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| Weekly Wrap Up |
September historically is a poor-performing month for the market, and the first week of September did not break from the pattern. After two weeks which ended with mostly gains, last week was disappointingly full of losses. The week got off to a bad start, with all the major indices posting losses Monday through Wednesday, and although the market tried to recover over the next two days, the Dow Jones closed the week with a 103 point loss, the NYSE with an almost 72 point loss, and the Nasdaq just shy of a 10 point loss. The week contained some major M&A news, with the purchase of Marvel Entertainment (MVL: Charts, News, Offers) by Walt Disney (DIS: Charts, News, Offers), and the sale of Skype by eBay (EBAY: Charts, News, Offers). Many financial sector companies struggled early in the week, including Morgan Stanley (MS: Charts, News, Offers), CIT Group (CIT: Charts, News, Offers), and Citigroup (C: Charts, News, Offers). Part of the reason for the upturn at the end of the week was some positive economic news, including a significant increase in worker productivity and a slight decrease in initial jobless claims. On Friday, unemployment rates was revealed to have risen to 9.7%, although some analysts still continued to speculate if the positive news was indicative of the end of the recession. Crude oil fell over $5 during the week, closing Friday at $68.02 per barrel, and gold prices continued to soar. More Market News
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| Economic News |
The housing recovery mirage
Is the housing bust over?
Shares of Toll Brothers (TOL: Charts, News, Offers), Hovnanian (HOV: Charts, News, Offers) and KB Home (KBH: Charts, News, Offers) and other builders have surged. The exchange-traded fund that tracks the group has nearly doubled since March.
Home starts have risen for five straight months, while sales of new homes recently hit their highest level since last September. Prices are up as well: the Case-Shiller index of national house prices rose 2.9% in the second quarter, ending a three-year decline.
These signs -- as well as anecdotal reports about house shoppers growing more willing to write a deposit check -- have executives at homebuilding firms declaring the worst is over.
But housing boosters have forecast turnarounds repeatedly since the market peaked in 2006, only to be proved wrong by plunging prices. And skeptics say they're wrong again now. (Source: CNN Money) Click here to read the full article
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Further evidence points to recession bottoming out
Productivity and factory orders are up as the Economy continues to flash signals that the longest recession since World War II is coming to an end. However, worries remain about how durable the rebound will be given lingering problems in the labor market.
Many economists are looking for the overall economy, which has been shrinking for a year, to begin growing again in the current July-September period. But the problem is that unemployment is expected to keep rising even as the nation's gross domestic product returns to positive territory.
The concern is that if businesses don't switch in coming months to rehiring workers who have been laid off, consumers won't have the ability or confidence to boost spending. Since consumers account for 70 percent of total economic activity, higher Consumer spending is seen as critical to making sure any economic recovery is sustained. (Source: Southern Ledger) Click here to read the full article
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Unemployment Rate Hits 9.7 Percent As Economy Sheds 216,000 Jobs In August
The national unemployment rate rose to 9.7 percent -- the highest level since June 1983 -- as the U.S. economy shed 216,000 jobs in August, the government announced on Friday morning. That's up from 9.4 percent in July.
By a broader measure that includes forced part-timers and people who'd like to work but aren't looking, the national unemployment rate reached 16.8 percent -- up a staggering 6 percent from this time last year.
The pace of job cuts has steadily slowed since the beginning of the year, when monthly losses exceeded 700,000 in January.
The total number of unemployed is 14.9 million, roughly double the number at the start of the recession in December 2007. (Source: Huffington Post) Click here to read the full article
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| Business News |
6 Things You Should Know About Disney Buying Marvel
As you probably know by now, the big entertainment news of the day is The Walt Disney Company (DIS: Charts, News, Offers) buying Marvel Entertainment (MVL: Charts, News, Offers). Shortly after the $4 billion dollar deal was announced, a shareholder conference call was held to explain some of the details. If you didn’t have a chance to sit through the call yourself, don't worry, as we’ve got you covered. Below you will find our quick guide to what is going on - based on the information we have in front of us.
1. Disney has an "If it ain't broke…" viewpoint toward Marvel Studios. Walt Disney President Bob Iger said specifically that Disney will have an "if it ain't broke…" attitude when it comes to the future of Marvel films. All of the creative control - including use of 3D, which characters will get movies, etc - will remain in the hands of the people who know the Marvel Universe best: the people at Marvel. Sure, this might change down the road, but the initial sentiment is that Disney does not intend to come in and take control of Marvel's creative world. (Source: Film School Rejects) Click here to read the full article
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Nickel and Diming at Southwest Airlines?
When does an airline cross that mythical line between offering fair value to customers and nickel-and-diming them? Hard to say, but Southwest Airlines (LUV: Charts, News, Offers) is clearly moving that way.
To me, one of the differentiators in the airline fee frenzy was whether an airline charges extra for a reserved seat. It’s one thing to offer better seating to your best customers and people traveling on full-fare tickets. It's another to essentially force people to pay more just to avoid the risk of a middle seat. Discount carriers like Spirit Airlines and AirTran Airways hit you with obnoxious seat fees - you want to reserve an aisle or window seat, you need to pay extra for the privilege.
And now Southwest is moving a lot closer to them. (Source: WSJ Blogs) Click here to read the full article
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Pfizer will pay $2.3B to settle allegations of illegally promoting drugs
Pfizer Inc. (PFE: Charts, News, Offers) and a subsidiary agreed to pay $2.3 billion to settle charges that it illegally promoted certain drugs. Missouri will get $22 million as its share of the settlement, and Kansas will get $6 million.
The U.S. Department of Justice said in a Wednesday release that the settlement with Pfizer and its Pharmacia & Upjohn Co. Inc. unit is the largest health care fraud settlement in the agency's history. The agreement resolves criminal and civil liability of Pfizer in the case.
Missouri Attorney General Chris Koster said in a separate release that Missouri's share of the settlement "shows why it is so important to our state to stay focused on Medicaid fraud."
The DOJ said in its release that Pharmacia & Upjohn agreed to plead guilty to violating the Food, Drug and Cosmetic Act for misbranding anti-inflammatory drug Bextra with the intent to defraud or mislead. Pfizer withdrew the drug from the market in 2005. (Source: BizJournals) Click here to read the full article
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| Technology Focus |
Challenging Microsoft With a New Technology
Microsoft's (MSFT: Charts, News, Offers) No. 1 rival is a household name, Google (GOOG: Charts, News, Offers). But a strong candidate for No. 2 is a company that is scarcely known outside the technology industry: Vmware (VMW: Charts, News, Offers).
"Vmware is definitely a threat," said Gary Chen, an analyst at IDC, a research firm. "After Google, it is the company Microsoft fears most."
Google and Vmware pose a broadly similar challenge to Microsoft, by potentially undermining the dominance of its most lucrative products, desktop software and operating systems. While Google represents the attack from above, Vmware is the assault from beneath.
Google, the search giant, offers free advertising-supported software for e-mail, word processing, calendars and spreadsheets online, as alternatives to Microsoft's popular Office products. For Web-based programs like these, it is the browser - not an operating system like Windows - that is the vital layer of software on the computer. (Source: CNBC) Click here to read the full article
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Did Ebay Make a Profit on Skype Or Not?
Isn't that interesting.
At $2.75 billion, Skype's latest valuation is nearly identical to the amount eBay (EBAY: Charts, News, Offers) paid four years ago, $2.6 billion. The number short-circuits headline writers, who after eBay announced its intention to sell Skype, were probably poised to write something like: "Ebay Takes Loss on Skype Experiment".
So, take that. But does the announcement mean that the much-maligned Skype acquisition was actually profitable for eBay?
The short answer: Not so fast.
From an accounting standpoint, eBay already wrote down Skype's value by $1.4 billion in 2007 after the deal failed to achieve the synergies eBay had expected. Conveniently, it will now be able to write that value back upwards.
On an operational basis, the Skype foray hasn't been a big money loser. (Source: WSJ Blogs) Click here to read the full article
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Marketplace Throwdown: Wal-Mart vs. Amazon
The biggest brick and mortar retailer and the biggest online retailer are facing off. The stakes? Control of a vast sea of third-party retailers looking to sell their wares online, and ultimately winning over consumers.
Discount retailer Wal-Mart (WMT: Charts, News, Offers) has started selling products from smaller businesses on its own Web site, both to get a piece of their revenue and to increase their online offerings. That means the retail giant is going head-to-head against Amazon.com (AMZN: Charts, News, Offers), which already runs a massive third-party marketplace.
Through Walmart Marketplace, the retail giant says it’s added about one million new items to its online offerings, according to The Wall Street Journal.
Wal-Mart hopes to make its site the most visited and most valued site on the Web, the Journal says. But whether it can even compete against Amazon, let alone eBay (EBAY: Charts, News, Offers) this late in the game has yet to be determined. (Source: Main Street) Click here to read the full article
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| Your Money |
The Mistakes We Make - and Why We Make Them
What was I thinking?
If there's one question that investors have asked themselves over the past year and a half, it's that one. If only I had acted differently, they say. If only, if only, if only.
Yet here's the problem: While we know that we made investment mistakes, and vow not to repeat them, most people have only the vaguest sense of what those mistakes were, or, more important, why they made them. Why did we think and feel and behave as we did? Why did we act in a way that today, in hindsight, seems so obviously stupid? Only by understanding the answer to these questions can we begin to improve our financial future.
This is where behavioral finance comes in. Most investors are intelligent people, neither irrational nor insane. But behavioral finance tells us we are also normal, with brains that are often full and emotions that are often overflowing. And that means we are normal smart at times, and normal stupid at others. (Source: Wall Street Journal) Click here to read the full article
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