Perhaps Warrent Buffett was asked and perhaps he was not, but Citigroup (C) ended the week with more money in its checking account.
According to The Wall Street Journal "Prince Alwaleed bin Talal is expected to be joined by other investors, including the China Development Bank, to invest in Citigroup."
The Chinese entity is expected to invest roughly $2 billion.
Citi probably needs more money, so this is not the end of it.
Douglas A. McIntyre
This was a great week for gold as the yellow metal continued to forge new highs, though many investors wondered when the effect will spill over to the junior miner sector, which still languishes overall. Diamond plays continued to radiate heat, and the soft commodities gained an even bigger foothold in the mainstream media – while Countrywide Financial slipped away. Here’s what some of our Stockhouse contributors were saying over the course of the week:
On Monday…
Luke Brocki informed readers that Cameco was back up to speed with its Eagle Point mine operation, though it didn’t do much for the spot price of uranium in Cameco’s news fails to budge U3O8 spot.
Darryl Robert Schoon gave a brief history lesson to Stockhouse readers as he looked at the rise and fall of the “era of credit” in Christmas on Threadneedle Street and the coming depression.
Matt Stiles examined the state of major currencies going forward into the new year in his final installment of the six-part series Themes for 2008.
Danny Deadlock highlighted two sub-10-cent picks in the tech sector in Two tech plays under a dime.
Boris Sobolev, of Resource Stock Guide, reported on Sabina Silver – Opportunity overlooked by the market, for the benefit of Stockhouse readers.
Zinc, lead and potash made the grade in Monday’s Buzz on Commodities report, called The world still needs zinc and lead.
Trader Thoughts presented a lengthy and informative report on current market conditions and the likelihood of a U.S.-led recession in Weekend market review from Trader Thoughts.
Then on Tuesday…
Mary Anne and Pamela Aden encouraged investors to keep riding that gold bull in Mega move underway; stay with it.
Dan Sweeney returned to Stockhouse with a look at some unconventional fossil fuel extraction options, including oil shale, in Hundred dollar a barrel oil and unconventional petroleum sources.
Community contributor MontyHigh offered a unique method of projecting the short and mid-term trends in financial stocks in Why I’m short the financial stocks.
Those with their ears to the ground regarding the subject of potash weighed in for this Buzz on Commodities report, Potash insiders speak their minds.
For Buzz on the Boards, Stockhouse visited the Bullboard of a Canadian bio-pharmaceutical company in Thallion Pharmaceuticals targets cancer with ECO-4601.
Trader Thoughts identified eight Internet / tech stocks that are poised to do well in 2008, in an article called Trader Thoughts’ mighty eight internet/tech picks for 2008.
On Wednesday…
Don Rodgers provided a helpful summary of some common trading terms – and included some advice on how to prevent brokers from loaning your shares to short sellers. Read more in Is that Comrade Ed?
What exactly is the root cause of the current debt crisis? Steven Saville tackled the question in Elephants and Market Stabilisers.
Iron ore took the top spot in Wednesday’s Buzz on Commodities edition, called Enter iron ore.
Points International (TSX: T.PTS, Bullboards) saw it’s share price slide, but that didn’t get Bullboard members down, as Buzz on the Boards discovered in Points International keeps the faith on a down day.
Troy Schwensen presented his outlooks for a number of short and medium term scenarios for gold and silver in an article entitled This is just the beginning.
Then on Thursday…
Portfolio manager Adrian Mastracci of KCM Wealth Management contributed his first article to Stockhouse with a list of 10 guidelines for long-term investing in Portfolio Insight: 10 pearls of wisdom to better investing in 2008.
Roy Martens shared his opinion on how far gold will go in 2008: Higher. Read about silver, copper, oil and the US dollar in $1,000 gold coming soon, a technical view.
Buzz on the Boards took time out to observe investor sentiment on the Arise Technologies (TSX: T.APV, Bullboards) board in Arise Technologies loses ground.
As the bubble bursts and the Fed tries to inflate a new one somewhere else, what investment category will be the recipient? Greg Silberman says commodities in The case for gold and oil stocks.
Gold liked the sound of Fed chairman Ben Bernanke’s words, as Buzz on Commodities reported in Bernanke speaks, gold and silver listen.
Finally, on Friday…
Nancy Zambell reviewed of a number of investing books – the oldies but goodies. Head on down to your local library and check out The investor’s bookshelf.
Ever heard of liquid ammonia? You have now. Bud Conrad of Casey Research shared an info-packed interview with Simmons & Co. founder and CEO Matt Simmons about peak oil and alternative energy solutions. Do not miss The Casey Files: Peak oil & beyond.
Stacey Laliberte, in his first contribution of 2008, reported on Yamana Gold (TSX: YRI, Bullboards) in Going for gold with Yamana Gold.
The week’s final Buzz on Commodities edition highlighted a few comments on potash, oil and gold in More potash, less oil.
IncrediMail Ltd. (NASDAQ:MAIL) saw its shares just crushed today. The company made the announcement that it received a notification from Google January 9th that Google (NASDAQ:GOOG) disengaged the Google Adsense program from the IncrediMail web site.
What is interesting is that it claims this was an "AdSense partnership" with the company, although Adsense is a program that anyone can set up on their website with a few simple lines of code. Google has disabled ads to search result pages displayed through IncrediMail’s account.
That’s not too good, and the only thing that comes to mind is a highly unusual amount of clicks or the belief that robots are pinging ads. We don’t know if Click Fraud was the reason or not and frankly don’t want to speculate without comments from both sides, but that is the first thing that comes to mind. IncrediMail also noted that in both 2006 and 2007, search revenues powered by Google’s AdSense program made a significant contribution to its results.
IncrediMail said it is currently clarifying the matter with Google and simultaneously exploring alternative relationships, with Google and other vendors. The bad news is that if there was a serious impropriety then another advertiser is going to either be reluctant to take over the relationship. The good news is that if that wasn’t the case then Yahoo! (NASDAQ:YHOO) or Time Warner’s (NYSE:TWX) AOL and Advertising.com properties have a potential huge new account.
IncrediMail isn’t based in the U.S. It is out of Israel and self-described itself as "a global leader in email solutions and offers products that create an entertaining email experience." It also says on its website, "IncrediMail generates revenues by selling premium software products, offering subscriptions to its content database, licensing and co-branding the Incredi- brand to operators of third-party websites; and by selling paid advertising, sponsored links and keyword search capabilities on IncrediMail’s website and email client."
It appears that there is only 43,000 or so shares trading on an average day. Today shares fell about 29% down to $3.24 on more than 790,000 shares, under the 52-week trading range of $4.46 to $10.69. Ouch. Shares slid further in after-hours trading down to $2.93. At the close, IncrediMail had a market cap of $30.45.
Some chat rooms are claiming that this is now close to its cash values, although we aren’t positive if that is really the case if you back out the potential woes here. The truth is that it is simple to turn on a new program as it is only a simple code to install. But if there are issues with the company’s programs having highly unusual activity, then AOL and Yahoo! will either not take them on at all or they’ll only take them on at a significantly discounted rate. We could speculate and we could comment on what others are saying online, but we’ll leave that to the company itself.
Jon C. Ogg
January 11, 2008
It will be 2011 until ViaSat launches a new satellite to help get broadband coverage to people in rural areas. WiMax may be available sooner.
Accroding to The New York Times "ViaSat plans to resell satellite broadband capacity through existing Internet service providers."
In the meantime, put an antenna on the cow.
Douglas A. McIntyre
Matt Simmons, founder of Houston-based Simmons and Co International believes that oil will be above $100 for some time to come.
"Demand is far more durable than anyone ever thought," Simmons told Reuters in an interview. "We’re on an insatiable growth curve."
Douglas A. McIntyre
Vivendi’s Blizzard could have a new trick up its sleeve in MMORPG (massively multi-player online role playing games) besides its pending merger. There is a report on the MMORPG Blog noting a "rumor" that the crack-like addictive World of Warcraft may actually be coming to video game consoles rather than solely being available on PC’s. Normally we might not address this one, but on the heels of the Consumer Electronics Show in Las Vegas and having been a longstanding reader of this site it has broken some development issues in the past.
If this occurs, there may be a few million more WoW addicts out there. And they’ll be paying a monthly fee for it too. There are some discrepancies here and there are no assurances this will occur for the already existing game.
Activision (NYSE:ATVI) would also stand to benefit here as its shareholders will own a part of the combined Blizzard-Activision. WoW is one of the few ongoing games in the MMORPG that has had this long of a run with the continued fervor and enthusiasm.
What is probably in the works is that the natural evolution of this MMORPG trend is one that is leaving millions of gamers out of the action (and out of the MMORPG revenue stream). Many gamers, including your truly, play video games via their consoles to escape the confines of being at the PC. This is a natural progression even if it is not WoW that makes it to consoles. Future editions could make the jump, and many others will in the future. Most online sessions on console sessions tend to involve a handful or two of players rather than Millions of users. We think this is just the natural progression whether the current versions of WoW or future versions make it or not.
When you combine this with a soon to be independent Bungie Studios out of Microsoft (still pending status) (NASDAQ:MSFT), it looks like the video game sector will have some excitement this year even without any new console system releases this year or next. In theory this could lead to more Xbox 360 console sales, and it likely wouldn’t be bad for Sony’s (NYSE: SNE) PS3 either.
GameStop (NYSE: GME) shares are trading lower despite raised guidance as a weak consumer may still affect some video game spending. Shares of Activision are down roughly 1% today too.
Jon C. Ogg
January 11, 2008
Just a couple of weeks ago McDonald’s (MCD) was the toast of the town. Same store sales were great and its breakfast menu was selling like hotcakes. It said it would put coffee bars in 14,000 US stores, which might be worth $1 billion in revenue per year.
Now investors have turned on the fast good company like a pack of dogs. MCD is down over 6% to $54.50.
The stock has had a fantastic run over the last two years. Perhaps it has gotten too expensive in the eyes of some.
Or, perhaps the market thinks the consumer is so poor that he cannot afford a hamburger.
Douglas A. McIntyre
Shares in Cadence Pharmaceuticals (CADX) are off as much as 50% on news that one of its drugs had failed in trials. According to Reuters "the biopharmaceutical company said one trial did not meet its main goal of significantly reducing pain following abdominal gynecologic surgery, while the other trial met its primary target of a significant reduction of fever."
The company loses about $10 million a quarter on no revenue. At the end of the third quarter it has $56 million in cash. Not much runway
Douglas A. McIntyre
Most major Wall Street firms are now predicting a recession (or saying we’re in one). Financial services firms, retailers, cable companies, and phone companies are hurting. Credit card companies are suddenly seeing a slowdown in consumer spending and an increase in delinquencies. Etc.
The dominoes are falling, but at many big media companies the current refrain is still a cheery "No recession here!" continued here…
247WallSt.com brings you the daily recap of the printed word from major publications:
REUTERS:
WALL STREET JOURNAL:
NEW YORK TIMES:
FINANCIAL TIMES:
BARRON’S:
OR………….
Goldman Sachs has an upgrade and a downgrade in the alternative energy sector today, although it notes positive headwinds in the sector continuing for 2008.
The brokerage firm likes companies with large potential markets that can be supplied, likes those with a competitive advantage, and those that are established that already have a track record. It also noted that out of the three areas of solar, clean coal, and fuel cells, it really prefers Solar the best as a subsector.
Jon C. Ogg
January 11, 2008
These are not the only big analysts calls this Friday morning, but these are the ones that 24/7WallSt.com is focusing on this morning:
DEUTSCHE BANK Downgrades Gold Stocks:
Jon C. Ogg
January 11, 2008
Amazon (AMZN) appears to have landed a deal to get Sony BMG as a customer for its music download service on top of deals with EMI, Universal, and Warner, according to Apple (AAPL) Insider.
Apple has a deal with only one music publisher–EMI.
Douglas A. McIntyre
Bank of America (BAC) has bought Countrywide Financial (CFC) for about $4 billion.
The move makes BAC the largest mortgage lender in the US.
Douglas A. McIntyre
Markets in Europe were modestly lower at 7.10 AM New York time
The FTSE fell .7% to 6,177. British Airways rose 4.5% to 280. Diageo fell 4% to 1009.
The DAXX dropped .4% to 7,685. Infineon was down 4.4% to 6.67. Metro was up 2.1% to 55.42.
The CAC 40 fell .5% to 5,376. AXA (AXA) rose 1.3% to 25.98. Danone fell 3.8% to 57.9
Data from Reuters
Douglas A. McIntyre
Merrill may have to write off another $15 billion for Q4.
If the Fed and Treasury want to do something for banks, mortgage companies, and investment houses, they can stop lending them money. In some ways access to capital only makes matters worse. Ready capital allows the companies to look to quick write-offs. Clean up the books. Hope for a 2008 rebound.
One radical proposal would be to allow big financial institutions to defer writing off parts of their portfolios which are illiquid. Those could be defined as securities in which their is no ready market. Financial instruments backed by certain mortgages would be an example.
One of the reasons that sovereign funds look at buying banking shares is that they are willing to wait two or three years to see if asset values on troubled paper improves. The Citadel bet at E*Trade (ETFC) was based on this thinking
Sovereign funds putting dollars into Citigroup (C) and Merrill Lynch (MER) are assuming that there will be a partial marking up of troubled assets. If it happens, earnings could bounce back in late 2008 or 2009.
The Fed could allow the process to occur through a deferral of write-downs. Or, it can throw money at the problem.
Douglas A. McIntyre
The No.2 man at Verizon (VZ) told an investing conference that the telecom company was not seeing any effect from the economic slowdown. Management from News Corp (NWS) made similar comments recently. The head of CBS (CBS) said that he had seen no impact on his local stations. He commented: We have not seen anything” that points to a recession in any of CBS’ businesses, which he said all are showing growth.
While AT&T (T) has said it sees slowing in its consumer landline operations, it does say that it business and wireless segments are doing fine. Its shares and Verizon’s are trading near their 52-week highs. Wall St. must share management’s confidence.
The search is on for industry pockets which might avoid a big slowdown in GDP. Investors are desperate not to have their money in industries which may suddenly fall apart. American Express (AXP) shareholders learned that the hard way recently.
The trouble with being an investor in a "recession proof" industry is that buyers tend to pile into the stocks. There is an unnatural rise in their value. Too much demand for perceived safety. When any bad news does come out, shareholders are badly injured trying to get to the fire exits.
The cautious view on this is that virtually no big business is going to dodge the bullet of falling GDP and that no stock is safe. But, investors will not accept the premise that they can’t out-think the market. Someone is always smarter than the wisdom of crowds. High IQ trumps the herd mentality every time.
Those are the investors who usually get crushed.
Douglas A. McIntyre
After airline stocks took a nearly unprecedented beating during the last few weeks on concerns about higher fuel costs and a falling economy, they rallied like mad yesterday. Some of its may be that the selling was a bit overdone. But, the biggest cause was news that Delta (DAL) was considering a merger with Northwest (NWA) or United (UAUA).
Mergers in the airline industry are often used to keep one or the other carrier out of Chapter 11. The courts have been the refuge of the flying business for decades. If a carrier can’t pay its bills, it goes into bankruptcy. When things get better, it comes out again. Creditors and unions usually get the short end.
The assumption that putting two big airlines together will save money is undoubtedly true. Compared to overall costs, those savings are probably very, very modest. Running Northwest costs about $12 billion a year. So much of that goes into fleet costs, fuel, and labor that there is not much to cut. Employees can be pushed out over time, but the unions are sensitive about it.
The largest single problem with merger two carriers is that consumers already hate airlines. The quality of service keeps dropping. They don’t serve free peanuts anymore. The planes are dirty.
The head of US Air recently admitted that its merger with America West had been a train wreck of the first order. Reservation systems don’t work. The employees of each company dislike one another. To put a point on it, the new company has all the hallmarks of an operator that is driving customers to rival airlines.
A merger between Delta and another large airline is not going to solve any problems. The modest savings of the combination will likely be offset by customer defections due to the poor service that comes from integrating two big carriers.
Like many other business proposals, it looks good on paper.
Douglas A. McIntyre
Yesterday, news hit the market, beginning with a report in The Wall Street Journal, that Bank of America (BAC) was thinking of buying troubled mortgage bank Countrywide Financial (CFC). At one point CFC was up nearly 70% and closed up 51%.
In side the Davey Jones’ Locker known as the Countrywide balance sheet there are hundreds of mortgage backed securities and tens of thousand of mortages at one stage or another of being paid by borrowers, or not. No human knows exactly what they are worth, or, to be more blunt, are not worth. It may take billions of dollars to save the institution. That is money which will have to be raised somewhere.
Bank of America could be getting a deal. Through its own lending operations it may be able to deduce what the guts of Countrywide look like. Probably not. Those who look on the bright side think that BAC could get a huge lending operation with millions of customers and might be able to pay a song for the place.
Herb Greenberg thinks that the Federal government has a hand in the deal, not wanting to see a big lender fail. Perhaps the Fed is making some guarantee about helping to cover losses. Herb is often right, so there is good reason to believe that this theory holds some water.
Investors poured into the CFC stock yesterday adding $1.5 billion to the company’s market cap. In reality, they have no idea what the firm is worth. That number could well be zero.
What is certain is that the heavy volume in the stock proves that there are as many suckers in a market on the way down as there are when a stock is rising. They are people who know nothing about the intrinsic value of a thing and are likely to pay a price for that.
Douglas A. McIntyre
Based on the Nasdaq short interest in major stocks listed on the exchange as of December 31, shares short in most big tech companies fell. The numbers are compared to those on December 14.
Shares short in Yahoo! (YHOO) fell 16.4 million to 39.1 million. Short interest in Intel (INTC) fell 14.1 million to 55.6 millon. Shares short in Level 2 (LVLT) fell 13.7 million to 153.8 million. Shares in Qualcomm (QCOM) fell 5.8 million to 20.1 million.
The largest increase in shares short at a Nasdaq listed company was a rise of 27.7 million to 81.3 million at E*Trade (EFTC)
Largest Short Position
Company Shares Sold Short
Level 3 153.8 million shares short
Microsoft (MSFT) 112.1 million
Sirius (SIRI) 105.0 million
Charter (CHTR) 95.3 million
E*Trade 81.4 million
Intel 55.6 million
Comcast (CMCSA) 44.5 million
Yahoo! 39.1 million
Largest Increases In Short Position
Company Increase In Shares Short
E*Trade 27.7 million increase
UTStarcom 8.5 million
Syntac-Brillian 5.0 million
Cheesecake Factory 4.5 million
Panera 3.3 million
Largest Decreases In Short Position
Company Decrease In Shares Short
Yahoo! 16.4 million decrease
Intel 14.1 million
Level 3 13.7 million
RF Micro 12.5 million
Amgen (AMGN) 8.2 million
Comcast 7.3 million
Qualcomm 5.8 million
Data from NYSE and WSJ
Douglas A. McIntyre
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