U.S. markets are closed Monday in observance of Memorial Day.

The U.S. dollar index is trading down 0.27% today, now at 83.5710. The GSCI commodity index is down 0.2% at 624.86. WTI crude oil closed down 0.1%, at $94.15 a barrel, to close the week down about 2%. Brent crude trades up 0.2% at $102.59 a barrel. Natural gas is down 0.6% today at about $4.24 per million BTUs. Gold settled down 0.4% today at $1,387.50, about 1.6% higher than last week’s close.

The unofficial closing bells put the DJIA up about 9 points to 15,303.33(0.06%), the NASDAQ fell less than 1 point1 (-0.01%) to 3,459.14, and the S&P 500fell -0.06% or less than 1 point to 1,649.60.

There were a several analyst upgrades and downgrades today, including:

• Procter & Gamble Co. (NYSE: PG) raised to ‘buy’ at UBS;
• The Wendy’s Co. (NASDAQ: WEN) raised to ‘buy’ at Janney;
• Cubist Pharmaceuticals Inc. (NASDAQ: CBST) cut to ‘neutral’ at Janney;
• Melco Crown Entertainment Ltd. (NASDAQ: MPEL) cut to ‘neutral’ at Macquarie; and
• Aixtron SE (NASDAQ: AIXG) cut to ‘neutral’ at Goldman Sachs.

Earnings reports since markets closed last night have resulted in some price changes for reporting companies as of the last half hour of trading today:

• Aeropostale Inc. (NYSE: ARO) is down 10.9% at $14.68;
• America’s Car-Mart Inc. (NASDAQ: CRMT) is up 1.2% at $46.59;
• Gap Inc. (NYSE: GPS) is down 1.9% at $40.56;
• Marvell Technology Group Ltd. (NASDAQ: MRVL) is down 0.1% at $11.30;
• Pandora Media Inc. (NYSE: P) is down 3.9% at $16.50 after posting a new 52-week high of $19.37 earlier today;
• Ross Stores Inc. (NASDAQ: ROST) is up 0.7% at $65.55;
• Salesforce.com Inc. (NYSE: CRM) is down 5.5% at $43.23;
• Zumiez Inc. (NASDAQ: ZUMZ) is down 1.2% at $X31.63X;
• Abercrombie & Fitch Co. (NYSE: ANF) is down 7.9% at $50.05; and
• Foot Locker Inc. (NYSE: FL) is down 5.2% at $33.82.

Before markets open Tuesday morning we are scheduled to hear earnings from Canadian Solar Inc. (NASDAQ: CSIQ) and Tiffany & Co. (NYSE: TIF).

Some standouts among heavily traded stocks today include:

Ziopharm Oncology Inc. (NASDAQ: ZIOP) is up 29.2% at $2.61. The cancer drug company had no news, which is often interpreted to be good news. Perhaps its investors looking for another biopharma company to match the price runup in MannKind Corp (NASDAQ: MNKD) earlier this week.

Facebook Inc. (NASDAQ: FB) is down 3.7% at $24.12. The social media company appears about to do battle with Google Inc. (NASDAQ: GOOG) over an Israeli company that makes a smartphone traffic app.

Sears Holdings Corp. (NASDAQ: SHLD) is down 13.6% at $50.33. The department store owner posted another big net loss in the first quarter.

Stay tuned for Tuesday. U.S. markets are closed on Monday. We have noted the following events on Tuesday’s schedule (all times Eastern):

• 9:00 a.m. – S&P Case-Shiller house price index
• 10:00 a.m. – Conference Board consumer sentiment index
• 10:00 a.m. – Richmond Fed manufacturing index
• 10:30 a.m. – Dallas Fed manufacturing survey
• 11:30 a.m. – 3- and 6-month bill auction
• 1:00 p.m. – 2-year note auction

Have a great holiday weekend!

First, a recent report from Pew Research indicates that teens are abandoning Facebook in favor of Twitter due to the increasing adoption of Facebook by adults (including their parents) and for other reasons. How many young people are dumping Facebook is not clear, and with 1 billion users worldwide, Facebook might be expected to lose a few.

But that teen demographic is critical to advertisers seeking to build a solid connection between their products and that audience. Losing teens in any number will likely lead advertisers to ask some tough questions of Facebook ad reps.

Second, Facebook is also apparently getting some competition from Google Inc. (NASDAQ: GOOG) in a contest to acquire Israel-based Waze, a smartphone traffic app. Mobile apps that deliver location information cause advertisers to salivate uncontrollably. Being able to deliver an ad targeted to a specific person at the very moment that person is looking in a store window is valuable beyond all other things.

With Waze and similar apps, Facebook’s billion users are individually addressable wherever they are. Letting Google grab the company would be a serious blow to Facebook’s mobile ad plans.

Shares of Facebook are down about 2.2% in the early afternoon today, at $24.52 after touching a year-to-date low of $24.32. The stock’s 52-week range is $17.55 to $33.45.

U.S. regulators are in the early stages of an antitrust probe into whether Google Inc, the top player in Web display advertising, breaks antitrust law in how it handles some advertising sales, a source told Reuters on Thursday.

The source said that it was unlikely that the Federal Trade Commission had sent out civil investigative demands in relation to the probe, which would be the sign of a formal and more serious investigation.

The new line of inquiry focuses on tools acquired when Google bought display ad company DoubleClick in 2007; other firms which specialize in helping Web publishers sell ads to put on their websites are complaining to the FTC, the source said.

Google shares are down fractionally in premarket trading to $880.55, in a 52-week range of $556.52 to $920.60.

Germany confirmed that its first-quarter gross domestic product rose only 0.1%. There was some excitement that the largest economy in Europe had dodged a recession, something its neighbors cannot claim. But the number was so perilously close to zero that calling Germany’s predicament a recession is not far off the mark. However, the cloud does have a silver lining. Sentiment about business prospects in Germany did improve:

The Ifo Business Climate Index for industry and trade in Germany has risen again after two consecutive declines. The firms are clearly more satisfied with their current business situation than in the previous month. The outlook for future business is unchanged and slightly positive. The German economy remains on track in a challenging European environment.

Retailers Sue Visa, MasterCard

Several large retailers accuse MasterCard Inc. (NYSE: MA) and Visa Inc. (NYSE: V) of setting unfair fees that damage the retailers’ sales prospects and margins while enriching the credit card companies. Bloomberg reports on the retailers’ suit:

Target Corp. (TGT) and Macy’s Inc. (M) joined with 15 other retailers in suing Visa Inc. and MasterCard Inc. (MA) over credit-card and debit-card fees after dropping out of a multibillion-dollar settlement of a similar case.

The biggest U.S. payment card firms illegally restrained competition for interchange fees by setting default rates and imposing almost identical rules for accepting cards, the retailers said yesterday in a federal court complaint in New York.

In the previous antitrust suit pending in Brooklyn federal court, dozens of large retailers including Target and Macy’s opposed a $7.25 billion proposed settlement, alleging it gave Visa and MasterCard too much freedom to raise rates in the future.

“Plaintiffs have paid and continue to pay significantly higher costs to accept Visa-branded and MasterCard-branded credit and debit cards than they would if the banks issuing such cards competed for merchant acceptance,” lawyers for the retailers said in yesterday’s complaint.

Google Faces FTC Charges

Just as Google Inc.’s (NASDAQ: GOOG) battle with European Union regulators has died down, the United States may bring antitrust charges against the company. According to Reuters:

U.S. regulators are in the early stages of an antitrust probe into whether Google Inc, the top player in Web display advertising, breaks antitrust law in how it handles some advertising sales, a source told Reuters on Thursday.

The source said that it was unlikely that the Federal Trade Commission had sent out civil investigative demands in relation to the probe, which would be the sign of a formal and more serious investigation.

The new line of inquiry focuses on tools acquired when Google bought display ad company DoubleClick in 2007; other firms which specialize in helping Web publishers sell ads to put on their websites are complaining to the FTC, the source said.

Google Inc. (NASDAQ: GOOG) may face antitrust investigations by the U.S. government. (Reuters)

Carl Icahn may raise $7 billion to support his effort to buy Dell Inc. (NASDAQ: DELL) (Reuters)

Google and Facebook Inc. (NASDAQ: FB) may compete to buy satellite firm Waze. (Reuters)

Sprint Nextel Corp. (NYSE: S) and Softbank receive the state regulatory approval needed for the Japanese company to buy 70% of the American one. (Reuters)

The U.S. government sets a deal for Chinese companies to provide auditors access to some of their finances. (WSJ)

Dish Network Corp. (NASDAQ: DISH) moves closer to getting $9 billion to finance its possible buyout of Sprint. (WSJ)

Sears Holdings Corp. (NASDAQ: SHLD) posts an unexpected loss. (WSJ)

After a drop in sales due to territorial disputes, Chinese consumer purchases of Japanese cars pick up. (WSJ)

Gap Inc.’s (NYSE: GPS) earnings support belief in a huge turnaround. (WSJ)

AT&T Inc. (NYSE: T) puts a new charge on wireless customers that could add half a billion dollars to its revenue. (WSJ)

Twitter will sell ads to people who are watching programs on TV related to tweets. (NYT)

Goldman Sachs Group Inc. (NYSE: GS) will create a committee to monitor its relationships with customers. (FT)

Official numbers for German GDP growth in the first quarter confirm a previous estimate of 0.1% as construction activity tampers off. (Bloomberg)

The 50 largest hedge funds increased their equity exposure by over 5% in Q 1 2013 This quarter, Boeing Co. was the favorite allocation of the funds. The stock experienced $1.6 billion in inflows, which amounted to nearly 250% of its Q4 value in the funds’ aggregate portfolio. Boeing’s shares are up 28.2% year to date (“YTD”), compared to 15.7% for the S&P 500. However, the largest dollar value increase in equity exposure arose from the January IPO of Norwegian Cruise Line Holdings Ltd which was backed in part by Apollo Global Management LP. It’s also interesting to note that though the funds sold some exposure in Google Inc. (Cl A), the technology company was present of the majority (62%) of the fifty hedge funds portfolios. This distinction was previously held by Apple. Two quarters ago, Apple was held by just as widely as Google and it was the largest equity holding of nearly one fourth of the funds. However, by Q1 2013, Apple was held by only 40% of the funds with only four carrying it as the top stock holding.

While the top 50 hedge fund managers largely increased their exposure to equities, the funds also made significant reductions to their stakes in two successful stocks in 2013: News Corp. (Cl A) and American International Group Inc. The funds reduced their holding in News Corp by 20.3% and the stock represented the largest individual equity sale in three of the fifty hedge funds. In addition, the funds reduced their exposure to AIG by 16.2%. With these sales, fund investors seem to be predicting a slowdown or reversal for these two issues, as AIG and News Corp have had very similar YTD returns as Boeing in 2013: 27.2% and 28.8%, respectively.

Shares of Apple Inc. (NASDAQ: AAPL) are fractionally higher in premarket trading, and Google Inc. (NASDAQ: GOOG) is down fractionally. Boeing Co. (NYSE: BA), News Corp. (NASDAQ: NWSA) and American International Group Inc. (NYSE: AIG) are thus far inactive.

Apple’s stock price by itself shows how investors have devalued the company and its products. A month ago, its share price was down 40% from its 52-week high. BrandZ would argue that the drop does not matter. The research firm’s methodology is such that Apple’s troubles could be swept under a rug:

It is the only study to combine measures of brand equity based on interviews with over two million consumers globally about thousands of global ‘consumer facing’ and business-to-business brands with a rigorous analysis of the financial and business performance of each company (using data from Bloomberg and Kantar Worldpanel) to separate the value that brand plays in driving business revenue and market capitalization. Consumer perception of a brand is a key input in determining brand value because brands are a combination of business performance, product delivery, clarity of positioning, and leadership. The ranking takes into account regional variations since, even for truly global brands, measures of brand contribution might differ substantially across countries

However, that explanation is inadequate. Apple’s brand valuation was higher by 1% year-over-year in the current study, which makes the BrandZ number even more questionable.

The most useful contrast among the top brands in the study, at least as far as how odd the results are, is that Google Inc.’s (NASDAQ: GOOG) brand value was only up 5% to $133.7 billion. Google’s success over the past year, in contrast to Apple’s, would argue powerfully for a much better increase.

As for the balance of the top 10: International Business Machines Corp. (NYSE: IBM) ranked third with a valuation of $112.5 (down 3%). It was followed by McDonald’s Corp. (NYSE: MCD) at $90.3 billion (down 5%), Coca-Cola Co. (NYSE: KO) at $70.4 billion (up 6%), AT&T Inc. (NYSE: T) up 10% to $75.5 billion, Microsoft Corp. (NASDAQ: MSFT) down 9% to $69.8 billion, Marlboro down 6% to $69.4 billion, Visa Inc. (NYSE: V) up 46% to $56.1 billion, and China Mobile Ltd. (NYSE: CHL) up 18% to $55.4 billion.

The valuations are not meant to track stock price alone, or a foundation of value based in financial results. However, the values at least should not be entirely offset by these things. As such, Visa’s revenue last year was up from $9.2 billion to $10.4 billion, and net income fell from $3.7 billion to $2.1 billion. These results are well less than spectacular, and might even be counted as mediocre. How do they justify a 46% increase in the value of the Visa brand?

BrandZ is free to use its own complex valuation model — it is the company’s survey, after all. But when the valuations do not true up at all to the real world, all the results have to be taken with a great deal of skepticism.

In a blog post about the eighth year anniversary, the “YouTube” Team bragged:

Today, more than 100 hours of video are uploaded to YouTube every minute. That’s more than four days of video uploaded each minute! Every month, more than 1 billion people come to YouTube to access news, answer questions and have a little fun. That’s almost one out of every two people on the Internet.

Movie and TV studios are not adding content at anywhere near that rate. The figure only proves that short clips from people who have no interest in premium video remain the biggest part of the site’s inventory, and the part that is growing fastest.

YouTube’s numbers are hugely impressive. Google video sites, made up almost exclusively of YouTube, had 153.9 million unique visitors in March, according to research firm comScore. No other sites where even close. Yahoo! Inc. (NASDAQ: YHOO) had the largest figure among the portals with 50.3 million visitors in March. Another contrast is that visitors to YouTube watched an average of 1,202.6 minutes in March. For Yahoo! the comparable number was 59.1 minutes.

YouTube’s advantage among its competitors ends with size. The video content at Yahoo!, AOL Inc. (NYSE: AOL) and Microsoft Corp. (NASDAQ: MSFT) is almost all professionally produced. Advertisers are happy to run marketing messages next to or in this content. YouTube has some movie trailers on its home page. It also has content there that includes “How to Disappoint Your Parents in 61 Seconds” and “The Disgusting Little Things That People Do.” Among those things is watching disgusting videos on YouTube.

Happy birthday.

Analysts have compared the Tumblr decision in relationship to AOL Inc.’s (NYSE: AOL) buyout of The Huffington Post and Google Inc.’s (NASDAQ: GOOG) purchase of YouTube. The three deals actually have little in common. AOL paid $315 million two years ago, a reasonable multiple give Huffington’s $60 million in sales the year before. In the process, AOL transformed the quality of its editorial content overnight. Google’s 2006 buyout of YouTube for $1.65 billion was not much of a gamble, based on the search company’s market cap and the fact the purchase was made with stock. Even if the decision has not paid off financially, it does put Google well ahead of all competition in the online video content business. Most experts believe YouTube eventually will pay off as the value of online video advertising rises.

The Yahoo! move with Tumblr represents one of the few deals the portal company could afford as part of a plan to take a large position in social media. As of March 31, Yahoo! had $5.4 billion in cash, short-term securities and long-term marketable securities. Twitter’s value has been estimated at more than $8 billion, which puts it out of Yahoo!’s reach. With Tumblr’s 29 million unique visitors in the United States, according to Comscore, Yahoo! could not find a larger acquisition to target Web 2.0 users. Yahoo! can reason Tumblr’s growth rate justifies the purchase price, along with Yahoo! advertising expertise that should allow its to build Tumblr’s revenue.

Critics argue the advertisers will not want to be put next to some of Tumblr’s more racy content, and the Tumblr users will find the presence of advertising offensive. Against that, Yahoo! can show that Facebook Inc. (NASDAQ: FB) faced the same hurdles just three or four years ago. The size of Facebook’s audience won over advertisers. Facebook users found the service important enough that their objections to advertising were short lived. Yahoo! can argue it is reasonable to wager that Tumblr’s revenue success may not be as fantastic as Facebook’s because of the social network’s size. However, based on their relative audiences, Tumblr’s annual revenue could reach into the hundreds of millions of dollars. If that happens, the $1.1 billion price is reasonable.

The most important aspect of the Tumblr deal is that Yahoo! needs a transaction that can be a large part of the transformation of the company. Its revenue is flat, and portal companies are considered ancient, in Internet years. Whether Tumblr fits seamlessly into the portal business may not be important. Yahoo! has admitted as much by the decision to keep Tumblr largely independent from Yahoo!’s main business. Tumblr gives Yahoo! scale in social media, and, that by itself is enough to argue the deal, at $1.1 billion, is brilliant.

Bernanke’s argument could be that the education of young Americans, particularly in math and the sciences, is not adequate to keep the U.S. in the innovation race. The superior educational attainment of children in Asia and parts of Europe will chip away at the American lead in creating the products which will drive the global economy in the decades ahead.

The strength of Bernanke’s argument is that most new wave of products and services still have their beginnings in the U.S.. The includes software and hardware products from Apple Inc. (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG), and more mundane processes like “fracking”

Bernanke’s case, which does not exclude nations outside the U.S. entirely:

Finally, pessimists may be paying too little attention to the strength of the underlying economic and social forces that generate innovation in the modern world. Invention was once the province of the isolated scientist or tinkerer. The transmission of new ideas and the adaptation of the best new insights to commercial uses were slow and erratic. But all of that is changing radically. We live on a planet that is becoming richer and more populous, and in which not only the most advanced economies but also large emerging market nations like China and India increasingly see their economic futures as tied to technological innovation. In that context, the number of trained scientists and engineers is increasing rapidly, as are the resources for research being provided by universities, governments, and the private sector. Moreover, because of the Internet and other advances in communications, collaboration and the exchange of ideas take place at high speed and with little regard for geographic distance. For example, research papers are now disseminated and critiqued almost instantaneously rather than after publication in a journal several years after they are written. And, importantly, as trade and globalization increase the size of the potential market for new products, the possible economic rewards for being first with an innovative product or process are growing rapidly. In short, both humanity’s capacity to innovate and the incentives to innovate are greater today than at any other time in history.

The U.S. needs to take it to heart as much as any other country