Archive for August, 2007
Wednesday, August 8th, 2007
Further demonstrating his tough angle on inflation, Bernanke left rates unchanged at 5.25% citing that “the best way to maintain financial stability is to maintain price stability”. The recent tightening of the credit markets has become more severe as of late, and has broader implications for economic growth moving forward. This has left many on Wall Street hoping for some glimmer of hope for a near term rate cut to stimulate growth. While this now looks unlikely, investors will have to take comfort in the fact that US corporations are cash rich, and may not even need to borrow to fund growth anyway.
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Thursday, August 2nd, 2007
The markets closed out the trading session in the black, as investor confidence was buoyed by continued strength in corporate profits. Among the winners were Nokia, reporting Q2 earnings up almost 9% vs. the prior year. CVS Caremark also posted gains on Q2 profits which doubled, and Kodak turned a quarterly profit for the first time in 3 years.
The bears have had plenty to worry about with the sub-prime lending implosion, housing weakness, LBO credit tightening, and even slowing personal consumption. However, the S&P 500 (which accounts for the majority of US market capitalization) is not unreasonably priced at 15-16X ‘07 earnings. Further, with real GDP growing and inflation in check, the market looks like it will end the year on a positive note.
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Thursday, August 2nd, 2007
Google is looking to cash in on the growing cellphone advertising market by leveraging its successful Adsense model. Adsense, which enables website administrators to place context specific ads on their sites, has been a significant source of revenue for the company. Sources on the internet already report receiving invitations to test beta functionality of the mobile ad service, but the company is maintaining a low profile.
Per the Wall Street Journal, the tech giant is also discussing development of handsets tailored to its services with mobile manufacturers and carriers. If all goes well, we may be seeing “Google phones” hitting the market as early as next year (and not through just one carrier). However, Google knows it will be hard to trump the iPhone, so they have chosen to drive technical specifications the manufacturers can use to develop their own handsets (vs. trying to release a phone of their own).
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Wednesday, August 1st, 2007
After 3 months of wrangling, Rupert Murdoch’s News Corp. acquired Dow Jones and Company for around 5 billion dollars. Until now, the Bancroft family (an esteemed New England family with deep roots that include the founding families of Boston) maintained majority control of the company. While the deal is seen as a smart move from a financial perspective, many worry it comes at the cost of journalistic independence and objectivity.
Clarence W. Barron, considered to be the founder of financial journalism, pioneered the ascent of Dow Jones through publications such as the Wall Street Journal and Barron’s. His dedication and hard work made these papers standard reference for anyone investing in the stock market. Hugh Bancroft, Barron’s son-in-law, took over as president of the company after his death in 1928.
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