so close to its all-time high, and a good portion of retail stocks hit their 52-week highs today. Cramer even went so far as to predict that we’d see “the most profitable Christmas selling season in years.”
Here’s the takeaway for viewers:
“If you can’t admit when you’re wrong, then you can’t win in this game,” he said. “Maybe the talking heads can afford to fudge the facts over and over again, but the market’s less forgiving.”
Call Cramer: 1-800-743-CNBC
Questions for Cramer?
Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com
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2416993e59207863c4c1cc51de0e1092 | https://www.cnbc.com/2009/10/08/dow-10000-experts-say-not-for-long.html | Dow 10,000? Experts Say Not for Long | Dow 10,000? Experts Say Not for Long
The Dow may very well pass the 10,000 mark, but any upward movement is likely to be short-lived, said Michael Church, president of Addison Capital, and Dean Barber, president and founder of Barber Financial Group.
VIDEO0:0000:00CNBC Market Edge
"Ten thousand's probably a good point to start getting a little more cautious," Church said.
"We've been quite bullish for some time, particularly in energy and materials space, but I would say that we're growing cautious as the market rises, simply as a function of growing optimism."
Trouble also lurks in the upcoming holiday season, which could be another cause for a retreat, Barber said.
"For the analysts to expect that we're going to spend as much money or more money this year in the holiday season when we've got 50 percent more people unemployed, I don't see that happening," he said.
Counterpoint:
2 Experts Position Themselves for Dow 10,000
Both said they expect the market to experience larger pullbacks than it has shown so far, and Barber said there is a possibility it will retest March lows.
Still, Church said there are opportunities to invest.
Church Likes:
Waste Management
BHP Billiton
Statoil Hydro
Barber Likes:
Oil & Gas (Short-term)
Health Care Real Estate (Long-term)
______________________________CNBC Data Pages:
Dow 30 Stocks—In Real Time Oil, Gold, Natural Gas Prices Now Where's the US Dollar Today?
______________________________CNBC Slideshows:
Hot Holiday Toys From Toys 'R UsTwenty Stocks Ready to Pop
______________________________
______________________________Retailers That Topped Sales Expectations in September
Target
Walgreen
TJX
Macy's
______________________________ Disclosures:
Disclosure information was not available for Church, Barber or their companies.
Disclaimer
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18119c8acb6e507055830b96267740b1 | https://www.cnbc.com/2009/10/08/earnings-roundup-oct-9.html | Earnings Roundup: Oct. 9 | Earnings Roundup: Oct. 9
What follows is a roundup of corporate earnings reports for Friday, Oct. 9.
BEFORE THE BELL
Infosys
The information technology company posted earnings of 56 cents per share for its second quarter. The company also posted revenue of $1.21 billion, beating analysts expectations.
Q3 Earnings Preview: Top Expectations for Growth
*Earnings data based off of Thomson Reuters
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62e6dfa73c31a0201bdbfc4dc7e437cb | https://www.cnbc.com/2009/10/08/editors-note-real-estate-at-a-crossroads.html | Editor's Note: Real Estate At A Crossroads | Editor's Note: Real Estate At A Crossroads
To say the residential real estate market is at a
crossroads is the understatement of the current economic
recession. After several months of gains in new and existing
home sales, as well as price stabilization in some of the
hardest hit local markets, the question going forward is: Can
this housing “recovery” be sustained?
AP
Taking into account the fact that most of the real estate
data we report is seasonally adjusted, fall is still
considered the slow season in real estate. Families are tied
to the school calendar and younger, single business
executives may be waiting for year-end bonuses.
Realty Check
Blog
This fall, the residential market is facing additional
headwinds. The expiration of the $8000 first-time home buyer
tax credit at the end of November, which has added an
estimated 200,000 buyers to the market, will undoubtedly take
its toll. Realtor and home builder lobbyists are hitting
Capitol Hill hard, and while several bills to extend and even
expand the credit are on the table, budget-wary
representatives are questioning continued housing
stimulus.
Rising foreclosures are also riling the recovery, with
various moratoria expiring and banks and servicers pushing
properties through the system more quickly. Inventories of
unsold homes, new and existing, have been falling over the
summer months, but a new wave of foreclosures could reverse
what was thought to be a promising trend.
Make no mistake, the government’s Home Affordable
Modification Program is putting a dent in potential
foreclosures, with over 500,000 trial modifications underway
and more than 45 servicers participating. But with rising
unemployment, fewer borrowers are qualifying for the
much-needed modifications. The Treasury’s Assistant
Secretary for Financial Institutions, Michael Barr, admits,
“that challenges remain in implementing and scaling up
the program.”
Finally, the mortgage market is still standing at odds
with housing’s recovery. Much-needed mortgage reform is
protecting housing’s future, but it’s a
double-edged sword.
New rules for appraisals are slowing the mortgage process,
and higher standards throughout the industry, and even the
Federal Housing Administration is pushing some potential
borrowers out of the market.
“On the whole, the new borrowers are at risk of not
being able to be served, as FHA and the private mortgage
insurance industry come under stress,” notes industry
analyst Howard Glaser.
It’s a buyer's market, for those with good credit and
substantial money to put down. Consumer confidence is gaining
slowly, and investors are definitely draining excess
inventory from the very low end of the market.
A real, sustained housing recovery will be slow to build, and
unemployment is arguably one of its greatest impediments, but
there are unprecedented opportunities in today’s real
estate landscape; all it takes are the right tools,
information and expertise to find them.
Here's what we have in our guide to help you through that
process.
Buyers
And Sellers
How
To Move Your House In A Tough Market Seven
Tips For Homebuyers Tips
For Sellers: Get Real, Get Ahead
Loan Shopping? Think Locally Foreclosures: For The Brave
And Handy For Sale By Owner: How
It Works Rent To Own: Going Half
Way Markets And AnalysisInterest Rates: As Good As
It Gets Equities: Capitalizing On
A Recovery National Scene:
Bargains And Bubbles California: From
The Bottom Up
Florida: No Fire Sale But
Affordable
Again Mid-Atlantic:
D.C.'s Hot,
Everything
Else Is
Not The
Midwest:
Less
Gain,
Less
Pain New
England:
Ahead
Of
The
Curve
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97890d5a6bb061b7a47ecca979c44f8e | https://www.cnbc.com/2009/10/08/fall-real-estate-guide-bargains-bubbles-and-stable-markets.html | Fall Real Estate Guide: Bargains, Bubbles And Stable Markets | Fall Real Estate Guide: Bargains, Bubbles And Stable Markets
Dallas, TexasDallas, Texas
Take a quick look at America’s hardest-hit housing markets, and you might think you’re looking at some once-in-a-lifetime bargains. Miami down by almost half from its peak? Las Vegas off 55 percent and Phoenix selling at a similar discount? Get your checkbook, you’ve got a McMansion to buy.
But hold off a minute, says Ingo Winzer of real-estate consulting firm Local Market Monitor, which tracks and forecasts 330 metro areas around the country.Just because a local housing market has sunk like a stone, doesn’t mean it can’t drop some more. And that’s exactly what many cities around the country are facing right now.
“Real estate cycles last for many years,” says Winzer. “Even though prices have been dropping for a couple of years in some markets, they could keep dropping for several years more.”
The culprit: A horrendous employment situation, which has already seen almost seven million jobs lost since the end of 2007. Even if the recession has technically bottomed out, people are still being laid off, and that will continue to be a drag on the housing market. Couple that with skittish lenders and the sheer number of distressed mortgages, and you have a toxic mix that still hasn’t been resolved.
“We’re definitely close to the bottom,” says Celia Chen, senior director of housing economics at Moody’s Economy.com, who points out that the Case-Shiller 20-city house-price index has finally been ticking up. “But we expect prices to start descending again by the end of this year. With so many foreclosures still in the pipeline, we don’t expect a bottom until the middle of next year.”
But not all is lost. All real estate is local, after all, and your hometown has its own unique prognosis. To make his forecasts at Local Market Monitor, Winzer compares income levels to housing prices, to determine which markets around the country are overvalued or undervalued. He then pairs that with local jobs outlook, to predict what’s in store for each community. His take on the best (and worst) housing bets for the next year:
Best Expected Performance:
In this group are many locales that never experienced the housing boom in the first place. Since they never climbed to unsustainable heights, they didn’t have a price cliff to fall off. Among this group are southern spots like Baton Rouge, La.; Columbia, S.C.; and Little Rock, Ark.
VIDEO0:0000:00Loan Modifications & Beyond
Long-suffering upstate New York cities like Syracuse and Buffalo also make the list, as does Pittsburgh, none of which saw the huge price runup of the sunbelt. Finally, Texas takes a total of four spots on the list, with Dallas, Houston, Fort Worth and San Antonio. Because of the oil-patch bust years ago, they’ve already worked through an extended era of weak prices.With all of these communities, don’t expect huge price jumps in the near term, but only appreciation of up to 5 percent a year. After all, in this brutal economy, even flat home values are considered outstanding performance.
Stable Performance:In a whipsawed market, most homeowners would love a little stability right now. That’s what buyers can expect in Oklahoma City, expected to fall only 1% in the next 12 months; Denver, down just 2%; and Nashville and Raleigh, both expected to sag a mere 3%. Also seeing only minor, if any, declines will be St. Louis, Mo.; Louisville, Ky.; and Omaha, Neb.
Home prices in those area are close to what Winzer calls their ‘equilibrium,’ with housing prices at reasonable levels that can be sustained by local incomes. While these regions might see very slight declines over the next 12 months, thanks to macro issues like the sluggish economy, their long-term outlook appears healthy.
Worst Expected Performance:
Miami Skyline
Here’s where you’ll find many of the faded stars of the housing boom, which could continue to see double-digit declines over the next year.
Miami prices could get chopped back another 16 percent, Las Vegas by the same amount, and Phoenix by even more, at 17 percent.
Embattled Florida figures most prominently on the list, with Sarasota, Orlando, West Palm Beach and Pompano Beach also making the top ten. So does California, including foreclosure-riddled Stockton, Bakersfield and Fresno.
Even Portland, Ore. in the Northwest isn’t immune, slated for an 11 percent decline.
In many cases the market may be overshooting to the downside; it may not be fair to existing homeowners, but such is the powerful momentum of housing cycles.
“Some of these markets have fallen so that they’re not overpriced anymore, but the depth of the local economic situation is so bad that they’ll continue to fall below their equilibrium price,” says Winzer. “So new buyers, wherever they live, should want to live in their home for a long time, not take out too big of a mortgage—and not expect prices to go up anytime soon.”
Special Report: Top States For Business
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752c28b811ade01861571b2a46763fc3 | https://www.cnbc.com/2009/10/08/farr-remain-vigilantstick-with-quality.html | Farr: Remain Vigilant-Stick With Quality | Farr: Remain Vigilant-Stick With Quality
Since our last meaningful market correction (7% decline from mid-June to July 10, 2009), the S&P 500 has risen over 21% in less than 3 months. The best-performing industry segment over this time frame has been the Financials, which are up close to 37%. Since the market low on March 9, 2009, the Financial sector has risen close to 144% and now represents 15.4% of the S&P 500 compared to 8.9% on March 9. We have been confounded by the meteoric rise in a sector so dependent on the health of the consumer and housing market. While things have obviously improved since the dreary days of March, we see a housing market and consumer that continue to be highly dependent on a series of government initiatives designed to plug the holes in the dike. What will the picture look like when the government takes off the training wheels?
Obama, Lawmakers, Weigh New Steps to Spur Economy
Yesterday we received more data to suggest the consumer remains in hunker-down mode. Consumer credit declined by $12 billion in August to mark the seventh consecutive month of contraction. The Wall Street Journal pointed out in an article yesterday that "credit hasn't contracted for eight months in a row since the Fed started tracking it in 1943." Since the peak in July, 2008, consumer credit has contracted by about $119 billion, or 4.6%. This magnitude of contraction also has never been seen in the history of the United States.
At the same time, we are receiving more data to suggest the housing market is by no means out of the woods. While housing sales have rebounded somewhat on a surge in foreclosure-related activity, tax credits and other government incentives, mortgage delinquencies and foreclosures continue to march steadily higher. We continue to find it hard to believe that the recent stabilization in home prices is sustainable in the face of rising unemployment, an increasing percentage of underwater mortgages, and a flood of Option-ARM resets in 2010-2011.
We see it as a foregone conclusion that the government will extend or possibly increase the $8,000 tax credit for first-time buyers, but how long can the Fed keep mortgage rates artificially low as markets across the world surge in a speculative fervor?
Has the global economy ever been so dependent on any one variable (US mortgage rates)?
Mortgage Rates: As Good As It Gets
Our consistent message since the market lows in March has been that valuations are attractive for high-quality, defensive stocks. However, this rally has been, and continues to be, one led by speculators betting on 1) a quick rebound in the housing market, 2) the worst is over for the credit cycle, 3) a return to the business-as-usual consumer spending spree that got us into this mess. We disagree. We believe we are experiencing a fundamental shift in both how Americans spend and save for retirement, and how banks underwrite loans. The combined effects of the banking crisis and the loss of over $11 trillion in household net wealth have led to a sharp contraction in both the supply and demand for credit. Let us be clear: it is a long-term positive that the consumer is beginning to spend within his means and save more. However, the retrenchment we are seeing also means that economic recovery will be slow and choppy for an extended period. And the collapse in lending standards that directly led to a bubble in housing prices has yet to run its course.
We continue to find value in high-quality, defensive names. Below is a representative list of stocks that on average are cheaper and carry higher dividend yields than the overall market. In addition, these companies all have fortress balance sheets to defend against the unknown. Investors in this type of undervalued quality may stand to continue benefiting in a market looking very frothy at the moment.
*These are not recommendations to buy or sell. We may be buying and or selling in portfolios under our discretionary management. If you have questions about the appropriateness of these issues for your investment strategy, please call us.
Michael K. Farr is President and majority owner of investment management firm Farr, Miller & Washington, LLC in Washington, D.C. Mr. Farr is a Contributor for CNBC television, and he is quoted regularly in the Wall Street Journal, Businessweek, USA Today, and many other publications. He has been in the investment business for over twenty years.
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d2aa44f510568d7e8e2e95f61ab5d3eb | https://www.cnbc.com/2009/10/08/govt-loan-mods-beat-the-deadline.html | Govt. Loan Mods Beat the Deadline | Govt. Loan Mods Beat the Deadline
CNBC.com
Today the Treasury Department releases its monthly status report on its launched last Spring.
This is the one that gives the number of trial mods offered and then lists all the servicers and shows what they are and, more importantly, are not doing for troubled borrowers. The report goes through Sept. 30th, but the Administration didn't want to let an important milestone go by, so they had a short conference call this morning with reporters.
Treasury Secretary Timothy Geithner began: "We are announcing today that half a million families are now participating in loan modifications that are substantially reducing their mortgage costs and therefore increasing the amount of money they get to keep." That was the figure officials targeted several months ago to get to by the end of October, and here we are only at October 8th, so a little back-slapping going on there. "It means that we're now reaching almost half or roughly 40% of the people currently eligible for this program," Geithner added.
CNBC Special Report-Investors Real Estate Guide
What's more important than that milestone, Secretary Geithner aptly points out, is that "the number of people participating in trial modifications is now, for the first time, increasing at a rate faster than new families are becoming eligible for this program, that is, facing the risk of foreclosure."
The statement left me wondering how long that would actually hold true? First of all, we have to be clear that he said those "currently eligible for the program." Now as one reporter on the call pointed out smartly, if the Treasury Secretary says half a million are taking part, and that's roughly 40 percent of the people eligible, that would mean about 1.2 million are eligible, and at the start of the program, the administration said 3-4 million would be eligible.
So a "Senior Administration Official" was left to do the math.
First of all, that 3-4 million is extrapolated out through next year and the year after, because as we all know the foreclosure crisis isn't getting much better. But then you have to remove all the folks that are not eligible, which is a long list: First there are those with FHA or VA loans, who are being modified separately, then those above the jumbo-conforming loan limit, then those non-owner-occupied types (investors), then those who ditched the home and are long gone, and then those who already have an "affordable" loan but just choose not to pay it. Take those out and you get to 1.2 million.
But back to my initial premise, which is can the mods stay ahead of the number of eligible borrowers? Even Secretary Geithner added, after his headline, "We're still living with some risk that housing is going to be a source of weakness for the broader economy and that we still face unacceptably large number of families across the country still at risk of losing a home they can afford to stay in."
We know that banks have been holding onto a large number of delinquent loans, waiting to get them into the system to see if they are eligible. We also know that unemployment continues to rise, which will put more borrowers into the delinquent pool. We also know that the current "stabilization" in home prices (and I call it that because I don't see home price gains, I just see their year over year drops improving) may in fact be temporary due to the expiration of the first time home buyer tax credit and increased inventories of foreclosed properties finally getting to the market.
If home prices do take a double dip, that could put more borrowers at risk, especially those who have Pay Option Arms, those lovely loans where you get to choose what you feel like paying each month, until the grim reaper comes a calling, which he's doing now.
Slideshow: 10 Most Affordable Metro Areas
Don't get me wrong, I'm not throwing icy cold reporter water all over the modification program's accomplishments. They've been pretty up front about improving things that aren't working, streamlining the process more every month, and, my fave, publishing the servicer numbers every month just to embarrass the big banks (it's kind of 4th grade, but it probably works).
Oh, and I asked about that pesky first time home buyer tax credit expiration. Unfortunately Geithner and Donovan weren't taking questions, so the "Senior Administration Official" was stuck with me. "There are a lot of ideas out there for what to do with the extension of the home buyer credit, and other credits, and those issues are not yet finalized from our perspective internally." In other words, he punted it.
Questions? Comments? RealtyCheck@cnbc.com
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3caf1727602f7057837c5a70168cdb23 | https://www.cnbc.com/2009/10/08/halftime-report-trading-homebuilders-materials-other-market-movers.html | Stocks rallied on Thursday after a solid profit report from Alcoa combined with a weaker dollar sent commodities and materials shares soaring.
Also mid-day comments by House Speaker Nancy Pelosi sent homebuilders skyward but dragged down insurance stocks.
VIDEO0:0000:00Fast Money Halftime Report
Where is the smart money going to work?Options investors have been snapping up commodities names as well as gold stocks, explains OptionMonster Jon Najarian. I don’t see any let up in out of the money call buying in commodity based stocks.
There’s bullish momentum in this market, adds Fast Money trader Guy Adami. No doubt about it. You can be bearish for all the right reasons and the market will still go higher. But... at some point... someone will wake up and realize the data isn’t as good as it seems.
---------PELOSI BOOSTS HOMEBUILDERS
The Homebuildres ETF shot higher on Thursday after House Speaker Nancy Pelosi said Congress will consider extending the tax credit for first-time home buyers, currently set to expire Dec. 1.
What’s the trade?
It seems like Washington is showing us their hand, speculates Jon Najarian. And whenever you have somebody showing you their hand you have to bet on that side. I expect to see a great deal of volatility in the space through November 30th. And as that plays out we’ll likely see opportunities to scalp stocks such as Hovnanian and Toll Brothers and all the rest.
---------PELOSI MOVES HEALTH INSURERS
Health insurance companies such as Aetna and UnitedHealth are also making moves on Wednesday – sharp moves lower -- also due to comments made by Nancy Pelosi. The Speaker said Democrats are looking at the possibility of a windfall profits tax on insurance companies as part of healthcare reform.What’s the trade?
The insurers are the proverbial rented mule, says JJ Kinahan of TD Ameritrade, everybody is just kicking them right now. I wouldn’t play the stock. I’d either buy puts or sell upside call spreads.
In the space I like United Health, says Guy Adami. I'm a buyer now, when it looks the worst, because I think the rhetoric will pass.
---------OIL ABOVE $71
Oil rose above $71 a barrel on Thursday largely buoyed by the weaker U.S. dollar.
What’s the trade?
It seems that every time oil drops below $70 it immediately rallies, muses JJ Kinahan. The next key level is $73. Personally, I wouldn’t stand in front of this train.
---------GOLD SETS ANOTHER RECORD
Gold set another record on Thursday with the spot price topping $1,050 per ounce. The precious metal has gained about 20 percent this year, driven by dollar weakness and inflation worries after central banks across the globe poured money into the financial system to help stimulate the economy.
What’s the trade?
Patterns in the charts suggest resistance could come around $1080, explains Katie Stockton of MKM. I think we could see that before October 23rd. However if it breaks through it could go to $1185.
If you’re looking to play metals, I’d do it with FreeportMcMoran, counsels Guy Adami. The stock looks like it’s going to break above $75.
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RETAILERS ROCKING TODAY
The XRT climbed on Thursday after retailers posted their first monthly sales increase in more than a year, which suggested to investors that recession-battered consumers might be regaining their ability to spend again.
Based on 30 retailers, sales at stores open at least a year climbed 0.6 percent, compared with expectations for a 1.1 percent decline, according to Thomson Reuters data. Nearly 80 percent of the companies beat expectations.
Among the day’s standouts; Macy's, Abercrombie & Fitch and Kohl's all surprised Wall Street on Thursday with better-than-expected September sales.
What’s the trade?I’d be a seller of strength in the retail sector, says Katie Stockton. It seems to me that XRT is coming into a zone of resistance in the mid-30’s. In the space I like Target , adds Jon Najarian. I’d get long.
---------NETAPP PUSHES TECH HIGHER
Shares of NTAP surged on Thursday after the company issued upbeat earnings and revenue forecasts for its second and third fiscal quarters.
The guidance follows comments made by chief executive Tom Georgens in a Barron’s interview in which he said that selling the data storage company might make sense at some point in the future.
What’s the trade?I think this space is very attractive, says Pete Najarian. Along with NTAP I also have Seagate and Western Digital on my radar.
---------
CALL THE CLOSE
Guy Adami: Ride the wave and get out of the way.
Jon Najarian: The momentum is with buyers.
JJ Kinahan: I’m a buyer.
Katie Stockton: I’m a seller into the bell.
______________________________________________________Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send those e-mails to .
Trader disclosure: On October 8, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Owns (UNH) Calls; Finerman's Firm Owns (MSFT), (TGT); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm And Finerman Own (WMT); Finerman's Firm Is Short (USO), (IJR), (MDY), (SPY), (IWM), (UNG); Finerman's Firm Owns (BAC), (BAC) Call Spread, (BAC) Preferred; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm Owns (AET) Calls; Finerman's Firm Owns (WLP) Calls; Finerman's Firm Owns (RIG), Is Short (RIG) Calls; Finerman Owns (RIG); Pete Najarian Owns (BRCD) Calls; Pete Najarian Owns (C) Calls; Pete Najarian Owns (INTC), Is Short (INTC) Calls; Pete Najarian Owns (MYL) Calls; Pete Najarian Owns (STX) Calls; Pete Najarian Owns (WFC) Puts; Pete Najarian Owns (YHOO) Call Spread; Grasso Owns (AAPL), (ABK), (ASTM), (BAC), (C), (COST), (PRST), (V), (WMT), (FAZ)For Steve GrassoStuart Frankel Corp. & Partners Own (CMCSK)Stuart Frankel Corp. & Partners Own (CUBA)Stuart Frankel Corp. & Partners Own (GERN)Stuart Frankel Corp. & Partners Own (HSPO)Stuart Frankel Corp. & Partners Own (LMT)Stuart Frankel Corp. & Partners Own (MSFT)Stuart Frankel Corp. & Partners Own (NWS.A)Stuart Frankel Corp. & Partners Own (NXST)Stuart Frankel Corp. & Partners Own (NYX)Stuart Frankel Corp. & Partners Own (PDE)Stuart Frankel Corp. & Partners Own (PRST)Stuart Frankel Corp. & Partners Own (RDC)Stuart Frankel Corp. & Partners Own (ROK)Stuart Frankel Corp. & Partners Own (TBT)Stuart Frankel Corp. & Partners Own (TLM)Stuart Frankel Corp. & Partners Own (XOM)Stuart Frankel Corp. & Partners Own (XRX)Stuart Frankel Corp. & Partners Own (SDS)Stuart Frankel Corp. & Partners Are Short (QQQQ)Stuart Frankel Corp. & Partners Are Short (CL)
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f9f3ab1512aedf8184cd6a696e6ead6f | https://www.cnbc.com/2009/10/08/ims-health-writes-a-new-script.html | IMS Health Writes A New Script | IMS Health Writes A New Script
With $137 billion worth of brand name drugs going generic over the next several years, the recession and the looming threat of healthcare reform a lot of people have been running scared about what it all means for pharma. So, surprise, surprise! This morning IMS Health, which closely monitors the industry, came out with its annual forecastand it now says the American drug market is going to grow this year instead of shrink. And not at a bad clip either. RX also raised its U.S. growth rate for next year. As I write this, all of the big pharma stocks are trading higher.
Positive Cost Report Boosts Health Plan
But shares of McKesson Corporation , which have been on an absolute tear over the last several months, are hitting another new intra-day high today. Lazard Capital Markets' analyst Tom Gallucci raised his price target on the drug distribution company's stock by 10 bucks to $68 specifically because of the IMS report. "Stronger overall market growth is positive and offers a more robust macro backdrop for key services companies in the drug channel," Gallucci wrote. He also bumped up his target by $3 on competitor AmerisourceBergen .
To be sure, the IMS forecast isn't all rosy. "Market growth is expected to remain at historically low levels....The economic climate will continue to be a dampening influence in most mature markets, particularly in those countries with rising budget deficits and publicly funded healthcare systems," the report says. So, where to look for strong growth? China. IMS predicts, "China's pharmaceutical market is expected to continue to grow at a 20+ percent pace annually, and contribute 21 percent of of overall global growth through 2013." Wow. More than one-fifth of the drug industry's growth over the next several years will come from one ginormous country with a burgeoning middle class that presumably will be buying more pills.
The major pharmaceutical companies these days love to talk about how they're busy increasing their footprint in China. I'd bet each one would tell you they've got the biggest head start or the best master plan to capitalize on that market. Zhu ni hao yun. (Thanks Melissa Lee.)
Questions? Comments? Pharma@cnbc.com and follow me on Twitter at mhuckman
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bcd0efa3b559cc24a1c9faaf53ed2b63 | https://www.cnbc.com/2009/10/08/in-merrills-failed-plan-lessons-for-pay-czar.html | In Merrill’s Failed Plan, Lessons for Pay Czar | In Merrill’s Failed Plan, Lessons for Pay Czar
It sounds like something Washington’s pay czar might propose to rein in runaway bonuses on Wall Street.
Kenneth R. Feinberg, the Treasury Department's special appointee for executive compensation.AP
Tie executives’ compensation to their company’s stock price. Withhold big paydays for years. Claw back bonuses if things go wrong. And force risk-loving traders to gamble with their own money, not just their company’s.
In fact, those strictures were part of a compensation plan that Merrill Lynch adopted voluntarily in 2006 — two years before the company collapsed into the arms of Bank of America .
But the Merrill program, which was supposed to align its top employees’ pay with the company’s long-term performance, did not keep workers from taking risks that nearly sank the brokerage giant. And some of its senior executives still stand to collect millions of dollars in stock under the plan.
As the Obama administration’s pay czar, Kenneth R. Feinberg, contemplates curbing compensation for the top 100 executives at each of the seven companies that received big bailouts — including Bank of America — the Merrill experience raises some sobering questions.
Can Washington really control outsize pay on Wall Street, which many critics say fueled this crisis? And can Mr. Feinberg and federal regulators ensure that their plans will work?
Most of the financial industry, after all, is out of Mr. Feinberg’s reach. And after the bailouts, many banks are moving toward paying employees more in the form of stock, rather than in cash, and spreading out workers’ payouts, much as Merrill did a few years ago.
At Merrill Lynch — whose 2008 bonuses have come under sharp scrutiny in Congress — some employees stand to profit from the 2006 incentive plan, which was turbo-charged by the company’s own money. The payments, due in January, are outside Mr. Feinberg’s purview, because they were guaranteed before pay restrictions were imposed on bailed-out banks. But the office of the New York attorney general, Andrew M. Cuomo, who is investigating the 2008 payouts, has questioned at least one Merrill executive about the 2006 plan.
Robert Stickler, a spokesman for Bank of America, said the coming Merrill payouts would be awarded as scheduled. Since the payments were tied to Merrill’s performance over four years, including a dismal 2007, some of the money has already been clawed back. Such punitive features, Mr. Stickler said, resemble some of the potential solutions the bank is considering. “In some aspects, that’s where we have been going in compensation in working with Feinberg’s office, so it is a sort of template,” Mr. Stickler said.
The Merrill plan, copies of which were reviewed by The New York Times, was authorized by the firm’s board and recommended by Towers Perrin, a compensation consulting firm.
Under the 2006 plan, top Merrill executives contributed a part of their bonuses from the prior year to an incentive plan that was then converted into stock. If Merrill did well, the firm doled out more shares to the employees at the end of each year. The plan was repeated over three years, and employees could not sell their stock until 2010.
Compensation experts who reviewed the plan commended much of it. They noted that the 34 Merrill executives included lost all of the money they put in for 2007, because Merrill performed poorly that year. But the main failure, they said, was that Merrill used leverage to juice its employees’ returns in good years.
As of this week, some managers have made a 9 percent return on their investments in the plan, although top executives have lost 17 percent. But both groups have fared better than an ordinary shareholder would have with similar investments in Merrill stock. Those investors would have lost 45 percent.
“What we have here is something that was by and large good, and now the spotlight is on plans like this,” said Lucian A. Bebchuk, a professor at Harvard Law School who has studied compensation. “But there are elements that could be improved on.”
The Merrill bonus plan was controversial from the start. It was created by Ahmass L. Fakahany, Merrill’s former co-president and chief operating officer, as part of a broader pay overhaul that also placed greater limits on workers’ ability to sell company stock and increased the amount of their pay that would come in stock.
For the top six executives, Merrill contributed $1.5 million for every $2 million each executive invested in the plan, leveraging the possible returns. For the next 28 workers in the plan, Merrill paid in an amount two and a half times their investments. That meant that the workers started out ahead, no matter how the shares performed.
“That’s an awful lot of leverage,” said Brian Foley, a compensation consultant in White Plains. “Would you risk a buck in order to make six bucks? Yeah, you would. Maybe that’s why people there were focused on the upside and not the risks.”
A year into the Merrill plan, a $2 million investment by a senior executive was worth $11.5 million. Merrill’s subsequent losses in 2007, though, meant that the money invested that year would be forfeited, essentially clawing back part of old bonuses.
Compensation experts who reviewed the Merrill plan wondered if it should have applied to more employees. Rank-and-file workers also take risks that can jeopardize a bank.
Merrill might also have used a longer-term measure than a single year’s results to decide how many shares to grant executives, Professor Bebchuk said.
And the plan also contained a provision that would automatically award top workers more stock in the event that Merrill was sold — which it was.
“Hindsight in these plans is 20/20,” said Charles M. Elson, a professor of corporate governance at the University of Delaware. “Feinberg is going to be coming up with a model for the bailed-out banks, and the question is, will he use a model like this? He can’t possibly know what the next few years will bring for these companies.”
In January, the Merrill plan will expire, and the stock held within it will be awarded to Merrill executives who are still at Bank of America, or those who have retired. Most Merrill executives in the plan have already broken even, and the top six will if Bank of America’s share price reaches $30 by January, from $17.35 now.
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But for a regular investor who put in money with the same timing, a break-even by then would not be possible unless the stock quadrupled.
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8bc818f8aa1a2c6749ebec1beef5112d | https://www.cnbc.com/2009/10/08/investors-real-estate-guidea-special-report.html | Investor's Real Estate Guide-A Special Report | Investor's Real Estate Guide-A Special Report
To say the residential real estate market is at a crossroads is the understatement of the current economic recession.
After several months of gains in new and existing home sales, as well as price stabilization in some of the hardest hit local markets, the question going forward is: Can this housing “recovery” be sustained?
Check out our new Special Report, Investor's Real Estate Guide for more.
Questions? Comments? RealtyCheck@cnbc.com
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0922abd841edaaa2fd5c0c4242bd013b | https://www.cnbc.com/2009/10/08/kneale-obama-ibm-and-how-to-kill-silicon-valley.html | Kneale: Obama, IBM and How to Kill Silicon Valley | Kneale: Obama, IBM and How to Kill Silicon Valley
The Obama Posse is hellbent-for-leather on a misguided crusade to rein in the one clear growth engine of the American manufacturing economy: high-tech.
There's no other way to explain the news today that IBM is in the cross-hairs of Justice Department anti-trust cops, who are suspicious of the grip it holds over a dinosaur business:
mainframe computers.
This is the latest boneheaded move in the new administration's sudden spate of meddling in Silicon Valley, the most competitive market in the world, where tech titans collide and start-ups mushroom overnight, where prices fall preternaturally and consumers gain from all of it.
Elsewhere, the Federal Trade Commission is investigating Intel in microchips, Justice lawyers are questioning Google's online deal with book publishers, SEC lawyers helped push Google's Eric Schmidt off the Apple board, and the FCC wants to force AT&T and Verizon the open up their privately funded wireless networks to all comers.
Try reciting that cacophony of crackdowns in a single breath. I am sure we will hear of even more.
Here's the biggest problem: How are consumers getting hurt by any of this? Not at all: The price of computing power drops 15% to 20% a year. The price of data storage plunges 30% to 40% a year.
We also get tons of technology free of charge—Google search power in exchange for enduring online ads, ever more "free" software bundled in with your new laptop, even free cell calls to your favorite friends and family. We also now can choose from a vast array of rival brands and designs and services.
So what we have is an Imperial Bureaucracy in Washington scrutinizing tech’s most powerful players merely because they have succeeded in grabbing major market share. The Obama Posse wants to punish them for their success.
This anti-capitalist crusade is especially wrongheaded—and utterly ridiculous—in the case of IBM . It shows a naïve disconnect with the past.
Background music, maestro: Let’s recall that by the early 1990s IBM—which at one point had 75% of all worldwide high-tech profits and 51% of all sales—was on its deathbed. It mulled breaking itself up into parts, just as the old Justice Department had done to the old AT&T (and had backed off from doing to IBM).
IBM’s mortal wound at the time: the mainframe computer business. The off-the-shelf cheap revolution (ever more powerful PCs at lower prices, a new wave of mid-range machines and client-server networks, and cut-price software) was roiling the fat margins and lack of choice in IBM’s core business: Systems costing $250,000 or more.
Big Blue survived by throwing out old proprietary, closed-design gear in favor of off-the-shelf chips and software. In the past decade IBM cut the price of its mainframes by 50% to 90% depending on the set-up. And customers are hurt by this how, exactly?
Competitors continued to eat into IBM’s business anyway, and the once-invincible giant retreated or bailed out entirely from an array of rapidly growing markets: PC’s and related software, disk storage, networking. IBM invented the database but largely lost out to Oracle Corp.
So, um, IBM is a rapacious monopolist in need of anti-trust inspection? Please!
The feds are focusing on where IBM remains especially strong, in its back-from-the-boneyard mainframe business. Yet even here, IBM is far less dominant. In the early 1980s IBM mainframes held 80% of the total computer market. Today IBM’s biggest boxes comprise just 0.03% of all server shipments, says International Data Corp.
Still, comma . . . among the most powerful machines, those priced at $250,000 and above, IBM commands a 58% share of the revenue.
Yet today corporate accounts can forgo IBM to buy cheap racks of “blade” servers from Hewlett-Packard and Dell and others. They can get plenty of power from Unix boxes made by Sun and HP. In the latest iteration, they can simply lease computing time from “the cloud,” services provided by such entrants as Google and Amazon (and IBM).
Amdahl and Fujitsu pulled out of the IBM mainframe market in the late 1990s, deciding it wasn’t worth the investment. IBM, meanwhile, spent billions on research and development--$1.5 billion over five years for its newest mainframe, the System z series; $6 billion a year in total R&D.
And for the sin of this moxie, the Obama Posse wants to rein in Big Blue.
IBM’s critics say the company abuses its hold over big corporate accounts, which can ill afford the hassle and cost of scrapping IBM gear and switching to new and incompatible rival wares. They say IBM soaks corporate customers on software upgrades, services fees and maintenance charges.
Why is it, then, that this whole anti-trust assault grew out of a complaint filed not by IBM’s customers---but by its competitors? Even worse, the Justice lawyers descend on IBM just one week after a federal district court judge in New York threw out a related anti-trust case against the company.
An outfit called T3T Inc. had argued, unsuccessfully, that IBM’s refusal to license its own mainframe software to let it run on copycat systems was illegal and anti-competitive. The judge flatly stated that this IBM stance “does not constitute anticompetitive conduct” under federal law.
Furthermore, the judge, Lewis A. Kaplan, ruled that T3T lacked any legal standing to sue and that “its claims would fail in any event.” Anti-trust laws don’t restrict the right of a maker to freely choose which parties it wants to do business with, the judge said, citing a 90-year-old precedent.
Despite the federal judge’s rejection, T3T’s plaint likely is the core focus of the Justice longriders now pursuing IBM. And guess what? T3T actually is partly owned by IBM’s most bitter rival: Microsoft.
The Obama folks sound more and more like . . . the anti-U.S. regulators of the European Union, who fined Intel $1.4 billion (and withheld exculpatory evidence in Intel’s favor) and are now meddling in Oracle’s takeover of Sun. That Intel fine, too, was stoked by a complaint that came not from an Intel customer but from a rival: Advanced Micro Devices.
The Obama Administration’s hard-eyed view of tech giants is horrible policy at a time of economic turmoil and when the U.S. manufacturing base is under siege from cheaper markets around the globe.
IBM’s mainframe biz employs 9,000 workers in the otherwise depressed Hudson Valley area of New York. The company has paid some $8 billion in federal taxes in the past five years. And now, Washington wants to mess with that. What are these guys thinking?
More Kneale ...
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95d27377c4c6f27d9f196d5980b13bea | https://www.cnbc.com/2009/10/08/lightning-round-las-vegas-sands-tekelec-wr-grace-and-more.html | AEP Industries : Cramer would rather see investors in W.R. Grace & Co .
Tekelec : Cramer is bullish on Tekelec.
VIDEO0:0000:00Lightning Round
Calumet Specialty Products : Cramer said he couldn’t recommend the stock until he knows the dividend is safe.
Las Vegas Sands : Don’t buy LVS. Go with Wynn Resorts instead, Cramer said.
Emergent BioSolutions : Cramer said he needed to do more research before making a call on EBS.
Call Cramer: 1-800-743-CNBC
Questions for Cramer?
Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com
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334276bb4c6887499e224438ede59b02 | https://www.cnbc.com/2009/10/08/lightning-round-ot-bp-xerox-and-more.html | VIDEO0:0000:00Lightning Round OT
Lawson Software :Salesforce.com is a better play on cloud computing, Cramer said.
BPZ Resources : Cramer would rather see investors in BP .
Xerox : Sell XRX, Cramer said.
Newell Rubbermaid : Buy NWL. “I think it can still go higher,” Cramer said.
Cramer's charitable trust owns BP.
Call Cramer: 1-800-743-CNBC
Questions for Cramer?
Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com
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9a04ae602f05c9000fc3e9648ba7eb8b | https://www.cnbc.com/2009/10/08/losey-how-long-will-my-portfolio-last.html | Losey: How Long Will My Portfolio Last? | Losey: How Long Will My Portfolio Last?
Question: If one has a properly diversified investment portfolio, what percentage do you feel is safe to plan on withdrawing annually so that my account value never decreases? Susan, New Jersey
Answer: Susan, as long as you limit your withdrawals to the amount of interest, dividends and capital gains generated, you won’t have to touch your principal and the value of your account won’t decrease. For example, let’s assume you have a $400,000 account value and by the end of the year your balance has increased to $425,000. If you only take out $25,000, your principal will remain intact.
Home Buyer Alert - Mortgage Rates: As Good As It Gets
For most people however, limiting their withdrawals to only interest, dividends or capital gains isn’t realistic because most people don’t hold investments that only go up in value. In short, their portfolios rise and fall in value with the normal stock and bond market fluctuations and could be worth more or less than their original investments. Additionally, most people won’t have a pension so they’ll have to rely heavily on an income stream from their portfolio. In many cases, these portfolios are scheduled to be depleted over time.
The issue of not running out of money and creating a sustainable income is hard because we don’t know how long we’re gonna live. I mean, when you retire, will you be around for 10 years or 30+ years? It’s anyone’s guess; so you’ll have to monitor your withdrawals at least annually.
Bill’s Bottom-line: The less money you take out, the lower inflation is, and the higher return you earn on your money, the longer it will last. Conversely, the more money you take out, the higher inflation is, and the lower your return is, the shorter your nest egg will last.
Your Money on CNBC.com
The World's Best Banks 2009Slideshow: What Does $1 Trillion Look Like?Slideshow: How Your Tax Dollars Are Spent
_________________________Bill Losey, CFP®, America's Retirement Strategist®, coaches women and couples nationwide with their retirement planning and investment portfolios. Bill is the author of Retire in a Weekend! The Baby Boomer’s Guide to Making Work Optional and he also publishes Retirement Intelligence®, a free weekly award-winning newsletter. You can learn more at .
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e79adb488368f500d29f81cf056e66b3 | https://www.cnbc.com/2009/10/08/market-is-in-a-sweet-spot-until-winter-chief-strategist.html | Market is in a 'Sweet Spot' — Until Winter: Chief Strategist | Market is in a 'Sweet Spot' — Until Winter: Chief Strategist
The market won't retest its March lows, but it will turn choppy around January or February, said Joe Quinlan, chief market strategist at Bank of America.
VIDEO0:0000:00Global Market Outlook
"We're in a sweet spot right now," Quinlan said.
"The global economy's much improved, the US is coming along, so right now I think a lot of investors are kind of rushing in to get the year-end peformance."
Quinlan recommended investing in emerging markets, but said investors should look outside of the BRIC countries.
More Market Wisdom:
Art Cashin: Weak Dollar Can Hurt Markets Like 2008Market Tips: A Bet Better Than Gold
Instead, they should look into Africa, the Middle East or Turkey, he said.
Asia also offers opportunities outside of China, in countries like Singapore, Thailand and Malaysia — a good place for buying commodities
With the US' growing deficit, Quinlan advised investors to avoid Treasurys.
______________________________CNBC Data Pages:
Dow 30 Stocks—In Real Time Oil, Gold, Natural Gas Prices Now Where's the US Dollar Today?
______________________________CNBC Slideshows:
Biggest Holders of US Government DebtWorld's Most Expensive Cities
______________________________
______________________________Companies That've Reported Earnings This Week:
Alcoa
Alcoa Reports Surprise Profit; Sales Also Beat
Costco
Costco Profit Falls, but Tops Views
Yum! Brands
Yum Brands Earnings Easily Beat Expectations
Pepsi Bottling
Pepsi Bottling Profit Beats Estimates
PepsiCo
PepsiCo Earnings Beat Expectations; Outlook Affirmed
______________________________ Disclosures:
Disclosure information was not available for Quinlan or his company.
Disclaimer
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ea4581532bd505c5c84a75fed18bf898 | https://www.cnbc.com/2009/10/08/market-tips-a-better-bet-than-gold.html | Market Tips: A Better Bet than Gold | Market Tips: A Better Bet than Gold
Global stocks were up on Thursday after aluminum giant Alcoa reported its first profit in a year and gold hit a fresh record high at $1,058. Experts tell CNBC frontier markets hold a lot of potential and that platinum may be a better bet than gold.
Play Platinum
Platinum may be a better play than gold, says Jonathan Barratt, managing director at Commodity Broking Services.
Gold Could Hit $2,000
Gold rose to an all-time high of $1,050 on Thursday. Simon Rose, CEO of Dahlman Rose believes it has the potential to go much higher.
Gold's Allure
Buy gold-related stocks, says Jonathan Barratt, managing director at Commodity Broking Services. He speaks to CNBC about the allure of gold.
Last Leg of a Bear Market Rally?
Markets could be at the last leg of a bear rally, says Suzanne Murphy, head of strategic development at Claren Road Asset Management.
Bullish on Sri Lanka
According to Reuters data, the world's best performing stock market is Sri Lanka. Nirosh De Silva, managing partner at Leopard Capital reveals how best to invest there.
Investing in Frontier Markets
The frontier markets in the Eurasia region have a lot of potential, says Alisher Ali Djumanov, managing partner at Eurasia Capital Management.
Emerging Markets Decoupling From the West
Emerging markets are starting to decouple from the Western world, notes Frederic Neumann, senior Asian economist at HSBC.
Opportunities in Southeast Asia
Johan Bastin, CEO of CIMB-Standard Strategic Assets Advisors is cautiously optimistic on private equity opportunities in Southeast Asian countries.
The Declining Dollar
Until markets get a clear signal on the Fed's exit strategies, the dollar will continue to deteriorate, says Jack Bouroudjian, CEO of IndexFuturesGroup.com.
More Upside Seen for the AUD
The Aussie dollar probably has a little bit more upside, predicts Olivier Desbarres, director of FX strategy at Credit Suisse. He tells CNBC that he sees the Aussie-dollar rising to $0.92 within the next three months.
Shift in Investor Sentiment
Matthew Hegarty, senior equities analyst at Global Value Investors has noted a change in investor sentiment towards the financial sector.
Road Ahead of US Automakers
The "Cash for Clunkers" program will cause U.S. automakers to struggle even more going forward, believes Jessica Caldwell, senior analyst at Edmunds.com.
Track Stock Funds, Bond Funds, Money Market Funds and ETFs Here
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4dbd0d3da11ecd9bd39d3fd318024b6a | https://www.cnbc.com/2009/10/08/markets-are-like-super-rats-close-to-end-of-bear-rally.html | Markets Are Like "Super Rats"; Close to End of Bear Rally | Markets Are Like "Super Rats"; Close to End of Bear Rally
The markets are like "super rats" as they have become immune to poison, said Jack Bouroudjian, CEO of IndexFuturesGroup.com.
VIDEO3:0103:01Last Leg of a Bear Market Rally?
"You can throw all the poison you want and (they) seem to digest it all and spit it right back out. We see it happening with the financial sector," he said on CNBC's "Squawk Box Asia."
Another commentator on the program, Suzanne Murphy, head of strategic development at Claren Road Asset Management, noted that the markets had become very "toppy", as investors were driven by fears of missing the boat. She said this signaled that we could be at the last leg of a bear rally."The classic end of a bear rally is everybody piling in at the wrong time. I've said for years -- what's the definition of the market top? Everyone getting in at the wrong time. What's the definition of market bottom? Everybody getting out at the wrong time. So we could be close to getting that, both in the equity and credit markets," she said.
No Earnings ClarityAs the reporting season kicked off with Alcoa offering a positive start to the earnings season on Wednesday, Murphy said she believed most other companies were unlikely to have much clarity for the months ahead.
"Expectations are just so low that earnings are coming in better than expected, fueled by cost-cutting. We don't feel it's sustainable," she explained. "You can't cost-cut your way to prosperity and the consumer is not back."
Murphy was critical of the "cash for clunkers" program, which she viewed as mere purchases being brought forward. She shared her family's experience with the government initiative to encourage consumption and boost the moribund auto industry.
"My parents, who are relatively affluent, decided to buy a new car because they got the cash for clunkers," she said. "They bought Toyota, which is fairly ironic. They bought a foreign car but their decision to buy a new car wasn't changed by cash for clunkers. Their demand was just moved forward. We pushed problems out, we haven't solved them per se."
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8e550edf5efe9e95c2b48bcf17848ff6 | https://www.cnbc.com/2009/10/08/midatlantic-real-estate-dcs-hot-everything-else-is-not.html | Mid-Atlantic Real Estate: D.C.'s Hot, Everything Else Is Not | Mid-Atlantic Real Estate: D.C.'s Hot, Everything Else Is Not
Thankfully, the two-year-long storm in the mid-Atlantic housing market appears to be over. In pockets of the region, the sun is beginning to peak through, and homes are again being bought and sold. But, like the weather, the recovery is variable.
Big Trend: First-Time Homebuyers
Roycroft House
The combination of the housing stimulus tax credit and greater affordability are bringing large numbers of new buyers to the market. “For first timers in any economy,” says Sal Prividera, a spokesman for the New York State Association of REALTORS, “it’s the lower end of the market that you see the greater amount of activity.”
“A first time home is certainly going to be at a lower price point in Erie County than Westchester County,” says Prividera, of the two counties within New York State.
In Erie, which includes Buffalo and Niagara Falls, the median sales price in August 2009 was $123,000, and existing home sales were up 20.3 percent year over year.
In Westchester County, New York City suburb, the median sales price was $644,250, and during the same period existing home sales fell by 10.5 percent.
Cynthia Howar, a broker with Washington Fine Properties in Washington D.C., says “usually, you see a recovery from the bottom, up, because it is easier to get a conforming loan (a loan under $730,000). It’s driven more by the banking and lending institutions. A function of the kind of money that is available to people to borrow”
Higher Peaks Mean Lower Bottoms
Local housing markets across the mid-Atlantic that were red hot only a few years ago are the ones that have cooled off the most. In the exclusive suburbs of metropolitan New York, such as Hunterdon County, New Jersey and Nassau County, New York higher-priced housing is not moving. Prices in these areas have not fallen by enough to offset the drag of jobs, incomes and wealth lost due to the financial crisis, say experts
“In 2006, Westchester was a red hot market. There were bidding wars, homes selling moments after they went on the market and multiple bids driving up prices. The market that we experienced at the hey day of the boom were simply unsustainable,” says Prividera.
Conversely, those markets that were not as inflated in the housing boom now appear stabile. It is the more obscure, chronically-sluggish areas with lower median home prices like Pittsburgh, Syracuse, and Buffalo, which avoided the real estate bubble and never comparatively lost their grasp of economic reality.
Unique Local Markets
There are also several unique, hyper local market situations. The numbers, which at first look like anomalies, are indeed explicable if you look closely at the region.
In the second quarter 2009, the best performer in the mid-Atlantic region in terms of existing home sales was Washington D.C. at 5.6 percent, year over year. After that, Maryland was at 4.4 percent, Delaware -3.4 percent, New York -5.5 percent, New Jersey -10.8 percent, and Pennsylvania -15.1 percent.
Howar says, “DC real estate is always more insulated than the rest of the country. We didn’t have as big of a down as other states because the government is here. We always have a steady stream of people coming and going.”
Georgetown, DC
Of the exclusive Hillendale section of D.C., which is in the $1-to-$1.5-million price range, Howar says, “nothing was selling in this neighborhood between last August and May. But since June, I think I’ve sold five houses in this neighborhood. We’ve also starting to see an increase in sales in the higher price ranges—the 1-million to 2-million dollar houses are selling.”
Greg Herb, president of the Pennsylvania Association of REALTORS, says the state is a “more stable market than other areas of the country" adding that because it is "more conservative and we didn’t have as big of a bubble as other places.”
For the year to date as of August, Pennsylvania’s median home price was $188,000, down only 6 percent from a year earlier, which was much shallower than the comparably measured 15.2 percent plunge by median home prices nationwide.
Camden County’s 2.2 percent year-to-year increase of 2009’s second quarter was one of only a handful of year-to-year increases in New Jersey. Sharon Fisher, a broker with Coldwell Banker in the area, says, “Camden is more affordable and a lot of people commute to Philadelphia, Princeton and Trenton.”
“We should begin to see an even greater improvement in the numbers for the third and fourth quarter because there are a lot of people who are under contract now,” Fisher says.
The market is still correcting for the excesses of the recent bubble. “The most important thing someone who is looking to buy or sell needs to do is become educated on that local market,” says Prividera.
Compare Mortgage Rates Nationwide
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1f40e9ee137900fe26d882a75b3fef86 | https://www.cnbc.com/2009/10/08/new-england-real-estate-still-ahead-of-the-curve.html | New England Real Estate: Still Ahead Of The Curve | New England Real Estate: Still Ahead Of The Curve
While the housing market isn’t out of the woods just yet, the New England region appears to be living up to its reputation as a trend setter.
Andrew Leventis, senior economist with the Federal Housing Finance Agency says the New England market, which, according to the FHFA, includes Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and Connecticut “has generally been a price leader."
“They went into the boom a little earlier than other regions and they went into the bust a little earlier,” he says adding that “consistent with that, prices have leveled off and are showing a little more strength in that part of the country than other parts of the country.”
According to numbers recently released by the FHFA, for the 12-month period between July 2008 and July 2009, prices for home sales in the U.S. declined 4.2%, compared to a more modest decline of 2.5% for the New England region.
“Most of the New England market has seen a bit of a moderation over the last 12 months,” says Ken Sears, an economist with the National Association of Realtors, who adds that while the market is still a little sluggish it is “definitely getting back in its feet”.
While prices are still down year-over-year, “they are not down as far down as earlier this year, " he says. "We are finding a bottom."
Rick Loughlin, president of Coldwell Banker Residential Brokerage in New England says the big distinction is that “we are not a speculative group of people. Instead [New Englanders] tend to be very conservative and don’t get into as much speculative behavior.”
“That’s why prices didn’t drop as much,” he says, adding that there weren’t a lot of people who got into that market trying to flip a home and make a quick dollar.
While activity in New England may be picking up, only certain pockets of the market are feeling the love.
According to Loughlin, the homes that are moving are those that are “well priced, well located and well conditioned homes.” Those, he says, ”are the hot button.”
In addition, Sears of NAR agrees, that in general there has also been lot more people coming in the lower to middle markets as well as among homes that are in close proximity to downtown areas, which offer residents short commutes to work.
Additionally, he says “first-time home buyers are really dominating sales, with conforming loans.” This is particularly true, he says, of buyers obtaining loans insured by the Federal Housing Administration, the number of which has surged in New England and other regions.
The federal tax credit has also played a large role in the increase of first-time home buyers
A home in Newport, R.I. on the market for $899,000.newenglandmoves.com
But while there are clearly pockets of strength, other parts of the market—the high end, for one—continue to suffer.
“A lot of the high-end buyers and sellers were caught in the [financial] meltdown a year ago,” Loughlin says. “Even though activity has increased in some markets it is much more sporadic.”
The same is true of the market for second homes, which is a market that generally attracts buyers with higher incomes.
Rates for jumbo loans and for second home mortgages are much higher now, which limits the number of buyers.
The market for new construction also remains nearly stagnant.
“Financing has been turned off for builders,” Coldwell Banker’s Loughlin says, adding that while there is some movement in new construction homes priced under $400,000, for the most part builders “are pretty much dead in the water.”
What's more, states such as Connecticut and Rhode Island have generally fared worse than others in the region, partly because of high unemployment levels. Rhode Island, for example, has had one nation's highest jobless for much of the year.
Coastal markets have also had a rough time, partly because they are fairly dependent on second-home buyers, who are having a tough time getting financing.
That said, given the general decline in prices, those who have the cash to qualify for a conforming loan—whether it's for a first or second home—will find it a great time to buy, say realtors.
“Rates are low, prices have come down and the [for first-time home buyers] the tax credit is out there,” said Loughlin. “Be carefully not to get caught in the squeeze,” he said, adding that it’s just a matter of time before interest rates and home values start to go up.
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ded3f95c138bc8743d4122109fe82e02 | https://www.cnbc.com/2009/10/08/nissans-newest-concept-car-tilts-into-corners.html | Nissan's Newest Concept Car Tilts into Corners | Nissan's Newest Concept Car Tilts into Corners
Nissan's Land Glider electric vehicle tilts from side to side, sashaying into curves by up to a 17-degree angle, as though showing off in a fashion statement that it's zero-emissions.
VIDEO0:3900:39Nissan Goes Green
The wheel segments of the car can move separately from the cabin, allowing the car, still an experimental concept model, to sway and swerve, almost like a motorcycle.
Nissan Motor Co. project design director Takashi Nakjima says Land Glider is designed to be a "personal city commuter."
In a demonstration for reporters, the car glided around on a test course at Nissan's design center, outside Tokyo, leaning slowly to one side, and then the other, as it turned tight corners.
Just 110 centimeters (43 inches) wide, Land Glider has sensors to calculate speed and level of lean required for corners, and can maneuver through narrow streets and fit into tight parking spaces, according to Yokohama-based Nissan.
People aboard sit in a line, one behind the other, not next to each other as in traditional two-seaters.
Reporters got a preview look, but no test drive, of the Land Glider, which will have its world premiere at the Tokyo Motor Show, opening to media Oct. 21, two days before its formal opening. The show runs through Nov. 4 in the Tokyo suburb of Chiba.
Japanese rivals Toyota Motor and Honda Motor are also showing nifty electric vehicles at the show.
Toyota's FT-EV II has a roomy cube design, a relatively conventional look for electric cars. But Honda's EV-N is small and cute with an intentionally old-fashioned car shape.
Electric Cars Are the Future: Analyst
"We feel exploratory efforts in electric vehicles have entered a new stage" with Land Glider, Nakajima said.
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5d826f244e642d66e2d57bb8b6fb64ca | https://www.cnbc.com/2009/10/08/options-extra-microsoft.html | Pete Najarian has spotted unusual options activity in Microsoft . And you can only find out what he makes of it here - on the web!Watch the video now!
VIDEO0:0000:00Options Action Web Extra
______________________________________________________Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! If you'd prefer to make a comment but not have it published on our website send your message to .Trader disclosure: On October 8, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Owns (UNH) Calls; Finerman's Firm Owns (MSFT), (TGT); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm And Finerman Own (WMT); Finerman's Firm Is Short (USO), (IJR), (MDY), (SPY), (IWM), (UNG); Finerman's Firm Owns (BAC), (BAC) Call Spread, (BAC) Preferred; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm Owns (AET) Calls; Finerman's Firm Owns (WLP) Calls; Finerman's Firm Owns (RIG), Is Short (RIG) Calls; Finerman Owns (RIG); Pete Najarian Owns (BRCD) Calls; Pete Najarian Owns (C) Calls; Pete Najarian Owns (INTC), Is Short (INTC) Calls; Pete Najarian Owns (MYL) Calls; Pete Najarian Owns (STX) Calls; Pete Najarian Owns (WFC) Puts; Pete Najarian Owns (YHOO) Call Spread; Grasso Owns (AAPL), (ABK), (ASTM), (BAC), (C), (COST), (PRST), (V), (WMT), (FAZ)For Steve GrassoStuart Frankel Corp. & Partners Own (CMCSK)Stuart Frankel Corp. & Partners Own (CUBA)Stuart Frankel Corp. & Partners Own (GERN)Stuart Frankel Corp. & Partners Own (HSPO)Stuart Frankel Corp. & Partners Own (LMT)Stuart Frankel Corp. & Partners Own (MSFT)Stuart Frankel Corp. & Partners Own (NWS.A)Stuart Frankel Corp. & Partners Own (NXST)Stuart Frankel Corp. & Partners Own (NYX)Stuart Frankel Corp. & Partners Own (PDE)Stuart Frankel Corp. & Partners Own (PRST)Stuart Frankel Corp. & Partners Own (RDC)Stuart Frankel Corp. & Partners Own (ROK)Stuart Frankel Corp. & Partners Own (TBT)Stuart Frankel Corp. & Partners Own (TLM)Stuart Frankel Corp. & Partners Own (XOM)Stuart Frankel Corp. & Partners Own (XRX)Stuart Frankel Corp. & Partners Own (SDS)Stuart Frankel Corp. & Partners Are Short (QQQQ)Stuart Frankel Corp. & Partners Are Short (CL)
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7d72f7b226636819eb0457717469e8a6 | https://www.cnbc.com/2009/10/08/options-position-for-a-pop-at-talbots.html | Options Position for a Pop at Talbots | Options Position for a Pop at Talbots
Shares of Talbots rose sharply for the second straight session yesterday along with upside options activity after FBR Capital Markets raised its price target on the women's apparel company by more than 60 percent.
TLB ended the session up 16.53 percent to $11.14 in afternoon trading on more than six times the average stock volume, following a a 7.4 pop Tuesday. The shares, which hit $1.19 at the depths of the financial crisis last November, have spiked more than 30 percent since only Friday.
Options activity was concentrated at the November 12.50 contracts, where 2,243 calls traded in a strong buying pattern. Most of them were purchased for the asking prices of $0.65 to $0.90, according to OptionMonster's real-time systems.
The retailer averages just 10 calls traded daily at the strike, where the open interest of only 179 contracts indicated that yesterday's trading represented newly opened positions. The purchased calls would profit only if the stock rises at least 18 percent to 20 percent by the time they expire on Nov. 20.
Talbots has struggled more than many competitors as it has tried to recover. But it got a much-needed boost this morning when FBR Capital raised its price target for the stock to $13 from $8 and reiterated its "outperform" rating on the stock.
___________________________
Options Tips from Jon NajarianRead The CNBC Stock BlogOptions Tips from Pete Najarian
___________________________Options Trading School:
Options Terminology: GlossaryBasic Strategies — with ExamplesOptions Basics: The ABCs
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___________________________
Mike Yamamoto is an analyst and writer for .
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Disclaimer
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69aa981d827f535ffccb5157c1924a3f | https://www.cnbc.com/2009/10/08/pops-drops-microsoft-pepsico.html | Following are the day’s biggest winners and losers. Find out why shares of Microsoft and Yamana Gold popped while Pepsico and Barnes & Noble dropped.
POPS (stocks that jumped higher)Microsoft (MSFT) popped 2%. Widely followed tech writer Walter Mossberg of the WSJ gave the Windows 7 a positive review calling it the best version of Windows yet. - The stock has to break above $26.25 to move higher, explains Guy Adami.
VIDEO0:0000:00Stock Pops & Drops
Yamana Gold (AUY) popped 7%. The Canada based gold producer closed higher after receiving several upgrades and increased price targets. - I also think it goes higher, muses Steve Grasso.
Oil Services ETF (OIH) popped 3%. This ETF that tracks the oil exploration names including Schlumberger and Transocean moved higher in tandem with the spot price of crude. - I think there's more room to run, says Karen Finerman.
Sequenom (SQNM) popped 2%. Market speculation suggested the company is interested in putting itself up for sale. - I noticed unusual call buying, reveals Pete Najarian.
Anheuser-Busch Inbev (BUD) popped 3%. The brewer is nearing its target of $7 billion in divestments, after its deal with Blackstone to sell its theme parks. - I don't know what to do with this stock, admits Guy Adami.
SAP (SAP) popped 4%. UBS lifted its price target on this name, citing its strong position in the European software industry.
DROPS (stocks that slid lower)
Pepsico (PEP) dropped 1%. The company reported falling North American soft drink sales, and cautioned it did not expect a major revival of consumer spending next year. - I'd stay away, counsels Steve Grasso.
Barnes & Noble (BKS) dropped 12%. The bookseller forecast lackluster same-store sales for fiscal 2010, raising concerns that its recent purchase of College Booksellers would not immediately boost results. - I'm afraid of book retailers, explains Karen Finerman. Times are changing in this industry.
______________________________________________________Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! If you'd prefer to make a comment but not have it published on our website send your e-mail to .Trader disclosure: On October 8, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Owns (UNH) Calls; Finerman's Firm Owns (MSFT), (TGT); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm And Finerman Own (WMT); Finerman's Firm Is Short (USO), (IJR), (MDY), (SPY), (IWM), (UNG); Finerman's Firm Owns (BAC), (BAC) Call Spread, (BAC) Preferred; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm Owns (AET) Calls; Finerman's Firm Owns (WLP) Calls; Finerman's Firm Owns (RIG), Is Short (RIG) Calls; Finerman Owns (RIG); Pete Najarian Owns (BRCD) Calls; Pete Najarian Owns (C) Calls; Pete Najarian Owns (INTC), Is Short (INTC) Calls; Pete Najarian Owns (MYL) Calls; Pete Najarian Owns (STX) Calls; Pete Najarian Owns (WFC) Puts; Pete Najarian Owns (YHOO) Call Spread; Grasso Owns (AAPL), (ABK), (ASTM), (BAC), (C), (COST), (PRST), (V), (WMT), (FAZ)For Steve GrassoStuart Frankel Corp. & Partners Own (CMCSK)Stuart Frankel Corp. & Partners Own (CUBA)Stuart Frankel Corp. & Partners Own (GERN)Stuart Frankel Corp. & Partners Own (HSPO)Stuart Frankel Corp. & Partners Own (LMT)Stuart Frankel Corp. & Partners Own (MSFT)Stuart Frankel Corp. & Partners Own (NWS.A)Stuart Frankel Corp. & Partners Own (NXST)Stuart Frankel Corp. & Partners Own (NYX)Stuart Frankel Corp. & Partners Own (PDE)Stuart Frankel Corp. & Partners Own (PRST)Stuart Frankel Corp. & Partners Own (RDC)Stuart Frankel Corp. & Partners Own (ROK)Stuart Frankel Corp. & Partners Own (TBT)Stuart Frankel Corp. & Partners Own (TLM)Stuart Frankel Corp. & Partners Own (XOM)Stuart Frankel Corp. & Partners Own (XRX)Stuart Frankel Corp. & Partners Own (SDS)Stuart Frankel Corp. & Partners Are Short (QQQQ)Stuart Frankel Corp. & Partners Are Short (CL)
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b0a20d573af650c9ece738d490d1f71b | https://www.cnbc.com/2009/10/08/rangel-faces-further-scrutiny-from-ethics-committee.html | Rangel Faces Further Scrutiny From Ethics Committee | Rangel Faces Further Scrutiny From Ethics Committee
The House ethics committee on Thursday expanded its investigation of Rep. Charles Rangel, to include his belated financial disclosure of hundreds of thousands of dollars in previously unreported assets and income.
Charles RangelAP
The expansion only increases the political burden that the Ways and Means Committee chairman from Harlem places on House Speaker Nancy Pelosi, who refuses to make him step down from his post.
Pelosi and Majority Leader Steny Hoyer have said they would take no action while the ethics investigation of the New York Democrat is under way, but the inquiry has dragged on for a year and expanded several times while it pushes closer to the 2010 election year.
Republicans have forced House votes three times, the latest this week, on removing Rangel from his tax-writing position. While Democrats easily defeated each attempt, the issue has allowed Republicans to ridicule Pelosi's refrain that Democrats would drain the swamp of ethical misconduct that previously plagued Republicans.
The committee said it would now investigate whether Rangel broke House rules "with respect to all financial disclosure statements and all amendments filed in calendar year 2009" as required under the Ethics In Government Act.
The law requires annual financial reports filed by all members of Congress showing ranges of assets and income.
Rangel's revisions showed assets and income from 2002 through 2006 that should have been reported in those earlier years.
The committee also gave an accounting of its work so far.
The House investigators have authorized nearly 150 subpoenas, interviewed some 34 witnesses and reviewed more than 12,000 pages of documents.
The committee has been concentrating on alleged financial improprieties and fundraising irregularities.
Among the most serious of Rangel's problems: the House's tax-writing chairman failed to pay all of his taxes, allowing Republicans to level charges that a tax scofflaw is writing tax legislation.
The unreported assets included a federal credit union account worth between $250,000 and $500,000; a Merrill Lynch account valued between $250,000 and $500,000; tens of thousands of dollars in municipal bonds and $30,000 to $100,000 in rent from a multifamily brownstone building in New York.
The ethics committee of five Democrats and five Republicans is also investigating whether Rangel and four other members of the Congressional Black Caucus violated gift rules and other standards of conduct with trips to the Caribbean in 2007 and 2008.
It's looking at contributions of money or monetary pledges to the Charles B. Rangel Center for Public Service at the City College of New York and his use of official House stationery to solicit potential donors.
Other questions involve Rangel's acceptance and use of rent-stabilized apartments in New York from a Manhattan developer, and whether he received a sweetheart deal to finance his ownership interest in the Dominican resort.
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9b20a6bd22d0d7e82d25f57b82635780 | https://www.cnbc.com/2009/10/08/same-store-sales-winners-and-losers.html | Same Store Sales Winners and Losers | Same Store Sales Winners and Losers
As of 9:12 this morning, 100% of retailers tracked by Thomson Reuters have reported same store sales. Here is a breakdown of where things stand:
Beat estimates - 78% vs. 46% last monthMet estimates - 4%, same as last monthMissed estimates - 19% vs. 50% last month
Per the chart below, teen apparel had the biggest surprise to the upside while drug stores had the highest growth overall.
Teen retailers were also on the top of the winners and losers lists. Aeropostale was up the most while Abercrombie and Fitch had the worst reported numbers, with sales down 18%. ARO was also the biggest surprise to the upside.
Comments? Send them to bythenumbers@cnbc.com
bythenumbers.cnbc.com
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6ecfcc3883647a0b50b1b7eda9662284 | https://www.cnbc.com/2009/10/08/sell-or-sell.html | Sell? Or Sell!!! | Sell? Or Sell!!!
Goldman Sachs today removed Northrop Grumman from its Conviction Sell list and upgraded it to...Sell.
What is THAT supposed to mean?
One reader suggested it means "Sell!" instead of "Sell!!!" Another said it means "sell", sotto voce, uttered very quietly.
Technically it's not an upgrade, just a, well, feeling(?), that analysts still don't like the stock, but they're less passionate in their hatred.
Slideshow: 20 Stocks with the Potential to Pop
The Goldman report explains it this way: "While we remove Northrop from the CL-Sell List, it remains Sell rated and our thesis is unchanged. However, it likely has less of a pension issue in 2010 than peers, and a sale of its TASC business is possible near-term, as has been widely reported. Since NOC was added to the CL-Sell List on May 18, 2009, shares have risen 6% vs a 16% gain in the S&P 500. Over the last 12 months, shares have fallen 7% vs a 6% rise in the S&P 500."
So...sell...if you feel like it...it's no biggie...there are bigger fish to fry/sell.
Meantime, Goldman downgraded L-3 to Sell from Neutral, saying it is more negative on L-3 than Northrop, but apparently not soooo negative to have any conviction about it.
Overall, the report is bearish on the defense sector, which may not surprise most of you who've noticed we've an administration in place for ten months now which was elected, in part, on promises to wind down the war.
Goldman, however, also adds that "valuation (of defense stocks) is not as inexpensive as it appears." The report is "incrementally negative" (as opposed to negative by leaps and bounds?) on the fourth quarter, saying it is seasonally weak historically. Also we should expect more "unfavorable rhetoric".
So sell. Incrementally.
Questions? Comments? Funny Stories? Email
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6e2c5968ab52e0e6691369b2df2fcb54 | https://www.cnbc.com/2009/10/08/senate-healthcare-bill-would-raise-taxes-grassley.html | Senate Health-Care Bill Would Raise Taxes: Grassley | Senate Health-Care Bill Would Raise Taxes: Grassley
Democrats on the Senate Finance Committee are cheering the latest estimates on its health care bill, but Sen. Charles Grassley, R-Iowa told CNBC that such legislation would impose tax hikes on premium payers.
VIDEO0:0000:00The Cost of Health Care Reform
(See the accompanying video for the complete interview.)
"The big untold story here is that most everybody is going to see their premiums go up for a couple reasons," he said. "People who don't have health insurance are going to be mandated to by health insurance and if they don't buy health insurance their family is going to pay a $1,500 penalty... And secondly, there are taxes on insurance companies."
Although premiums will go up immediately, said Grassley, the bill won't kick in until 2013.
More Health Care News On CNBC.com:
Positive Cost Report Boosts Health PlanHealth Care Strategist's 3 Big TradesPharma's Market with Mike Huckman
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b0291f6f6fd217f4953d0d0cb3798e57 | https://www.cnbc.com/2009/10/08/start-to-earnings-season-lifts-stocks.html | Both the Dow and S&P 500 rose on Thursday after a surprise profit from Alcoa sent materials names higher and generated an overall feeling that earnings season had gotten off to a strong start.
Another tailwind came from same-store sales, which showed their first monthly sales increase in more than a year. Investors took the results as a sign that consumers might be spending again.
Also the Labor Department said the number of U.S. workers filing new jobless claims slid to a nine-month low last week.
However, the rally lost some of its steam in the afternoon when investors learned that the latest auction of 30-year Treasurys had not been received well. The news was surprising considering 10-year notes drew strong demand one day earlier.
VIDEO0:0000:00Word on the Street
What’s the word on the Street?
I think it all makes sense, says Karen Finerman. If we’re seeing an economic recovery and things are getting better than there should be inflation concerns. That speaks to the action in Thursday's bond auction.Looking at the catalyst for stocks, I can’t be that enthusiastic about Alcoa , says Guy Adami. To me the valuations don’t make sense. Yes they made money and they cut costs but this stock is the same price it was last year when they made $7 billion. This time around they made $4.5.
I think we’re seeing profit taking in Alcoa because of the run ahead of earnings, explains Pete Najarian. But I do think there are better names in the space that are cheaper.If you’re looking for a resource trade, look at copper miner FreeportMcMoRan, adds Adami. I’d get long with a stop at $73.43. I like copper a lot more than aluminum.-----------
GOLD HITS 3RD RECORD CLOSE IN A ROW
Gold set another record on Thursday with the spot price topping $1,050 per ounce. The precious metal has gained about 20 percent this year, driven by dollar weakness and inflation worries after central banks across the globe poured money into the financial system to help stimulate the economy.
What’s the trade?
I’ve been more wrong than right, admits Guy Adami, but gold takes the stairs higher and the elevator down. I’ve seen gold drop $150 in one day. Understand this trade and how difficult it is to get out – at some point I think you'll need to run for the exits.
If you’re playing gold, I’d make sure to also have put protection, counsels Pete Najarian. You never know when we'll see a sharp sell-off.
I agree that eventually gold is going to burst, adds Steve Grasso, but the big questions is at what level. If it’s at $3000 you don’t want to miss the run higher.-----------
RETAILERS ROCKING TODAY
The XRT climbed on Thursday after retailers posted their first monthly sales increase in more than a year. Investors took the results as a sign that consumers might be spending again.Among the day’s standouts; Macy's, Abercrombie & Fitch and Kohl's. They all surprised Wall Street on Thursday with better-than-expected September sales.
What’s the trade?ANF may have reported better than expected results, but their results were still lousy. It traded up to 35.20, explains Guy Adami. I still think it’s a short with a stop above $35.20
I was impressed by same-store sales data out of TJX, says Pete Najarian. Although some retailers may be infront of themselves I don’t think this one is.
All retailers can’t run at the same time, adds Steve Grasso. Eventually investors will toss some of them out.
I’m very curious about the holidays, says Karen Finerman. True, Target is dropping prices to compete with Walmart, but inventories are lower and that’s bullish.
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VIDEO0:0000:00Wall Street Analyst Goes Rogue
ANALYZE THIS: WALL STREET ANALYST GOES ROGUE
UBS initiated coverage of rival Wells Fargo with a ‘sell’ rating saying this bank along with some regional banks, “have run too fast” recently.
Both Wells Fargo and PNC face "meaningful" credit problems in the near term that make them likely to disappoint the Street's 2010 and 2011 earnings forecasts, UBS said.
By contrast, earlier in the week, Goldman Sachs singled out Wells Fargo along with Capital One for upgrades as it raised its rating on the large-bank sector to attractive.
What’s the trade?
I'm with UBS, I happen to think Wells is going down as well, says Guy Adami. If they price a secondary it can’t be good for the stock.
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BULL MARKET OR BS?Are there real signs of an economic recovery? OptionMonster Jon Najarian says there are indeed.
Find out what’s making him optimistic and why he's bullish on Hertz and Wyndham. Watch the video now!
VIDEO0:0000:00Word on the Street
You can find out interview with Jon Najarian at the end of the Word on the Street video.
______________________________________________________Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send those e-mails to .Trader disclosure: On October 8, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Owns (UNH) Calls; Finerman's Firm Owns (MSFT), (TGT); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm And Finerman Own (WMT); Finerman's Firm Is Short (USO), (IJR), (MDY), (SPY), (IWM), (UNG); Finerman's Firm Owns (BAC), (BAC) Call Spread, (BAC) Preferred; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm Owns (AET) Calls; Finerman's Firm Owns (WLP) Calls; Finerman's Firm Owns (RIG), Is Short (RIG) Calls; Finerman Owns (RIG); Pete Najarian Owns (BRCD) Calls; Pete Najarian Owns (C) Calls; Pete Najarian Owns (INTC), Is Short (INTC) Calls; Pete Najarian Owns (MYL) Calls; Pete Najarian Owns (STX) Calls; Pete Najarian Owns (WFC) Puts; Pete Najarian Owns (YHOO) Call Spread; Grasso Owns (AAPL), (ABK), (ASTM), (BAC), (C), (COST), (PRST), (V), (WMT), (FAZ)For Steve GrassoStuart Frankel Corp. & Partners Own (CMCSK)Stuart Frankel Corp. & Partners Own (CUBA)Stuart Frankel Corp. & Partners Own (GERN)Stuart Frankel Corp. & Partners Own (HSPO)Stuart Frankel Corp. & Partners Own (LMT)Stuart Frankel Corp. & Partners Own (MSFT)Stuart Frankel Corp. & Partners Own (NWS.A)Stuart Frankel Corp. & Partners Own (NXST)Stuart Frankel Corp. & Partners Own (NYX)Stuart Frankel Corp. & Partners Own (PDE)Stuart Frankel Corp. & Partners Own (PRST)Stuart Frankel Corp. & Partners Own (RDC)Stuart Frankel Corp. & Partners Own (ROK)Stuart Frankel Corp. & Partners Own (TBT)Stuart Frankel Corp. & Partners Own (TLM)Stuart Frankel Corp. & Partners Own (XOM)Stuart Frankel Corp. & Partners Own (XRX)Stuart Frankel Corp. & Partners Own (SDS)Stuart Frankel Corp. & Partners Are Short (QQQQ)Stuart Frankel Corp. & Partners Are Short (CL)CNBC.com with wires
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3cdede6808d8c4d402f27f8485cc7181 | https://www.cnbc.com/2009/10/08/stronger-earnings-will-send-markets-higher-strategist.html | Stronger Earnings Will Send Markets Higher: Strategist | Stronger Earnings Will Send Markets Higher: Strategist
The markets will continue to grind higher, propelled by forthcoming reports that will show growing strength in the economy, said Alec Young, equity strategist at Standard & Poor's, and Benny Lorenzo, CEO of Kaufman Brothers.
VIDEO0:0000:00Checking Market's Moves
"While we [at Standard & Poor's] think that the explosive gains that we've seen since March probably mean that the upside has to moderate a bit, we still think markets are heading higher," Young said.
Lorenzo said the markets are looking for top-line growth in third-quarter earnings reports, and if companies don't deliver, it will be a big blow. But Young doesn't anticipate this being a problem, he said.
"We think that there's more risk being out of the market than in it," he said. "Because we've seen so much cost-cutting, it means that at the slightest sign of top-line growth, a tremendous amount of money drops to the bottom line."
Lorenzo specifically recommended the technology sector, adding that Kaufman Brothers recently upgraded online retailer eBay .
Counterpoint:
Dow 10,000? Experts Call a Market Top
He added that he thinks the economy will show GDP growth in the third quarter, which it will maintain into 2010.
______________________________CNBC Data Pages:
Dow 30 Stocks—In Real Time Oil, Gold, Natural Gas Prices Now Where's the US Dollar Today?
______________________________CNBC Slideshows:
America's Biggest Trading PartnersMillion-Dollar Home Price Reductions
___________________________
______________________________Thursday's Top Gainers on the Dow
Home Depot
American Express
Caterpillar
DuPont
Microsoft
______________________________ Disclosures:
Lorenzo does not own any shares of eBay.
Disclosure information was not available for Young or his company.
Disclaimer
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