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| Weekly Wrap Up |
Equities had a pretty strong holiday-shortened week with the blue chip DJIA gaining 1.74% and the broader S&P 500 rising 2.59%. The popular opinion among traders at the beginning of the week was that the stock market had come too far too fast and post-Labor Day, when most people are back at work full-time, volumes will pick up and the market will correct. The latter part of the prediction did not come true last week as stocks continued to rise. At this point, some market watchers are genuinely puzzled as to the dichotomy between the stock market and the underlying economy which continues to be weak, with the most common explanation of course being that the equity markets are forward looking. Some investors are probably also taking the contrarian view and betting that a U-shaped recovery is in the offing and therefore, stocks will still continue to be the place to be. Gold crossed a $1000 per ounce for the first time since February as investors who are concerned about long-term weakness in the dollar seek refuge. The Federal Reserve’s beige book survey indicated that manufacturing activity is picking up but consumer spending remains weak. Small cap stocks, traditionally a pretty risky area, had a strong run last week, providing another indication that risk appetite is returning relatively quickly. More Market News
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| Economic News |
What's Behind the Gold Price Surge
After spending the summer in the doldrums, the price of gold has started to perk up in September--enough to push the yellow metal near the $1,000-per-ounce mark. Last week, gold jumped 3.6% in just two days, peaking at $997.80 an ounce on Sept. 3. By the end of the week, it had pulled back slightly--the December futures contract on the New York Mercantile Exchange settled $1.60 lower, at $996.10 on Sept. 4. On Sept. 8, the December contract moved above $1,000--gold's highest level since March, 2008--amid a further decline in the U.S dollar.
There's no shortage of rationales that investment strategists and economists have offered for the biggest price spike in gold in six months--from increased purchases by China's central bank to inflation fears--but these seem like mostly after-the-fact justifications for what's occurred, according to Philip Klapwijk, chairman of Britain-based metals consulting firm Gold Fields Minerals Service (GFMS). (Source: BusinessWeek) Click here to read the full article
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Why Wall Street’s set to fail again
President Obama is speaking tonight, apparently to assure us all that his administration has the financial crisis resolved. Don't bet on it. To see why, let me take you back a couple of years.
In the fall of 2007, facing billions in losses on Merrill Lynch's holdings of toxic assets, then-CEO Stan O'Neal approached his board at least twice to sell Merrill or merge it with a major bank -- and at least twice got rejected. Merrill was bleeding, he warned, and might not survive the huge losses on its balance sheet. The board's response: No way.
The firm would be selling out cheaply, was the general consensus. Key board members believed that, if all else failed, Merrill would survive because the government wouldn’t let it die.
The Federal Reserve, they expected, would do what it had done for Wall Street for years -- basically bail out firms that had made disastrous decisions by handing them virtually free money through low interest rates. (Source: NY Post) Click here to read the full article
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Is this rally for real?
If you had the courage to buy stocks when the market hit bottom in March, congratulations! The S&P 500 and Dow Jones industrial indexes are near highs for the year after soaring around 50% since then.
But if you've been waiting on the sidelines as improving unemployment, housing, and GDP numbers surprise Wall Street pros, you may now be wondering, Should I still buy in, or is the rally over?
To try to answer that question, we talked to some of the smartest market watchers we know. Despite some big worries about 2010, most expect the combination of market momentum and government stimulus spending to carry stocks higher for the rest of this year. (Source: Fortune) Click here to read the full article
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| Business News |
Cadbury Gags On Kraft Bid
Cadbury (CBY: Charts, News, Offers) is being loud and clear about the inadequacy of a $16.7 billion takeover bid from Kraft (KFT: Charts, News, Offers), as it preps investors to snub the suitor's initial offer.
Chairman Roger Carr complained in a public letter to Kraft's chief executive, Irene Rosenfeld, that the idea of Cadbury being absorbed into Kraft's "low growth, conglomerate business model," was an "unappealing prospect which contrasts sharply with our strategy to be a pure play confectionery company." He added on Monday that Cadbury's board was confident in remaining an "independent company." (Source: Forbes) Click here to read the full article
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Gorman earned respect of heavy hitters
James Gorman, the 51-year-old Australian who will take over as the next chief executive of Morgan Stanley (MS: Charts, News, Offers) in January, does not have the classic background one might expect for a Wall Street chief executive. He has never traded bonds, sold stock, run an initial public offering or brokered a merger between industrial giants.
But as a recent protégé of John Mack, Morgan Stanley's outgoing chief, Mr Gorman has met and earned the respect of several of Wall Street's heaviest hitters. In recent months, he has been introduced to a series of financial titans, including Henry Kravis of Kohlberg Kravis Roberts. In 2007, Mr Gorman was part of the Morgan Stanley team that advised Blackstone (BX: Charts, News, Offers) on its IPO. His involvement and strategic insight made an impression, according to Tony James, president of Blackstone. (Source: Financial Times) Click here to read the full article
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The Beatles were a triumph of capitalism
When Brian Epstein died of an overdose of sleeping pills in the summer of 1967, he was only 32 years old. He was buried in Liverpool at the Long Lane Jewish Cemetery, mourned over by his doting mother Queenie. The Beatles, the group that Epstein had made famous, had to stay away. There would have been too many members of the press and too many fans. The rabbi told the congregation that "Brian Epstein was a symbol of the malaise of our generation".
It was an incredibly insensitive remark. Who says such a thing at the funeral of a 32-year-old? It was also very wrong. But it did reflect one faint glimmer of understanding. Epstein was indeed a symbol of his generation. And I think understanding that helps to understand both the Beatles and the 1960s. If you write the history of the 1960s with a bigger role in it for Brian Epstein, you write a different history of the 1960s and see the present differently.
In 1965, when the Beatles received the MBE, George Harrison quipped that the letters stood for "Mr Brian Epstein". But there hadn't been an insignia for the group's manager and his early death meant that there never would be one. It is easy to see why Harold Wilson hadn't added him to the list. He was just a suit, after all, not the talent. (Source: Times Online) Click here to read the full article
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| Technology Focus |
Why Google Voice is a huge threat to the wireless industry
Apple (AAPL: Charts, News, Offers) has drawn a lot of attention lately for banning applications from its iPhone. There was the Me So Holy app (which let users paste their face on a picture of Jesus), the Hottest Girls app (featuring nude photos) and the disturbing Baby Shaker app (shake your phone to quiet a crying baby). But the latest app to get the boot has been the most controversial rejection yet: Google Voice. The decision, made last month, immediately drew the attention of the U.S. Federal Communications Commission (FCC), which demanded that Apple explain why the app was rejected. There were even whispers that iPhone's exclusive U.S. carrier, AT&T (T: Charts, News, Offers), was behind the ban.
Why such a backlash? Because there's a lot at stake. Google Voice is more than just another fun iPhone add-on. It could rock the very foundation of the traditional telecommunications landscape. By offering consumers the promise of a "Google number" for life, which replaces their existing home, business and cellphone numbers, Google Voice is a bold attempt by the Internet giant to wedge itself between consumers and their cellphone carriers. (Source: MacLeans) Click here to read the full article
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Six Reasons Why T-Mobile Should Not Buy Sprint
There's one critical thing to understand about big merger rumors - they usually don't make it past the rumor stage. The idea that T-Mobile's parent Deutsche Telekom might buy Sprint (S: Charts, News, Offers) has popped up periodically (most recently in 2008) among stock-market analysts, but it's a horrifyingly bad idea that fortunately never makes it past the idea stage.
The rumor raised its head again today, but the idea hasn't improved in quality at all. (Source: GearLog) Click here to read the full article
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Full stream ahead for some HDTVs
The battle for your living-room real estate rages on. Internet-connected HDTVs featuring on-demand movies, real-time weather, news and more are available from most TV manufacturers.
While watching a TV show, you can track an eBay (EBAY: Charts, News, Offers) auction or tweet on Twitter in a separate window on the screen. Weather updates run unobtrusively along the bottom of your high-definition TV display. Movies, increasingly available in HD, are rented, streamed and available to watch almost instantly, all with the push of a button on the TV remote control.
The promise of streaming HD entertainment and browsing the Web without connecting any extra gear is enticing. But before you get rid of your cable box, computers, Apple TV, Blu-ray players or any other boxes nestled under your set, have a look at what different companies are offering. (Source: MSNBC) Click here to read the full article
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| Your Money |
The Year of Investing Cautiously
As the one-year anniversary of Lehman's collapse approaches, many have been focusing on how everything seems to have changed, from investors' reduced appetite for risk to consumers shunning conspicuous consumption. I've concluded that what is most surprising isn't what has changed, but what hasn't.
The collapse of Lehman Brothers last year marked the beginning of the most severe financial crisis of my lifetime, drawing comparisons to the 1929 crash and other events that led to the Great Depression. Without benefit of hindsight, of course, there was no way to know this. The Dow Jones Industrial Average actually rallied last year on news of the government's takeover of Fannie Mae and Freddie Mac, in the belief the rescue would resolve the crisis. With benefit of hindsight, investors would have sold their stock portfolios and re-invested in March, when stocks bottomed. (Source: Wall Street Journal) Click here to read the full article
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Food prices drop, and there may be more to come
Grocery shoppers are finally seeing some reprieve from last year's steep price increases.
Food prices are dropping on some key items as retailers slash prices to better compete and food makers do more promotions and pass along savings from lower ingredient and gasoline costs.
It's welcome relief for American consumers who are looking to save money as they cope with stagnant incomes, job loss and economic uncertainty.
Prices for dairy, meat, fruits, vegetables and bread have all fallen.
A Labor Department price index of food sold to be eaten at home fell for the seventh time in eight months in July. The index, which is part of the consumer price index, fell 0.5% in the most recent month and is down 0.9% in the past 12 months. (Source: USA Today) Click here to read the full article
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