After China’s Rare Earth Embargo, a New Calculus

Posted by & filed under Economic Analysis, Governments & Regulators, Industry Analysis.

Description: When Japanese mineral traders learned in late September that China was blocking shipments of a vital commodity, the word came not from a government announcement but from dock workers in Shanghai.

Source:  NYTimes.com

Date: 10/29/2010

Link: http://www.nytimes.com/2010/10/30/business/global/30rare.html?ref=business

Questions for discussion:

  • Summarize the reasons given for the actions by China?
  • How do you think this scenario with play out in terms of commodity prices, mining activities, and investing strategies in the firms involved?
  • How do you think this will impact currencies?

Ford’s quarterly profit climbs 69%

Posted by & filed under Company Analysis.

Description:  Ford Motor Co. (F) reported a 69% jump in third-quarter earnings Tuesday, marking five straight quarterly profits for the resurgent auto giant as it moves to slash debt and meet pension obligations. In addition, Ford said it would pay down $2 billion of debt and use cash to fully prepay the remaining $3.6 billion of debt owed to a health-care trust for retirees.Ford also said it has launched a tender offer for about $2.6 billion in convertible notes, offering a cash premium to encourage holders to convert the debt into common stock.

Source: Marketwatch.com
 
Date: 10/26/2010

Link: http://www.marketwatch.com/story/ford-profit-climbs-by-71-2010-10-26?siteid=nwtwk

Questions for discussion:

  • Summarize the financials reported at Ford.
  • What is your assessment of these metrics from the point of view of an investor
  • How would you expect management of the firm to view these results?

Fed’s Bond Buying Won’t Help

Posted by & filed under Economic Analysis, Governments & Regulators.

Description: Whatever the Federal Reserve does to lower interest rates further won’t help the U.S. economy, according to First Pacific Advisors fund manager Tom Atteberry, who says that’ll just weaken the dollar and hurt savers. Deborah Levine reports.

Source:  Marketwatch.com – video report

Date: 10/21/2010

Link: http://www.marketwatch.com/video/asset/fed-bond-buying-wont-help/1ABF00C0-B59C-492E-A0B3-E66664FBBB7E

Questions for discussion:

  • Summarize the main comments made about the Fed’s strategy to lower interest rates.
  • Do you agree with the analysis and forecasts made?
  • Does a strategy of investing in corporate bonds maturing within the next five years make sense?
  • How should investors respond to this report?

digits: Steve Jobs Jabs at Competition

Posted by & filed under Company Analysis, Management Issues.

Description: On yesterday’s earning call, Apple CEO Steve Jobs issued a string of criticisms about Apple’s rivals from Research in Motion and Google to unnamed companies making seven-inch tablets. Plus: what analysts have to say this morning about Apple’s growth overriding concerns. Peter Kafka and Jennifer Valentino-DeVries discuss on Digits.

Source: Marketwatch..com  – video report

Date: 10/19/2010

Link: http://www.marketwatch.com/video/asset/digits-steve-jobs-jabs-at-competition/CB58AF5B-10DF-44C8-858C-F87DB7BFBFA4

Questions for discussion: 

  • What were the reasons given that might explain Steve Jobs’ criticisms of competitors?
  • What is your understanding of the financial situation at Apple?
  • Given financial conditions described, what would you suggest to the firm?
  • What is your view of a merger between Apple and Facebook?
  • Why would this deal make sense for both parties?
  • What does the loss of senior management at Microsoft mean for the firm?

Caterpillar beats but sales mix worries investors

Posted by & filed under Company Analysis, Economic Analysis, Financial analysis, Governments & Regulators.

Description:  Caterpillar Inc (CAT.N) reported stronger-than-expected earnings on Thursday and raised its full-year forecast, but warned that a number of factors could weigh on its performance next year, and its shares fell as much as 2.8 percent.

Source:  Reuters.com
 
Date: 10/21/2010

Link: http://www.reuters.com/article/idUSTRE69K27Y20101021

Questions for discussion: 

  • What is the significance of the financial results and aftermath reported in the article?
  • Why do you think Caterpillar is considered a bellwether of the global economy and hence, global markets?
  • How would you think financial managers at Caterpillar are strategizing for the near future?
  • How should investors regard the firm?

Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes

Posted by & filed under Company Analysis, Governments & Regulators.

Description:  Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.

Source: Bloomberg.com
 
Date: 10/21/2010

Link: http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html

Questions for discussion:

  • Are Google’s actions unethical or illegal? 
  • What does this report have to say about the relationships between governments and international businesses?
  • Who are the winners and losers in this situation?
  • What should the governments and businesses involved do?
  • How does this situation affect investors?
  • Do you think the US government will go after the tax revenues missed through international structuring or do you think this is considered acceptable by government?
  • What are the arguments for allowing Google and other companies to dodge US taxes in this manner?

China prompts rare earth consumers to look elsewhere

Posted by & filed under Economic Analysis, Governments & Regulators, Industry Analysis.

Description: Japan and South Korea moved on Friday to reduce their dependence on China’s rare earth metals amid fears export reductions by Beijing could be the trigger for a broader trade conflict as nations joust over currencies.

Source:  Reuters.com

Date: 10/22/2010

Link: http://www.reuters.com/article/idUSTRE69L27D20101022

Questions for discussion:

  • Summarize the activities reported and their significance for investors in these commodities and currencies.
  • How might you expect investors to respond to these developments?
  • What are the concerns raised by this scenario?
  • How do you think it will be played out?

News Hub: Markets Focus on Bernanke Speech

Posted by & filed under Economic Analysis, Governments & Regulators.

Description:  Paul Vigna discusses how Bernanke’s speech at the Boston Fed will likely play out in the markets, along with fresh data on inflation and retail sales.

Source:  Marketwatch.com – video report

Date: 10/15/2010

Link: http://www.marketwatch.com/video/asset/news-hub-markets-focus-on-bernanke-speech/A2ACEBAE-022C-4E50-A009-00B48B736CFB

Questions for discussion:

  • Summarize the main comments made about the Ben Bernanke’s speech.
  • What is “asset inflation” and why is it being pointed to as a concern?
  • How should investors respond to this report?

Cutting Back: Ireland Deals With Property Bust

Posted by & filed under Economic Analysis, Governments & Regulators.

Description:  As Ireland copes with the aftermath of a large property bust, it faces a new wave of emigration but also innovation, as a group of architects band together to create a micro economy. WSJ’s Andy Jordan reports from Dublin.

Source:  Marketwatch.com – video report
  
Date: 10/12/2010

Link:  http://www.marketwatch.com/video/asset/cutting-back-ireland-deals-with-property-bust/01A39122-5330-4101-8DA1-739C2E5EF877

Questions for discussion:

  • Summarize the analysis presented?
  • How much of Ireland’s economic collapse was due to the real estate bubble alone?
  • What affect did Ireland’s real estate taxes have on investors and the economy in general?
  • What could government regulators have done to mitigate the problems that eventually caused the collapse?
  • Why do you suppose they didn’t respond earlier?
  • What should they do now?
  • How do you see the Irish economy emerging over the next ten years?
  • How different will this scenario be in comparison to other countries such as Spain, Portugal, and Greece?
  • How should investors think of Ireland?
  • How should corporate finance managers think about investing in operations in Ireland?

Facebook employees must pay big to cash out

Posted by & filed under Company Analysis, Governments & Regulators, Management Issues.

Description:  Although Facebook isn’t yet public, employees and other insiders have been able to cash out some of their equity through private stock-sale deals. But the company is trying to dump cold water on that rapidly heating up market: Facebook recently began charging employees a $2,500 fee if they sell their private stock.

Source:  CNNMoney.com
 
Date: 10/15/2010

Link: http://money.cnn.com/2010/10/15/technology/facebook_stock/index.htm

Questions for discussion: 

  • Why are these firms trying to mitigate stock selling by employees?
  • What impact might this have on non-employee investors?
  • Could this strategy affect any future IPO values?
  • What would you do if you were an employee and held stock?
  • What would you do if you were the financial managers of these firms?