Toyota, Japan’s biggest car maker by volume, plans to sell more than 1 million subcompacts in more than 100 countries and regions, such as China, Southeast Asia, India and Brazil, by 2015.

Toyota does not have many other places to go for expansion. The European markets are nearly dead. China’s market has slowed considerably. Toyota’s sales have picked up a great deal in America, but the market has become progressively more competitive as U.S. car companies has been revived and large firms, including Volkswagen, BMW and Mercedes, have aggressively exploited the one region in which they have an ongoing chance for rising sales volume.

A New Web Browser

For some reason, Yahoo! (NASDAQ: YHOO) wants to be in the crowded web browser arena. Its new product is called Axis. It is meant to compete with Apple’s (NASDAQ: AAPL) iPhone, iPad and iPod Touch products. But Apple already has its own Safari browser. And the industry is controlled by Microsoft’s (NASDAQ: MSFT) Internet Explorer, Google’s (NASDAQ: GOOG) Chrome, and Firefox. It is a good guess that Yahoo! wants to use Axis to move further into mobile search, but it already has lost most of that market to Google. And there is no reason for the great majority of users to switch from their preferred browser when they move from computer to portable device.

Galaxy S3’s U.S. Launch

The wildly successful Samsung Galaxy S III will be available in the United States starting on June 1. But the first wave of handsets will not be sold by carriers. Amazon.com (NASDAQ: AMZN) will sell the new Galaxy without a wireless contract. Wireless companies underwrite the costs of smartphones because they get two-year subscriptions from customers. Amazon will sell the Galaxy S III for $800. The product will be “unlocked” so it can be used on a number of networks. There is some debate over whether its powerful processor is set to work on superfast 4G LTE networks, or if a less-powerful processor will be required to operate on those systems. The Samsung Galaxy is widely regarded as the primary competitor to the Apple iPhone 4S, so early sales in the U.S. will prove whether that perception is true.

MSNBC.com Buyout Talks

Comcast’s (NASDAQ: CMCSA) NBCUniversal operations is in talks with Microsoft to takeover the part of MSNBC.com that it does not already own. The rumor was reported in Adweek. Microsoft may not want to part with the stake. NBC could use it as a portal to increase traffic to its media sites. But Microsoft has its large MSN.com operation, which has a close relationship with MSNBC.com. As Microsoft works to drive traffic to its Bing search engine, MSNBC.com is strategically important.

Douglas A. McIntyre

Costco Sales

Costco (NASDAQ: COST) continues its extraordinary run as the most successful big-box retailer. Its club membership system has bettered the more traditional store operations of Walmart (NYSE: WMT) and Target (NYSE: TGT). Net sales for the quarter that ended May 6 increased 8% from last year to $21.85 billion. Net sales for the first 36 weeks increased 10% to $65.54 billion. Same-store sales were up 5% for the most recent quarter. Costco’s shares trade at $83.50, up from a 52-week low of $70.22. Costco’s revenue per employee was $569,488, compared to $206,117 for Walmart.

Best IPOs

A quick review of the 25 largest U.S. IPOs ever shows how badly Facebook has done in early trading. Most of the companies on the list have tremendous revenue, traditional business plans that they have been able to freshen, and large profits. Among these are Visa (NYSE: V), UPS (NYSE: UPS), General Motors (NYSE: GM), MetLife (NYSE: MET) and Prudential Financial (NYSE: PRU). The thing that stands out most about the list is how few tech companies it has. Google (NASDAQ: GOOG) is on the list, of course. But most of the companies are financial ones or firms that are manufacturing based. (Data from CapitalIQ.)

Facebook Investigation

The debate over whether some large investors were warned about a revenue downgrade of Facebook (NASDAQ: FB) continues. Several media have carried stories about Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS) passing on numbers that showed lowered forecasts for earnings and revenue in the second quarter and the full year. The attorney general of Massachusetts has begun an investigation into whether information was selectively disclosed. Morgan Stanley insists that it was in compliance with all the regulations that set rules for IPO behavior. Even if Morgan Stanley makes its case successfully, the news likely will keep individual investors out of the market. Many of these investors have turned to mutual funds, exchange traded funds and fixed income paper to protect their interests. That behavior has been reinforced by the Facebook IPO.

Douglas A. McIntyre

Facebook IPO Mess

The Facebook (NASDAQ: FB) IPO mess has worsened considerably in just 24 hours. The federal government will examine why analysts at Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) lowered their financial forecasts for the social network just ahead of the IPO. The concern is that favored clients knew about the changes, but the broader investment world did not. Nasdaq claims that if it had known how badly its technical glitches would be, it would have suspended the IPO until there was full confidence shares could trade smoothly. There are also rumors that Facebook’s CFO David Ebersman decided at the last minute to increase the number of shares that would be offered by 25% without enough conversation with his entire team of bankers. Ebersman discussed his plans with lead underwriter Morgan Stanley. But the decision caught many large investors by surprise and caused them to wonder whether the market had enough of an appetite for all of the new shares. Based on how Facebook has traded since the IPO, the answer is no.

Fiat and Mazda

Fiat and Mazda will build a small convertible together. Fiat is the controlling shareholder of Chrysler. The deal is an example of how large car companies that face slow sales in Europe and slowing sales in China have started to band together to save costs. General Motors (NYSE: GM) and Peugeot plan to jointly operate production facilities in Europe. GM’s Opel division is bleeding money in the region. Peugeot is one of the most financially troubled European car companies. GM also has made in investment in Peugeot. And trouble is probably what binds Fiat and Mazda together. Fiat’s sales in Europe have collapsed. Mazda sales run well behind Japanese rivals Toyota (NYSE: TM), Honda (NYSE: HMC) and Nissan. Nissan already has a close alliance with Renault. Fiat and Mazda do not have the capacity to easily develop many new models on their own.

Getty Images for Sale

Private equity firm Hellman & Friedman, which owns Getty Images, has begun the process to sell the company it bought for $2.4 billion in 2008. It reckons using investment banks Goldman Sachs and JP Morgan (NYSE: JPM), it can get $4 billion. Getty has one of the world’s great inventories of photos, some of them artistic icons taken by photographers years ago. The company gets a ready stream of licensing revenue for use of its inventory. The Financial Times points out that there have already been a number of deals in the sector. That by itself may hurt interest and bring down the price that outside investors would pay.

Douglas A. McIntyre

The Nasdaq OMX Group Inc. (NASDAQ: NDAQ) gets the nod from some for the exchange’s inability to handle the volume of trades when the stock first began trading. Lead underwriter Morgan Stanley (NYSE: MS) gets its share of harsh words too. Even General Motors Co. (NYSE: GM) gets in line for some blame after cancelling its Facebook advertising deal. And non-stop coverage of the IPO surely could have given one the impression that this was the deal of the century.

But if you bought the stock, the real bad guy is looking back at you from your mirror. We tried to warn you.

Facebook’s shares are down about -6% at $32.01 after 20 minutes of trading this morning.

Paul Ausick

The economic crisis abruptly ended the gradual decline in global youth unemployment rates during the period 2002–07. Since 2007 the global youth unemployment rate has started rising again, and the increase between 2008 and the height of the economic crisis in 2009 effectively wiped out much of the gains made in previous years. Globally, the youth unemployment rate has remained close to its crisis peak in 2009. At 12.6 per cent in 2011 and projected at 12.7 per cent in 2012, the global youth unemployment rate remains at least a full percentage point above its level in 2007. Nearly 75 million youth are unemployed around the world, an increase of more than 4 million since 2007. Medium-term projections (2012–16) suggest little improvement in youth labour markets. By 2016, the youth unemployment rate is projected to remain at the same high level.

The rise in part-time employment adds to the anemic creation of highly productive and well-paid jobs. The damage, if it is a decade long or longer, almost certainly will weigh on the economy well beyond the next decade.

Japan Ratings Cut

Credit rating agency Fitch Ratings cut Japan’s sovereign ratings to A+ and posted its outlook as “negative.” It is one in a long line of downgrades in the ratings of large developed nations. The announcement undermines faith in a rapid economic recovery in the old order, which used to include the United States, Europe and Japan. Japan may not be effected much, at least in its ability to raise money on preferential terms. As the economic and financial situation in the European Union worsens, there are limited investment options for global capital markets investors. This has kept U.S. Treasury yields at all-time lows, despite a cut in its AAA rating by S&P last August. Fitch wrote about the Asian nation:

Japan’s gross general government debt is projected to hit 239% of GDP by end-2012, by far the highest for any Fitch-rated sovereign. This debt ratio would also have risen 61pp since the global financial crisis. This compares with a median of 39pp for OECD economies and 8pp for ‘A’ range sovereigns. Japan is less of an outlier when account is taken of its large pile of sovereign financial assets (worth about 80% of GDP on Fitch’s calculations), but net indebtedness is still rising strongly.

Japan’s Fiscal Management Strategy envisages declines in the government debt/GDP ratio only from FY21. Fitch regards this as a slow pace of consolidation given the scale of Japan’s debt. Moreover, Japan’s consolidation strategy is subject to political risk. The government’s key revenue-raising plan is to hike the consumption tax to 10% by FY15 from 5% now. The measure is back-loaded (planned to start in FY14) and remains highly politically controversial.

Windows 7 Forecast

Microsoft (NASDAQ: MSFT) CEO Steve Ballmer claims that 350 million Windows 7 enabled devices will ship this year. According to Bloomberg, Ballmer claims, “It makes Windows the most popular single system.” Compared to what, a skeptic might ask. Windows 7 is the past, and Windows 8, slated to be released this fall, is the future. Ballmer did not have as much to say about that. Microsoft may ship many tens of millions of Windows 8 enabled devices, but Wall St.’s most significant concern is that very few of these will be mobile devices, the supposed future of operating systems as the demand for PCs falters. Microsoft’s largest bet on mobile versions of Windows is its partnership with deeply wounded handset company Nokia (NYSE: NOK). Its new smartphones, part of its Lumia brand, have only sold modestly well, and continue to be swamped by sales of Apple (NASDAQ: AAPL) iPhones and iPads, and a new generation of Google (NASDAQ: GOOG) Android-powered devices. Ballmer’s comments about Windows 7 mean little.

IMF on the UK

The new International Monetary Fund report on the UK (“United Kingdom—2012 Article IV Consultation Concluding Statement of the Mission”) has a pessimistic tone. But the agency believes that the country can help its own cause through stimulus and monetary policy. These cut against the current trend of government austerity and a lack of intervention of any significance from the Bank of England. The IMF analysts write:

Policies to bolster demand should help close the output gap faster. It needs to be recognized that policy options in this regard come with risks, including uncertainty about their effectiveness. However, these risks need to be weighed against the risk of weak demand that leads to persistently slow growth and high unemployment that become entrenched in decisions made by consumers and investors.

To meet that goal, the Cameron government would have to reverse course and replace its expense cuts, at least in part, with national stimulus. That would be well off the charted path of set by Cameron and is highly unlikely to happen.

Douglas A. McIntyre

“Economists responding to the latest NABE Outlook Survey expect moderate growth in the near-term with improvement coming in the post-election year,” said NABE Outlook Survey Chair Shawn DuBravac, chief economist at the Consumer Electronics Association.

Almost all key indicators, particularly housing and unemployment, will improve, but not really by much, if the numbers are taken one by one. Monthly jobs added are expected to be 188,000 for nonfarm payrolls. This is up from 170,000 in the forecast done a quarter ago. In 2012, housing starts are expect to move up 18% to 720,000 and then to 850,000 in 2013. None of these numbers, if reached, would be enough to drive the U.S. economy higher quickly.

Low Gas Prices

Gasoline prices reached a three-month low, according to the carefully watched Lundberg Survey. Prices nationwide for regular fell to $3.7833 for the two weeks that ended May 19. This represents a drop of 6.1 cents from the two weeks prior. The data are based on a canvassing of 2,500 stations. Lundberg reports that prices peaked in the two weeks that ended April 6, when they were only four pennies short of $4. AAA Fuel Gauge data supports Lundberg. It showed yesterday’s price for regular gas based on the nationwide average at $3.689, down from $3.727 a week ago and $3.871 a month ago. The national average for a gallon of premium finally has dropped below $4 to $3.991, AAA reports. As the summer driving season begins next weekend, prices were supposed to rise. But WTI crude is below $92 and falling. Less than three months ago, the price was higher by more than $10. Based on anecdotal evidence, oil demand from China has fallen. Of course, the recession in Europe has killed oil demand as well.

Whither the Dow?

The DJIA starts the week at 12,269.38. Plenty of forecasters believe it will fall to 11,000 long before its makes it back to 14,000. The index is down 7% in less than two months. The so-called headwinds against stocks number at least three. The most obvious is trouble in Europe. The recession there not only will hurt the demand for goods and services from U.S. companies, there could be bank balance sheet fallout for some American financial firms, if Greece defaults. China’s economy also has hit a snag, making it another region where demand for U.S. products likely will falter. Last, key data about the U.S. economy has been relatively poor. The number of jobs added per month has dropped well below the 200,000 pace set earlier this year. Housing starts have improved somewhat, but home prices have not. If there will be any stimulus added to the economy by the federal government, it will not be until after the election — which means next year. And both individuals and companies are uncertain about what their tax status will be. Congress could decide to allow relatively low tax rates, which have been in place since the Bush administration, to expire.

Insider Trading Trial

Rajat K. Gupta, a former head of McKinsey & Co. and director of Goldman Sachs (NYSE: GS), will go on trial for insider trading. He will sit in federal district court today and hear the charges against him read. Gupta allegedly gave Raj Rajaratnam, former head of the Galleon Group hedge fund, confidential information about two companies. The information helped create $63 million in illegal trading profits. Much of the evidence presented will be based on phone bills that show Gupta’s calls, during which he may have talked about the confidential matters. Other evidence is based on his trading records. A number of legal experts do not think there are enough smoking guns to show Gupta’s guilt. U.S. prosecution of insider trading would be badly hurt if a prized target like Gupta gets off.

Douglas A. McIntyre

Gas and Oil Prices

Gas and oil prices continued to sell down on worry that the problems of Europe could spread across the world and tip many nations back into recession. Concerns about Europe also have put a cap on oil use there. Oil was off another eight cents and dropped to $92.27, near a multimonth low. The average price of a gallon of regular gasoline dropped again yesterday, according to the AAA Fuel Gauge. It fell to $3.713, down from $3.899 a month ago and $3.926 a year ago. The dip may cause an uptick in travel among Americans this summer. That would tend to simulate the economy as people spend money on vacations, even if they are modest ones.

Galaxy III Launch

Samsung’s launch of its new Galaxy III smartphone has begun to look like an Apple (NASDAQ: AAPL) iPhone event. Nine million of the model have been preordered worldwide. The number is even more impressive since the smartphone will not be available in the United States for months. Samsung is considered the only viable competitor to Apple. And the Galaxy III will be released before the iPhone 5, which probably will not launch until fall. Samsung has developed an important edge over Apple that the American company cannot easily overcome. The Galaxy III runs on superfast 4G networks. These networks have become the core of most wireless subscriber marketing campaigns. With the Galaxy III, Samsung will extend its advantage.

Yahoo! Changes

The trend of never-ending executive changes at Yahoo! (NASDAQ: YHOO) continues. New interim CEO Ross Levinsohn fired some of the people predecessor Scott Thompson hired. The most notable of these worked with Thompson at the eBay (NASDAQ: EBAY) PayPal division. This executive — Sam Shrauger — is gone. Levinsohn also promoted executives to take over Yahoo!’s large global media operations, which was Levinsohn’s job until recently. Levinsohn giving up his previous position is a sign that he plans to stay as CEO. Levinsohn also folded e-commerce operations, the core of Thompson’s turnaround plans, back into the company’s traditional structure.

Douglas A. McIntyre

Japanese GDP

Japan’s surprisingly sharp rebound in gross domestic product shows how resilient its economy can be despite years of growth that has been hobbled by a sort of stagflation, and more recently, the value of the yen. GDP rose at an annualized rate of 4.1% in the first quarter. Almost 40% of the improvement was due to government expenditures to rebuild parts of Japan after the horrible earthquake a year and a half ago. But even the speed with which the government turned on stimulus to fuel this is impressive. The Japanese consumer also was active in the period. Sales of cars and other consumer goods were strong. The earthquake may have shattered a large part of the economy, but many consumers have put that behind them, at least as far as their spending habits are concerned.

Shaky Greece

The situation in Greece almost certainly will drag on for another month. A caretaker government is about to take over ahead of June elections. Greece may say it cannot make the next debt payment, which is due before voters go to the polls. It could become obvious, well before the vote, that enemies of austerity will be clear winners. There is still no consensus about what happens if Greece leaves the eurozone. Some economists believe the impact will be benign. Debt held by banks and the International Monetary Fund could be wiped out. It is too early to predict what that would mean, other than to say some large private financial firms may barely survive it, if pessimists are correct. Greece’s own banking system took a blow, which is a signal for what will continue to happen to the financial companies there. The European Central Bank said it would not provide capital to four Greek banks it believes are insolvent. As Greeks continue to take money out of bank accounts, the trouble will only get worse.

Verizon Plan Changes

Verizon (NYSE: VZ) will end its unlimited data plan for existing subscribers. As customers upgrade to superfast 4G LTE service, Verizon will use the opportunity to take away something many consumers thought was routine pricing. 4G networks carry larger amounts of data than 3G ones. Verizon will make the case that the expense of customers who use these networks is high. Verizon has a strong enough lock on the American market to hold most customers to such a plan. So does AT&T (NYSE: T). Sprint (NYSE: S) and T-Mobile are in another class. They cannot alienate their smaller pools of customers and need to try to take subscribers from their larger rivals. Their one point of leverage could be to keep 4G unlimited plans and promote them as superior for heavy users of data on 4G networks.

Douglas A. McIntyre

Oil Prices Fall

WTI crude reached a six-month low, which is positive news for nearly everyone other than the oil and gas industry. The price moved below $92, down from close to $110 less than 90 days ago. One reason is that U.S. supplies of oil are higher than expected. But the most substantial reason is belief that demand in Europe will be historically low for this time of year. A drop in the rapid expansion in China’s gross domestic product may also be a cause for lower prices. The most important effect on the U.S. economy is that gasoline prices are plummeting. The cost for a gallon of regular based on a nationwide average calculated by the AAA is $3.728, compared to $3.727 the day before and $3.907 a month ago. The fall from the year ago price of $3.955 is extraordinary. The price of premium appears ready to drop below $4 for the first time in months. There is school of thought among some economists that whatever factors might slow U.S. GDP growth in the middle of this year will be partially offset by the lower cost of gas for American families that live paycheck to paycheck. With regular gas above $4, many could not be consumers of anything other than bare necessities. As gas prices fall, that should change.

GM and Facebook

Investors do not seem to care that General Motors (NYSE: GM) has dropped Facebook as an advertising medium. The press made a great deal of the news, but GM’s investment was only a few million dollars over the past year. Maybe skeptics about Facebook’s future reason that other very large advertisers will be unhappy with the result of their marketing on the social network and will withdraw as well. But, in the face of the GM news, Facebook as raised the number of shares it will sell in its initial public offering to 421 million, according to several media reports. That is up 25% from the number expected just a few days ago. This would set the amount of money collected by Facebook at $16 billion and value the company at over $110 billion. Many analysts believe that Facebook’s valuation is much too high. But that has not stopped a nearly insatiable appetite for ownership in the company. Perhaps Facebook users want to be shareholders are well. It works that way with Apple (NASDAQ: AAPL), so there is a precedent.

Relational Investors vs. Pepsi

Shareholder activist firm Relational Investors has bought $600 million of PepsiCo (NYSE: PEP) shares, according to the Wall Street Journal. Large companies are not immune from the kind of attacks recently experienced by AOL (NYSE: AOL) and Yahoo! (NASDAQ: YHOO). The market has been concerned about the stewardship of Pepsi CEO Indra Nooyi for some time. Soda sales have dropped in many parts of the world, in part because of health concerns. That has caused Pepsi and rival Coca-Cola (NYSE: KO) to rely more on sales of bottled water, noncarbonated drinks and snacks. Soda sales have been so huge for so long that replacing them is almost impossible. PepsiCo is too large for almost any one shareholder to attack. Its market capitalization is more than $100 billion, so the Relational Investors position is inconsequential, whether or not the group has reasonable concerns.

Douglas A. McIntyre

CalPERS vs. Jamie Dimon

The California Public Employees Retirement System (CalPERS) remarked that it will pressure the JP Morgan (NYSE: JPM) board to split the CEO and chairman roles to water down the power of long-time leader Jamie Dimon. Under most circumstances, the proposal would be ludicrous. But JP Morgan just admitted that it lost $2 billion on a series of trading positions. Top management at the investment unit already has been forced out. No one has shown conclusively that Dimon knew the details of the risks or the trades themselves. There are concerns that he did push his traders to improve results, which could have fostered a dangerous attitude toward risky positions. CalPERS does not have the votes to win the issue, but it can further embarrass Dimon and his board.

Facebook’s IPO

The price of Facebook’s IPO is likely to fall between $34 and $38. That is above the previous forecast of $28 to $35. Of course, this means that demand for shares has risen sharply in the past few days. This is despite evidence that Facebook’s revenue growth has slowed and its mobile sales are almost nonexistent. The lure of the offering remains Facebook’s 900 million users. Investors believe that there must be some way to turn that population into tens of billions in high-margin revenue. Facebook still may be able to pick the lock of display advertising, which it has been unable to sell at high prices. Whether it can win a race to smartphones against other social networks, like Twitter, and search companies like Google (NASDAQ: GOOG) is less likely. Only so many angels can sit on the head of the mobile device pin.

Wireless Customer Satisfaction

Customer satisfaction with wireless subscriber companies steadied last quarter, according to the widely followed American Customer Satisfaction Index. On a 100-point scale, AT&T (NYSE: T) and T-Mobile each posted a 69. Verizon’s (NYSE: VZ) wireless division has a score of 70, and Sprint-Nextel (NYSE: S) came in first at 71. The news is good for Sprint, which has been criticized for poor customer service in the past. It probably will not keep the company from bleeding subscribers. AT&T and Verizon Wireless continue to take customers in a U.S. market that is not growing. What is notable about the figures is that 70 is a low score. Even though the four companies have similar levels of satisfaction, it is at a poor level.

Douglas A. McIntyre