Daily Archives: April 2, 2009

Credit Card Interest Rates Keep Rising

burning-money-pic2If you have been expecting that all of the lower rates and all of the government bailout money was going to make your credit cards cheaper, perhaps you may need to rethink the scenario.  The TARP and TALF money may have kept these from getting even higher, but banking institutions are actually still very concerned about the waves of unemployed borrowers out there and probably the waves of underemployed or leveraged borrowers on the streets as well.  A report from CreditCards.com is showing how rates are not getting cheaper for borrowers, although this does not include the low “teaser” rates which many borrowers get when they sign up.

CARD SECTOR…… Avg.APR. Week Ago. 6Mo.Ago
National Average.. 12.35%… 12.00%… 11.38%
Instant Approval.. 11.49%… 11.29%… 11.58%
Balance Transfer… 11.52%… 11.18%… 10.08%
Bad Credit………… 11.79%… 11.79%… 10.87%
Low Interest……… 12.29%… 11.83%… 10.73%

We saw further gains in rates on rewards cards, cash back, and airline issue cards.  The surprise was on the bad credit side, because it stayed flat from last week at 11.79% (up from 10.87% six months ago).  But the other surprise was cards for students.  That also stayed flat at 14.9% week over week and has only risen 0.24% over the last six months.

JON C. OGG
April 2, 2009

Posted on: April 2, 2009 – 4:36 pm in Banking, Business Services, Financial Stocks

Rally & IPO Reception Could Heat IPO Market Again (CYOU, SOHU, MJN, BMY, LOPE)

money-stack-image4It has been no secret that the market for initial public offerings has been one of the biggest ghost towns in the financial markets.  The secondary markets and the bond markets are opening up capital to companies, even if it comes at historically expensive prices.  But still, IPO’s have been dead.  Based upon the recent move of Changyou.com (NASDAQ: CYOU) and Mead Johnson Nutrition Company (NYSE: MJN) and upon a few other factors like a nearly 25% rise from March lows, there could be some hope that the U.S. IPO market will start to open back up.
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Posted on: April 2, 2009 – 4:01 pm in IPOs, , , , ,

RIM Beats Its Own Targets (RIMM)

rimm-logo1Research in Motion Ltd. (NASDAQ: RIMM) posted earnings of $0.90 EPS and $3.46 billion in revenue.   Thomson Reuters (First Call) had estimates of $0.83+ EPS and $3.4 billion in revenue. The company had already guided down expectations in recent weeks to around $0.83 EPS and roughly $3.35 billion in revenue.  While the earnings data is important, today is really all about just how much tomorrow’s move had already priced into the news.
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Posted on: April 2, 2009 – 3:23 pm in Consumer Electronics, Earnings, Wireless,

S&P 500 Pushes Toward 25% Gain Since March 9th

bear6At 842, the S&P is pushing near a 25% gains since it bottomed for the year-to-date at 677 on March 9th.

The bank stocks continue an extraordinary run over that period. Citigroup (C) is up 120% and Bank of America (BAC) has risen nearly 100%. GE (GE) has recovered from concerns about its financial unit and it up 40% for the period. Read More »

Posted on: April 2, 2009 – 1:52 pm in Drug companies, Financial Stocks, Healthcare, Index, Internet, Large Cap Stocks, Media, Most Actives, Old Media, Pharmaceuticals, Technology, Technology Companies, , , , , , , , , ,

RIM Earnings to Dictate Smartphone Trends? (RIMM, AAPL, PALM)

rimm-logoResearch in Motion Ltd. (NASDAQ: RIMM) is set to report earnings after the close of trading today.  The maker of the BlackBerry, or ‘CrackBerry,’ has Thomson Reuters (First Call) estimates of $0.83+ EPS and $3.4 billion in revenue.  Be advised that those consensus estimates differ from other “consensus” sources.  While attention is going to be given to the formal numbers, the real interest is going to be just how much of tomorrow’s news was priced in ahead of the earnings event.
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Posted on: April 2, 2009 – 11:23 am in Consumer Electronics, Earnings, Wireless, , ,

Why Facebook Can’t Succeed

Letting readers call all the shots is great for community but bad for business

By Edmund Lee of The Big Money

Facebook, the world’s largest social network, suffered under the tyranny of its own users in early February after the company rewrote its long-standing terms of service. Many members interpreted the revised rules to mean that the company would own every bit of uploaded ephemera, resulting in closed accounts and a rash of anti-Facebook groups—on Facebook. Founder and CEO Mark Zuckerberg clarified the company’s position, but users wouldn’t budge, many commenting with the same four words: “Delete my account, please.” After three days, Facebook reinstated the original terms.

Read more…

Posted on: April 2, 2009 – 11:19 am in Uncategorized

FASB Bring Sense, and Cents, To Banks & Mark-to-Market (C, WFC, BAC, JPM)

money-stack-image3The Financial Accounting Standards Board, or FASB, has voted to loosen its rules for the (now dreaded) balance sheet act of mark-to-market valuation for accounting.  Many will argue that this is unfairly giving clemency to the troubled banks and financial institutions.  Some will argue that it violates free market principles.  And some will argue that it will save the system and limit the amount of extra capital needed in the system.  The term “toxic assets” will now be called something to the tune of “underperforming assets” or “exceptional assets.”

Citigroup, Inc. (NYSE: C) and Wells Fargo & Co. (NYSE: WFC) have been on record noting that the mark-to-market standard does not work in the current periods of inactivity or illiquidity.  This morning Ken Lewis of Bank of America Corp. (NYSE: BAC) told CNBC’s Becky Quick that it is a mark-to- maturity company as the bank holds the loans.  Jamie Dimon of JPMorgan Chase & Co. (NYSE: JPM) has defended mark-to-market, but with some exceptions and without the ultimate endorsement.  Even if you do interpret Dimon’s statements as supporting mark-to-market in all cases no matter what, you can always expect the guy with the strongest books that can hold up to any storm to say everyone else should be that way.

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Posted on: April 2, 2009 – 9:50 am in Accounting, Banking, Financial Stocks, Regulation, SEC, , , ,

Gold Production Expected to Fall (AU, GLD, GDX)

gold-image31AngloGold Ashanti Ltd. (NYSE:AU) has indicated that first quarter 2009 production will reach just 1.1 million ounces of gold, 2.5% lower than previous guidance. The company has maintained its previous guidance for production for the full year at 4.9-5.0 million ounces at a cash cost of $435-$450/ounce.
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Posted on: April 2, 2009 – 9:21 am in Commodities, ETF, Metals, , ,

ConocoPhillips Reveals First Quarter Blues (COP)

offshore-rig-pic51ConocoPhillips Corporation (NYSE:COP) has released its interim update for the first quarter of 2009. The news is mixed at best.  Exploration and production was hit by low prices for both crude oil and natural gas. Production is expected to be higher by about 30,000 barrels/day.
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Posted on: April 2, 2009 – 8:42 am in Oil & Gas,

Manufacturing Output In China Expands

China’s Purchasing Manager’s Index rose to 52.4 in March from 49 in February, the China Federation of Logistics and Purchasing reported. A reading above 50 signals expansion.

This was the first expansion in China’s manufacturing output in six months, spurred by the Chinese government’s 4 trillion yuan stimulus package.

Read more…

Posted on: April 2, 2009 – 8:28 am in Uncategorized

Jobless Claims Keep Rising; Is It Really A Lagging Indicator?

jobless-line-pic2The poor employment data from yesterday is being echoed this morning.  The weekly jobless claims from the Labor Department came in at 669,000, which  is a gain of 12,000 from the revised week before data which was originally put at 652,000.  The Bloomberg consensus data was expecting 655,000 for this week’s report.  This trend is setting us up for what may end up being a historic number tomorrow of non-farm jobs lost on the payrolls.
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Posted on: April 2, 2009 – 7:50 am in Economy, Labor & Unions

IPO ALERT: Sohu.com’s Changyou.com Hits Today (SOHU, CYOU)

money-stack-image2Sohu.com Inc. (NASDAQ: SOHU) is completing the first partial spin-off initial public offering of its Changyou.com (NASDAQ: CYOU).  This IPO will trade today and we are still awaiting the time stamp from NASDAQ.   We had been given a price range of $14.00 to $16.00 per share, and the IPO priced at the $16.00 level for some 7.5 million shares.  There are some solid merits behind this company, and there are some who are very cautious on it.

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Posted on: April 2, 2009 – 7:34 am in ADR, China, Entertainment, IPOs, Video Games, ,

Top Analyst Downgrades (AAP, AMZN, AZO, BDK, LAZ, MS, TXN)

These are some of the top pre-market analyst downgrades and negative research calls we have seen from Wall Street early this Thursday morning with about two hours until the market opens:

Advance Auto Parts (AAP) Cut to Hold at Citigroup.
Amazon.com (AMZN) Cut to Equal Weight at Barclays.
AutoZone (AZO) Cut to Hold at Citigroup.
Black & Decker (BDK) Cut to Underperform at Credit Suisse.
Lazard (LAZ) Cut to Neutral at Credit Suisse.
Morgan Stanley (MS) Cut to Neutral at Credit Suisse.
Texas Instruments (TXN) Started as Sell at Auriga.

JON C. OGG

Posted on: April 2, 2009 – 6:42 am in Analyst Calls, , , , , , ,

Top Analyst Upgrades (CTV, DPS, COOL, PBG, TRW, WLL)

These are the top pre-market analyst upgrades and positive research calls we have seen from Wall Street this Thursday morning:

CommScope (CTV) Raised to Outperform at Baird.
Dr. Pepper Snapple (DPS) Raised to Buy at Deutsche Bank.
Majesco Entertainment (COOL) Raised to Buy at Needham.
Pepsi Bottling (PBG) Raised to Buy at Deutsche Bank.
TRW Automotive (TRW) Raised to Neutral from Underweight at JPMorgan.
Whiting Petroleum (WLL) Started as Overweight at Thomas Weisel.

JON C. OGG

Posted on: April 2, 2009 – 6:38 am in Analyst Calls, , , , , ,

An Economics Lesson From Norway

winterNorway has something to teach almost every other nation in the developed world. Unemployment in the country moved to 2.8% last month. That is very high by Norway’s standards. Last year the figure was only 1.7%.

The easiest explanation for the low jobless rate is that Norway is a large net exporter of oil and gas. But, the explanation is not adequate. Read More »

Posted on: April 2, 2009 – 5:16 am in International Markets

Geithner Says He Can Fire Bank CEOs

bank3Secretary Geithner has been late to every party he has attended since talking over Treasury. His plans have often been tardy and full of holes. He seemed to redeem himself with the new public/private program to buy toxic assets from banks. It does have critics who say it will eventually cost taxpayers and enrich hedge funds, but those concerns appear to be subordinate to fixing the big financial firms. Read More »

Posted on: April 2, 2009 – 5:04 am in Banking, Regulation, ,

China Working On Leading Global Car Industry

water-liliesTwo years ago, the Chinese were viewed as car industry amateurs. Most of their design and manufacturing skills came from joint venture partners in the US and Europe. Chinese cars where shown at the international auto shows and the reaction was always the same. The car built in China was too crude to sell well in the large developed car markets.

Of course, the same observations of primitive design and production were made about Japanese and Korean cars. Those criticisms are lost in the fog of time. And China may have an edge that neither of the other Asian nations did. Read More »

Posted on: April 2, 2009 – 4:33 am in Autos, China,

What If The G-20 Summit Works?

bank2What if the G-20 is like the stock market four weeks ago? No one thought the market would go up over 20% in less than five weeks. Many people did not think it would go up at all.

The expectations for the G-20 meeting are so low that a great deal of positive action may come out of it, depending on whether the analysts looking at the agreements that think that regulation and stimulus are the tonics for the global recession. Read More »

Posted on: April 2, 2009 – 4:15 am in Economy, International Markets, Politics

Media Digest 4/2/2009 Reuters, WSJ, NYTimes, FT, Bloomberg

newspaper1According to Reuters, the G-20 began the work of addressing the economic crisis.

Reuters reports that US auto sales may have bottomed.

Reuters reports that the House backed new laws for pay curbs at bailed out firms.

Reuters reports that Hank Greeenberg said AIG’s (AIG) problems are not his fault.

Reuters reports that CEOs often wait too long to file bankruptcy.

Reuters reports that Netflix (NFLX) delivered its 2 billionth movie.

Reuters reports that the US is facing danger of a second recession next year.

Reuters reports that Costco (COST) closed its home service stores.

The Wall Street Journal reports that Qwest (Q) may sell its long haul unit. Read More »

Posted on: April 2, 2009 – 3:23 am in Press Digest, , , , , , , , ,

Asia Markets 4/2/2009

sunset1Markets in Asia rallied.

The Nikkei rose 4.4% to 8,720.

The Hang Seng was up 7.2% to 14,595.

The Shanghai Composite was up .7% to 2,425.

Data from Reuters

Douglas A. McIntyre

Posted on: April 2, 2009 – 3:04 am in International Markets