What's Happening In The Financial World (11/25/2011) Apple Customer Loyalty, Walmart India

The sovereign debt forest fire moved to Hungary, the debt of which was downgraded to junk status by Moody’s . Other factors were even more important as the fate of the EU becomes more difficult. Portugal’s debt was cut to junk by rating agency Fitch. Portugal has been out of the news recently as attention has focused on Italy and Spain. But, a failure of Portugal would pressure eurozone rescue funds nearly as much as Greece did. The two countries have similar GDPs. Whatever hope the capital markets had that ECB loans, or its purchase of sovereign debt on the open market, would improve regional financials has been dashed by the central bank’s unwillingness to act.

The “Black Friday” shopping weekend got off to a good start. Experts believe foot traffic will pick up sharply this year, compared to last. Lines at large big box and department stores were long as stores opened at midnight. It remains to be seen if these things matter. Shoppers may not be buyers because they think retail establishments will cut prices even more as the holiday season progresses. There is also ample evidence that people who go to stores return home and look online for bargains on the goods they have seen in bricks and mortar establishments.

India has opened its retail market to foreign companies. Firms like Walmart (NYSE: WMT) can now own 100% of large store chains. India is the second biggest country in the world by population. But, India has local retail operations which have been established for decades. Walmart has a mixed history in overseas markets. It has done well in Mexico and China. It has failed in Germany and South Korea and struggled in Japan. It may find its big box, high discount formula is poorly suited to India as well.

Yet another study has been released that shows Apple’s (NASDAQ: AAPL) strength in the wireless market. Research firm Gfk reports that 84% of iPhone users would pick the smartphone as a replacement for their current model. Phones based on the Google (NASDAQ: GOOG) Android operating system have less loyal owners. Only 60% of current owners would be buyers of the smartphones with the same OS again. The Gfk data reinforces recent studies which show that most of the profits in the smartphone industry are generated by Apple. Other new research reported that Apple apps make developers much more money than Google apps do

Douglas A. McIntyre