Entries for April 2008

TechTicker and WallStrip parse the latest in the battle for smartphone supremacy.

TechTicker's Aaron Task and Henry Blodget key off a Fortune report that the 3G iPhone will come priced at just $200.

Immigrants' families back in their home countries are feeling the pinch of weaker U.S. growth.

A new survey by the Inter-American Development Bank shows America's faltering economy, plus renewed enforcement of immigration policy, means less cash is being sent back to Latin American countries in the form of remittances.

Just 50 percent of Latino immigrants are sending money home regularly, compared with 73 percent a year ago, according to the survey.

American automakers are all still having big problems selling cars in the United States, but their international sales growth is staggering.

A quick look at first-quarter international sales shows General Motors posting a 20 percent jump, with notable strength in Russia, China, and Brazil. Some 64 percent of GM sales came from overseas. In Ford's first quarter reported last week, it earned a profit everywhere except in North America. European and South American demand boosted its profits to a surprise $100 million gain in the quarter.

Also, newcomers like India's Tata Motors are gaining clout. Most recently, Tata bought the Land Rover and Jaguar lines from Ford in a $1.7 billion deal approved last week by the European Union.

There's simply no stopping MasterCard and Visa. Both credit card giants are well on their way to becoming two of the Street's best performers for the first half, especially after this week's earnings reports. MasterCard shares rose almost 15 percent today after first-quarter profits more than doubled. Since Visa's May 19 initial public offering, its shares have surged more than 70 percent.

International growth is a big part of both stories, with half MasterCard's quarterly revenue coming from outside the United States. Foreign payments are adding to profits as the U.S. dollar remains weak.

Over at BusinessWeek, Ben Steverman rounds up the latest bullish money manager sentiment and points out some recovery in financials.

Among the riskiest equities these days are financial stocks, and they've been on a tear lately. One index of financial stocks, the Financial Select Sector SPDR Fund, is up almost 16% since the Bear Stearns debacle.

Meanwhile, MarketWatch technicians say a breakout after the conclusion of the Fed meeting tomorrow is possible as markets press three-month highs.

The release of any new Grand Theft Auto title, the hyperviolent bestseller from Take-Two Interactive, always makes waves in gaming circles. Wall Street is watching, too.

That's because Take-Two is currently trying to fend off a takeover by rival Electronic Arts in a tense $1.9 billion buyout offer that's become the gaming industry's equivalent of Microsoft's bid for Yahoo.

Markets looked almost respectable this morning, with investing giants Warren Buffett and Kirk Kerkorian stepping back into the fray.

Buffett is teaming up with Mars to buy chewing gum legend Wrigley in a $23 billion deal for a company he's long admired. Chicago's Wrigley is a standard Buffett investment (though he rarely takes a partner) in a sector with long-term growth potential. His other food holdings include Kraft.

Oh, how my nerdy Fed-watching heart fluttered during this exchange on last night's always genius "30 Rock."

On picking a successor:

Don Geiss: "A word of advice: Whoever you chose has got to be someone you trust."

Jack Donaghy: "I guess that rules out the Federal Reserve."

Donald Straszheim, a long-time China watcher at Roth Capital Partners, calls the bottom for Chinese shares. He cites a recently announced lowering of taxes on stock trading, known as the stamp duty tax, that comes as a long bout of fiscal tightening is finally starting to slow.

Interest rate hikes, tighter reserve requirements, rising inflation, worldwide market turmoil, and questions over global growth have all played a part in sending shares slumping mightily this year. The Shanghai Composite Index jumped almost 10 percent on the news after slumping to near 3000—barely half its value just six month ago. At its peak on Oct. 17, 2007, the index topped out at 6124.

"With equities down 38% year-to-date, and down 47% from the October peak, China equities have become much more attractive," Straszheim writes.

Craig Hodges, a Dallas fund manager who runs the Hodges and Hodges Small Cap Funds, stopped by the office this week to talk stocks. I grew up in nearby Grapevine, which is Spanish for "by the airport," so we wound up discussing a few of his favorite local names in addition to the usual market talk.

An extended Q&A is on the way next week, but he picked out one interesting Loan Star State name worth checking out if you're looking for a safe, long-lived investment.

Capping off another huge day in earnings news, Google posts after the market's close today.

Its shares are off more than a third this year, and this is shaping up as a definitive quarter for the world's best-known tech company.

I've been meaning to get back to Richard Thaler and Cass Sunstein's book, Nudge: Improving Decisions About Health, Wealth and Happiness.

It's their crack at a popular explanation of behavioral economics, where "the robot-like creatures who populate standard economic theories are replaced with real human beings."

Wall Street is rallying today as JPMorgan Chase, Wells Fargo, Coca-Cola, and a few others turn in respectable first-quarter results. A 200-plus gain in the Dow is always welcome, but hopes for a sustained round of surprises may be short lived. At a Lipper press event this morning, Reuters Estimates' Ashwani Kaul reminded us that the final tally will still equal a tarnished quarter.

"First-quarter earnings are going to be an absolute disaster," he said, predicting a 14 percent year-over-year decline in S&P 500 earnings, with most of the damage coming from financials.

Solar enthusiasts are eagerly awaiting earnings results from SunPower, which kicks off the industry's first-quarter earnings season on Thursday. They may also be interested to know that Claymore launched the first solar exchange-traded fund today.

The Claymore/MAC Global Solar Energy Index fund tracks a group of 25 mostly overseas solar companies, including equipment makers, materials producers, and service providers. Almost all of the index constituents are profitable. (IndexUniverse points out that the universe of publicly traded companies with interests in solar energy worldwide is small: roughly 200 companies.)

Guess what the fund's ticker symbol is? TAN.

For those who prefer investing in individual stocks, here are some solar picks from the experts.

Market bubbles and busts get blamed on a lot of things, but new research shows hormones may exacerbate the extremity of swings.

University of Cambridge researchers have discovered a link between daily profits and morning testosterone levels. They followed City of London traders through their days on the trading floor, occasionally stopping to swab a quick saliva sample.

Following James Pethokoukis's cover story in this week's U.S. News on the return of Big Government, it seems like a good opportunity to consider how government largesse affects a few popular corners of Wall Street—specifically, green tech companies where subsidies are the only thing keeping most of the industry economically feasible.

A new report by Laurence Alexander, Paul Clegg, and Michael McNamara at Jefferies & Co. says the technology is great and demand sound, but the real catalyst for successful green gains remains support from governments.

Guess who's gonna get through the recession just fine? The New York Times soothes the fears of a very small number of people: "Despite Tough Times, Ultrarich Keep Spending."

Snippet:

Seth Semilof, the publisher of Haute Living, a luxury magazine, said that luxury car dealerships that advertise with him are pushing Bentleys and Rolls-Royces at the expense of less extravagant cars like the BMW 5 Series.

"If you look at the $20 million-plus market, it's still strong as ever," Mr. Semilof said.

Bob Doll, BlackRock's vice chairman and global CIO of equities, just released a bullish outlook for stocks. Here are 10 positive factors he cites:

1) Sentiment measures, including the closely watched Investors Intelligence and Conference Board indices, are showing that overall investor sentiment is extremely pessimistic; historically, this often coincides with market bottoms.

2) Monetary policy in the current cycle is being eased earlier and more rapidly than is usual (in most downturns, monetary easing follows, rather than precedes, job losses). Additionally, the expanding of the discount window and the broadening of collateral have been important steps in overall policy easing.

3) The fiscal stimulus checks will be arriving soon, which should give a jolt to consumer spending.

Small literary magazines aren't my usual source of news on the credit crisis (I'm looking your way, Paris Review), but n+1 has posted the second of its long (and I mean looong) installments of Interviews With a Hedge Fund Manger on its site.

The first, published in January, offered a nice first-person take on the housing and securitization mess. The second focuses on the collapse of Bear Stearns.

General Electric's first-quarter earnings are the latest victim of the financial sector's credit problems, and the results are the latest example of why hoped-for growth in the world economy won't be immune from problems in the United States.

Here are the numbers that matter:

Profit from the highly international infrastructure division: up 17 percent.

Profit from the commercial finance division: down 20 percent.

That bifurcation shows just how tenuous American finances still are and puts a chink in assumptions touted by many advisers that investors could hide out during market turmoil by putting money in huge multinationals that would stay afloat thanks to demand from abroad. GE's overseas orders were absolutely huge, up 8 percent to $24 billion in the quarter, but core earnings still lost four cents to 44 cents a share from a year ago.

Before the bell this morning, GE's shares fell as much as 9.5 percent.